"Filed Pursuant to Rule 424(b)(2)
relating to Reg. Stmt. 33-48840
and Reg. Stmt. 33-78424
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MAY 12, 1994)
$500,800,000
[LOGO]
MEDIUM-TERM NOTES, SERIES B
DUE MORE THAN ONE YEAR FROM DATE OF ISSUE
------------------------
Colgate-Palmolive Company (the "Company") may offer from time to time up to
$500,800,000 aggregate principal amount, or the equivalent thereof in one or
more foreign or composite currencies, of its Medium-Term Notes, Series B (the
"Notes"). Each Note will mature on a day more than one year from the date of
issue, as selected by the purchaser and agreed to by the Company, and may be
subject to redemption by the Company or repayment at the option of the Holder
thereof, in each case, in whole or in part, prior to its Stated Maturity, as set
forth therein and specified in a pricing supplement hereto (each, a "Pricing
Supplement").
The interest rate, if any, or the formula for the determination of any such
interest rate, applicable to each Note and other variable terms of the Notes as
described herein will be established by the Company at the date of issue of such
Note and will be set forth therein and specified in a Pricing Supplement.
Interest rates, interest rate formulae and such other variable terms 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 book-entry form (a "Book-Entry Note") or
definitive form (a "Definitive Note"), as set forth in the applicable Pricing
Supplement, in denominations of $1,000 and integral multiples thereof, unless
otherwise specified in the applicable Pricing Supplement. Each Book-Entry Note
will be represented by a global security deposited with or on behalf of The
Depository Trust Company (or such other depositary as is identified in an
applicable Pricing Supplement) (the "Depositary") and registered in the name of
the Depositary's nominee. Interests in Book-Entry Notes will be shown on, and
transfers thereof will be effected only through, records maintained by the
Depositary (with respect to its participants) and the Depositary's participants
(with respect to beneficial owners).
Unless otherwise specified in an applicable Pricing Supplement, the Notes
will bear interest at fixed rates (the "Fixed Rate Notes") or at floating rates
(the "Floating Rate Notes"). The applicable Pricing Supplement will specify
whether a Floating Rate Note is a Floating Rate/Fixed Rate Note or Inverse
Floating Rate Note or whether its rate of interest is determined by reference to
one or more of the CD Rate, the CMT Rate, the Commercial Paper Rate, the
Eleventh District Cost of Funds Rate, the Federal Funds Rate, LIBOR, the Prime
Rate or the Treasury Rate (each, an "Interest Rate Basis"), or any other
interest rate formula, as adjusted by any Spread and/or Spread Multiplier and
will specify such other terms applicable to such Note. See "Description of
Notes." Interest on Fixed Rate Notes will accrue from their date of issue and,
unless otherwise specified in the applicable Pricing Supplement, will be payable
semiannually in arrears on June 1 and December 1 of each year and at Maturity.
Unless otherwise specified in an applicable Pricing Supplement, the rate of
interest on each Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semiannually or annually, as set forth therein and specified in the
applicable Pricing Supplement, and interest on each Floating Rate Note will
accrue from its date of issue and will be payable in arrears monthly, quarterly,
semiannually or annually, as specified in the applicable Pricing Supplement and
at Maturity. Notes may also be issued with original issue discount, and such
Notes may or may not currently pay interest.
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, THE PROSPECTUS OR ANY
SUPPLEMENT HERETO. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
AGENTS' DISCOUNTS
PRICE TO AND PROCEEDS TO THE
PUBLIC(1) COMMISSIONS(2)(3) COMPANY(2)(4)
Per Note.......................................... 100% .150% - .750% 99.850% - 99.250%
$751,200 - $500,048,800 -
Total............................................. $500,800,000 $3,756,000 $497,044,000
(1) Unless otherwise specified in an applicable Pricing Supplement, the Notes
will be issued at 100% of their principal amount.
(2) The Company will pay to Citicorp Securities, Inc., Goldman, Sachs & Co.,
Lazard Freres & Co., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated or J.P. Morgan Securities Inc. a commission ranging from
.150% to .750% of the principal amount of a Note, depending upon its Stated
Maturity, sold through any such agent, and may sell Notes to any agent, as
principal, for resale to investors and other purchasers at varying prices
relating to prevailing market prices at the time of resale, as determined by
such agent or, if so agreed, at a fixed public offering price.
(3) The Company has agreed to indemnify the agents against, and to provide
contribution under the Securities Act of 1933, as amended. See "Plan of
Distribution."
(4) Before deducting expenses payable by the Company estimated at $365,415.
------------------------
The Notes are being offered on a continuing basis by the Company through
agents, which may include those listed below (collectively, the "Agents"), who
have agreed to use their reasonable efforts to solicit offers to purchase the
Notes. The Company may also sell Notes to any Agent, as principal, for resale to
investors and other purchasers. The Company has reserved the right to sell Notes
directly on its own behalf or to appoint other agents from time to time, which
will be named in the appropriate Pricing Supplement. No commission will be
payable on any Notes sold directly by the Company. 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 cancel or modify the offer made hereby without
notice. The Company or an Agent, if it solicits the offer, may reject any offer
to purchase Notes in whole or in part. See "Plan of Distribution."
------------------------
CITICORP SECURITIES, INC.
GOLDMAN, SACHS & CO.
LAZARD FRERES & CO.
MERRILL LYNCH & CO.
J.P. MORGAN SECURITIES INC.
------------------------
The date of this Prospectus Supplement is May 12, 1994.
THE COMPANY
Colgate-Palmolive Company (the "Company"), founded in 1806, is one of the
world's leading consumer products companies. It has operating companies in more
than 70 countries and markets its products in approximately 170 countries. The
Company has been operating outside the United States for more than 70 years. The
Company is a Delaware corporation with its principal executive offices located
at 300 Park Avenue, New York, New York 10022 (telephone (212) 310-2000).
The Company manufactures and markets a wide variety of products in the U.S.
and around the world in two distinct business segments: Oral, Personal and
Household Care, and Specialty Marketing. Oral, Personal and Household Care
products include toothpastes, oral rinses and toothbrushes, bar and liquid
soaps, shampoos, conditioners, deodorants and antiperspirants, baby and shave
products, laundry and dishwashing detergents, fabric softeners, cleansers and
cleaners, bleach, and other similar items. Specialty Marketing products include
pet dietary care products and portable fuel for warming food. Principal global
trademarks and tradenames include Colgate, Palmolive, Mennen, Ajax, Fab and
Science Diet in addition to various regional tradenames.
USE OF PROCEEDS
The Company anticipates that approximately $250 million of the proceeds of
the offering of Notes will be used to repay the Company's commercial paper
currently outstanding. Such commercial paper has a 30-day term, bears varying
interest rates ranging from 4.3% to 4.5% and was originally issued to fund
current transactions.
DESCRIPTION OF NOTES
The Notes will be issued as a series of debt securities under an Indenture,
dated as of November 15, 1992 (the "Indenture"), between the Company and The
Bank of New York, as trustee (the "Trustee"). The following summary of certain
provisions of the Notes and of the Indenture does not purport to be complete and
is qualified in its entirety by reference to the Indenture including the forms
of Notes, copies of which have been filed as an exhibit to the Registration
Statement of which this Prospectus Supplement and the accompanying Prospectus
are a part. Capitalized terms used but not defined herein have the meanings
given to them in the Indenture or the Notes, as the case may be. The term "Debt
Securities," as used under this caption, refers to all securities issued and
issuable from time to time under the Indenture and includes the Notes.
Unless otherwise specified in an applicable Pricing Supplement, the Trustee
will also act as "Calculation Agent."
GENERAL
THE FOLLOWING DESCRIPTION OF NOTES WILL APPLY UNLESS OTHERWISE SPECIFIED IN
AN APPLICABLE PRICING SUPPLEMENT.
All Debt Securities, including the Notes, issued and to be issued under the
Indenture will be unsecured general obligations of the Company and will rank
pari passu with all other unsecured and unsubordinated indebtedness of the
Company from time to time outstanding. The Indenture does not limit the
aggregate principal amount of Debt Securities which may be issued thereunder and
Debt Securities may be issued thereunder from time to time as a single series or
in two or more separate series up to the aggregate principal amount from time to
time authorized by the Company for each series. As of the date of this
Prospectus Supplement, the Company has authorized the issuance under the
Indenture of up to $900,000,000 aggregate principal amount of Debt Securities
(including $399,200,000 aggregate principal amount of Medium-Term Notes, Series
A issued by the Company in 1992 which are still outstanding). The Company may,
from time to time, without the consent of the
S-2
Holders of the Notes, provide for the issuance of Notes or other Debt Securities
under the Indenture in addition to the $900,000,000 aggregate principal amount
of Debt Securities authorized as of the date of this Prospectus Supplement.
The Notes are currently limited to $500,800,000 aggregate principal amount
or the equivalent thereof in one or more foreign or composite currencies. The
Notes will be offered on a continuing basis and will mature on a day more than
one year from the date of issue, as selected by the purchaser and agreed to by
the Company. Unless otherwise specified in an applicable Pricing Supplement,
interest-bearing Notes will either be Fixed Rate Notes or Floating Rate Notes as
specified in the applicable Pricing Supplement. Notes may be issued at
significant discounts from their principal amount payable at Stated Maturity (or
on any prior date on which the principal or an installment of principal of a
Note becomes due and payable whether by the declaration of acceleration, call
for redemption at the option of the Company, repayment at the option of the
Holder or otherwise) (each such date, a "Maturity"), and some Notes may not bear
interest.
Unless otherwise indicated in a Note or in a foreign currency supplement
thereto (a "Multiple-Currency Supplement") or Indexed Note (as defined below)
supplement thereto (an "Indexed Note Supplement"), the Notes will be denominated
in United States dollars and payments of principal of, and premium, if any, and
interest on, the Notes will be made in United States dollars. If any of the
Notes are to be denominated other than in United States dollars or if the
principal of, and interest on, the Notes, and any premium provided for in any
Note is to be payable in or by reference to a currency (or in composite currency
units or in amounts determined by reference to one or more currencies) other
than that in which such Note is denominated, provisions with respect thereto
will be set forth in such Note and in the applicable Multi-Currency Supplement
or Indexed Note Supplement.
Interest rates, interest rate formulae and other variable terms of the
Notes are subject to change by the Company from time to time, but no such 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 book-entry form (a "Book-Entry
Note") or definitive form (a "Definitive Note"), in denominations of $1,000 and
integral multiples thereof, unless otherwise specified in the applicable Pricing
Supplement. Book-Entry Notes may be transferred or exchanged only through a
participating member of The Depository Trust Company (or such other depository
as is identified in an applicable Pricing Supplement) (the "Depositary"). See
"Book-Entry Notes." Registration of transfer of Definitive Notes will be made at
the Corporate Trust Office of the Trustee. No service charge will be made by the
Company, the Trustee or the Security Registrar for any such registration of
transfer or exchange of Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith (other than exchanges pursuant to the Indenture, not involving any
transfers).
Payments of principal of, and premium and interest, if any, on Book-Entry
Notes will be made by the Company through the Trustee to the Depositary. See
"Book-Entry Notes." In the case of Definitive Notes, payment of principal or
premium, if any, at the Maturity of each Definitive Note will be made in
immediately available funds upon presentation of the Definitive Note at the
Corporate Trust Office of the Trustee in the Borough of Manhattan, The City of
New York, or at such other place as the Company may designate. Payment of
interest due at Maturity will be made to the person to whom payment of the
principal of the Definitive Note shall be made. Payment of interest due on
Definitive Notes other than at Maturity will be made at the Corporate Trust
Office of the Trustee or, at the option of the Company, may be made by check
mailed to the address of the person entitled thereto as such address shall
appear in the Security Register. Notwithstanding the foregoing, a Holder of
$5,000,000 or more in aggregate principal amount of Definitive Notes having the
same Interest Payment Dates will, at the option of the Company, be entitled to
receive interest payments (other than at Maturity) by wire transfer of
immediately available funds if appropriate wire transfer instructions have been
received in writing by the Trustee not less than 15 days prior to the applicable
Interest Payment Date.
S-3
REDEMPTION
Unless otherwise specified in an applicable Pricing Supplement, the Notes
will not be subject to any sinking fund. If provided in an applicable Pricing
Supplement, Notes may be subject to redemption, in whole or in part, prior to
their Stated Maturity at the option of the Company (upon at least 30 but not
more than 60 days' prior notice to the Depositary in the case of Book-Entry
Notes) or through operation of a mandatory or optional sinking fund or analogous
provisions. Such Pricing Supplement will set forth the detailed terms of such
redemption, including, but not limited to, the date after or on which and the
price or prices (including premium, if any) at which such Notes may be redeemed.
REPAYMENT AT THE OPTION OF THE HOLDER
If so indicated in an applicable Pricing Supplement, Notes will be payable
by the Company in whole or in part at the option of the Holders thereof on their
respective optional repayment dates, if any, as agreed upon by the Company and
the purchasers thereof at the time of sale (each, an "Optional Repayment Date").
If no Optional Repayment Date is indicated with respect to a Note, such Note
will not be repayable at the option of the Holder thereof prior to its Stated
Maturity. Any repayment in part will be in increments of $1,000 provided that
any remaining principal amount of such Note will be an authorized denomination
of such Note. Unless otherwise provided in an applicable Pricing Supplement, the
repayment price for any Note so repaid will be 100% of the principal amount to
be repaid, together with accrued interest thereon payable to the date of
repayment. For any Note to be so repaid, the Note must be received, together
with the form thereon entitled "Option to Elect Repayment" duly completed, by
the Trustee at its Corporate Trust Office (or at such other address of which the
Company shall from time to time notify the holders) not more than 60 nor less
than 30 days prior to the Optional Repayment Date. Exercise of such repayment
option by the Holder will be irrevocable.
While the Book-Entry Notes are represented by Global Securities (as defined
below) held by or on behalf of the Depositary, and registered in the name of the
Depositary or the Depositary's nominee, the Depositary or its nominee will be
the Holder of such Book-Entry Note and therefore will be the only entity that
can exercise a right to repayment. In order to ensure that the Depositary or its
nominee will timely exercise a right to repayment with respect to a particular
Book-Entry Note, the beneficial owner of such Book-Entry Note must instruct the
participant through which it holds an interest in such Book-Entry Note to notify
the Depositary of its desire to exercise a right of repayment. Different firms
may have different deadlines for accepting instructions from their customers.
Accordingly, beneficial owners of Book-Entry Notes should consult the
participants through which they own their interest in the Book-Entry Notes for
the respective deadlines for such participants. All notices shall be executed by
a duly authorized officer of such participant (with signature guaranteed) and
shall be irrevocable. In addition, such beneficial owners of Book-Entry Notes
shall effect delivery of such Book-Entry Notes at the time such notices of
election are given to the Depositary by causing the participant to transfer such
beneficial owner's interest in the Book-Entry Notes, on the Depositary's
records, to the Trustee. Conveyance of notices and other communications by the
Depositary to participants, by participants to indirect participants and by
participants and indirect participants to beneficial owners of the Book-Entry
Notes will be governed by agreements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
INTEREST
GENERAL
Unless otherwise specified in an applicable Pricing Supplement, each Note
will bear interest from the date of issue at the rate per annum or, in the case
of a Floating Rate Note, pursuant to the interest rate formula stated therein
and in the applicable Pricing Supplement until the principal thereof is paid or
made available for payment. Interest will be payable in arrears on each date
specified in the applicable Pricing Supplement on which an installment of
interest is due and payable (an "Interest
S-4
Payment Date") and at Maturity. Unless otherwise specified in an applicable
Pricing Supplement, the first payment of interest on any Note originally issued
between a Regular Record Date and the related Interest Payment Date or on an
Interest Payment Date will be made on the Interest Payment Date immediately
following the next succeeding Regular Record Date to the registered Holder on
such next succeeding Regular Record Date. Unless otherwise specified in an
applicable Pricing Supplement, a "Regular Record Date" shall be the fifteenth
day (whether or not a Business Day (as defined herein)) immediately preceding
the related Interest Payment Date. In the case of defaulted interest, the
Company may elect to make payment of such defaulted interest on a "Special
Record Date," which date shall be fixed in the manner provided for in the
Indenture.
FIXED RATE NOTES
Unless otherwise specified in an applicable Pricing Supplement, each Fixed
Rate Note will bear interest from and including the date of issue, or from and
including the most recent date to which interest has been paid or duly provided
for, to but excluding the Interest Payment Date or Maturity, as the case may be,
at the rate per annum stated on the face thereof until the principal amount
thereof is paid or made available for payment. Unless otherwise specified in an
applicable Pricing Supplement, interest on Fixed Rate Notes will be computed on
the basis of a 360-day year of twelve 30-day months.
Interest on Fixed Rate Notes will be payable semiannually on June 1 and
December 1 of each year, unless otherwise specified in an applicable Pricing
Supplement, and at Maturity. If any Interest Payment Date or the Maturity of a
Fixed Rate Note falls on a day that is not a Business Day, the related payment
of principal, premium, if any, or interest will be made on the next succeeding
Business Day as if made on the date such payment was due, and no interest will
accrue on the amount so payable for the period from and after such Interest
Payment Date or Maturity, as the case may be.
FLOATING RATE NOTES
Unless otherwise specified in an applicable Pricing Supplement, Floating
Rate Notes will be issued as described below. Each applicable Pricing Supplement
will specify certain terms with respect to which such Floating Rate Note is
being delivered, including: whether such Floating Rate Note is a "Regular
Floating Rate Note" (as defined below), an "Inverse Floating Rate Note" (as
defined below) or a "Floating Rate/Fixed Rate Note" (as defined below); the
Interest Rate Basis or Bases, Initial Interest Rate, Interest Reset Dates,
Interest Reset Period, Regular Record Dates, Interest Payment Dates, Index
Maturity, maximum interest rate and minimum interest rate, if any, and the
Spread and/or Spread Multiplier, if any, as described below.
The interest rate borne by the Floating Rate Notes will be determined as
follows:
(i) Unless such Floating Rate Note is designated as a "Floating
Rate/Fixed Rate Note," an Inverse Floating Rate Note or as having an
Addendum attached, such Floating Rate Note will be designated as a "Regular
Floating Rate Note" and, except as described below or in an applicable
Pricing Supplement, bear interest at the rate determined by reference to
the applicable Interest Rate Basis (i) plus or minus the applicable Spread,
if any, and/or (ii) multiplied by the applicable Spread Multiplier, if any.
Commencing on the Initial Interest Reset Date, the rate at which interest
on such Regular Floating Rate Note shall be payable shall be reset as of
each Interest Reset Date; provided, however, that the interest rate in
effect for the period from the Original Issue Date to the Initial Interest
Reset Date will be the Initial Interest Rate.
(ii) If such Floating Rate Note is designated as a "Floating
Rate/Fixed Rate Note," then, except as described below or in an applicable
Pricing Supplement, such Floating Rate Note will bear interest at the rate
determined by reference to the applicable Interest Rate Basis (i) plus or
minus the applicable Spread, if any, and/or (ii) multiplied by the
applicable Spread Multiplier, if any. Commencing on the Initial Interest
Reset Date, the rate at which interest on such Floating Rate/Fixed Rate
Note shall be payable shall be reset as of each Interest Reset Date;
provided, however, that (i) the interest rate in effect for the period from
the Original Issue Date to the Initial
S-5
Interest Reset Date will be the Initial Interest Rate; and (ii) the
interest rate in effect commencing on, and including, the Fixed Rate
Commencement Date to Maturity shall be the Fixed Interest Rate, if such
rate is specified in the applicable Pricing Supplement, or if no such Fixed
Interest Rate is so specified, the interest rate in effect thereon on the
day immediately preceding the Fixed Rate Commencement Date.
(iii) If such Floating Rate Note is designated as an "Inverse Floating
Rate Note," then, except as described below or in an applicable Pricing
Supplement, such Floating Rate Note will bear interest equal to the Fixed
Interest Rate specified in the related Pricing Supplement minus the rate
determined by reference to the Interest Rate Basis (i) plus or minus the
applicable Spread, if any, and/or (ii) multiplied by the applicable Spread
Multiplier, if any; provided, however, that, unless otherwise specified in
an applicable Pricing Supplement, the interest rate thereon will not be
less than zero. Commencing on the Initial Interest Reset Date, the rate at
which interest on such Inverse Floating Rate Note is payable shall be reset
as of each Interest Reset Date; provided, however, that the interest rate
in effect for the period from the Original Issue Date to the Initial
Interest Reset Date will be the Initial Interest Rate.
(iv) Notwithstanding the foregoing, if such Floating Rate Note is
designated as having an Addendum attached as specified on the face thereof,
such Floating Rate Note shall bear interest in accordance with the terms
described in such Addendum and the applicable Pricing Supplement.
Unless otherwise provided in the applicable Pricing Supplement, each
Interest Rate Basis shall be the rate determined in accordance with the
applicable provisions below. Except as set forth above or in an applicable
Pricing Supplement, the interest rate in effect on each day shall be (a) if such
day is an Interest Reset Date, the interest rate determined as of the Interest
Determination Date (as defined below) immediately preceding such Interest Reset
Date or (b) if such day is not an Interest Reset Date, the interest rate
determined as of the Interest Determination Date immediately preceding the next
preceding Interest Reset Date.
Interest on Floating Rate Notes will be determined by reference to an
"Interest Rate Basis," which may be one or more of (i) the "CD Rate," (ii) the
"CMT Rate," (iii) the "Commercial Paper Rate," (iv) the "Eleventh District Cost
of Funds Rate," (v) the "Federal Funds Rate," (vi) "LIBOR," (vii) the "Prime
Rate," (viii) the "Treasury Rate," or (ix) such other interest rate formula as
may be set forth in the applicable Pricing Supplement; provided, however, that
with respect to a Floating Rate/Fixed Rate Note, the interest rate commencing on
the Fixed Rate Commencement Date and continuing, unless otherwise specified in
the applicable Pricing Supplement, until Maturity shall be the Fixed Interest
Rate, if such rate is specified in the applicable Pricing Supplement, or if no
such Fixed Interest Rate is so specified, the interest rate in effect thereon on
the day immediately preceding the Fixed Rate Commencement Date. In addition, a
Floating Rate Note may bear interest in respect of two or more Interest Rate
Bases.
The "Spread" is the number of basis points to be added to or subtracted
from the related Interest Rate Basis or Bases applicable to such Floating Rate
Note. The "Spread Multiplier" is the percentage of the related Interest Rate
Basis or Bases applicable to such Floating Rate Note by which such Interest Rate
Basis or Bases will be multiplied to determine the applicable interest rate on
such Floating Rate Note. The "Index Maturity" is the period to maturity of the
instrument or obligation with respect to which the Interest Rate Basis or Bases
will be calculated. The Spread, Spread Multiplier, Index Maturity and other
variable terms of the Floating Rate Notes are subject to change by the Company
from time to time, but no such change will affect any Floating Rate Note
previously issued or as to which an offer has been accepted by the Company.
Each applicable Pricing Supplement will specify whether the rate of
interest on the related Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semiannually, annually or such other specified period (each, an
"Interest Reset Period") and the dates on which such interest rate will be reset
(each, an "Interest Reset Date"). Unless otherwise specified in the applicable
Pricing Supplement,
S-6
the Interest Reset Date will be, in the case of Floating Rate Notes which reset:
(i) daily, each Business Day; (ii) weekly, the Wednesday of each week (with the
exception of weekly reset Treasury Rate Notes which will reset the Tuesday of
each week, except as specified below); (iii) monthly, the third Wednesday of
each month (with the exception of Eleventh District Cost of Funds Rate Notes,
all of which reset monthly, which will reset on the first calendar day of the
month); (iv) quarterly, the third Wednesday of March, June, September and
December of each year; (v) semiannually, the third Wednesday of the two months
specified in the applicable Pricing Supplement; and (vi) annually, the third
Wednesday of the month specified in the applicable Pricing Supplement; provided,
however, that, with respect to Floating Rate/Fixed Rate Notes, the fixed rate of
interest in effect for the period from the Fixed Rate Commencement Date until
Maturity shall be the Fixed Interest Rate or the interest rate in effect on the
day immediately preceding the Fixed Rate Commencement Date, as specified in the
applicable Pricing Supplement. 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 will be postponed to the next succeeding day that is a Business Day, except
that in the case of a Floating Rate Note as to which LIBOR is an applicable
Interest Rate Basis, if such Business Day falls in the next succeeding calendar
month, such Interest Reset Date will be the immediately preceding Business Day.
As used herein, "Business Day" means, unless otherwise specified in the
applicable Pricing Supplement, any day other than a Saturday or Sunday or any
other day on which banks in The City of New York are generally authorized or
obligated by law or executive order to close and, with respect to Notes as to
which LIBOR is an applicable Interest Rate Basis, is also a London Business Day.
As used herein, "London Business Day" means any day on which dealings in
deposits in the Index Currency are transacted in the London interbank market.
A Floating Rate Note may also have either or both of the following: (i) a
maximum numerical limitation, or ceiling, on the rate at which interest may
accrue during any interest period and (ii) a minimum numerical limitation, or
floor, on the rate at which interest may accrue during any interest period. 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 Floating Rate
Notes will in no event be higher than the maximum rate permitted by New York
law, as the same may be modified by United States law of general application.
Each Floating Rate Note will bear interest from the date of issue at the
rates specified therein until the principal thereof is paid or otherwise made
available for payment. Except as provided below or in an applicable Pricing
Supplement, interest will be payable in the case of Floating Rate Notes which
reset: (i) daily, weekly or monthly, 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; (ii) quarterly, on the third
Wednesday of March, June, September and December of each year; (iii)
semiannually, on the third Wednesday of the two months of each year specified in
the applicable Pricing Supplement; and (iv) annually, on the third Wednesday of
the month of each year specified in the applicable Pricing Supplement (each, an
"Interest Payment Date") and, in each case, at Maturity. If any Interest Payment
Date for any Floating Rate Note would otherwise be a day that is not a Business
Day, such Interest Payment Date will be postponed to the next succeeding day
that is a Business Day, except that in the case of a Floating Rate Note as to
which LIBOR is an applicable Interest Rate Basis, if such Business Day falls in
the next succeeding calendar month, such Interest Payment Date will be the
immediately preceding Business Day. If the Maturity of a Floating Rate Note
falls on a day that is not a Business Day, the payment of principal, premium, if
any, and interest will be made on the next succeeding Business Day, and no
interest on such payment shall accrue for the period from and after such
Maturity.
All percentages resulting from any calculation on Floating Rate Notes will
be rounded, if necessary, to the next highest one hundred-thousandth of a
percentage point, with five one-millionths of a percentage point rounded upwards
(e.g., 9.876545% (or .09876545) would be rounded to 9.87655%
S-7
(or .0987655)), and all dollar amounts used in or resulting from such
calculation on Floating Rate Notes will be rounded to the nearest cent (with
one-half cent being rounded upwards) .
Unless otherwise specified in the applicable Pricing Supplement, interest
payments on Floating Rate Notes will equal the amount of interest accrued from
and including the next preceding Interest Payment Date in respect of which
interest has been paid (or from and including the date of issue, if no interest
has been paid with respect to such Floating Rate Notes), to but excluding the
related Interest Payment Date or Maturity, as the case may be.
With respect to each Floating Rate Note, unless otherwise specified in the
applicable Pricing Supplement, accrued interest is calculated by multiplying its
face amount by an accrued interest factor. Such accrued interest factor is
computed by adding the interest factor calculated for each day in the period for
which accrued interest is being calculated. Unless otherwise specified in the
applicable Pricing Supplement, the interest factor for each such day will be
computed by dividing the interest rate applicable to such day by 360, in the
case of Notes for which the Interest Rate Basis is the CD Rate, the Commercial
Paper Rate, the Eleventh District Cost of Funds Rate, the Federal Funds Rate,
LIBOR or the Prime Rate, or by the actual number of days in the year in the case
of Notes for which the Interest Rate Basis is the Treasury Rate or the CMT Rate.
Unless otherwise specified in an applicable Pricing Supplement, the interest
factor for Notes for which the interest rate is calculated with reference to two
or more Interest Rate Bases will be calculated in each period in the same manner
as if only one of the applicable Interest Rate Bases applied.
The interest rate applicable to each Interest Reset Period commencing on
the Interest Reset Date with respect to such Interest Reset Period will be the
rate determined as of the applicable "Interest Determination Date." Unless
otherwise specified in the applicable Pricing Supplement: (i) the Interest
Determination Date with respect to the CD Rate, the CMT Rate, the Commercial
Paper Rate, the Federal Funds Rate and the Prime Rate will be the second
Business Day preceding each Interest Reset Date for the related Note; (ii) the
Interest Determination Date with respect to the Eleventh District Cost of Funds
Rate will be the last working day of the month immediately preceding each
Interest Reset Date on which the Federal Home Loan Bank of San Francisco (the
"FHLB of San Francisco") publishes the Index (as defined below); and (iii) the
Interest Determination Date with respect to LIBOR will be the second London
Business Day preceding each Interest Rate Date. With respect to the Treasury
Rate, unless otherwise specified in the applicable Pricing Supplement, the
Interest Determination Date will be the day in the week in which the related
Interest Reset Date falls on which day Treasury Bills (as defined below) are
normally 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); provided, however, that if an auction is held on the
Friday of the week preceding the related Interest Reset Date, the related
Interest Determination Date will be such preceding Friday; and provided,
further, that if an auction falls on any Interest Reset Date, then the related
Interest Reset Date will instead be the first Business Day following such
auction. Unless otherwise specified in the applicable Pricing Supplement, the
Interest Determination Date pertaining to a Floating Rate Note the interest rate
of which is determined with reference to two or more Interest Rate Bases will be
the first Business Day which is at least two Business Days prior to such
Interest Reset Date for such Floating Rate Note on which each Interest Rate
Basis is determinable.
Unless otherwise provided in the applicable Pricing Supplement, The Bank of
New York will be the "Calculation Agent." Upon request of the Holder of any
Floating Rate Note, the Calculation Agent will provide the interest rate then in
effect and, if determined, the interest rate that will become effective as a
result of a determination made for the next Interest Reset Date with respect to
such Floating Rate Note. Unless otherwise specified in the applicable Pricing
Supplement, the "Calculation Date," if applicable, pertaining to any Interest
Determination Date will be the earlier of (i) the tenth calendar day after such
Interest Determination Date, or, if such day is not a Business Day, the next
succeeding
S-8
Business Day or (ii) the Business Day immediately preceding the applicable
Interest Payment Date or Maturity, as the case may be.
CD Rate. CD Rate Notes will bear interest at the rates (calculated with
reference to the CD Rate and the Spread and/or Spread Multiplier, if any)
specified in such CD Rate Notes and in any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CD Rate"
means, with respect to any Interest Determination Date relating to a CD Rate
Note or any Floating Rate Note for which the interest rate is determined with
reference to the CD Rate (a "CD Rate Interest Determination Date"), the rate on
such date for negotiable certificates of deposit having the Index Maturity
specified in the applicable Pricing Supplement as published by the Board of
Governors of the Federal Reserve System in "Statistical Release H.15(519),
Selected Interest Rates" or any successor publication ("H.15(519)") under the
heading "CDs (Secondary Market)," or, if not published by 3:00 P.M., New York
City time, on the related Calculation Date, the rate on such CD Rate Interest
Determination Date for negotiable certificates of deposit of the Index Maturity
specified in the applicable Pricing Supplement as published by the Federal
Reserve Bank of New York in its daily statistical release "Composite 3:30 P.M.
Quotations for U.S. Government Securities" or any successor publication
("Composite Quotations") under the heading "Certificates of Deposit." If such
rate is not yet published in either H.15(519) or Composite Quotations by 3:00
P.M., New York City time, on the related Calculation Date, then the CD Rate on
such CD Rate 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 Rate Interest Determination Date,
of three leading nonbank dealers in negotiable United States dollar certificates
of deposit in The City of New York (which may include the Agents or their
respective affiliates) selected by the Calculation Agent for negotiable
certificates of deposit of major United States money market banks in the market
for negotiable certificates of deposit with a remaining maturity closest to the
Index Maturity designated in the applicable Pricing Supplement in an amount that
is representative for a single transaction in that market at that time;
provided, however, that if any of the dealers so selected by the Calculation
Agent are not quoting as set forth above, the CD Rate with respect to such CD
Rate Interest Determination Date will be the CD Rate in effect on such CD Rate
Interest Determination Date.
CMT Rate Notes. CMT Rate Notes will bear interest at the rates (calculated
with reference to the CMT Rate and the Spread and/or Spread Multiplier, if any)
specified in such CMT Rate Notes and any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CMT Rate"
means, with respect to any Interest Determination Date relating to a CMT Rate
Note or any Floating Rate Note for which the interest rate is determined with
reference to the CMT Rate (a "CMT Rate Interest Determination Date"), the rate
displayed on the Designated CMT Telerate Page 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
for (i) if the Designated CMT Telerate Page is 7055, the rate on such CMT Rate
Interest Determination Date and (ii) if the Designated CMT Telerate Page is
7052, the week, or the month, as applicable, ended immediately preceding the
week in which the related CMT Rate Interest Determination Date occurs. If such
rate is no longer displayed on the relevant page, or if not displayed by 3:00
P.M., New York City time, on the related Calculation Date, then the CMT Rate for
such CMT Rate Interest Determination Date will be such treasury constant
maturity rate for the Designated CMT Maturity Index as published in the relevant
H.15(519). If such rate is no longer published, or if not published by 3:00
P.M., New York City time, on the related Calculation Date, then the CMT Rate for
such CMT Rate Interest Determination Date will be such treasury constant
maturity rate for the Designated CMT Maturity Index (or other United States
Treasury rate for the Designated CMT Maturity Index) for the CMT Rate Interest
Determination Date with respect to such Interest Reset Date as may then be
published by either the Board of
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Governors of the Federal Reserve System or the United States Department of the
Treasury that the Calculation Agent determines to be comparable to the rate
formerly displayed on the Designated CMT Telerate Page and published in the
relevant H.15(519). If such information is not provided by 3:00 P.M., New York
City time, on the related Calculation Date, then the CMT Rate for the CMT Rate
Interest Determination Date will be calculated by the Calculation Agent and will
be a yield to maturity, based on the arithmetic mean of the secondary market
closing offer side prices as of approximately 3:30 P.M. (New York City time) on
the CMT Rate 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 selected by the Calculation
Agent (from five such Reference Dealers selected by the Calculation Agent and
eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for the most recently issued direct noncallable fixed rate obligations
of the United States ("Treasury Notes") with an original maturity of
approximately the Designated CMT Maturity Index and a remaining term to maturity
of not less than such Designated CMT Maturity Index minus one year. If the
Calculation Agent cannot obtain three such Treasury Note quotations, the CMT
Rate for such CMT Rate Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity based on the arithmetic mean
of the secondary market offer side prices as of approximately 3:30 P.M. (New
York City time) on the CMT Rate Interest Determination Date of three Reference
Dealers in The City of New York (from five such Reference Dealers selected by
the Calculation Agent and eliminating the highest quotation (or, in the event of
equality, one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for Treasury Notes with an original maturity of
the number of years that is the next highest to the Designated CMT Maturity
Index and a remaining term to maturity closest to the Designated CMT Maturity
Index and in an amount of at least $100 million. If three or four (and not five)
of such Reference Dealers are quoting as described above, then the CMT Rate will
be based on the arithmetic mean of the offer prices obtained and neither the
highest nor the lowest of such quotes will be eliminated; provided, however,
that if fewer than three Reference Dealers selected by the Calculation Agent are
quoting as described herein, the CMT Rate with respect to such CMT Rate Interest
Determination Date will be the CMT Rate in effect on such CMT Rate 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 CMT Rate Note with the
shorter remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page designated in the applicable Pricing Supplement (or any
other page as may replace such page on that service for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519)), for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519). If
no such page is specified in the applicable Pricing Supplement, the Designated
CMT Telerate Page will be 7052 for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of
the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years)
specified in the applicable Pricing Supplement with respect to which the CMT
Rate will be calculated. If no such maturity is specified in the applicable
Pricing Supplement, the Designated CMT Maturity Index will be 2 years.
Commercial Paper Rate. Commercial Paper Rate Notes will bear interest at
the rates (calculated with reference to the Commercial Paper Rate and the Spread
and/or Spread Multiplier, if any) specified in such Commercial Paper Rate Notes
and in any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement,
"Commercial Paper Rate" means, with respect to any Interest Determination Date
relating to a Commercial Paper Rate Note or any Floating Rate Note for which the
interest rate is determined with reference to the Commercial Paper Rate (a
"Commercial Paper Rate Interest Determination Date"), the Money Market Yield (as
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defined below) on such date of the rate for commercial paper having the Index
Maturity specified in the applicable Pricing Supplement as published by the
Board of Governors of the Federal Reserve System in H.15(519) under the heading
"Commercial Paper." In the event such rate is not published by 3:00 P.M., New
York City time, on the related Calculation Date, then the Commercial Paper Rate
will be the Money Market Yield on such Commercial Paper Rate Interest
Determination Date of the rate for commercial paper having the Index Maturity
specified in the applicable Pricing Supplement as published in Composite
Quotations under the heading "Commercial Paper" (with an Index Maturity of one
month or three months being deemed to be equivalent to an Index Maturity of 30
days or 90 days, respectively). If by 3:00 P.M., New York City time, on the
related Calculation Date such rate is not yet published in either H.15(519) or
Composite Quotations, then the Commercial Paper Rate for such Commercial Paper
Rate Interest Determination Date will be calculated by the Calculation Agent and
will be the Money Market Yield of the arithmetic mean of the offered rates at
approximately 11:00 A.M., New York City time, on such Commercial Paper Rate
Interest Determination Date of three leading dealers of commercial paper in The
City of New York (which may include the Agents or their respective affiliates)
selected by the Calculation Agent for commercial paper having the Index Maturity
designated in the applicable Pricing Supplement placed for an industrial issuer
whose bond rating is "AA," or the equivalent, from a nationally recognized
securities rating agency; provided, however, that if any of the dealers so
selected by the Calculation Agent are not quoting as mentioned in this sentence,
the Commercial Paper Rate determined on such Commercial Paper Rate Interest
Determination Date will be the rate in effect on such Commercial Paper Rate
Interest Determination Date.
"Money Market Yield" means a yield (expressed as a percentage rounded to
the nearest one hundred-thousandth of a percentage point) 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 interest period for which interest is being calculated.
Eleventh District Cost of Funds Rate. Eleventh District Cost of Funds Rate
Notes will bear interest at the rates (calculated with reference to the Eleventh
District Cost of Funds Rate and the Spread and/or Spread Multiplier, if any)
specified in such Eleventh District Cost of Funds Rate Notes and in any
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Eleventh
District Cost of Funds Rate" means, with respect to any Interest Determination
Date relating to an Eleventh District Cost of Funds Rate Note or any Floating
Rate Note for which the interest rate is determined with reference to the
Eleventh District Cost of Funds Rate (an "Eleventh District Cost of Funds Rate
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 Rate Interest Determination Date as set forth under the caption "11th
District" on Telerate Page 7058 as of 11:00 A.M., San Francisco time, on such
Eleventh District Cost of Funds Rate Interest Determination Date. If such rate
does not appear on Telerate Page 7058 on any related Eleventh District Cost of
Funds Rate Interest Determination Date, the Eleventh District Cost of Funds Rate
for such Eleventh District Cost of Funds Rate Interest Determination Date will
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 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
Rate Interest Determination Date, then the Eleventh District Cost of Funds Rate
for such Eleventh District Cost of Funds Rate Interest Determination Date will
be the Eleventh District Cost of Funds Rate in effect on such Eleventh District
Cost of Funds Rate Interest Determination Date.
S-11
Federal Funds Rate. Federal Funds Rate Notes will bear interest at the
rates (calculated with reference to the Federal Funds Rate and the Spread and/or
Spread Multiplier, if any) specified in such Federal Funds Rate Notes and in any
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to any Interest Determination Date relating to a
Federal Funds Rate Note or any Floating Rate Note for which the interest rate is
determined with reference to the Federal Funds Rate (a "Federal Funds Rate
Interest Determination Date"), the rate on such date for federal funds as
published in H.15(519) under the heading "Federal Funds (Effective)" or, if not
published by 3:00 P.M., New York City time, on the related Calculation Date, the
rate on such Federal Funds Rate Interest Determination Date as published in
Composite Quotations under the heading "Federal Funds/Effective Rate." If such
rate is not published in either H.15(519) or Composite Quotations by 3:00 P.M.,
New York City time, on the related Calculation Date, the Federal Funds Rate for
such Federal Funds Rate Interest Determination Date will be calculated by the
Calculation Agent and will be the arithmetic mean of the rates for the last
transaction in overnight United States dollar federal funds arranged by three
leading brokers of federal funds transactions in The City of New York (which may
include the Agents or their respective affiliates) selected by the Calculation
Agent as of 9:00 A.M., New York City time, on such Federal Funds Rate Interest
Determination Date; provided, however, that if any of the brokers so selected by
the Calculation Agent are not quoting as mentioned in this sentence, the Federal
Funds Rate with respect to such Federal Funds Rate Interest Determination Date
will be the Federal Funds Rate in effect on such Federal Funds Rate Interest
Determination Date.
LIBOR. LIBOR Notes will bear interest at the rates (calculated with
reference to LIBOR and the Spread and/or Spread Multiplier, if any) specified in
such LIBOR Notes and in any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "LIBOR"
means the rate determined by the Calculation Agent in accordance with the
following provisions:
(i) With respect to an Interest Determination Date relating to a LIBOR
Note or any Floating Rate Note for which the interest rate is determined
with reference to LIBOR (a "LIBOR Interest Determination Date"), LIBOR will
be either: (a) if "LIBOR Reuters" is specified in the applicable Pricing
Supplement, the arithmetic mean of the offered rates (unless the specified
Designated LIBOR Page by its terms provides only for a single rate, in
which case such single rate shall be used) for deposits in the Index
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
Designated LIBOR Page specified in the applicable Pricing Supplement as of
11:00 A.M. London time, on such LIBOR Interest Determination Date, if at
least two such offered rates appear (unless, as aforesaid, only a single
rate is required) on such Designated LIBOR Page, or (b) if "LIBOR Telerate"
is specified in the applicable Pricing Supplement or if neither "LIBOR
Reuters" nor "LIBOR Telerate" is specified as the method for calculating
LIBOR, the rate for deposits in the Index 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 appears on the Designated LIBOR Page specified in
the applicable Pricing Supplement as of 11:00 A.M., London time, on such
LIBOR Interest Determination Date. If fewer than two such offered rates
appear, or if no such rate appears, as applicable, LIBOR in respect of the
related LIBOR Interest Determination Date will be determined in accordance
with the provisions described in clause (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which
fewer than two offered rates appear, or no rate appears, as the case may
be, on the applicable Designated LIBOR Page as specified in clause (i)
above, the Calculation Agent will request the principal London offices of
each of four major reference banks in the London interbank market, as
selected by the Calculation Agent, to provide the Calculation Agent with
its offered quotation for deposits in the Index Currency for the period of
the Index Maturity designated in the applicable Pricing Supplement,
S-12
commencing on the second London Business Day immediately following such
LIBOR Interest Determination Date, to prime banks in the London interbank
market at approximately 11:00 A.M., London time, on such LIBOR Interest
Determination Date and in a principal amount that is representative for a
single transaction in such Index Currency in such market at such time. If
at least two such quotations are provided, LIBOR determined on such LIBOR
Interest Determination Date will be the arithmetic mean of such quotations.
If fewer than two quotations are provided, LIBOR determined on such LIBOR
Interest Determination Date will be the arithmetic mean of the rates quoted
at approximately 11:00 A.M., 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 Index Currency to leading European banks, having the Index Maturity
designated in the applicable Pricing Supplement and in a principal amount
that is representative for a single transaction in such Index Currency in
such market at such time; provided, however, that if the banks so selected
by the Calculation Agent are not quoting as mentioned in this sentence,
LIBOR determined as of such LIBOR Interest Determination Date will be LIBOR
in effect on such LIBOR Interest Determination Date.
"Index Currency" means the currency (including composite currencies)
specified in the applicable Pricing Supplement as the currency for which LIBOR
shall be calculated. If no such currency is specified in the applicable Pricing
Supplement, the Index Currency will be United States dollars.
"Designated LIBOR Page" means either (a) if "LIBOR Reuters" is specified in
the applicable Pricing Supplement, the display on the Reuters Monitor Money
Rates Service for the purpose of displaying the London interbank rates of major
banks for the applicable Index Currency, or (b) if "LIBOR Telerate" is specified
in the applicable Pricing Supplement or neither "LIBOR Reuters" nor "LIBOR
Telerate" is specified as the method for calculating LIBOR, the display on the
Dow Jones Telerate Service for the purpose of displaying the London interbank
rates of major banks for the applicable Index Currency.
"Principal Financial Center" will generally be the capital city of the
country of the specified index Currency, except that with respect to United
States dollars, Deutsche Marks, Dutch Guilders, Italian Lire, Swiss Francs and
ECUs, the Principal Financial Center shall be The City of New York, Frankfurt,
Amsterdam, Milan, Zurich and Luxembourg, respectively.
Prime Rate. Prime Rate Notes will bear interest at the rates (calculated
with reference to the Prime Rate and the Spread and/or Spread Multiplier, if
any) specified in such Prime Rate Notes and in any applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Interest Determination Date relating to a Prime
Rate Note or any Floating Rate Note for which the interest rate is determined
with reference to the Prime Rate (a "Prime Rate Interest Determination Date"),
the rate on that day set forth in H.15(519) opposite the caption "Bank Prime
Loan." If such rate is not yet published in H.15(519) by 3:00 P.M., New York
City time, on the Calculation Date, the Prime Rate will be the arithmetic mean
of the rates of interest publicly announced by each bank that appears on the
Reuters Screen NYMF Page (as defined below) as such bank's prime rate or base
lending rate as in effect for such Prime Rate Interest Determination Date. If
fewer than four such rates appear on such Reuters Screen NYMF Page for such
Prime Rate Interest Determination Date, the Prime Rate will be determined 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 a 360-day year as
of the close of business on such Prime Rate Interest Determination Date by
three, or two if only two such rates are quoted, major money center banks in The
City of New York (which may include affiliates of certain of the Agents)
selected by the Calculation Agent (after consultation with the Company). If
fewer than two such rates are quoted as aforesaid, the Prime Rate will be
determined by the Calculation Agent on the basis of the prime rates quoted in
The City of New York by three, or two if only two are available, substitute
banks or trust companies organized and doing business under the laws of the
United States,
S-13
or any state thereof, having total equity capital of at least $500 million and
being subject to supervision or examination by a federal or state authority,
selected by the Calculation Agent (after consultation with the Company) to
provide such rates; provided, however, that if fewer than two of such substitute
banks or trust companies selected as aforesaid by the Calculation Agent are
quoting as mentioned in this sentence, the Prime Rate will be the Prime Rate
then in effect on such Prime Rate Interest Determination Date. "Reuters Screen
NYMF Page" means the display designated as page "NYMF" on the Reuters Monitor
Money Rates Service (or such other page as may replace the NYMF page on that
service for the purpose of displaying prime rates or base lending rates of major
United States banks).
Treasury Rate. Treasury Rate Notes will bear interest at the rates
(calculated with reference to the Treasury Rate and the Spread and/or Spread
Multiplier, if any) specified in such Treasury Rate Notes and in any applicable
Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Interest Determination Date relating to a
Treasury Rate Note or any Floating Rate Note for which the interest rate is
determined by reference to the Treasury Rate (a "Treasury Rate Interest
Determination Date"), the rate applicable to the most recent auction of direct
obligations of the United States ("Treasury Bills") having the Index Maturity
specified in the applicable Pricing Supplement, as such rate is published in
H.15 (519) under the heading "Treasury Bills--auction average (investment)" or,
if not published by 3:00 P.M., New York City time, on the related Calculation
Date, the auction average rate (expressed as a bond equivalent on the basis of a
year of 365 or 366 days, as applicable, and applied on a daily basis) as
otherwise announced by the United States Department of Treasury. In the event
that the results of the auction of Treasury Bills having the Index Maturity
specified in the applicable Pricing Supplement are not reported as provided 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 will be calculated by the
Calculation Agent and will be a yield to maturity (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and applied
on a daily basis) of the arithmetic mean of the secondary market bid rates, as
of approximately 3:30 P.M., New York City time, on such Treasury Rate Interest
Determination Date of three leading primary United States government securities
dealers (which may include one or more of the Agents or their respective
affiliates) as 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 any of the dealers so
selected by the Calculation Agent are not quoting as mentioned in this sentence,
the Treasury Rate with respect to such Treasury Rate Interest Determination Date
will be the Treasury Rate in effect on such Treasury Rate Interest Determination
Date.
OTHER PROVISIONS; ADDENDA
Any provisions with respect to the determination of an Interest Rate Basis,
the specification of Interest Rate Bases, calculation of the interest rate
applicable to a Floating Rate 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 thereof or in an Addendum relating thereto, if so
specified on the face thereof and in the applicable Pricing Supplement.
ORIGINAL ISSUE DISCOUNT NOTES
Notes may be issued at a price less than their redemption price at
Maturity, resulting in such Notes being treated as if they were issued with
original issue discount for federal income tax purposes ("Original Issue
Discount Notes"). Such Original Issue Discount Notes may currently pay no
interest or interest at a rate which at the time of issuance is below market
rates. Certain additional considerations relating to any Original Issue Discount
Notes may be described in the Pricing Supplement relating thereto.
S-14
MULTI-CURRENCY NOTES
If the principal of any Note is not to be denominated in U.S. dollars, or
the interest thereon is not to be paid in U.S. dollars, certain provisions with
respect thereto will be set forth in a Multi-Currency Supplement hereto which
will specify the currency or currencies, including composite currencies such as
the European Currency Unit, in which the principal and interest with respect to
such Note are to be paid (the "Specified Currencies" or the "Specified
Currency"), along with any other terms relating to the non-U.S. dollar
denomination.
INDEXED NOTES
Notes also may be issued with the principal amount payable at Maturity
and/or interest to be paid thereon to be determined with reference to the price
or prices of specified commodities or stocks, the exchange rate of one or more
specified currencies (including a composite currency such as the European
Currency Unit) relative to an indexed currency, or such other price or exchange
rate or other index as may be specified in such Note ("Indexed Notes"), as set
forth in an Indexed Note Supplement. Holders of such Notes may receive a
principal amount at Maturity that is greater than or less than the face amount
of the Notes depending upon the relative value at Maturity of the specified
indexed item. Information as to the method for determining the principal amount
payable at Maturity, certain historical information with respect to the
specified indexed item and tax considerations associated with investment in
Indexed Notes will be set forth in the applicable Indexed Note Supplement.
BOOK-ENTRY NOTES
Upon issuance, all Book-Entry Notes having the same Original Issue Date,
Stated Maturity and otherwise having identical terms and provisions will be
represented by a single global security (each, a "Global Security"); provided,
however, that if by reason of the foregoing, a single Global Security would
exceed $150,000,000 in aggregate principal amount, one Global Security will be
issued to represent each $150,000,000 of aggregate principal amount and an
additional Global Security will be issued to represent any remaining principal
amount. Each Global Security representing Book-Entry Notes will be deposited
with, or on behalf of, the Depositary. 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 nominee to a successor of
the Depositary or a nominee of such successor.
The Depository Trust Company, New York, New York ("DTC"), will be the
initial Depositary with respect to the Notes. DTC has advised the Company and
the Agents that it is a limited-purpose trust company organized under the laws
of the State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the Uniform Commercial Code and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Depositary was
created to hold securities of its participants and to facilitate the clearance
and settlement of securities transactions among its participants in such
securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. DTC's participants include securities brokers and dealers
(including the Agents), banks, trust companies, clearing corporations and
certain other organizations, some of whom (and/or their representatives) own
DTC. Access to DTC's book-entry system is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
Persons who are not participants may beneficially own securities held by DTC
only through participants.
Upon the issuance of the Notes represented by a Global Security, the
Depositary will credit, on its book-entry registration and transfer system, the
principal amounts of the Notes represented by such Global Security to the
accounts of participants. The accounts to be credited will be designated by the
Agent or underwriter of such Book-Entry Notes, as the case may be. Ownership of
beneficial interests in the Global Security will be limited to participants or
persons that hold interests through participants. Ownership of beneficial
interest in the Notes will be shown on, and the transfer of that ownership will
be
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effected only through, records maintained by the Depositary (with respect to
interests of participants in the Depositary), or by participants in the
Depositary or persons that may hold interest through such participants (with
respect to persons other than participants in the Depositary). The laws of some
states require that certain purchasers of securities take physical delivery of
such securities in definitive form. Such limitations and such laws may impair
the ability of Holders of the Notes to acquire or 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, the Depositary or its nominee, as the
case may be, will be considered the sole owner or Holder of the Notes
represented by such Global Security for all purposes under the Indenture. Except
as provided below, owners of beneficial interests in the Notes represented by a
Global Security will not be entitled to have the Notes represented by such
Global Security registered in their names, will not receive or be entitled to
receive physical delivery of the Notes in definitive form and will not be
considered the owners or Holders thereof under the Indenture.
Payments of principal of and interest on the Notes will be made by the
Company through the Trustee to the Depositary or its nominee, as the case may
be, as the registered owner of a Global Security. Neither the Company nor the
Trustee will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests of a
Global Security or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests. The Company expects that the
Depositary, upon receipt of any payment of principal or interest in respect of a
Global Security, will credit the accounts of the related participants with
payment in amounts proportionate to their respective holdings in principal
amount of beneficial interest in such Global Security as shown on the records of
the Depositary. The Company also expects that payments by participants to owners
of beneficial interests in a Global Security will be governed by standing
customer 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" and will be the responsibility of such participants.
If the Depositary is at any time unwilling or unable to continue as
Depositary and a successor Depositary is not appointed by the Company within 90
days, the Company will issue Definitive Notes in exchange for the Notes
represented by such Global Security or Securities. In addition, the Company may
at any time and in its sole discretion determine to discontinue use of the
Global Security and, in such event, will issue Definitive Notes in exchange for
the Notes represented by such Global Security or Securities. Notes so issued
will be issued in denominations of $1,000 and integral multiples thereof and
will be issued in registered form only, without coupons.
CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
Set forth below is a general discussion of certain material United States
federal income tax consequences, under current law and regulations, resulting
from the ownership of Notes by a United States holder or a foreign holder
generally subject to United States income taxation on its worldwide income. The
discussion does not purport to consider all the possible tax consequences of the
purchase, ownership or disposition of the Notes, and it is not intended to
reflect the individual tax position of any holder. The discussion deals only
with Notes held as capital assets. The discussion does not deal with special tax
situations, such as with respect to dealers in securities, Notes held as a hedge
against currency risks or as part of a straddle with other investments, with
respect to situations in which the functional currency of the holder is not the
U.S. dollar or with respect to taxpayers subject to special tax rules, such as
banks, insurance companies, regulated investment companies and foreign persons
not subject to United States tax on worldwide income. The discussion is based
upon the United States federal income tax laws and regulations as now in effect
and as currently interpreted, and does not take into account possible changes in
such tax laws or such interpretations. The discussion does not include any
description of the tax laws of any state or local governments, or of any foreign
government, that
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may be applicable to the Notes or holders thereof. Special United States federal
income tax considerations or other restrictions on terms applicable to Indexed
Notes, Notes bearing variable rates of interest which do not constitute
"qualifying variable rates" under the Original Issue Discount rules described
below or Notes denominated in one or more foreign currencies will be set forth
in the applicable Pricing Supplement. Persons considering the purchase of Notes
should consult their own tax advisors concerning the application of the United
States federal income tax laws to their particular situations, as well as any
consequences arising under the laws of any other taxing jurisdiction.
UNITED STATES HOLDERS
As used herein, a "United States Holder" of a Note means a holder that is a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States or any
political subdivision thereof, or an estate or trust the income of which is
subject to United States federal income taxation regardless of its source. A
"Non-United States Holder" is a holder that is not a United States Holder.
PAYMENT OF INTEREST
Except as set forth below, interest on a Note will generally be taxable to
a United States Holder as ordinary income from domestic sources at the time it
is paid or accrued in accordance with the United States Holder's method of
accounting for tax purposes.
ORIGINAL ISSUE DISCOUNT
The following is a summary of the principal United States federal income
tax consequences of the ownership of Original Issue Discount Notes (as defined
below) by United States Holders. Additional rules that are applicable to
Original Issue Discount Notes which are denominated in or determined by
reference to a foreign currency or to certain Floating Rate Notes will be set
forth in the applicable Pricing Supplement. The summary is based in part upon
recent Treasury regulations which were issued on January 27, 1994 (the "OID
Regulations") and became effective with respect to debt instruments issued on or
after April 4, 1994.
A Note will bear original issue discount ("OID") if its stated redemption
price at maturity (the sum of all payments to be made on the Note other than
"qualified stated interest") exceeds its "issue price" by at least 0.25 percent
of the stated redemption price at maturity multiplied by the number of complete
years to maturity. (Notes issued with OID shall be referred to as "Original
Issue Discount Notes" in this section.) The applicable Pricing Supplement will
indicate whether a particular Note will bear OID.
The "issue price" of each Note in a particular offering will be the first
price at which a substantial amount of that particular offering is sold.
"Qualified stated interest" is stated interest that is unconditionally payable
in cash or in property (other than debt instruments of the issuer) or that is
constructively received at least annually and is either a single fixed rate or a
qualifying variable rate. If the interest rate of a Floating Rate Note will not
be a qualifying variable rate, the applicable Pricing Supplement will so
indicate and will describe the federal income tax consequences thereof.
The OID Regulations provide that Notes that may be redeemed prior to their
Stated Maturity at the option of the issuer, or that may be prepaid prior to
their Stated Maturity at the option of the holder, shall be treated from the
time of issuance as having a maturity date for federal income tax purposes on
such redemption or prepayment date if (i) in the case of a redemption at the
option of the issuer, such redemption would result in a lower yield to maturity
or (ii) in the case of a prepayment at the option of the holder, such prepayment
would result in a higher yield to maturity.
United States Holders of Original Issue Discount Notes with a maturity upon
issuance of more than one year must, in general, include OID in income in
advance of the receipt of some or all of the related cash payments. The amount
of OID includible in income by the initial United States Holder of an Original
Issue Discount Note is the sum of the daily portions of OID with respect to the
Note for
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each day during the taxable year or portion of the taxable year in which such
United States Holder held such Note ("accrued OID"). The daily portion is
determined by allocating to each day in any "accrual period" a pro rata portion
of the OID allocable to that accrual period. Under these rules, a United States
Holder will have to include in income increasingly greater amounts of OID in
successive accrual periods since OID accrued is determined by multiplying the
Note's "adjusted issue price" (which includes previously accrued OID which
remains unpaid) by the Note's yield to maturity. The Company is required to
report the amount of OID accrued on Notes held of record by persons other than
corporations and other exempt holders.
In the case of Original Issue Discount Notes having a term of one year or
less ("Short-Term Original Issue Discount Notes"), under the OID Regulations,
all payments (including all stated interest) will be included in the stated
redemption price at maturity and, thus, United States Holders will generally be
taxable on the discount in lieu of stated interest. The discount will be equal
to the excess of the stated redemption price at maturity over the issue price of
a Short-Term Original Issue Discount Note, unless the United States Holder
elects to compute this discount using tax basis instead of issue price. However,
certain categories of United States Holders (generally individuals or other cash
method taxpayers) are not required to include accrued discount in their income
currently unless they elect to do so. United States Holders who report income
for federal income tax purposes on the accrual method and certain other United
States Holders are required to accrue discount on such Short-Term Original Issue
Discount Notes (as ordinary income) on a straight-line basis, unless an election
is made to accrue the discount according to a constant yield method based on
daily compounding. In the case of a United States Holder that is not required,
and that does not elect, to include discount in income currently, any gain
realized on the sale, exchange or retirement of the Short-Term Original Issue
Discount Note will be ordinary income to the extent of the discount accrued
through the date of sale, exchange or retirement. In addition, any holder of a
Note who does not elect to currently include accrued discount in income may be
required to defer deductions for a portion of the United States Holder's
interest expenses with respect to any indebtedness incurred or maintained to
purchase or carry such Note.
MARKET DISCOUNT
If a United States Holder purchases a Note, other than an Original Issue
Discount Note, for an amount that is less than its issue price (or, in the case
of a subsequent purchaser, its stated redemption price at maturity) or, in the
case of an Original Issue Discount Note, for an amount that is less than its
"revised issue price" (defined as the sum of the issue price of the Note and the
aggregate amount of the OID includible, if any, without regard to the rules for
acquisition premium discussed below, in the gross income of all previous holders
of the Note), the amount of the difference will be treated as "market discount"
for United States federal income tax purposes, unless such difference is less
than a specified de minimis amount. Under the market discount rules, a United
States Holder will be required to treat any principal payment on, or any gain on
the sale, exchange, retirement or other disposition of, a Note as ordinary
income to the extent of the market discount which has not previously been
included in income and is treated as having accrued on such Note at the time of
such payment or disposition. In addition, the United States Holder may be
required to defer, until the maturity of the Note or its earlier disposition in
a taxable transaction, the deduction of all or a portion of the interest expense
on any indebtedness incurred or continued to purchase or carry such Note.
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the Note, unless the United
States Holder elects to accrue on a constant yield method. A United States
Holder of a Note may elect to include market discount in income currently as it
accrues (on either a ratable or constant yield basis), in which case the rule
described above regarding deferral of interest deductions will not apply. This
election to include market discount in income currently, once made, applies to
all market discount obligations acquired on or after the first taxable year to
which the election applies, and may not be revoked without the consent of the
Internal Revenue Service (the "IRS").
S-18
AMORTIZATION OF PREMIUM; AMORTIZABLE BOND PREMIUM
A United States Holder who purchases a Note for an amount that is greater
than its adjusted issue price but equal to or less than the sum of all amounts
payable on the Note after the purchase date other than payments of qualified
stated interest will be considered to have purchased such Note at an
"acquisition premium." Under the acquisition premium rules the amount of OID
which such holder must include in its gross income with respect to such Note for
any taxable year will be reduced by the portion of such acquisition premium
properly allocable to such year.
A United States Holder who purchases a Note for an amount in excess of the
sum of all amounts payable on the Note after the purchase date other than
qualified stated interest will be considered to have purchased the Note at a
"premium" and will not be required to include any OID in income. A United States
Holder generally may elect to amortize the premium over the remaining term of
the Note on a constant yield method. The amount amortized in any year will be
treated as a reduction of the United States Holder's interest income from the
Note. Bond premium on a Note held by a United States Holder that does not make
such an election will decrease the gain or increase the loss otherwise
recognized on disposition of the Note. The election to amortize premium on a
constant yield method once made applies to all debt obligations held or
subsequently acquired by the electing holder on or after the first day of the
first taxable year to which the election applies and may not be revoked without
the consent of the IRS.
ELECTION TO TREAT ALL INTEREST AS OID
Under the OID Regulations, a United States Holder may elect to treat all
interest on any Note acquired on or after April 4, 1994, as OID and calculate
the amount includible in gross income under the constant yield method described
above. For the purposes of this election, interest includes stated interest,
acquisition discount, OID, de minimis OID, market discount, de minimis market
discount and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium. If a United States Holder makes this election for a Note
with market discount or amortizable bond premium, the election is treated as an
election under the market discount or amortizable bond premium provisions,
described above, and the electing United States Holder will be required to
amortize bond premium or include market discount in income currently for all of
the holder's other debt instruments with market discount or amortizable bond
premium. The election is to be made for the taxable year in which the United
States Holder acquired the Note, and may not be revoked without the consent of
the IRS. United States Holders should consult with their own tax advisors about
this election.
SALE, EXCHANGE AND RETIREMENT OF NOTES
A United States Holder's tax basis in a Note will, in general, be the
United States Holder's cost therefor, increased by the amount of OID, or any
discount with respect to a Short-Term Original Issue Discount Note, included in
income by the United States Holder and reduced by any amortized premium and any
cash payments on the Note other than qualified stated interest. Upon the sale,
exchange or retirement of a Note, a United States Holder will recognize capital
gain or loss equal to the difference between the amount realized upon the sale,
exchange or retirement and the adjusted tax basis of the Note. Except as
described above with respect to certain Short-Term Original Issue Discount
Notes, and with respect to market discount that has not previously been included
in income, to the extent such market discount has accrued, such gain or loss
will be capital gain or loss and will be long-term capital gain or loss if at
the time of sale, exchange or retirement the Note has been held for more than
one year. Under current law, net capital gains of individuals are, under certain
circumstances, taxed at lower rates than items of ordinary income. The
deductibility of capital losses is subject to limitations.
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NON-UNITED STATES HOLDERS
Under present United States federal income and estate tax law, and subject
to the discussion below concerning backup withholding:
a. no withholding of United States federal income tax will be required
with respect to the payment by the Company or any Paying Agent of principal
or interest (which for purposes of this discussion includes OID) on a Note
owned by a Non-United States Holder, provided, in the case of interest,
that (i) the beneficial owner does not actually or constructively own 10%
or more of the total combined voting power of all classes of stock of the
Company entitled to vote within the meaning of section 871(h)(3) of the
Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
thereunder, (ii) the beneficial owner is not a controlled foreign
corporation that is related to the Company through stock ownership, (iii)
the beneficial owner is not a bank whose receipt of interest on a Note is
described in section 881(c)(3)(A) of the Code and (iv) the beneficial owner
satisfies the statement requirement (described generally below) set forth
in section 871(h) and section 881(c) of the Code and the Treasury
regulations thereunder;
b. no withholding of United States federal income tax will be required
with respect to any gain or income realized by a Non-United States Holder
upon the sale, exchange or retirement of a Note; and
c. a Note beneficially owned by an individual who at the time of death
is a Non-United States Holder will not be subject to United States federal
estate tax as a result of such individual's death, provided that such
individual does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of the Company entitled to
vote within the meaning of section 871(h)(3) of the Code and provided that
the interest payments with respect to such Note would not have been, if
received at the time of such individual's death, effectively connected with
the conduct of a United States trade or business by such individual.
To qualify for the exemption from withholding tax referred to in (a)(iv)
above, the beneficial owner of such Note, or a financial institution holding the
Note on behalf of such owner, must provide, in accordance with specified
procedures, a paying agent of the Company with a statement to the effect that
the beneficial owner is not a U.S. person, citizen or resident. Pursuant to
current temporary Treasury regulations, these requirements will be met if (1)
the beneficial owner provides his name and address, and certifies, under
penalties of perjury, that he is not a U.S. person, citizen or resident (which
certification may be made on an IRS Form W-8 (or successor form)) or (2) a
financial institution holding the Note on behalf of the beneficial owner
certifies, under penalties of perjury, that such statement has been received by
it and furnishes a paying agent with a copy thereof.
Payments to Non-United States Holders not meeting the requirements of
paragraph (a) above and thus subject to withholding of United States federal
income tax may nevertheless be exempt from such withholding if the beneficial
owner of the Note provides the Company with a properly executed (1) IRS Form
1001 (or successor form) claiming an exemption from withholding under the
benefit of a tax treaty or (2) IRS Form 4224 (or successor form) stating that
interest paid on the Note is not subject to withholding tax because it is
effectively connected with the owner's conduct of a trade or business in the
United States.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to certain
payments of principal, interest, OID and premium paid on Notes and to the
proceeds of the sale of a Note made to United States Holders other than certain
exempt recipients (such as corporations). A 31% backup withholding tax will
apply to such payments if the United States Holder fails to provide a taxpayer
identification number or certification of foreign or other exempt status or
fails to report in full dividend and interest income.
No information reporting or backup withholding will be required with
respect to payments made by the Company or any paying agent to Non-United States
Holders if a statement has been received in the form required by applicable
Treasury Regulations and the payor does not have actual knowledge that the
beneficial owner is a United States person.
S-20
In addition, backup withholding and information reporting will not apply if
payments of the principal, interest, original issue discount or premium on a
Note are paid or collected by a foreign office of a custodian, nominee or other
foreign agent on behalf of the beneficial owner of such Note, or if a foreign
office of a broker (as defined in applicable Treasury regulations) pays the
proceeds of the sale of a Note to the owner thereof. If, however, such nominee,
custodian, agent or broker is, for United States federal income tax purposes, a
U.S. person, a controlled foreign corporation or a foreign person that derives
50% or more of its gross income for certain periods from the conduct of a trade
or business in the United States, such payments will not be subject to backup
withholding but will be subject to information reporting, unless (1) such
custodian, nominee, agent or broker has documentary evidence in its records that
the beneficial owner is not a U.S. person and certain other conditions are met
or (2) the beneficial owner otherwise establishes an exemption. Temporary
Treasury regulations provide that the Treasury is considering whether backup
withholding will apply with respect to such payments of principal, interest or
the proceeds of a sale that are not subject to backup withholding under the
current regulations. Under proposed Treasury regulations not currently in effect
backup withholding will not apply to such payments absent actual knowledge that
the payee is a United States person.
Payments of principal, interest, OID and premium on a Note paid to the
beneficial owner of a Note by a United States office of a custodian, nominee or
agent, or the payment by the United States office of a broker of the proceeds of
sale of a Note, will be subject to both backup withholding and information
reporting unless the beneficial owner provides a statement described in (a)(iv)
under "Non-United States Holders," and the payor does not have actual knowledge
that the beneficial owner is a United States person, or otherwise establishes an
exemption.
Any amounts withheld under the backup withholding rules will be allowed as
a refund or a credit against such holder's U.S. federal income tax liability
provided the required information is furnished to the IRS.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis for sale by the Company
through the Agents, who have agreed to use their reasonable efforts to solicit
offers to purchase the Notes, and the Company may also sell Notes to any Agent,
as principal, for resale to investors and other purchasers at varying prices
related to prevailing market prices at the time of resale to be determined by
such Agent or, if so agreed, at a fixed public offering price. The Company has
reserved the right to sell Notes directly on its own behalf or to appoint other
agents from time to time, which will be named in the appropriate Pricing
Supplement, and to use other distribution agreements containing substantially
the same terms as the distribution agreement with the Agents. There will not be
any commission for direct sales by the Company. The Company reserves the right
to withdraw, cancel or modify the offer made hereby without notice and may
reject orders in whole or in part whether placed directly with the Company or
through one of the Agents. The Agents will have the right, in their discretion
reasonably exercised, to reject in whole or in part any offer to purchase Notes
received by them. The Company will pay the related Agent, in the form of a
discount or otherwise, a commission, ranging from .150% to .750% of the
principal amount of any Note sold through such Agent, depending on the Stated
Maturity of the Note.
In addition, the Agents may offer the Notes they have purchased as
principal to other dealers. The Agents may sell Notes to any dealer at a
discount and, unless otherwise specified in the applicable Pricing Supplement,
such discount allowed to any dealer will not be in excess of the discount to be
received by such Agent from the Company. Unless otherwise indicated 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 any agency sale of a
Note of identical maturity, and may be resold by the Agent to investors and
other purchasers from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying prices
determined at the time of sale or may be resold to certain
S-21
dealers as described above. After the initial public offering of Notes to be
resold to investors and other purchasers, the public offering price (in the case
of Notes to be resold at a fixed public offering price), the concession and
discount may be changed.
Unless otherwise specified in an applicable Pricing Supplement, payment of
the purchase price of the Notes will be required to be made in immediately
available funds in The City of New York on the date of settlement.
No Note will have an established trading market when issued. The Notes will
not be listed on any securities exchange. Each of the Agents may from time to
time purchase and sell Notes in the secondary market, but no Agent is obligated
to do so, and there can be no assurance that there will be a secondary market
for the Notes or liquidity in the secondary market if one develops. From time to
time, each of the Agents may make a market in the Notes.
Each Agent may be deemed to be an "underwriter" 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 payments the Agents
may be required to make in respect thereof. The Company has agreed to reimburse
each of the Agents for certain expenses.
In the ordinary course of their respective businesses, certain of the
Agents listed herein or affiliates of such Agents have in the past engaged, and
may in the future engage, in commercial banking transactions with the Company
and each of the Agents or affiliates of such Agents have in the past engaged,
and may in the future engage, in investment banking transactions with the
Company.
S-22
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NO DEALER, SALESMAN, OR ANY OTHER PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER, DEALER
OR AGENT. THIS PROSPECTUS SUPPLEMENT (INCLUDING THE
PRICING SUPPLEMENT) AND THE ACCOMPANYING PROSPECTUS
DO NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN
THE SECURITIES TO WHICH IT RELATES OR ANY OFFER TO
SELL OR THE SOLICIATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH
OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT (INCLUDING
THE PRICING SUPPLEMENT) AND THE ACCOMPANYING PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THEREOF OR THAT THE INFORMATION
CONTAINED HEREIN OR THERIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE OF THIS PROSPECTUS SUPPLEMENT
(INCLUDING THE PRICING SUPPLEMENT) OR THE
ACCOMPANYING PROSPECTUS.
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TABLE OF CONTENTS
PAGE
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PROSPECTUS SUPPLEMENT
The Company................................... S-2
Use of Proceeds............................... S-2
Description of Notes.......................... S-2
Certain United States Federal Tax
Consequences................................ S-16
Plan of Distribution.......................... S-21
PROSPECTUS
Available Information......................... 2
Incorporation of Certain Documents by
Reference................................... 2
The Company................................... 3
Ratio of Earnings to Fixed Charges............ 3
Use of Proceeds............................... 3
Description of Debt Securities................ 3
Plan of Distribution.......................... 10
Legal Matters................................. 11
Experts....................................... 11
COLGATE-PALMOLIVE COMPANY
MEDIUM-TERM NOTES,
SERIES B
------------------------------------------
PROSPECTUS SUPPLEMENT
------------------------------------------
CITICORP SECURITIES, INC.
GOLDMAN, SACHS & CO.
LAZARD FRERES & CO.
MERRILL LYNCH & CO.
J.P. MORGAN SECURITIES INC.
Dated May 12, 1994
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