EXHIBIT 4-r
[FORM OF FACE OF SECURITY]
Subordinated Variable Rate Renewable Note
REGISTERED REGISTERED
No. SUBVRR Cusip
[PRINCIPAL AMOUNT],
as modified by
Schedule I
Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the issuer or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of Cede & Co. or
such other name as requested by an authorized representative of The Depository
Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, since
the registered owner hereof, Cede & Co., has an interest herein.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID," "ORIGINAL YIELD TO MATURITY"
AND "INITIAL ACCRUAL PERIOD OID" (COMPUTED UNDER THE APPROXIMATE METHOD)
SET FORTH BELOW HAVE BEEN COMPLETED SOLELY FOR THE PURPOSES OF APPLYING
THE FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
SUBORDINATED VARIABLE RATE RENEWABLE
GLOBAL MEDIUM-TERM NOTE, SERIES C
Morgan Stanley, Dean Witter, Discover & Co., a Delaware
corporation (together with its successors and assigns, the "Issuer"), for
value received, hereby promises to pay to
, or registered assignees, the principal sum specified in Schedule I hereto on
the Initial Maturity Date specified above or, to the extent the maturity date
of any portion of the principal amount of this Note is extended in accordance
with the procedures set forth below to an Extended Maturity Date, as defined
below, on such Extended Maturity Date (except to the extent such portion is
redeemed prior to such Extended Maturity Date) and to pay interest on the
principal amount hereof outstanding from time to time, from the Interest
Accrual Date specified above at a rate per annum equal to the Initial Interest
Rate specified above until the Initial Interest Reset Date specified above,
and thereafter at a rate per annum determined in accordance with the
provisions specified on the reverse hereof until (a) the principal hereof is
paid or duly made available for payment or (b) this Note has been cancelled
in accordance with the provisions set forth below.
The Issuer will pay interest in arrears monthly, quarterly,
semiannually or annually as specified above as the Interest Payment Period
on each Interest Payment Date (as specified above), commencing with the
first Interest Payment Date next succeeding the Interest Accrual Date
specified above, and on the Initial Maturity Date or the Extended Maturity
Date, as the case may be (each, a "Maturity Date"), or any redemption date;
provided, however, if the Interest Accrual Date occurs between a Record
Date, as defined below, and the next succeeding Interest Payment Date,
interest payments will commence on the second Interest Payment Date
succeeding the Interest Accrual Date to the registered holder of this Note
on the Record Date with respect to such second Interest Payment Date;
provided, further, that if an Interest Payment Date or the Maturity Date or
redemption date would fall on a day that is not a Business Day, as defined
on the reverse hereof, such Interest Payment Date, Maturity Date or
redemption date shall be the following day that is a Business Day, except
that if the Base Rate specified above is LIBOR and such next Business Day
falls in the next calendar month, the Interest Payment Date, Maturity Date
or redemption date shall be the immediately preceding day that is a
Business Day. As used herein, "Extended Maturity Date" means the Interest
Payment Date occurring in the month six months after the Initial Maturity
Date and each Interest Payment Date occurring in the month six months after
the immediately preceding Extended Maturity Date.
Interest on this Note will accrue from and including the
most recent date to which interest has been paid or duly provided for, or,
if no interest has been paid or duly provided for, from the Interest
Accrual Date, until (a) the principal hereof has been paid or duly made
available for payment or (b) this Note has been cancelled in accordance
with the provisions set forth below. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will,
subject to certain exceptions described herein, be paid to the person in
whose name this Note (or one or more predecessor Notes) is registered at
the close of business on the date 15 calendar days prior to such Interest
Payment Date (whether or not a Business Day) (each such date a "Record
Date"); provided, however, that interest payable on the Maturity Date (or
any redemption date) shall be payable to the person to whom the principal
hereof shall be payable.
On the Interest Payment Date occurring in the month six
months prior to the Initial Maturity Date (the "Initial Election Date"),
the maturity of this Note shall be extended to the Extended Maturity Date
occurring in the month twelve months following the Initial Election Date
and on the Interest Payment Date occurring in the month six months prior to
each Extended Maturity Date (an "Election Date," which term shall include
the Initial Election Date), the maturity of this Note shall be extended to
the Extended Maturity Date occurring in the month twelve months after such
Election Date, unless, in any such case, the holder hereof elects to
terminate the automatic extension of the maturity hereof or of any portion
hereof having a principal amount of $1,000 or any larger multiple of $1,000
in excess thereof by delivering to the Paying Agent, as defined on the
reverse hereof, not less than 23 nor more than 30 days prior to the
applicable Election Date (i) this Note with the form entitled "Option to
Elect Termination of Automatic Extension" below duly completed or (ii) a
telegram, telex, facsimile transmission or a letter from a member of a
national securities exchange or the National Association of Securities
Dealers, Inc. or a commercial bank or a trust company in the United States
of America setting forth the name of the holder of this Note, the principal
amount hereof, the certificate number of this Note or a description of this
Note's tenor or terms, a statement that the option to elect termination of
automatic extension is being exercised thereby, the principal amount hereof
with respect to which such option is being exercised and a guarantee that
this Note with the form entitled "Option to Elect Termination of Automatic
Extension" below duly completed will be received by the Paying Agent no
later than five Business Days after the date of such telegram, telex,
facsimile transmission or letter; provided that such telegram, telex,
facsimile transmission or letter shall not be effective unless this Note
and such form duly completed are received by the Paying Agent by such fifth
Business Day. Such option may be exercised by the holder for less than the
entire principal amount hereof provided that the principal amount for which
such option is not exercised is at least $1,000 or any larger amount that
is an integral multiple of $1,000. The exercise of such option may be
withdrawn before or after the applicable Election Date, pursuant to the
procedures described on the reverse hereof and in a Short-Term Note (as
defined below). If the option to terminate the automatic extension of the
maturity of any portion hereof is exercised and not withdrawn prior to the
applicable Election Date in accordance with such procedures, a new Note or
Notes in the form attached hereto as Exhibit A (each, a "Short-Term Note")
for the principal amount hereof for which such option was exercised and not
withdrawn shall be issued on such Election Date in the name of the holder
hereof and Schedule I hereto shall be annotated as of such Election Date to
reflect the corresponding decrease in the principal amount hereof. Each
such Short-Term Note shall have as its "Maturity Date" (as such term is
used in such Short-Term Note) the Interest Payment Date occurring in the
month six months after such Election Date and shall have as its Spread or
Spread Multiplier, as the case may be, the Spread or Spread Multiplier
applicable to this Note on the day prior to the issuance of such Short-Term
Note. If any exercise of the option to terminate the automatic extension
of the maturity hereof causes the principal amount of this Note to be
reduced to zero, this Note shall nevertheless not be cancelled until the
date on which all outstanding Short-Term Notes issued in exchange for this
Note shall have been paid in full.
Notwithstanding the foregoing, the maturity of this Note
shall not be extended beyond the Final Maturity Date specified above.
If the holder of any Short-Term Note exchanges all or a
portion of such Short-Term Note for an interest in this Note in accordance
with the terms of such Short-Term Note, Schedule I hereto shall be
annotated on the date of such exchange to reflect the corresponding
increase in the principal amount hereof.
Payment of the principal of this Note, any premium and the
interest due at the Maturity Date (or any redemption date), unless this
Note is denominated in a Specified Currency other than U.S. dollars and is
to be paid in whole or in part in such Specified Currency, will be made in
immediately available funds upon surrender of this Note at the office or
agency of the Paying Agent maintained for that purpose in the Borough of
Manhattan, The City of New York, or at the office or agency of such other
paying agent as the Issuer may determine in U.S. dollars. U.S. dollar
payments of interest, other than interest due at maturity or any date of
redemption, will be made by United States dollar check mailed to the
address of the person entitled thereto as such address shall appear in the
Note register. A holder of U.S. $10,000,000 or more in aggregate principal
amount of Notes having the same Interest Payment Date, the interest on
which is payable in U.S. dollars, will be entitled to receive payments of
interest, other than interest due at maturity or any date of redemption, by
wire transfer of immediately available funds if appropriate wire transfer
instructions have been received by the Paying Agent in writing not less
than 15 calendar days prior to the applicable Interest Payment Date.
If this Note is denominated in a Specified Currency other
than U.S. dollars, and the holder does not elect (in whole or in part) to
receive payment in U.S. dollars pursuant to the next succeeding paragraph,
payments of interest, principal or any premium with regard to this Note
will be made by wire transfer of immediately available funds to an account
maintained by the holder hereof with a bank located outside the United
States if appropriate wire transfer instructions have been received by the
Paying Agent in writing not less than 15 calendar days prior to the
applicable payment date, provided that, if such wire transfer instructions
are not received, such payments will be made by check payable in such
Specified Currency mailed to the address of the person entitled thereto as
such address shall appear in the Note register, and provided, further, that
payment of the principal of this Note, any premium and the interest due at
maturity (or on any redemption or repayment date) will be made upon
surrender of this Note at the office or agency referred to in the preceding
paragraph.
If so indicated on the face hereof, the holder of this Note,
if denominated in a Specified Currency other than U.S. dollars, may elect
to receive all or a portion of payments on this Note in U.S. dollars by
transmitting a written request to the Paying Agent, on or prior to the
Record Date or at least ten Business Days prior to the Maturity Date or any
redemption date, as the case may be. Such election shall remain in effect
unless such request is revoked by written notice to the Paying Agent as to
all or a portion of payments on this Note at least five Business Days prior
to such Record Date or at least ten days prior to the Maturity Date or any
redemption date, as the case may be.
If the holder elects to receive all or a portion of payments
of principal of and any premium and interest on this Note, if denominated
in a Specified Currency other than U.S. dollars, in U.S. dollars, the
Exchange Rate Agent will convert such payments into U.S. dollars. In the
event of such an election, payment in respect of this Note will be based
upon the exchange rate as determined by the Exchange Rate Agent based on
the highest bid quotation in The City of New York received by such Exchange
Rate Agent at approximately 11:00 a.m., New York City time, on the second
Business Day preceding the applicable payment date from three recognized
foreign exchange dealers (one of which may be the Exchange Rate Agent
unless such Exchange Rate Agent is an affiliate of the Issuer), for the
purchase by the quoting dealer of U.S. dollars for the Specified Currency
for settlement on such payment date in the amount of the Specified Currency
payable in the absence of such an election to such holder and at which the
applicable dealer commits to execute a contract. If such bid quotations
are not available, such payment will be made in the Specified Currency.
All currency exchange costs will be borne by the holder of this Note by
deductions from such payments.
If this Note ceases to be held by The Depository Trust
Company or its successor or the nominee of The Depository Trust Company or
its successor, this Note will be exchanged for one or more Notes of
authorized denominations having an aggregate principal amount equal to the
principal amount of this Note as then shown on Schedule I hereto, which new
Notes shall otherwise have the same terms as this Note, except that the
provisions of such new Notes regarding the termination of the automatic
extension of the maturity thereof shall be modified to the extent
appropriate for notes not required to be held in a securities depositary;
provided that the respective rights and obligations of the Issuer and the
holders of such new Notes shall be the same in all material respects as the
respective rights and obligations of the Issuer and the holder of this
Note. Such new Notes shall have stated principal amounts and shall be
registered in the names of the persons then having a beneficial interest in
this Note or in the names of their nominees.
Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place, including,
without limitation, the provisions relating to the subordination of this
Note to the Issuer's Senior Indebtedness, as defined on the reverse hereof.
Unless the certificate of authentication hereon has been
executed by the Authenticating Agent referred to on the reverse hereof by
manual signature, this Note shall not be entitled to any benefit under the
Subordinated Indenture, as defined on the reverse hereof, or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly
executed.
DATED: MORGAN STANLEY, DEAN WITTER,
DISCOVER & CO.
By:_____________________________
Name:
Title:
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Notes referred
to in the within-mentioned
Subordinated Indenture.
THE CHASE MANHATTAN BANK,
as Authentication Agent
By:_____________________________
Authorized Officer
[REVERSE OF SECURITY]
This Note is one of a duly authorized issue of the Subordinated
Global Medium-Term Notes, Series C, having maturities more than nine months
from the date of issue (the "Notes") of the Issuer. The Notes are issuable
under a Subordinated Indenture, dated as of April 15, 1989, as supplemented
by a First Supplemental Subordinated Indenture dated as of May 15, 1991 and a
Second Supplemental Subordinated Indenture dated as of April 15, 1996 between
Morgan Stanley Group Inc. (as predecessor of the Issuer) and The First
National Bank of Chicago, as Trustee (the "Trustee," which term includes any
successor trustee under the Subordinated Indenture as further supplemented by
a Third Supplemental Subordinated Indenture dated as of June 1, 1997 between
the Issuer and the Trustee (as so supplemented, the "Subordinated
Indenture"), to which Subordinated Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities of the
Issuer, the Trustee and holders of the Notes and the terms upon which the
Notes are, and are to be, authenticated and delivered. The Trustee has
appointed The Chase Manhattan Bank (formerly known as Chemical Bank) as
Authenticating Agent (the "Authenticating Agent," which term includes any
successor authenticating agent appointed by the Trustee) with respect to
the Notes, and the Issuer has appointed The Chase Manhattan Bank (formerly
known as Chemical Bank) at its corporate trust office in The City of New
York as the paying agent (the "Paying Agent," which term includes any
additional or successor Paying Agent appointed by the Issuer) with respect
to the Notes. The terms of individual Notes may vary with respect to
interest rates, interest rate formulas, issue dates, maturity dates, or
otherwise, all as provided in the Subordinated Indenture. To the extent
not inconsistent herewith, the terms of the Subordinated Indenture are
hereby incorporated by reference herein.
Unless otherwise provided on the face hereof, this Note will
not be subject to any sinking fund and, unless otherwise provided on the face
hereof in accordance with the provisions of the following paragraph, will not
be redeemable prior to maturity.
If so indicated on the face of this Note, this Note may be
redeemed in whole or in part at the option of the Issuer on the Redemption
Dates specified on the face hereof on the terms set forth on the face hereof,
together with interest accrued and unpaid hereon to the date of redemption.
Notice of redemption shall be mailed to the registered holders of the Notes
designated for redemption at their addresses as the same shall appear on the
Note register not less than 180 nor more than 210 days prior to the date fixed
for redemption, subject to all the conditions and provisions of the
Subordinated Indenture. In the event of redemption of this Note in part only,
a new Note or Notes for the amount of the unredeemed portion hereof shall be
issued in the name of the holder hereof upon the cancellation hereof.
This Note will bear interest at the rate determined in
accordance with the applicable provisions below by reference to the Base Rate
shown on the face hereof based on the Index Maturity, if any, shown on the
face hereof (i) plus or minus the Spread, if any, or (ii) multiplied by the
Spread Multiplier, if any, (a) specified on the face hereof, (b) if the Spread
or Spread Multiplier is reset in accordance with the procedures specified
below, then as determined pursuant to such procedures, or (c) if a holder of a
Short-Term Note has exchanged such Note for an interest in this Note in
response to an Optional Exchange Notice (as defined in such Short-Term Note),
then as set forth in such Optional Exchange Notice. Commencing with the
Initial Interest Reset Date specified on the face hereof, the rate at which
interest on this Note is payable shall be reset as of each Interest Reset Date
(as used herein, the term "Interest Reset Date" shall include the Initial
Interest Reset Date). The determination of the rate of interest at which this
Note will be reset on any Interest Reset Date shall be made on the Interest
Determination Date (as defined below) pertaining to such Interest Reset Date.
The Interest Reset Dates will be the Interest Reset Dates specified on the
face hereof; provided, however, that (a) the interest rate in effect for the
period from the Interest Accrual Date to the Initial Interest Reset Date
specified on the face hereof will be the Initial Interest Rate and (b) unless
otherwise specified on the face hereof, the interest rate in effect for the
ten calendar days immediately prior to maturity, redemption or repayment will
be that in effect on the tenth calendar day preceding such maturity,
redemption or repayment date. If any Interest Reset Date would otherwise be a
day that is not a Business Day, such Interest Reset Date shall be postponed to
the next succeeding day that is a Business Day, except that if the Base Rate
specified on the face hereof is LIBOR and such Business Day is in the next
succeeding calendar month, such Interest Reset Date shall be the next
preceding Business Day. As used herein, "Business Day" means any day, other
than a Saturday or Sunday, that is neither a legal holiday nor a day on which
banking institutions are authorized or required by law or regulation to close
in The City of New York and, with respect to Notes bearing interest calculated
by reference to LIBOR, in the City of London.
If so indicated on the face of this Note, the Issuer has the
option to reset the Spread or Spread Multiplier on this Note as of any
Election Date. Such option shall include the right to reset the Maximum
Interest Rate or Minimum Interest Rate on this Note. The Issuer may exercise
such option by notifying the Paying Agent of such exercise at least 45 but not
more than 60 days prior to an Election Date, such notice to be accompanied by
the form of the Reset Notice referred to below. Not later than 38 days prior
to such Election Date, the Paying Agent will mail to the holder hereof a
notice (the "Reset Notice"), first class mail, postage prepaid, setting forth
(a) the election of the Issuer to reset the Spread or Spread Multiplier and
(b) such new Spread or Spread Multiplier, together with any new Maximum
Interest Rate or Minimum Interest Rate.
If the face hereof indicates that the Issuer has the option to
reset the Spread or Spread Multiplier on this Note, then, if the holder of
this Note elects to terminate the automatic extension of the maturity hereof
or any portion hereof as of any Election Date, the Issuer may, not later than
the later of (a) the twentieth calendar day prior to such Election Date and
(b) the first Business Day following the twenty-third calendar day prior to
such Election Date, propose a new Spread or Spread Multiplier or revoke a
Spread or Spread Multiplier previously set forth in a Reset Notice and propose
a higher Spread or Spread Multiplier, in either case together with any new
Maximum Interest Rate or Minimum Interest Rate, by causing the Paying Agent to
send notice thereof, to the holder of this Note by first class mail, postage
prepaid, or by such other means as shall be agreed between the Issuer and the
Paying Agent. If the Issuer has proposed a new or higher Spread or Spread
Multiplier as described above, the holder hereof may withdraw his election to
terminate the automatic extension of the maturity hereof or any portion hereof
by giving written notice to such effect to the Paying Agent not less than 16
days prior to such Election Date (or if such sixteenth day is not a Business
Day, on the immediately preceding Business Day), in which case such new or
higher Spread or Spread Multiplier, together with any new Maximum Interest
Rate or Minimum Interest Rate, will apply to the entire principal amount of
this Note from such Election Date until the Maturity Date or until the Spread
or Spread Multiplier is further reset by the Issuer pursuant to the provisions
hereof or of a Short-Term Note.
The Interest Determination Date pertaining to an Interest Reset
Date for Notes bearing interest calculated by reference to the CD Rate,
Commercial Paper Rate, Federal Funds Rate, Prime Rate and CMT Rate will be the
second Business Day next preceding such Interest Reset Date. The Interest
Determination Date pertaining to an Interest Reset Date for Notes bearing
interest calculated by reference to LIBOR shall be the second London Banking
Day preceding such Interest Reset Date, except that the Interest Determination
Date pertaining to an Interest Reset Date for a LIBOR Note for which the Index
Currency is pounds sterling will be such Interest Reset Date. As used herein,
"London Banking Day" means any day on which dealings in deposits in the Index
Currency (as defined herein) are transacted in the London interbank market.
The Interest Determination Date pertaining to an Interest Reset Date for Notes
bearing interest calculated by reference to the Treasury Rate shall be the day
of the week in which such Interest Reset Date falls on which Treasury bills
normally would be auctioned; provided, however, that if as a result of a legal
holiday an auction is held on the Friday of the week preceding such Interest
Reset Date, the related Interest Determination Date shall be such preceding
Friday; and provided, further, that if an auction shall fall on any Interest
Reset Date, then the Interest Reset Date shall instead be the first Business
Day following the date of such auction.
Unless otherwise specified on the face hereof, the "Calculation
Date" pertaining to an Interest Determination Date will be the earlier of (i)
the tenth calendar day after such Interest Determination Date or, if such day
is not a Business Day, the next succeeding Business Day, or (ii) the Business
Day preceding the applicable Interest Payment Date or Maturity Date (or, with
respect to any principal amount to be redeemed or repaid, any redemption or
repayment date), as the case may be.
Determination of CD Rate. If the Base Rate specified on the
face hereof is the CD Rate, the CD Rate with respect to this Note shall be
determined on each Interest Determination Date and shall be the rate on
such date for negotiable certificates of deposit having the Index Maturity
specified on the face hereof as published by the Board of Governors of the
Federal Reserve System in "Statistical Release H.15(519), Selected Interest
Rates," or any successor publication of the Board of Governors of the
Federal Reserve System ("H.15(519)"), under the heading "CDs (Secondary
Market)," or, if not so published by 9:00 A.M., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, the CD
Rate will be the rate on such Interest Determination Date for negotiable
certificates of deposit of the Index Maturity specified on the face hereof
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" ("Composite Quotations") under the heading "Certificates of
Deposit." If neither of such rates is published by 3:00 P.M., New York City
time, on such Calculation Date, then the CD Rate on such Interest
Determination Date will be calculated by the Calculation Agent referred to
on the face hereof and will be the arithmetic mean of the secondary market
offered rates as of 10:00 A.M., New York City time, on such Interest
Determination Date for certificates of deposit in the denomination of
$5,000,000 with a remaining maturity closest to the Index Maturity
specified on the face hereof of three leading nonbank dealers in negotiable
U.S. dollar certificates of deposit in The City of New York selected by the
Calculation Agent for negotiable certificates of deposit of major United
States money center banks of the highest credit standing in the market for
negotiable certificates of deposit; provided, however, that if the dealers
selected as aforesaid by the Calculation Agent are not quoting as mentioned
in this sentence, the CD Rate in effect for the applicable period will be
the same as the CD Rate for the immediately preceding Interest Reset Period
(or, if there was no such Interest Reset Period, the rate of interest
payable hereon shall be the Initial Interest Rate).
Determination of Commercial Paper Rate. If the Base Rate
specified on the face hereof is the Commercial Paper Rate, the Commercial
Paper Rate with respect to this Note shall be determined on each Interest
Determination Date and shall be the Money Market Yield (as defined herein) of
the rate on such date for commercial paper having the Index Maturity specified
on the face hereof, as such rate shall be published in H.15(519) under the
heading "Commercial Paper," or if not so published prior to 9:00 A.M., New
York City time, on the Calculation Date pertaining to such Interest
Determination Date, the Commercial Paper Rate shall be the Money Market Yield
of the rate on such Interest Determination Date for commercial paper of the
Index Maturity specified on the face hereof as published in Composite
Quotations under the heading "Commercial Paper." If neither of such rates is
published by 3:00 P.M., New York City time, on such Calculation Date, then the
Commercial Paper Rate shall be the Money Market Yield of the arithmetic mean
of the offered rates as of 11:00 A.M., New York City time, on such Interest
Determination Date of three leading dealers in commercial paper in The City of
New York selected by the Calculation Agent for commercial paper of the Index
Maturity specified on the face hereof, placed for an industrial issuer whose
bond rating is "AA," or the equivalent, from a nationally recognized rating
agency; provided, however, that if the dealers selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this sentence, the
Commercial Paper Rate in effect for the applicable period will be the same as
the Commercial Paper Rate for the immediately preceding Interest Reset Period
(or, if there was no such Interest Reset Period, the rate of interest payable
hereon shall be the Initial Interest Rate).
"Money Market Yield" shall be the yield calculated in
accordance with the following formula:
D x 360
Money Market Yield = ------------- x 100
360 - (D x M)
where "D" refers to the applicable per annum rate for
commercial paper quoted on a bank discount basis and expressed as a decimal
and "M" refers to the actual number of days in the Index Maturity specified on
the face hereof.
Determination of Federal Funds Rate. If the Base Rate specified
on the face hereof is the Federal Funds Rate, the Federal Funds Rate with
respect to this Note shall be determined on each Interest Determination Date
and shall be the rate on such date for Federal Funds as published in H.15(519)
under the heading "Federal Funds (Effective)," or, if not so published by 9:00
A.M., New York City time, on the Calculation Date pertaining to such Interest
Determination Date, the Federal Funds Rate will be the rate on such Interest
Determination Date as published in Composite Quotations under the heading
"Federal Funds/Effective Rate." If neither of such rates is published by 3:00
P.M., New York City time, on such Calculation Date, the Federal Funds Rate for
such Interest Determination Date will be calculated by the Calculation Agent
and will be the arithmetic mean of the rates for the last transaction in
overnight Federal funds as of 11:00 A.M., New York City time, on such Interest
Determination Date arranged by three leading brokers in Federal funds
transactions in The City of New York selected by the Calculation Agent;
provided, however, that if the brokers selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this sentence, the Federal
Funds Rate in effect for the applicable period will be the same as the Federal
Funds Rate for the immediately preceding Interest Reset Period (or, if there
was no such Interest Reset Period, the rate of interest payable hereon shall
be the Initial Interest Rate).
Determination of LIBOR. If the Base Rate specified on the face
hereof is LIBOR, LIBOR with respect to this Note shall be determined on each
Interest Determination Date as follows:
(i) As of the Interest Determination Date, the Calculation
Agent will determine (a) if "LIBOR Reuters" is specified as the Reporting
Service on the face hereof, the arithmetic mean of the offered rates
(unless the specified Designated LIBOR Page (as defined below) by its terms
provides only for a single rate, in which case such single rate shall be
used) for deposits in the London interbank market in the Index Currency for
the period of the Index Maturity specified on the face hereof, commencing
on the second London Banking Day immediately following such Interest
Determination Date, which appear on the Designated LIBOR Page at
approximately 11:00 a.m., London time, on such Interest Determination Date,
if at least two such offered rates appear (unless, as aforesaid, only a
single rate is required) on such Designated LIBOR Page, or (b) if "LIBOR
Telerate" is specified as the Reporting Service on the face hereof, the
rate for deposits in the Index Currency for the period of the Index
Maturity, each as designated on the face hereof, commencing on the second
London Banking Day following such Interest Determination Date (or, if
pounds sterling is the Index Currency, commencing on such Interest
Determination Date), that appears on the Designated LIBOR Page at
approximately 11:00 a.m., London time, on such Interest Determination Date.
If fewer than two offered rates appear (if "LIBOR Reuters" is specified as
the Reporting Service on the face hereof and calculation of LIBOR is based
on the arithmetic mean of the offered rates) or if no rate appears (if the
Reporting Service on the face hereof specifies either (x) "LIBOR Reuters"
and the Designated LIBOR Page by its terms provides only for a single rate
or (y) "LIBOR Telerate"), LIBOR in respect of that Interest Determination
Date will be determined as if the parties had specified the rate described
in (ii) below.
(ii) With respect to an Interest Determination Date on which
fewer than two offered rates appear (if "LIBOR Reuters" is specified as the
Reporting Service on the face hereof and calculation of LIBOR is based on
the arithmetic mean of the offered rates) or no rate appears (if the
Reporting Service on the face hereof specifies either (x) "LIBOR Reuters"
and the Designated LIBOR Page by its terms provides only for a single rate
or (y) "LIBOR Telerate"), the Calculation Agent will request the principal
London offices of each of four major reference banks in the London
interbank market, as selected by the Calculation Agent (after consultation
with the Issuer), to provide the Calculation Agent with its offered
quotations for deposits in the Index Currency for the period of the Index
Maturity specified on the face hereof, commencing on the second London
Banking Day immediately following such Interest Determination Date (or, if
pounds sterling is the Index Currency, commencing on such Interest
Determination Date), to prime banks in the London interbank market at
approximately 11:00 a.m., London time, on such Interest Determination Date
and in a principal amount equal to an amount of not less than U.S.$1
million (or the equivalent in the Index Currency(if the Index Currency is
not the U.S. dollar)) that is representative of a single transaction in
such Index Currency in such market at such time. If at least two such
quotations are provided, LIBOR determined on such Interest Determination
Date will be the arithmetic mean of such quotations. If fewer than two
quotations are provided, LIBOR determined on such Interest Determination
Date will be the arithmetic mean of rates quoted at approximately 11:00
a.m. (or such other time specified on the face hereof), in the applicable
principal financial center for the country of the Index Currency on such
Interest Determination Date, by three major banks in such principal
financial center selected by the Calculation Agent (after consultation with
the Issuer) on such Interest Determination Date for loans in the Index
Currency to leading European banks, for the period of the Index Maturity
specified on the face hereof commencing on the second London Banking Day
immediately following such Interest Determination Date (or, if pounds
sterling is the Index Currency, commencing on such Interest Determination
Date) and in a principal amount of not less than U.S.$1 million (or the
equivalent in the Index Currency(if the Index Currency is not the U.S.
dollar)) that is representative of a single transaction in such Index
Currency in such market at such time; provided, however, that if the banks
selected as aforesaid by the Calculation Agent are not quoting rates as
mentioned in this sentence, "LIBOR" for such Interest Reset Period will be
the same as LIBOR for the immediately preceding Interest Reset Period (or,
if there was no such Interest Reset Period, the rate of interest payable on
the LIBOR Notes for which LIBOR is being determined shall be the Initial
Interest Rate). "Index Currency" means the currency (including composite
currencies) specified as Index Currency on the face hereof. If no such
currency is specified as Index Currency on the face hereof, the Index
Currency shall be U.S. dollars. "Designated LIBOR Page" means either (a) if
"LIBOR Reuters" is designated as the Reporting Service on the face hereof,
the display on the Reuters Monitor Money Rates Service for the purpose of
displaying the London interbank rates of major banks for the applicable
Index Currency, or (b) if "LIBOR Telerate" is designated as the Reporting
Service on the face hereof, the display on the Dow Jones Telerate Service
for the purpose of displaying the London interbank rates of major banks for
the applicable Index Currency. If neither LIBOR Reuters nor LIBOR Telerate
is specified as the Reporting Service on the face hereof, LIBOR for the
applicable Index Currency will be determined as if LIBOR Telerate (and, if
the U.S. dollar is the Index Currency, Page 3750) had been specified.
Determination of Prime Rate. If the Base Rate specified on
the face hereof is the Prime Rate, the Prime Rate with respect to this Note
shall be determined on each Interest Determination Date and shall be the
rate set forth in H.15(519) for such date opposite the caption "Bank Prime
Loan." If such rate is not yet published by 9:00 a.m., New York City time,
on the Calculation Date pertaining to such Interest Determination Date, the
Prime Rate for such Interest Determination Date will be the arithmetic mean
of the rates of interest publicly announced by each bank named on the
Reuters Screen USPRIME1 Page (as defined below) as such bank's prime rate
or base lending rate as in effect for such Interest Determination Date as
quoted on the Reuters Screen USPRIME1 Page on such Interest Determination
Date, or, if fewer than four such rates appear on the Reuters Screen
USPRIME1 Page for such Interest Determination Date, the rate shall be the
arithmetic mean of the prime rates quoted on the basis of the actual number
of days in the year divided by 360 as of the close of business on such
Interest Determination Date by at least two of the three major money center
banks in The City of New York selected by the Calculation Agent from which
quotations are requested. If fewer than two quotations are provided, the
Prime Rate shall be calculated by the Calculation Agent and shall be
determined as the arithmetic mean on the basis of the prime rates in The
City of New York by the appropriate number of substitute banks or trust
companies organized and doing business under the laws of the United States,
or any State thereof, in each case having total equity capital of at least
U.S. $500 million and being subject to supervision or examination by
Federal or State authority, selected by the Calculation Agent to quote such
rate or rates; provided, however, that if the banks or trust companies
selected as aforesaid by the Calculation Agent are not quoting rates as set
forth above, the "Prime Rate" in effect for such Interest Reset Period will
be the same as the Prime Rate for the immediately preceding Interest Reset
Period (or, if there was no such Interest Reset Period, the rate of
interest payable hereon shall be the Initial Interest Rate).
"Reuters Screen USPRIME1 Page" means the display designated as
Page "USPRIME1" on the Reuters Monitor Money Rates Service (or such other page
as may replace the USPRIME1 Page on that service for the purpose of displaying
prime rates or base lending rates of major United States banks).
Determination of Treasury Rate. If the Base Rate specified
on the face hereof is the Treasury Rate, the Treasury Rate with respect to
this Note shall be determined on each Interest Determination Date and shall
be the rate for the auction held on such date of direct obligations of the
United States ("Treasury Bills") having the Index Maturity specified on the
face hereof, as published in H.15(519) under the heading "Treasury Bills--
auction average (investment)," or if not so published by 9:00 a.m., New
York City time, on the Calculation Date pertaining to such Interest
Determination Date, the auction average rate on such Interest Determination
Date (expressed as a bond equivalent, on the basis of a year of 365 or 366
days, as applicable, and applied on a daily basis) as otherwise announced
by the United States Department of the Treasury. In the event that the
results of the auction of Treasury Bills having the Index Maturity
specified on the face hereof are not published or reported as provided
above by 3:00 p.m., New York City time, on such Calculation Date or if no
such auction is held on such Interest Determination Date, then the Treasury
Rate shall be calculated by the Calculation Agent and shall be a yield to
maturity (expressed as a bond equivalent, on the basis of a year of 365 or
366 days, as applicable, and applied on a daily basis) calculated using the
arithmetic mean of the secondary market bid rates, as of approximately 3:30
p.m., New York City time, on such Interest Determination Date, of three
leading primary United States government securities dealers selected by the
Calculation Agent for the issue of Treasury Bills with a remaining maturity
closest to the Index Maturity specified on the face hereof; provided,
however, that if the dealers selected as aforesaid by the Calculation Agent
are not quoting as mentioned in this sentence, the Treasury Rate for such
Interest Reset Date will be the same as the Treasury Rate for the
immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the rate of interest payable hereon shall be the
Initial Interest Rate).
Determination of CMT Rate. If the Base Rate specified on
the face hereof is the CMT Rate, the CMT Rate with respect to this Note
shall be determined on each Interest Determination Date and shall be the
rate displayed for the Index Maturity specified on the face hereof on the
designated Telerate Page (as defined below) under the caption ". . .
Treasury Constant Maturities and . . . Federal Reserve Board Release H.15"
under the column for the Designated CMT Maturity Index (as defined below)
for (i) if the Designated CMT Telerate Page is 7055, the rate on such
Interest Determination Date and (ii) if the Designated CMT Telerate Page is
7052, the week or the month, as applicable, ended immediately preceding the
week in which the related Interest Determination Date occurs. If such rate
is no longer displayed on the relevant page, or is not displayed by 3:00
p.m., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, then the CMT Rate for such Interest
Determination Date will be such Treasury Constant Maturity rate for the
Designated CMT Maturity Index as published in the relevant H.15(519). If
such rate is no longer published, or is not published by 3:00 p.m., New
York City time, on the related Calculation Date, then the CMT Rate for such
Interest Determination Date will be such Treasury Constant Maturity rate
for the Designated CMT Maturity Index (or other United States Treasury rate
for the Designated CMT Maturity Index) for the Interest Determination Date
with respect to the related Interest Reset Date as may then be published by
either the Board of Governors of the Federal Reserve System or the United
States Department of the Treasury that the Calculation Agent determines to
be comparable to the rate formerly displayed on the Designated CMT Telerate
Page and published in the relevant H.15(519). If such information is not
provided by 3:00 p.m., New York time, on the related Calculation Date, then
the CMT Rate for the Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity, based on the arithmetic
mean of the secondary market closing offer side prices as of approximately
3:30 p.m., New York City time, on the Interest Determination Date reported,
according to their written records, by three leading primary United States
government securities dealers (each, a "Reference Dealer") in The City of
New York (which may include affiliates of the Issuer) selected by the
Calculation Agent (from five such Reference Dealers selected by the
Calculation Agent, after consultation with the Issuer, and eliminating the
highest quotation (or, in the event of equality, one of the highest) and
the lowest quotation (or, in the event of equality, one of the lowest)),
for the most recently issued direct noncallable fixed rate obligations of
the United States ("Treasury Notes") with an original maturity of
approximately the Designated CMT Maturity Index and remaining term to
maturity of not less than such Designated CMT Maturity Index minus one
year. If the Calculation Agent cannot obtain three such Treasury notes
quotations, the CMT Rate for such Interest Determination Date will be
calculated by the Calculation Agent and will be a yield to maturity based
on the arithmetic mean of the secondary market offer side prices as of
approximately 3:30 p.m., New York City time, on the Interest Determination
Date of three Reference Dealers in The City of New York (from five such
Reference Dealers selected by the Calculation Agent, after consultation
with the Issuer, 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 $100,000,000. If three or
four (and not five) of such Reference Dealers are quoting as described
above, then the CMT Rate will be based on the arithmetic mean of the offer
prices obtained and neither the highest nor the lowest of such quotes will
be eliminated; provided, however, that if fewer than three Reference
Dealers selected by the Calculation Agent are quoting as described herein,
the CMT Rate for such Interest Reset Date will be the same as the CMT Rate
for the immediately preceding Interest Reset Period (or, if there was no
such Interest Reset Period, the rate of interest payable hereon shall be
the Initial Interest Rate). If two Treasury notes with an original
maturity as described in the second preceding sentence have remaining terms
to maturity equally close to the Designated CMT Maturity Index, the quotes
for the Treasury note with the shorter remaining term to maturity will be
used.
"Designated CMT Telerate Page" means the display on the Dow
Jones Telerate Service specified on the face hereof (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 on the face hereof, the Designated CMT Telerate Page shall be 7052,
for the most recent week.
"Designated CMT Maturity Index" shall be the original period to
maturity of the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30
years) specified on the face hereof with respect to which the CMT Rate will be
calculated. If no such maturity is specified on the face hereof, the
Designated CMT Maturity Index shall be two years.
Notwithstanding the foregoing, the interest rate hereon shall
not be greater than the Maximum Interest Rate, if any, or less than the
Minimum Interest Rate, if any, specified on the face hereof or, if the Maximum
Interest Rate or Minimum Interest Rate is reset in accordance with the
procedures referred to above, as determined pursuant to such procedures. The
Calculation Agent shall calculate the interest rate hereon in accordance with
the foregoing on or before each Calculation Date. The interest rate on this
Note will in no event be higher than the maximum rate permitted by New York
law, as the same may be modified by United States Federal law of general
application.
At the request of the holder hereof, the Calculation Agent will
provide to the holder hereof the interest rate hereon then in effect and, if
determined, the interest rate that will become effective as of the next
Interest Reset Date.
Unless otherwise indicated on the face hereof, interest
payments on this Note shall be the amount of interest accrued from and
including the Interest Accrual Date or from and including the last date to
which interest has been paid to but, excluding the Interest Payment Dates
or Maturity Date (or any earlier redemption date), as the case may be.
Accrued interest hereon for any period shall be the sum of the products
obtained by multiplying the interest factor calculated for each day in such
period by the principal amount hereof shown on Schedule I hereto for each
such day; provided that for the purpose of calculating the amount of
interest payable hereon, any decrease in the principal amount hereof
attributable to an exercise of the option to terminate the automatic
extension of the maturity hereof shall be effective on and as of the
Election Date corresponding to the exercise of such option, and any
increase in the principal amount hereof shall be effective on and as of the
Interest Payment Date immediately preceding the date of such increase. The
interest factor for each such day shall be computed by dividing the
interest rate applicable to such day by 360 if the Base Rate is CD Rate,
Commercial Paper Rate, Federal Funds Rate, Prime Rate or LIBOR, as
specified on the face hereof, or by the actual number of days in the year
if the Base Rate is the Treasury Rate or the CMT Rate, as specified on the
face hereof. All percentages resulting from any calculation of the rate of
interest on this Note will be rounded, if necessary, to the nearest one
hundred-thousandth of a percentage point (.0000001), with five one-
millionths of a percentage point rounded upward, and all dollar amounts
used in or resulting from such calculation on this Note will be rounded to
the nearest cent (with one-half cent rounded upward). The interest rate in
effect on any Interest Reset Date will be the applicable rate as reset on
such date. The interest rate applicable to any other day is the interest
rate from the immediately preceding Interest Reset Date (or, if none, the
Initial Interest Rate).
This Note and all other obligations of the Issuer hereunder
will constitute part of the subordinated debt of the Issuer, will be issued
under the Subordinated Indenture and will be subordinate and junior in
right of payment, to the extent and in the manner set forth in the
Subordinated Indenture, to all "Senior Indebtedness" of the Issuer. The
Subordinated Indenture defines "Senior Indebtedness" as obligations (other
than non-recourse obligations, the debt securities, including this Note,
issued under the Subordinated Indenture or any other obligations
specifically designated as being subordinate in right of payment to Senior
Indebtedness) of, or guaranteed or assumed by, the Issuer for borrowed
money or evidenced by bonds, debentures, notes or other similar
instruments, and amendments, renewals, extensions, modifications and
refundings of any such indebtedness or obligation.
This Note, and any Note or Notes issued upon transfer or
exchange hereof, is issuable only in fully registered form, without
coupons, and is issuable only in denominations of U.S. $1,000 and any
integral multiple of U.S. $1,000 in excess thereof. If this Note is
denominated in a Specified Currency other than U.S. dollars, then, unless a
higher minimum denomination is required by applicable law, it is issuable
only in denominations of the equivalent of U.S. $1,000 (rounded to an
integral multiple of 1,000 units of such Specified Currency), or any amount
in excess thereof which is an integral multiple of 1,000 units of such
Specified Currency, as determined by reference to the noon dollar buying
rate in New York City for cable transfers of such Specified Currency
published by the Federal Reserve Bank of New York (the "Market Exchange
Rate") on the Business Day immediately preceding the date of issuance;
provided, however, in the case of ECUs, the Market Exchange Rate shall be
the rate of exchange determined by the Commission of the European
Communities (or any successor thereto) as published in the Official Journal
of the European Communities, or any successor publication, on the Business
Day immediately preceding the date of issuance.
The Chase Manhattan Bank (formerly known as Chemical Bank)
has been appointed registrar for the Notes (the "Registrar," which term
includes any successor registrar appointed by the Issuer), and the
Registrar will maintain at its office in The City of New York a register
for the registration and transfer of Notes. This Note may be transferred
at the aforesaid office of the Registrar by surrendering this Note for
cancellation, accompanied by a written instrument of transfer in form
satisfactory to the Registrar and duly executed by the registered holder
hereof in person or by the holder's attorney duly authorized in writing,
and thereupon the Registrar shall issue in the name of the transferee or
transferees, in exchange herefor, a new Note or Notes having identical
terms and provisions and having a like aggregate principal amount in
authorized denominations, subject to the terms and conditions set forth
herein; provided, however, that the Registrar will not be required (i) to
register the transfer of or exchange any Note that has been called for
redemption in whole or in part, except the unredeemed portion of Notes
being redeemed in part, (ii) to register the transfer of or exchange any
Note if the holder thereof has exercised his right, if any, to require the
Issuer to repurchase such Note in whole or in part, except the portion of
such Note not required to be repurchased or (iii) to register the transfer
of or exchange Notes to the extent and during the period so provided in the
Subordinated Indenture with respect to the redemption of Notes. Notes are
exchangeable at said office for other Notes of other authorized
denominations of equal aggregate principal amount having identical terms
and provisions. All such exchanges and transfers of Notes will be free of
charge, but the Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge in connection therewith. All Notes
surrendered for exchange shall be accompanied by a written instrument of
transfer in form satisfactory to the Registrar and executed by the
registered holder in person or by the holder's attorney duly authorized in
writing. The date of registration of any Note delivered upon any exchange
or transfer of Notes shall be such that no gain or loss of interest results
from such exchange or transfer.
In case this Note shall at any time become mutilated,
defaced or be destroyed, lost or stolen and this Note or evidence of the
loss, theft or destruction thereof (together with the indemnity hereinafter
referred to and such other documents or proof as may be required in the
premises) shall be delivered to the Registrar, a new Note of like tenor
will be issued by the Issuer in exchange for this Note, but, if this Note
is destroyed, lost or stolen, only upon receipt of evidence satisfactory to
the Registrar and the Issuer that this Note was destroyed or lost or stolen
and, if required, upon receipt also of indemnity satisfactory to each of
them. All expenses and reasonable charges associated with procuring such
indemnity and with the preparation, authentication and delivery of a new
Note shall be borne by the owner of the Note mutilated, defaced, destroyed,
lost or stolen.
The Subordinated Indenture provides that, (a) if an Event of
Default (as defined in the Subordinated Indenture) due to the default in
payment of principal of, premium, if any, or interest on, any series of debt
securities issued under the Subordinated Indenture, including the series of
Subordinated Medium-Term Notes of which this Note forms a part, or due to the
default in the performance or breach of any other covenant or warranty of the
Issuer applicable to the debt securities of such series but not applicable to
all outstanding debt securities issued under the Subordinated Indenture shall
have occurred and be continuing, either the Trustee or the holders of not less
than 25% in principal amount of the debt securities of each affected series
(voting as a single class) may then declare the principal of all debt
securities of all such series and interest accrued thereon to be due and
payable immediately and (b) if an Event of Default due to a default in the
performance of any other of the covenants or agreements in the Senior
Indenture applicable to all outstanding debt securities issued thereunder,
including this Note, or due to certain events of bankruptcy, insolvency and
reorganization of the Issuer, shall have occurred and be continuing, either
the Trustee or the holders of not less than 25% in principal amount of all
debt securities issued under the Subordinated Indenture then outstanding
(treated as one class) may declare the principal of all such debt securities
and interest accrued thereon to be due and payable immediately, but upon
certain conditions such declarations may be annulled and past defaults may be
waived (except a continuing default in payment of principal (or premium, if
any) or interest on such debt securities) by the holders of a majority in
principal amount of the debt securities of all affected series then
outstanding.
The Subordinated Indenture permits the Issuer and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the debt securities of all series issued
under the Subordinated Indenture then outstanding and affected (voting as
one class), to execute supplemental indentures adding any provisions to or
changing in any manner the rights of the holders of each series so
affected; provided that the Issuer and the Trustee may not, without the
consent of the holder of each outstanding debt security affected thereby,
(a) extend the final maturity of any such debt security, or reduce the
principal amount thereof, or reduce the rate or extend the time of payment
of interest thereon, or reduce any amount payable on redemption thereof, or
change the currency of payment thereof, or impair or affect the rights of
any holder to institute suit for the payment thereof without the consent of
the holder of each debt security so affected or (b) reduce the aforesaid
percentage in principal amount of debt securities the consent of the
holders of which is required for any such supplemental indenture; provided,
however, that neither this Note nor the Subordinated Indenture may be
amended to alter the subordination provisions hereof or thereof without the
written consent of each holder of Senior Indebtedness then outstanding that
would be adversely affected thereby.
Except as set forth below, if the principal of, premium, if
any, or interest on, this Note is payable in a Specified Currency other
than U.S. dollars and such Specified Currency is not available to the
Issuer for making payments hereon due to the imposition of exchange
controls or other circumstances beyond the control of the Issuer or is no
longer used by the government of the country issuing such currency or for
the settlement of transactions by public institutions within the
international banking community, then the Issuer will be entitled to
satisfy its obligations to the holder of this Note by making such payments
in U.S. dollars on the basis of the Market Exchange Rate on the date of
such payment or, if the Market Exchange Rate is not available on such date,
as of the most recent practicable date; provided, however, that if such
Specified Currency is replaced by a single European currency (expected to
be named the Euro), the payment of principal of, premium, if any, or
interest on any Note denominated in such currency shall be effected in the
new single European currency in conformity with legally applicable measures
taken pursuant to, or by virtue of, the treaty establishing the European
Community (the "EC"), as amended by the treaty on European Union (as so
amended, the "Treaty"). Any payment made under such circumstances in U.S.
dollars (or, if applicable, such new single European currency) where the
required payment is in a Specified Currency other than U.S. dollars will
not constitute an Event of Default.
Subject to the provisions below, the value of the ECU, in which
the Notes may be denominated or may be payable, is equal to the value of the
ECU that is from time to time used as the unit of account of the EC. If the
ECU becomes a currency in its own right in accordance with the Treaty, all
references to ECU in the Notes shall be construed as references to such
currency.
With respect to each due date for the payment of principal
of, or interest on, the Notes on or after the first business day in
Brussels on which the ECU ceases to be used as the unit of account of the
EC, and has not become a currency in its own right replacing all or some of
the currencies of the member States of the EC, the Company shall choose a
substitute currency (the "Chosen Currency"), which may be any currency
which was, on the last day on which the ECU was used as the unit of account
of the EC, a component currency of the ECU or U.S. dollars, in which all
payments due on or after that date with respect to the Notes and coupons
shall be made. Notice of the Chosen Currency so selected shall be provided
by first class mail to each holder at the address of such holder which
appears on the books maintained by the Registrar and to the Paying Agent.
The amount of each payment in such Chosen Currency shall be computed on the
basis of the equivalent of the ECU in that currency, determined as
described below, as of the fourth business day in Brussels prior to the
date on which such payment is due.
On the first business day in Brussels on which the ECU
ceases to be used as the unit of account of the EC, and has not become a
currency in its own right replacing all or some of the currencies of the
member States of the EC, the Company shall select a Chosen Currency in
which all payments with respect to Notes and coupons having a due date
prior thereto but not yet presented for payment with respect to Notes and
coupons having a due date prior thereto but not yet presented for payment
are to be made. The amount of each payment in such Chosen Currency shall
be computed on the basis of the equivalent of the ECU in that currency,
determined as described below, as of such first business day.
The equivalent of the ECU in the relevant Chosen Currency as of
any date (the "Day of Valuation") shall be determined by, or on behalf of, the
Exchange Rate Agent on the following basis. The amounts and components
composing the ECU for this purpose (the "Components") shall be the amounts and
components that composed the ECU as of the last date on which the ECU was used
as the unit of account of the EC. The equivalent of the ECU in the Chosen
Currency shall be calculated by, first, aggregating the U.S. dollar
equivalents of the Components; and then, in the case of a Chosen Currency
other than U.S. dollars, using the rate used for determining the U.S. dollar
equivalent of the Components in the Chosen Currency as set forth below,
calculating the equivalent in the Chosen Currency of such aggregate amount in
U.S. dollars.
The "Exchange Rate Agent" shall be Morgan Stanley & Co.
Incorporated, unless otherwise indicated on the face hereof.
The U.S. dollar equivalent of each of the Components shall be
determined by, or on behalf of, the Exchange Rate Agent on the basis of the
middle spot delivery quotations prevailing at 2:30 p.m., Brussels time, on the
Day of Valuation, as obtained by, or on behalf of, the Exchange Rate Agent
from one or more major banks, as selected by the Company, in the country of
issue of the component currency in question.
If for any reason no direct quotations are available for a
Component as of a Day of Valuation from any of the banks selected for this
purpose, in computing the U.S. dollar equivalent of such Component, the
Exchange Rate Agent shall (except as provided below) use the most recent
direct quotations for such Component obtained by it or on its behalf,
provided that such quotations were prevailing in the country of issue not
more than two Business Days before such Day of Valuation. If such most
recent quotations were so prevailing in the country of issue more than two
Business Days before such Day of Valuation, the Exchange Rate Agent shall
determine the U.S. dollar equivalent of such Component on the basis of
cross rates derived from the middle spot delivery quotations for such
component currency and for the U.S. dollar prevailing at 2:30 p.m.,
Brussels time, on such Day of Valuation, as obtained by, or on behalf of,
the Exchange Rate Agent from one or more major banks, as selected by the
Company, in a country other than the country of issue of such component
currency. Notwithstanding the foregoing, the Exchange Rate Agent shall
determine the U.S. dollar equivalent of such Component on the basis of such
cross rates if the Company or such agent judges that the equivalent so
calculated is more representative than the U.S. dollar equivalent
calculated as provided in the first sentence of this paragraph. Unless
otherwise specified by the Company, if there is more than one market for
dealing in any component currency by reason of foreign exchange regulations
or for any other reason, the market to be referred to in respect of such
currency shall be that upon which a non-resident issuer of securities
denominated in such currency would purchase such currency in order to make
payments in respect of such securities.
Payments in the Chosen Currency will be made at the specified
office of a paying agent in the country of the Chosen Currency, or, if none,
or at the option of the holder, at the specified office of any Paying Agent
either by a check drawn on, or by transfer to an account maintained by the
holder with, a bank in the principal financial center of the country of the
Chosen Currency.
All determinations referred to above made by, or on behalf of,
the Company or by, or on behalf of, the Exchange Rate Agent shall be at such
entity's sole discretion and shall, in the absence of manifest error, be
conclusive to the extent permitted by law for all purposes and binding on the
holder of this Note and coupons, if any.
So long as this Note shall be outstanding, the Issuer will
cause to be maintained an office or agency for the payment of the principal of
and premium, if any, and interest on this Note as herein provided in the
Borough of Manhattan, The City of New York, and an office or agency in said
Borough of Manhattan for the registration, transfer and exchange as aforesaid
of the Notes. The Issuer may designate other agencies for the payment of said
principal, premium and interest at such place or places (subject to applicable
laws and regulations) as the Issuer may decide. So long as there shall be such
an agency, the Issuer shall keep the Trustee advised of the names and
locations of such agencies, if any are so designated.
With respect to moneys paid by the Issuer and held by the
Trustee or any Paying Agent for the payment of the principal of or interest or
premium, if any, on any Notes that remain unclaimed at the end of two years
after such principal, interest or premium shall have become due and payable
(whether at maturity or upon call for redemption or otherwise), (i) the
Trustee or such Paying Agent shall notify the holders of such Notes that such
moneys shall be repaid to the Issuer and any person claiming such moneys shall
thereafter look only to the Issuer for payment thereof and (ii) such moneys
shall be so repaid to the Issuer. Upon such repayment all liability of the
Trustee or such Paying Agent with respect to such moneys shall thereupon
cease, without, however, limiting in any way any obligation that the Issuer
may have to pay the principal of or interest or premium, if any, on this Note
as the same shall become due.
No provision of this Note or of the Subordinated Indenture
shall alter or impair the obligation of the Issuer, which is absolute and
unconditional, to pay the principal of, premium, if any, and interest on this
Note at the time, place, and rate, and in the coin or currency, herein
prescribed unless otherwise agreed between the Issuer and the registered
holder of this Note.
Prior to due presentment of this Note for registration of
transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee
may treat the holder in whose name this Note is registered as the owner hereof
for all purposes, whether or not this Note be overdue, and none of the Issuer,
the Trustee or any such agent shall be affected by notice to the contrary.
No recourse shall be had for the payment of the principal of,
premium, if any, or the interest on this Note, for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the Subordinated
Indenture or any indenture supplemental thereto, against any incorporator,
shareholder, officer or director, as such, past, present or future, of the
Issuer or of any successor corporation, either directly or through the Issuer
or any successor corporation, whether by virtue of any constitution, statute
or rule of law or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part of
the consideration for the issue hereof, expressly waived and released.
This Note shall for all purposes be governed by, and construed
in accordance with, the laws of the State of New York.
All terms used in this Note which are defined in the
Subordinated Indenture and not otherwise defined herein shall have the
meanings assigned to them in the Subordinated Indenture.
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written
out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as
tenants in common
UNIF GIFT MIN ACT - ________________________ Custodian _______________
(Cust) (Minor)
Under Uniform Gifts to Minors Act ____________________________________
(State)
Additional abbreviations may also be used though not in the
above list.
___________________
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto
________________________________________
[PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE]
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
[PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE]
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing such person attorney to transfer such note on the books of the
Issuer, with full power of substitution in the premises.
Dated:___________________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Note in every particular without
alteration or enlargement or any change whatsoever.
OPTION TO ELECT TERMINATION OF AUTOMATIC EXTENSION
The undersigned hereby elects to terminate the automatic
extension of the maturity of the within Note (or the portion thereof
specified below) with the effect provided in the within Note by
surrendering the within Note to the Paying Agent at The Chase Manhattan
Bank (formerly known as Chemical Bank), 55 Water Street, New York, New York
10041, Attention: Corporate Trustee Administration Department, or such
other address of which the Issuer shall from time to time notify the
holders of the Notes, together with this form of "Option to Elect
Termination of Automatic Extension" duly completed by the holder of the
within Note.
If the automatic extension of the maturity of less than the
entire principal amount of the within Note is to be terminated, specify the
portion thereof (which shall be $100,000 or an integral multiple of $1,000
in excess thereof) as to which the holder elects to terminate the automatic
extension of the maturity $______; and specify the denomination or
denominations (which shall be $100,000 or an integral multiple of $1,000 in
excess thereof) of the Notes in the form attached to the within Note as
Exhibit A to be issued to the holder for the portion of the within Note as
to which the automatic extension of maturity is being terminated (in the
absence of any such specification one such Note will be issued for the
portion as to which the automatic extension of maturity is being
terminated) $__________.
Dated:___________________________ ______________________________
NOTICE: The signature on this
Option to Elect Termination of
Automatic Extension must
correspond with the name as
written upon the face of the
within Note in every particular,
without alteration or enlargement
or any change whatever.
SCHEDULE I
SCHEDULE OF EXCHANGES
The initial principal amount of this Note is $__________. The
following exchanges of a portion of this Note for an interest in a Short-Term
Note and the following exchanges of an interest in a Short-Term Note for an
interest in this Note have been made:
EXHIBIT A TO SUBORDINATED VARIABLE RATE RENEWABLE NOTE
[FORM OF FACE OF SECURITY]
REGISTERED REGISTERED
No. SUBVRR Cusip
U.S. $_________
Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York,
New York) to the issuer or its agent for registration of transfer, exchange
or payment, and any certificate issued is registered in the name of Cede &
Co. or such other name as requested by an authorized representative of The
Depository Trust Company and any payment is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL, since the registered owner hereof, Cede & Co., has an
interest herein.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID," "ORIGINAL YIELD TO MATURITY"
AND "INITIAL ACCRUAL PERIOD OID" (COMPUTED UNDER THE APPROXIMATE METHOD)
SET FORTH BELOW HAVE BEEN COMPLETED SOLELY FOR THE PURPOSES OF APPLYING
THE FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
SUBORDINATED VARIABLE RATE RENEWABLE
GLOBAL MEDIUM-TERM NOTE, SERIES C
Morgan Stanley, Dean Witter, Discover & Co., a Delaware
corporation (together with its successors and assigns, the "Issuer"), for
value received, hereby promises to pay to
, or registered assignees, the principal sum specified in Schedule I hereto on
the Maturity Date specified above and to pay interest on the principal amount
hereof outstanding from time to time, from the Interest Accrual Date specified
above at a rate per annum equal to the Initial Interest Rate, as defined
below, until the Initial Interest Reset Date specified above, and thereafter
at a rate per annum determined in accordance with the provisions specified on
the reverse hereof until the earlier of (a) the date on which the principal
hereof is paid or duly made available for payment and (b) the Interest Payment
Date immediately preceding the date on which the principal amount hereof is
reduced to zero, in each case, together with the unpaid amount of interest, if
any, payable on the principal amount hereof during the period that the
Issuer's obligation to pay such principal amount was evidenced by a
predecessor Note that provided for the automatic extension of the maturity
thereof (the "Renewable Note"), which amount shall be payable on the first
date succeeding the Interest Accrual Date specified above on which interest on
this Note is paid and shall be payable to the person receiving such interest
payment. The Issuer will pay interest hereon in arrears monthly, quarterly,
semiannually or annually as specified above as the Interest Payment Period on
each Interest Payment Date (as specified above), commencing with the first
Interest Payment Date next succeeding the Interest Accrual Date specified
above, and on the Maturity Date or any redemption date; provided, however, if
the Interest Accrual Date occurs between a Record Date, as defined below, and
the next succeeding Interest Payment Date, interest payments will commence on
the second Interest Payment Date succeeding the Interest Accrual Date to the
registered holder of this Note on the Record Date with respect to such second
Interest Payment Date; provided, further, that if an Interest Payment Date or
the Maturity Date would fall on a day that is not a Business Day, as defined
on the reverse hereof, such Interest Payment Date or Maturity Date shall be
the following day that is a Business Day, except that if the Base Rate
specified above is LIBOR and such next Business Day falls in the next calendar
month, the Interest Payment Date or Maturity Date shall be the immediately
preceding day that is a Business Day. As used herein, "Initial Interest Rate"
means the rate of interest determined using the Spread or Spread Multiplier,
as the case may be, specified in the Renewable Note and using the Base Rate
determined in accordance with the provisions of the Renewable Note (i) on the
Interest Reset Date with respect to the Renewable Note occurring on the
Interest Accrual Date specified above or (ii) if no such Interest Reset Date
occurred on the Interest Accrual Date, on the Interest Reset Date with respect
to the Renewable Note occurring immediately preceding the Interest Accrual
Date.
Interest on this Note will accrue from and including the most
recent date to which interest has been paid or duly provided for, or, if no
interest has been paid or duly provided for, from the Interest Accrual Date,
until the earlier of (a) the date on which the principal hereof has been paid
or duly made available for payment and (b) the Interest Payment Date
immediately preceding the date on which the principal amount hereof is reduced
to zero in accordance with the provisions set forth below. The interest so
payable, and punctually paid or duly provided for, on any Interest Payment
Date will, subject to certain exceptions described herein, be paid to the
person in whose name this Note (or one or more predecessor Notes) is
registered at the close of business on the date 15 calendar days prior to such
Interest Payment Date (whether or not a Business Day) (each such date a
"Record Date"); provided, however, that interest payable on the Maturity Date
will be payable to the person to whom the principal hereof shall be payable.
On any date following the Original Issue Date and prior to the
Record Date immediately preceding the Maturity Date, the holder hereof may,
with the consent of the Issuer, exchange this Note or any portion hereof
having a principal amount of $1,000 or any larger multiple of $1,000 in excess
thereof for an interest in the Renewable Note equal to the principal amount
hereof so exchanged by delivering to the Paying Agent, as defined on the
reverse hereof, (i) this Note with the form entitled "Request to Exchange"
below duly completed or (ii) a telegram, telex, facsimile transmission or a
letter from a member of a national securities exchange or the National
Association of Securities Dealers, Inc. or a commercial bank or a trust
company in the United States of America setting forth the name of the holder
of this Note, the principal amount hereof, the certificate number of this Note
or a description of this Note's tenor or terms, a statement that a request to
exchange is being made thereby, the principal amount hereof with respect to
which such request is being made and a guarantee that this Note with the form
entitled "Request to Exchange" below duly completed will be received by the
Paying Agent no later than five Business Days after the date of such telegram,
telex, facsimile transmission or letter; provided that such telegram, telex,
facsimile transmission or letter shall not be effective unless this Note and
such form duly completed are received by the Paying Agent by such fifth
Business Day. Such exchange may occur with respect to less than the entire
principal amount hereof provided that the principal amount for which such
exchange does not occur is at least $1,000 or any larger amount that is an
integral multiple of $1,000. Notwithstanding the foregoing, a request to
exchange all or a portion of this Note for an interest in the Renewable Note
may not be made during the period from and including a Record Date to but
excluding the immediately succeeding Interest Payment Date. If a request to
exchange any portion hereof is granted by the Issuer, then, on the date of
such exchange, Schedule I hereto shall be annotated to reflect the
corresponding decrease in the principal amount hereof, and Schedule I to the
Renewable Note shall be annotated to reflect the corresponding increase in the
principal amount thereof.
Payment of the principal of this Note, any premium and the
interest due at the Maturity Date (or any redemption date), unless this
Note is denominated in a Specified Currency other than U.S. Dollars and is
to be paid in whole, or in part in such Specified Currency, will be made in
immediately available funds upon surrender of this Note at the office or
agency of the Paying Agent maintained for that purpose in the Borough of
Manhattan, The City of New York, or at the office or agency of such other
paying agent as the Issuer may determine in U.S. dollars. U.S. dollar
payments of interest, other than interest due at maturity or any date of
redemption, will be made by United States dollar check mailed to the
address of the person entitled thereto as such address shall appear in the
Note register. A holder of U.S. $10,000,000 or more in aggregate principal
amount of Notes having the same Interest Payment Date, the interest on
which is paid in U.S. dollars, will be entitled to receive payments of
interest, other than interest due at maturity or any date of redemption, by
wire transfer of immediately available funds if appropriate wire transfer
instructions have been received by the Paying Agent in writing not less
than 15 calendar days prior to the applicable Interest Payment Date.
If this Note is denominated in a Specified Currency other
than U.S. dollars, and the holder does not elect (in whole or in part) to
receive payment in U.S. dollars pursuant to the next succeeding paragraph,
payments of interest, principal or any premium with regard to this Note
will be made by wire transfer of immediately available funds to an account
maintained by the holder hereof with a bank located outside the United
States if appropriate wire transfer instructions have been received by the
Paying Agent in writing not less than 15 calendar days prior to the
applicable payment date, provided that, if such wire transfer instructions
are not received, such payments will be made by check payable in such
Specified Currency mailed to the address of the person entitled thereto as
such address shall appear in the Note register, and provided, further, that
payment of the principal of this Note, any premium and the interest due at
maturity (or on any redemption or repayment date) will be made upon
surrender of this Note at the office or agency referred to in the preceding
paragraph.
If so indicated on the face hereof, the holder of this Note,
if denominated in a Specified Currency other than U.S. dollars, may elect
to receive all or a portion of payments on this Note in U.S. dollars by
transmitting a written request to the Paying Agent, on or prior to the
Record Date or at least ten Business Days prior to the Maturity Date or any
redemption date, as the case may be. Such election shall remain in effect
unless such request is revoked by written notice to the Paying Agent as to
all or a portion of payments on this Note at least five Business Days prior
to such Record Date or at least ten days prior to the Maturity Date or any
redemption date, as the case may be.
If the holder elects to receive all or a portion of payments
of principal of and any premium and interest on this Note, if denominated
in a Specified Currency other than U.S. dollars, in U.S. dollars, the
Exchange Rate Agent will convert such payments into U.S. dollars. In the
event of such an election, payment in respect of this Note will be based
upon the exchange rate as determined by the Exchange Rate Agent based on
the highest bid quotation in The City of New York received by such Exchange
Rate Agent at approximately 11:00 a.m., New York City time, on the second
Business Day preceding the applicable payment date from three recognized
foreign exchange dealers (one of which may be the Exchange Rate Agent
unless such Exchange Rate Agent is an affiliate of the Issuer), for the
purchase by the quoting dealer of U.S. dollars for the Specified Currency
for settlement on such payment date in the amount of the Specified Currency
payable in the absence of such an election to such holder and at which the
applicable dealer commits to execute a contract. If such bid quotations
are not available, such payment will be made in the Specified Currency.
All currency exchange costs will be borne by the holder of this Note by
deductions from such payments.
If this Note ceases to be held by The Depository Trust
Company or its successor or the nominee of The Depository Trust Company or
its successor, this Note will be exchanged for one or more Notes of
authorized denominations having an aggregate principal amount equal to the
principal amount of this Note as then shown on Schedule I hereto, which new
Notes shall otherwise have the same terms as this Note, except that the
provisions of such new Notes regarding the exchange thereof for an interest
in a note providing for the automatic extension of the maturity thereof (a
"New Renewable Note") shall be modified to the extent appropriate for notes
not required to be held in a securities depositary; provided that the
respective rights and obligations of the Issuer and the holders of such new
Notes shall be the same in all material respects as the respective rights
and obligations of the Issuer and the holder of this Note. The terms of
the New Renewable Note shall be the same as the terms of the Renewable
Note, except that the principal amount thereof shall equal the principal
amount of the new Notes exchanged therefor and the provisions of such New
Renewable Notes regarding the automatic extension of the maturity thereof
shall be modified to the extent appropriate for notes not required to be
held in a securities depositary; provided that the respective rights and
obligations of the Issuer and the holders of such New Renewable Notes shall
be the same in all material respects as the respective rights and
obligations of the Issuer and the holder of the Renewable Note. Such new
Notes shall have stated principal amounts and shall be registered in the
names of the persons then having a beneficial interest in this Note or in
the names of their nominees.
Reference is hereby made to the further provisions of this Note
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place, including,
without limitation, the provisions relating to the subordination of this Note
to the Issuer's Senior Indebtedness, as defined on the reverse hereof.
Unless the certificate of authentication hereon has been
executed by the Authenticating Agent referred to on the reverse hereof by
manual signature, this Note shall not be entitled to any benefit under the
Subordinated Indenture, as defined on the reverse hereof, or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly
executed.
DATED: MORGAN STANLEY, DEAN WITTER,
DISCOVER & CO.
By:_____________________________
Name:
Title:
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Notes referred
to in the within-mentioned
Subordinated Indenture.
THE CHASE MANHATTAN BANK,
as Authentication Agent
By:_____________________________
Authorized Officer
[FORM OF REVERSE OF SECURITY]
This Note is one of a duly authorized issue of the Subordinated
Global Medium-Term Notes, Series C, having maturities more than nine months
from the date of issue (the "Notes") of the Issuer. The Notes are issuable
under a Subordinated Indenture, dated as of April 15, 1989, as supplemented
by a First Supplemental Subordinated Indenture dated as of May 15, 1991 and a
Second Supplemental Subordinated Indenture dated as of April 15, 1996 between
Morgan Stanley Group Inc. (as predecessor of the Issuer) and The First
National Bank of Chicago, as Trustee (the "Trustee," which term includes any
successor trustee under the Subordinated Indenture) as further supplemented
by a Third Supplemental Subordinated Indenture dated as of June 1, 1997
between the Issuer and the Trustee (as so supplemented, the "Subordinated
Indenture"), to which Subordinated Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities of the Issuer, the Trustee and
holders of the Notes and the terms upon which the Notes are, and are to be,
authenticated and delivered. The Trustee has appointed The Chase Manhattan
Bank (formerly known as Chemical Bank) as Authenticating Agent (the
"Authenticating Agent," which term includes any successor authenticating agent
appointed by the Trustee) with respect to the Notes, and the Issuer has
appointed The Chase Manhattan Bank (formerly known as Chemical Bank) at its
corporate trust office in The City of New York as the paying agent (the
"Paying Agent," which term includes any additional or successor Paying Agent
appointed by the Issuer) with respect to the Notes. The terms of individual
Notes may vary with respect to interest rates, interest rate formulas, issue
dates, maturity dates, or otherwise, all as provided in the Subordinated
Indenture. To the extent not inconsistent herewith, the terms of the
Subordinated Indenture are hereby incorporated by reference herein.
Unless otherwise provided, this Note will not be subject to
any sinking fund and will not be redeemable prior to maturity.
This Note will bear interest at the rate determined in
accordance with the applicable provisions below by reference to the Base
Rate shown on the face hereof based on the Index Maturity, if any, shown on
the face hereof (i) plus or minus the Spread, if any, or (ii) multiplied by
the Spread Multiplier, if any, specified on the face hereof. Commencing
with the Initial Interest Reset Date specified on the face hereof, the rate
at which interest on this Note is payable shall be reset as of each
Interest Reset Date (as used herein, the term "Interest Reset Date" shall
include the Initial Interest Reset Date). The determination of the rate of
interest at which this Note will be reset on any Interest Reset Date shall
be made, on the Interest Determination Date (as defined below) pertaining
to such Interest Reset Date. The Interest Reset Dates will be the Interest
Reset Dates specified on the face hereof; provided, however, that (a) the
interest rate in effect for the period from the Interest Accrual Date to
the Initial Interest Reset Date specified on the face hereof will be the
Initial Interest Rate and (b) unless otherwise specified on the face
hereof, the interest rate in effect for the ten calendar days immediately
prior to maturity, redemption or repayment will be that in effect on the
tenth calendar day preceding such maturity, redemption or repayment date.
If any Interest Reset Date would otherwise be a day that is not a Business
Day, such Interest Reset Date shall be postponed to the next succeeding day
that is a Business Day, except that if the Base Rate specified on the face
hereof is LIBOR and such Business Day is in the next succeeding calendar
month, such Interest Reset Date shall be the next preceding Business Day.
As used herein, "Business Day" means any day, other than a Saturday or
Sunday, and that is neither a legal holiday nor a day on which banking
institutions are authorized or required by law or regulation to close in
The City of New York and, with respect to Notes bearing interest calculated
by reference to LIBOR, in the City of London.
If so indicated on the face of this Note, the Issuer may
from time to time offer to reset the Spread or Spread Multiplier, as the
case may be, on the Renewable Note by causing the Paying Agent to send to
the holder hereof a notice (an "Optional Exchange Notice") by first class
mail, postage prepaid, or by such other means as shall be agreed between
the Issuer and the Paying Agent, setting forth (a) the new Spread or Spread
Multiplier to be applied to the Renewable Note, together with any change in
the Maximum Interest Rate or Minimum Interest Rate, and (b) the date, if
any, on which such offer will expire. In order to accept such offer, the
holder hereof must exchange this Note in whole or in part for an interest
in the Renewable Note in accordance with the third paragraph on the face of
this Note by delivering to the Paying Agent the notice referred to in
clause (i) or (ii) of such paragraph prior to the earlier of the expiration
date, if any, of such offer and the Record Date immediately preceding the
Maturity Date.
The Interest Determination Date pertaining to an Interest
Reset Date for Notes bearing interest calculated by reference to the CD
Rate, Commercial Paper Rate, Federal Funds Rate, Prime Rate and CMT Rate
will be the second Business Day next preceding such Interest Reset Date.
The Interest Determination Date pertaining to an Interest Reset Date for
Notes bearing interest calculated by reference to LIBOR shall be the second
London Banking Day preceding such Interest Reset Date except that the
Interest Determination Date pertaining to an Interest Reset Date for a
LIBOR Note for which the Index Currency is pounds Sterling will be such
Interest Reset Date. As used herein, "London Banking Day" means any day on
which dealings in deposits in the Index Currency (as defined herein) are
transacted in the London interbank market. The Interest Determination Date
pertaining to an Interest Reset Date for Notes bearing interest calculated
by reference to the Treasury Rate shall be the day of the week in which
such Interest Reset Date falls on which Treasury bills normally would be
auctioned; provided, however, that if as a result of a legal holiday an
auction is held on the Friday of the week preceding such Interest Reset
Date, the related Interest Determination Date shall be such preceding
Friday; and provided, further, that if an auction shall fall on any
Interest Reset Date, then the Interest Reset Date shall instead be the
first Business Day following the date of such auction.
Unless otherwise specified on the face hereof, the
"Calculation Date" pertaining to an Interest Determination Date will be the
earlier of (i) the tenth calendar day after such Interest Determination
Date or, if such day is not a Business Day, the next succeeding Business
Day, or (ii) the Business Day preceding the applicable Interest Payment
Date or Maturity Date (or, with respect to any principal amount to be
redeemed or repaid, any redemption or repayment date), as the case may be.
Determination of CD Rate. If the Base Rate specified on the
face hereof is the CD Rate, the CD Rate with respect to this Note shall be
determined on each Interest Determination Date and shall be the rate on
such date for negotiable certificates of deposit having the Index Maturity
specified on the face hereof as published by the Board of Governors of the
Federal Reserve System in "Statistical Release H.15(519), Selected Interest
Rates," or any successor publication of the Board of Governors of the
Federal Reserve System ("H.15(519)"), under the heading "CDs (Secondary
Market)," or, if not so published by 9:00 A.M., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, the CD
Rate will be the rate on such Interest Determination Date for negotiable
certificates of deposit of the Index Maturity specified on the face hereof
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" ("Composite Quotations") under the heading "Certificates of
Deposit." If neither of such rates is published by 3:00 P.M., New York City
time, on such Calculation Date, then the CD Rate on such Interest
Determination Date will be calculated by the Calculation Agent referred to
on the face hereof and will be the arithmetic mean of the secondary market
offered rates as of 10:00 A.M., New York City time, on such Interest
Determination Date for certificates of deposit in the denomination of
$5,000,000 with a remaining maturity closest to the Index Maturity
specified on the face hereof of three leading nonbank dealers in negotiable
U.S. dollar certificates of deposit in The City of New York selected by the
Calculation Agent for negotiable certificates of deposit of major United
States money center banks of the highest credit standing in the market for
negotiable certificates of deposit; provided, however, that if the dealers
selected as aforesaid by the Calculation Agent are not quoting as mentioned
in this sentence, the CD Rate in effect for the applicable period will be
the same as the CD Rate for the immediately preceding Interest Reset Period
(or, if there was no such Interest Reset Period, the rate of interest
payable hereon shall be the Initial Interest Rate).
Determination of Commercial Paper Rate. If the Base Rate
specified on the face hereof is the Commercial Paper Rate, the Commercial
Paper Rate with respect to this Note shall be determined on each Interest
Determination Date and shall be the Money Market Yield (as defined herein)
of the rate on such date for commercial paper having the Index Maturity
specified on the face hereof, as such rate shall be published in H.15(519)
under the heading "Commercial Paper," or if not so published prior to 9:00
A.M., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, the Commercial Paper Rate shall be the Money
Market Yield of the rate on such Interest Determination Date for commercial
paper of the Index Maturity specified on the face hereof as published in
Composite Quotations under the heading "Commercial Paper." If neither of
such rates is published by 3:00 P.M., New York City time, on such
Calculation Date, then the Commercial Paper Rate shall be the Money Market
Yield of the arithmetic mean of the offered rates as of 11:00 A.M., New
York City time, on such Interest Determination Date of three leading
dealers in commercial paper in The City of New York selected by the
Calculation Agent for commercial paper of the Index Maturity specified on
the face hereof, placed for an industrial issuer whose bond rating is "AA,"
or the equivalent, from a nationally recognized rating agency; provided,
however, that if the dealers selected as aforesaid by the Calculation Agent
are not quoting as mentioned in this sentence, the Commercial Paper Rate in
effect for the applicable period will be the same as the Commercial Paper
Rate for the immediately preceding Interest Reset Period (or, if there was
no such Interest Reset Period, the rate of interest payable hereon shall be
the Initial Interest Rate).
"Money Market Yield" shall be the yield calculated in
accordance with the following formula:
Money Market Yield = D x 360
------------- x 100
360 - (D x M)
where "D" refers to the applicable per annum rate for
commercial paper quoted on a bank discount basis and expressed as a decimal
and "M" refers to the actual number of days in the Index Maturity specified
on the face hereof.
Determination of Federal Funds Rate. If the Base Rate
specified on the face hereof is the Federal Funds Rate, the Federal Funds
Rate with respect to this Note shall be determined on each Interest
Determination Date and shall be the rate on such date for Federal Funds as
published in H.15(519) under the heading "Federal Funds (Effective)," or,
if not so published by 9:00 A.M., New York City time, on the Calculation
Date pertaining to such Interest Determination Date, the Federal Funds Rate
will be the rate on such Interest Determination Date as published in
Composite Quotations under the heading "Federal Funds/Effective Rate." If
neither of such rates is published by 3:00 P.M., New York City time, on
such Calculation Date, the Federal Funds Rate for such Interest
Determination Date will be calculated by the Calculation Agent and will be
the arithmetic mean of the rates for the last transaction in overnight
Federal funds as of 11:00 A.M., New York City time, on such Interest
Determination Date arranged by three leading brokers in Federal funds
transactions in The City of New York selected by the Calculation Agent;
provided, however, that if the brokers selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this sentence, the
Federal Funds Rate in effect for the applicable period will be the same as
the Federal Funds Rate for the immediately preceding Interest Reset Period
(or, if there was no such Interest Reset Period, the rate of interest
payable hereon shall be the Initial Interest Rate).
Determination of LIBOR. If the Base Rate specified on the
face hereof is LIBOR, LIBOR with respect to this Note shall be determined
on each Interest Determination Date as follows:
(i) As of the Interest Determination Date, the
Calculation Agent will determine (a) if "LIBOR Reuters" is specified as
the Reporting Service on the face hereof, the arithmetic mean of the
offered rates (unless the specified Designated LIBOR Page (as defined
below) by its terms provides only for a single rate, in which case such
single rate shall be used) for deposits in the London interbank market
in the Index Currency for the period of the Index Maturity specified on
the face hereof, commencing on the second London Banking Day
immediately following such Interest Determination Date, which appear on
the Designated LIBOR Page at approximately 11:00 a.m., London time, on
such Interest Determination Date, if at least two such offered rates
appear (unless, as aforesaid, only a single rate is required) on such
Designated LIBOR Page, or (b) if "LIBOR Telerate" is specified as the
Reporting Service on the face hereof, the rate for deposits in the
Index Currency for the period of the Index Maturity, each as designated
on the face hereof, commencing on the second London Banking Day
following such Interest Determination Date (or, if pounds Sterling is
the Index Currency, commencing on such Interest Determination Date),
that appears on the Designated LIBOR Page at approximately 11:00 a.m.,
London time, on such Interest Determination Date. If fewer than two
offered rates appear (if "LIBOR Reuters" is specified as the Reporting
Service on the face hereof and calculation of LIBOR is based on the
arithmetic mean of the offered rates) or if no rate appears (if the
Reporting Service on the face hereof specifies either (x) "LIBOR
Reuters" and the Designated LIBOR Page by its terms provides only for a
single rate or (y) "LIBOR Telerate"), LIBOR in respect of that Interest
Determination Date will be determined as if the parties had specified
the rate described in (ii) below.
(ii) With respect to an Interest Determination Date on
which fewer than two offered rates appear (if "LIBOR Reuters" is
specified as the Reporting Service on the face hereof and calculation
of LIBOR is based on the arithmetic mean of the offered rates) or no
rate appears (if the Reporting Service on the face hereof specifies
either (x) "LIBOR Reuters" and the Designated LIBOR Page by its terms
provides only for a single rate or (y) "LIBOR Telerate"), the
Calculation Agent will request the principal London offices of each of
four major reference banks in the London interbank market, as selected
by the Calculation Agent (after consultation with the Issuer), to
provide the Calculation Agent with its offered quotations for deposits
in the Index Currency for the period of the Index Maturity specified on
the face hereof, commencing on the second London Banking Day
immediately following such Interest Determination Date (or, if pounds
Sterling is the Index Currency, commencing on such Interest
Determination Date), to prime banks in the London interbank market at
approximately 11:00 a.m., London time, on such Interest Determination
Date and in a principal amount equal to an amount of not less than
U.S.$1 million (or the equivalent in the Index Currency (if the Index
Currency is not U.S. dollars)) that is representative of a single
transaction in such Index Currency in such market at such time. If at
least two such quotations are provided, LIBOR determined on such
Interest Determination Date will be the arithmetic mean of such
quotations. If fewer than two quotations are provided, LIBOR
determined on such Interest Determination Date will be the arithmetic
mean of rates quoted at approximately 11:00 a.m. (or such other time
specified on the face hereof), in the applicable principal financial
center for the country of the Index Currency on such Interest
Determination Date, by three major banks in such principal financial
center selected by the Calculation Agent (after consultation with the
Issuer) on such Interest Determination Date for loans in the Index
Currency to leading European banks, for the period of the Index
Maturity specified on the face hereof commencing on the second London
Banking Day immediately following such Interest Determination Date (or,
if pounds Sterling is the Index Currency, commencing on such Interest
Determination Date) and in a principal amount of not less than U.S.$1
million (or the equivalent in the Index Currency (if the Index Currency
is not U.S. Dollars)) that is representative of a single transaction
in such Index Currency in such market at such time; provided, however,
that if the banks selected as aforesaid by the Calculation Agent are
not quoting rates as mentioned in this sentence, "LIBOR" for such
Interest Reset Period will be the same as LIBOR for the immediately
preceding Interest Reset Period (or, if there was no such Interest
Reset Period, the rate of interest payable on the LIBOR Notes for which
LIBOR is being determined shall be the Initial Interest Rate). "Index
Currency" means the currency (including composite currencies) specified
as Index Currency on the face hereof. If no such currency is specified
as Index Currency on the face hereof, the Index Currency shall be U.S.
dollars. "Designated LIBOR Page" means either (a) if "LIBOR Reuters" is
designated as the Reporting Service on the face hereof, the display on
the Reuters Monitor Money Rates Service for the purpose of displaying
the London interbank rates of major banks for the applicable Index
Currency, or (b) if "LIBOR Telerate" is designated as the Reporting
Service on the face hereof, the display on the Dow Jones Telerate
Service for the purpose of displaying the London interbank rates of
major banks for the applicable Index Currency. If neither LIBOR
Reuters nor LIBOR Telerate is specified as the Reporting Service on the
face hereof, LIBOR for the applicable Index Currency will be determined
as if LIBOR Telerate (and, if the U.S. dollar is the Index Currency,
Page 3750) had been specified.
Determination of Prime Rate. If the Base Rate specified on
the face hereof is the Prime Rate, the Prime Rate with respect to this Note
shall be determined on each Interest Determination Date and shall be the
rate set forth in H.15(519) for such date opposite the caption "Bank Prime
Loan." If such rate is not yet published by 9:00 A.M., New York City time,
on the Calculation Date pertaining to such Interest Determination Date, the
Prime Rate for such Interest Determination Date will be the arithmetic mean
of the rates of interest publicly announced by each bank named on the
Reuters Screen USPRIME1 Page (as defined below) as such bank's prime rate
or base lending rate as in effect for such Interest Determination Date as
quoted on the Reuters Screen USPRIME1 Page on such Interest Determination
Date, or, if fewer than four such rates appear on the Reuters Screen
USPRIME1 Page for such Interest Determination Date, the rate shall be the
arithmetic mean of the prime rates quoted on the basis of the actual number
of days in the year divided by 360 as of the close of business on such
Interest Determination Date by at least two of the three major money center
banks in The City of New York selected by the Calculation Agent from which
quotations are requested. If fewer than two quotations are provided, the
Prime Rate shall be calculated by the Calculation Agent and shall be
determined as the arithmetic mean on the basis of the prime rates in The
City of New York by the appropriate number of substitute banks or trust
companies organized and doing business under the laws of the United States,
or any State thereof, in each case having total equity capital of at least
U.S. $500 million and being subject to supervision or examination by
Federal or State authority, selected by the Calculation Agent to quote such
rate or rates; provided, however, that if the banks or trust companies
selected as aforesaid by the Calculation Agent are not quoting rates as set
forth above, the "Prime Rate" in effect for such Interest Reset Period will
be the same as the Prime Rate for the immediately preceding Interest Reset
Period (or, if there was no such Interest Reset Period, the rate of
interest payable hereon shall be the Initial Interest Rate).
"Reuters Screen USPRIME1 Page" means the display designated
as Page "USPRIME1" on the Reuters Monitor Money Rates Service (or such
other page as may replace the USPRIME1 Page on that service for the purpose
of displaying prime rates or base lending rates of major United States
banks).
Determination of Treasury Rate. If the Base Rate specified
on the face hereof is the Treasury Rate, the Treasury Rate with respect to
this Note shall be determined on each Interest Determination Date and shall
be the rate for the auction held on such date of direct obligations of the
United States ("Treasury Bills") having the Index Maturity specified on the
face hereof, as published in H.15(519) under the heading "Treasury Bills--
auction average (investment)," or if not so published by 9:00 A.M., New
York City time, on the Calculation Date pertaining to such Interest
Determination Date, the auction average rate on such Interest Determination
Date (expressed as a bond equivalent, on the basis of a year of 365 or 366
days, as applicable, and applied on a daily basis) as otherwise announced
by the United States Department of the Treasury. In the event that the
results of the auction of Treasury Bills having the Index Maturity
specified on the face hereof are not published or reported as provided
above by 3:00 P.M., New York City time, on such Calculation Date or if no
such auction is held on such Interest Determination Date, then the Treasury
Rate shall be calculated by the Calculation Agent and shall be a yield to
maturity (expressed as a bond equivalent, on the basis of a year of 365 or
366 days, as applicable, and applied on a daily basis) calculated using the
arithmetic mean of the secondary market bid rates, as of approximately 3:30
P.M., New York City time, on such Interest Determination Date, of three
leading primary United States government securities dealers selected by the
Calculation Agent for the issue of Treasury Bills with a remaining maturity
closest to the Index Maturity specified on the face hereof; provided,
however, that if the dealers selected as aforesaid by the Calculation Agent
are not quoting as mentioned in this sentence, the Treasury Rate for such
Interest Reset Date will be the same as the Treasury Rate for the
immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the rate of interest payable hereon shall be the
Initial Interest Rate).
Determination of CMT Rate. If the Base Rate specified on
the face hereof is the CMT Rate, the CMT Rate with respect to this Note
shall be determined on each Interest Determination Date and shall be the
rate displayed for the Index Maturity specified on the face hereof on the
Designated CMT Telerate Page (as defined below) under the caption ". . .
Treasury Constant Maturities and . . . Federal Reserve Board Release
H.15," under the column for the Designated CMT Maturity Index (as defined
below) for (i) if the Designated CMT Telerate Page is 7055, the rate on
such Interest Determination Date and (ii) if the Designated CMT Telerate
Page is 7052, the week or the month, as applicable, ended immediately
preceding the week in which the related Interest Determination Date occurs.
If such rate is no longer displayed on the relevant page, or is not
displayed by 3:00 p.m., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, then the CMT Rate for such
Interest Determination Date will be such Treasury Constant Maturity rate
for the Designated CMT Maturity Index as published in the relevant
H.15(519). If such rate is no longer published, or is not published by
3:00 p.m., New York City time, on the related Calculation Date, then the
CMT Rate for such Interest Determination Date will be such Treasury
Constant Maturity rate for the Designated CMT Maturity Index (or other
United States Treasury rate for the Designated CMT Maturity Index) for the
Interest Determination Date with respect to the related Interest Reset Date
as may then be published by either the Board of Governors of the Federal
Reserve System or the United States Department of the Treasury that the
Calculation Agent determines to be comparable to the rate formerly
displayed on the Designated CMT Telerate Page and published in the relevant
H.15(519). If such information is not provided by 3:00 p.m., New York
time, on the related Calculation Date, then the CMT Rate for the Interest
Determination Date will be calculated by the Calculation Agent and will be
a yield to maturity, based on the arithmetic mean of the secondary market
closing offer side prices as of approximately 3:30 p.m., New York City
time, on the Interest Determination Date reported, according to their
written records, by three leading primary United States government
securities dealers (each, a "Reference Dealer") in The City of New York
(which may include affiliates of the Issuer) selected by the Calculation
Agent (from five such Reference Dealers selected by the Calculation Agent,
after consultation with the Issuer, and eliminating the highest quotation
(or, in the event of equality, one of the highest) and the lowest quotation
(or, in the event of equality, one of the lowest)), for the most recently
issued direct noncallable fixed rate obligations of the United States
("Treasury Notes") with an original maturity of approximately the
Designated CMT Maturity Index and remaining term to maturity of not less
than such Designated CMT Maturity Index minus one year. If the Calculation
Agent cannot obtain three such Treasury Notes quotations, the CMT Rate for
such Interest Determination Date will be calculated by the Calculation
Agent and will be a yield to maturity based on the arithmetic mean of the
secondary market offer side prices as of approximately 3:30 p.m., New York
City time, on the Interest Determination Date of three Reference Dealers in
The City of New York (from five such Reference Dealers selected by the
Calculation Agent, after consultation with the Issuer, 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 $100,000,000. If three or four (and not five) of such
Reference Dealers are quoting as described above, then the CMT Rate will be
based on the arithmetic mean of the offer prices obtained and neither the
highest nor the lowest of such quotes will be eliminated; provided,
however, that if fewer than three Reference Dealers selected by the
Calculation Agent are quoting as described herein, the CMT Rate for such
Interest Reset Date will be the same as the CMT Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset
Period, the rate of interest payable hereon shall be the Initial Interest
Rate). If two Treasury Notes with an original maturity as described in the
second preceding sentence have remaining terms to maturity equally close to
the Designated CMT Maturity Index, the quotes for the Treasury note with
the shorter remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow
Jones Telerate Service specified on the face hereof (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 on the face hereof, the Designated CMT Telerate Page
shall be 7052, for the most recent week.
"Designated CMT Maturity Index" shall be the original period
to maturity of the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20
or 30 years) specified on the face hereof with respect to which the CMT
Rate will be calculated. If no such maturity is specified on the face
hereof, the Designated CMT Maturity Index shall be two years.
Notwithstanding the foregoing, the interest rate hereon
shall not be greater than the Maximum Interest Rate, if any, or less than
the Minimum Interest Rate, if any, specified on the face hereof. The
Calculation Agent shall calculate the interest rate hereon in accordance
with the foregoing on or before each Calculation Date. The interest rate
on this Note will in no event be higher than the maximum rate permitted by
New York law, as the same may be modified by United States Federal law of
general application.
At the request of the holder hereof, the Calculation Agent
will provide to the holder hereof the interest rate hereon then in effect
and, if determined, the interest rate that will become effective as of the
next Interest Reset Date.
Unless otherwise indicated on the face hereof, interest
payments on this Note shall be the amount of interest accrued from and
including the Interest Accrual Date or from and including the last date to
which interest has been paid to but, excluding the Interest Payment Dates
or Maturity Date, as the case may be. Accrued interest hereon for any
period shall be the sum of the products obtained by multiplying the
interest factor calculated for each day in such period by the principal
amount hereof shown on Schedule I hereto for each such day; provided that
for the purpose of calculating the amount of interest payable hereon, any
decrease in the principal amount hereof attributable to an exchange of a
portion of this Note for an interest in the Renewable Note shall be
effective on and as of the Interest Payment Date immediately preceding the
date of such decrease. The interest factor for each such day shall be
computed by dividing the interest rate applicable to such day by 360 if the
Base Rate is CD Rate, Commercial Paper Rate, Federal Funds Rate, Prime Rate
or LIBOR, as specified on the face hereof, or by the actual number of days
in the year if the Base Rate is the Treasury Rate or the CMT Rate, as
specified on the face hereof. All percentages resulting from any
calculation of the rate of interest on this Note will be rounded, if
necessary, to the nearest one hundred-thousandth of a percentage point
(.0000001), with five one-millionths of a percentage point rounded upward,
and all dollar amounts used in or resulting from such calculation on this
Note will be rounded to the nearest cent (with one-half cent rounded
upward). The interest rate in effect on any Interest Reset Date will be
the applicable rate as reset on such date. The interest rate applicable to
any other day is the interest rate from the immediately preceding Interest
Reset Date (or, if none, the Initial Interest Rate).
This Note and all other obligations of the Issuer hereunder
will constitute part of the subordinated debt of the Issuer, will be issued
under the Subordinated Indenture and will be subordinate and junior in
right of payment, to the extent and in the manner set forth in the
Subordinated Indenture, to all "Senior Indebtedness" of the Issuer. The
Subordinated Indenture defines "Senior Indebtedness" as obligations (other
than non-recourse obligations, the debt securities, including this Note,
issued under the Subordinated Indenture or any other obligations
specifically designated as being subordinate in right of payment to Senior
Indebtedness) of, or guaranteed or assumed by, the Issuer for borrowed
money or evidenced by bonds, debentures, notes or other similar
instruments, and amendments, renewals, extensions, modifications and
refundings of any such indebtedness or obligation.
This Note, and any Note or Notes issued upon transfer or
exchange hereof, is issuable only in fully registered form, without
coupons, and is issuable only in denominations of U.S. $1,000 and any
integral multiple of U.S. $1,000 in excess thereof. If this Note is
denominated in a Specified Currency other than U.S. dollars, then, unless a
higher minimum denomination is required by applicable law, it is issuable
only in denominations of the equivalent of U.S. $1,000 (rounded to an
integral multiple of 1,000 units of such Specified Currency), or any amount
in excess thereof which is an integral multiple of 1,000 units of such
Specified Currency, as determined by reference to the noon dollar buying
rate in New York City for cable transfers of such Specified Currency
published by the Federal Reserve Bank of New York (the "Market Exchange
Rate") on the Business Day immediately preceding the date of issuance;
provided, however, in the case of ECUs, the Market Exchange Rate shall be
the rate of exchange determined by the Commission of the European
Communities (or any successor thereto) as published in the Official Journal
of the European Communities, or any successor publication, on the Business
Day immediately preceding the date of issuance.
The Chase Manhattan Bank (formerly known as Chemical Bank)
has been appointed registrar for the Notes (the "Registrar," which term
includes any successor registrar appointed by the Issuer), and the
Registrar will maintain at its office in The City of New York a register
for the registration and transfer of Notes. This Note may be transferred
at the aforesaid office of the Registrar by surrendering this Note for
cancellation, accompanied by a written instrument of transfer in form
satisfactory to the Registrar and duly executed by the registered holder
hereof in person or by the holder's attorney duly authorized in writing,
and thereupon the Registrar shall issue in the name of the transferee or
transferees, in exchange herefor, a new Note or Notes having identical
terms and provisions and having a like aggregate principal amount in
authorized denominations, subject to the terms and conditions set forth
herein; provided, however, that the Registrar will not be required (i) to
register the transfer of or exchange any Note that has been called for
redemption in whole or in part, except the unredeemed portion of Notes
being redeemed in part, (ii) to register the transfer of or exchange any
Note if the holder thereof has exercised his right, if any, to require the
Issuer to repurchase such Note in whole or in part, except the portion of
such Note not required to be repurchased or (iii) to register the transfer
of or exchange Notes to the extent and during the period so provided in the
Subordinated Indenture with respect to the redemption of Notes. Notes are
exchangeable at said office for other Notes of other authorized
denominations of equal aggregate principal amount having identical terms
and provisions. All such exchanges and transfers of Notes will be free of
charge, but the Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge in connection therewith. All Notes
surrendered for exchange shall be accompanied by a written instrument of
transfer in form satisfactory to the Registrar and executed by the
registered holder in person or by the holder's attorney duly authorized in
writing. The date of registration of any Note delivered upon any exchange
or transfer of Notes shall be such that no gain or loss of interest results
from such exchange or transfer.
In case this Note shall at any time become mutilated,
defaced or be destroyed, lost or stolen and this Note or evidence of the
loss, theft or destruction thereof (together with the indemnity hereinafter
referred to and such other documents or proof as may be required in the
premises) shall be delivered to the Registrar, a new Note of like tenor
will be issued by the Issuer in exchange for this Note, but, if this Note
is destroyed, lost or stolen, only upon receipt of evidence satisfactory to
the Registrar and the Issuer that this Note was destroyed or lost or stolen
and, if required, upon receipt also of indemnity satisfactory to each of
them. All expenses and reasonable charges associated with procuring such
indemnity and with the preparation, authentication and delivery of a new
Note shall be borne by the owner of the Note mutilated, defaced, destroyed,
lost or stolen.
The Subordinated Indenture provides that, (a) if an Event of
Default (as defined in the Subordinated Indenture) due to the default in
payment of principal of, premium, if any, or interest on, any series of
debt securities issued under the Subordinated Indenture, including the
series of Subordinated Medium-Term Notes of which this Note forms a part,
or due to the default in the performance or breach of any other covenant or
warranty of the Issuer applicable to the debt securities of such series but
not applicable to all outstanding debt securities issued under the
Subordinated Indenture shall have occurred and be continuing, either the
Trustee or the holders of not less than 25% in principal amount of the debt
securities of each affected series (voting as a single class) may then
declare the principal of all debt securities of all such series and
interest accrued thereon to be due and payable immediately and (b) if an
Event of Default due to a default in the performance of any other of the
covenants or agreements in the Subordinated Indenture applicable to all
outstanding debt securities issued thereunder, including this Note, or due
to certain events of bankruptcy, insolvency and reorganization of the
Issuer, shall have occurred and be continuing, either the Trustee or the
holders of not less than 25% in principal amount of all debt securities
issued under the Subordinated Indenture then outstanding (treated as one
class) may declare the principal of all such debt securities and interest
accrued thereon to be due and payable immediately, but upon certain
conditions such declarations may be annulled and past defaults may be
waived (except a continuing default in payment of principal (or premium, if
any) or interest on such debt securities) by the holders of a majority in
principal amount of the debt securities of all affected series then
outstanding.
The Subordinated Indenture permits the Issuer and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the debt securities of all series issued
under the Subordinated Indenture then outstanding and affected (voting as
one class), to execute supplemental indentures adding any provisions to or
changing in any manner the rights of the holders of each series so
affected; provided that the Issuer and the Trustee may not, without the
consent of the holder of each outstanding debt security affected thereby,
(a) extend the final maturity of any such debt security, or reduce the
principal amount thereof, or reduce the rate or extend the time of payment
of interest thereon, or reduce any amount payable on redemption thereof, or
change the currency of payment thereof, or impair or affect the rights of
any holder to institute suit for the payment thereof without the consent of
the holder of each debt security so affected or (b) reduce the aforesaid
percentage in principal amount of debt securities the consent of the
holders of which is required for any such supplemental indenture; provided,
however, that neither this Note nor the Subordinated Indenture may be
amended to alter the subordination provisions hereof or thereof without the
written consent of each holder of Senior Indebtedness then outstanding that
would be adversely affected thereby.
Except as set forth below, if the principal of, premium, if
any, or interest on, this Note is payable in a Specified Currency other
than U.S. dollars and such Specified Currency is not available to the
Issuer for making payments hereon due to the imposition of exchange
controls or other circumstances beyond the control of the Issuer or is no
longer used by the government of the country issuing such currency or for
the settlement of transactions by public institutions within the
international banking community, then the Issuer will be entitled to
satisfy its obligations to the holder of this Note by making such payments
in U.S. dollars on the basis of the Market Exchange Rate on the date of
such payment or, if the Market Exchange Rate is not available on such date,
as of the most recent practicable date; provided, however, that if such
Specified Currency is replaced by a single European currency (expected to
be named the Euro), the payment of principal of, premium, if any, or
interest on any Note denominated in such currency shall be effected in the
new single European currency in conformity with legally applicable measures
taken pursuant to, or by virtue of, the treaty establishing the European
Community (the "EC"), as amended by the treaty on European Union (as so
amended, the "Treaty"). Any payment made under such circumstances in U.S.
dollars (or, if applicable, such new single European currency) where the
required payment is in a Specified Currency other than U.S. dollars will
not constitute an Event of Default.
Subject to the provisions below, the value of the ECU, in
which the Notes may be denominated or may be payable, is equal to the value
of the ECU that is from time to time used as the unit of account of the EC.
If the ECU becomes a currency in its own right in accordance with the
Treaty, all references to ECU in the Notes shall be construed as references
to such currency.
With respect to each due date for the payment of principal
of, or interest on, the Notes on or after the first business day in
Brussels on which the ECU ceases to be used as the unit of account of the
EC, and has not become a currency in its own right replacing all or some of
the currencies of the member States of the EC, the Company shall choose a
substitute currency (the "Chosen Currency"), which may be any currency
which was, on the last day on which the ECU was used as the unit of account
of the EC, a component currency of the ECU or U.S. dollars, in which all
payments due on or after that date with respect to the Notes and coupons
shall be made. Notice of the Chosen Currency so selected shall be provided
by first class mail to each holder at the address of such holder which
appears on the books maintained by the Registrar and to the Paying Agent.
The amount of each payment in such Chosen Currency shall be computed on the
basis of the equivalent of the ECU in that currency, determined as
described below, as of the fourth business day in Brussels prior to the
date on which such payment is due.
On the first business day in Brussels on which the ECU
ceases to be used as the unit of account of the EC, and has not become a
currency in its own right replacing all or some of the currencies of the
member States of the EC, the Company shall select a Chosen Currency in
which all payments with respect to Notes and coupons having a due date
prior thereto but not yet presented for payment with respect to Notes and
coupons having a due date prior thereto but not yet presented for payment
are to be made. The amount of each payment in such Chosen Currency shall
be computed on the basis of the equivalent of the ECU in that currency,
determined as described below, as of such first business day.
The equivalent of the ECU in the relevant Chosen Currency as
of any date (the "Day of Valuation") shall be determined by, or on behalf
of, the Exchange Rate Agent on the following basis. The amounts and
components composing the ECU for this purpose (the "Components") shall be
the amounts and components that composed the ECU as of the last date on
which the ECU was used as the unit of account of the EC. The equivalent of
the ECU in the Chosen Currency shall be calculated by, first, aggregating
the U.S. dollar equivalents of the Components; and then, in the case of a
Chosen Currency other than U.S. dollars, using the rate used for
determining the U.S. dollar equivalent of the Components in the Chosen
Currency as set forth below, calculating the equivalent in the Chosen
Currency of such aggregate amount in U.S. dollars.
[The "Exchange Rate Agent" shall be Morgan Stanley & Co.
Incorporated, unless otherwise indicated on the face hereof.]
The U.S. dollar equivalent of each of the Components shall
be determined by, or on behalf of, the Exchange Rate Agent on the basis of
the middle spot delivery quotations prevailing at 2:30 p.m., Brussels time,
on the Day of Valuation, as obtained by, or on behalf of, the Exchange Rate
Agent from one or more major banks, as selected by the Company, in the
country of issue of the component currency in question.
If for any reason no direct quotations are available for a
Component as of a Day of Valuation from any of the banks selected for this
purpose, in computing the U.S. dollar equivalent of such Component, the
Exchange Rate Agent shall (except as provided below) use the most recent
direct quotations for such Component obtained by it or on its behalf,
provided that such quotations were prevailing in the country of issue not
more than two Business Days before such Day of Valuation. If such most
recent quotations were so prevailing in the country of issue more than two
Business Days before such Day of Valuation, the Exchange Rate Agent shall
determine the U.S. dollar equivalent of such Component on the basis of
cross rates derived from the middle spot delivery quotations for such
component currency and for the U.S. dollar prevailing at 2:30 p.m.,
Brussels time, on such Day of Valuation, as obtained by, or on behalf of,
the Exchange Rate Agent from one or more major banks, as selected by the
Company, in a country other than the country of issue of such component
currency. Notwithstanding the foregoing, the Exchange Rate Agent shall
determine the U.S. dollar equivalent of such Component on the basis of such
cross rates if the Company or such agent judges that the equivalent so
calculated is more representative than the U.S. dollar equivalent
calculated as provided in the first sentence of this paragraph. Unless
otherwise specified by the Company, if there is more than one market for
dealing in any component currency by reason of foreign exchange regulations
or for any other reason, the market to be referred to in respect of such
currency shall be that upon which a non-resident issuer of securities
denominated in such currency would purchase such currency in order to make
payments in respect of such securities.
Payments in the Chosen Currency will be made at the
specified office of a paying agent in the country of the Chosen Currency,
or, if none, or at the option of the holder, at the specified office of any
Paying Agent either by a check drawn on, or by transfer to an account
maintained by the holder with, a bank in the principal financial center of
the country of the Chosen Currency.
All determinations referred to above made by, or on behalf
of, the Company or by, or on behalf of, the Exchange Rate Agent shall be at
such entity's sole discretion and shall, in the absence of manifest error,
be conclusive to the extent permitted by law for all purposes and binding
on the holder of this Note and coupons, if any.
So long as this Note shall be outstanding, the Issuer will
cause to be maintained an office or agency for the payment of the principal
of and premium, if any, and interest on this Note as herein provided in the
Borough of Manhattan, The City of New York, and an office or agency in said
Borough of Manhattan for the registration, transfer and exchange as
aforesaid of the Notes. The Issuer may designate other agencies for the
payment of said principal, premium and interest at such place or places
(subject to applicable laws and regulations) as the Issuer may decide. So
long as there shall be such an agency, the Issuer shall keep the Trustee
advised of the names and locations of such agencies, if any are so
designated.
With respect to moneys paid by the Issuer and held by the
Trustee or any Paying Agent for the payment of the principal of or interest
or premium, if any, on any Notes that remain unclaimed at the end of two
years after such principal, interest or premium shall have become due and
payable (whether at maturity or upon call for redemption or otherwise), (i)
the Trustee or such Paying Agent shall notify the holders of such Notes
that such moneys shall be repaid to the Issuer and any person claiming such
moneys shall thereafter look only to the Issuer for payment thereof and
(ii) such moneys shall be so repaid to the Issuer. Upon such repayment all
liability of the Trustee or such Paying Agent with respect to such moneys
shall thereupon cease, without, however, limiting in any way any obligation
that the Issuer may have to pay the principal of or interest or premium, if
any, on this Note as the same shall become due.
No provision of this Note or of the Subordinated Indenture
shall alter or impair the obligation of the Issuer, which is absolute and
unconditional, to pay the principal of, premium, if any, and interest on
this Note at the time, place, and rate, and in the coin or currency, herein
prescribed unless otherwise agreed between the Issuer and the registered
holder of this Note.
Prior to due presentment of this Note for registration of
transfer, the Issuer, the Trustee and any agent of the Issuer or the
Trustee may treat the holder in whose name this Note is registered as the
owner hereof for all purposes, whether or not this Note be overdue, and
none of the Issuer, the Trustee or any such agent shall be affected by
notice to the contrary.
No recourse shall be had for the payment of the principal
of, premium, if any, or the interest on this Note, for any claim based
hereon, or otherwise in respect hereof, or based on or in respect of the
Subordinated Indenture or any indenture supplemental thereto, against any
incorporator, shareholder, officer or director, as such, past, present or
future, of the Issuer or of any successor corporation, either directly or
through the Issuer or any successor corporation, whether by virtue of any
constitution, statute or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the
acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
This Note shall for all purposes be governed by, and
construed in accordance with, the laws of the State of New York.
All terms used in this Note which are defined in the
Subordinated Indenture and not otherwise defined herein shall have the
meanings assigned to them in the Subordinated Indenture.
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written
out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as
tenants in common
UNIF GIFT MIN ACT - ________________________ Custodian _______________
(Cust) (Minor)
Under Uniform Gifts to Minors Act ____________________________________
(State)
Additional abbreviations may also be used though not in the
above list.
___________________
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto
________________________________________
[PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE]
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
[PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE]
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing such person attorney to transfer such note on the books of the
Issuer, with full power of substitution in the premises.
Dated:___________________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Note in every particular without
alteration or enlargement or any change whatsoever.
REQUEST TO EXCHANGE
The undersigned hereby requests to exchange the within Note (or
the portion thereof specified below) with the effect provided in the within
Note by surrendering the within Note to the Paying Agent at The Chase
Manhattan Bank (formerly known as Chemical Bank), 55 Water Street, New York,
New York 10041, Attention: Corporate Trustee Administration Department, or
such other address of which the Issuer shall from time to time notify the
holders of the Notes, together with this form of "Request to Exchange" duly
completed by the holder of the within Note.
If less than the entire principal amount of the within Note is
requested to be exchanged, specify the portion thereof (which shall be
$100,000 or an integral multiple of $1,000 in excess thereof) to be exchanged
$______.
Dated:___________________________ -------------------------------
NOTICE: The signature on this
Request to Exchange must
correspond with the name as
written upon the face of the
within Note in every particular,
without alteration or enlargement
or any change whatever.
SCHEDULE I
SCHEDULE OF EXCHANGES
The initial principal amount of this Note is ________________.
The following exchanges of a portion of this Note for an interest in the
Renewable Note have been made:
[FORM OF FACE OF SECURITY]
Subordinated Variable Rate Renewable Note
REGISTERED REGISTERED
No. SUBVRR Cusip
[PRINCIPAL AMOUNT],
as modified by
Schedule I
Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the issuer or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of Cede & Co. or
such other name as requested by an authorized representative of The Depository
Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, since
the registered owner hereof, Cede & Co., has an interest herein.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID," "ORIGINAL YIELD TO MATURITY"
AND "INITIAL ACCRUAL PERIOD OID" (COMPUTED UNDER THE APPROXIMATE METHOD)
SET FORTH BELOW HAVE BEEN COMPLETED SOLELY FOR THE PURPOSES OF APPLYING
THE FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
SUBORDINATED VARIABLE RATE RENEWABLE
GLOBAL MEDIUM-TERM NOTE, SERIES C
Morgan Stanley, Dean Witter, Discover & Co., a Delaware
corporation (together with its successors and assigns, the "Issuer"), for
value received, hereby promises to pay to
, or registered assignees, the principal sum specified in Schedule I hereto on
the Initial Maturity Date specified above or, to the extent the maturity date
of any portion of the principal amount of this Note is extended in accordance
with the procedures set forth below to an Extended Maturity Date, as defined
below, on such Extended Maturity Date (except to the extent such portion is
redeemed prior to such Extended Maturity Date) and to pay interest on the
principal amount hereof outstanding from time to time, from the Interest
Accrual Date specified above at a rate per annum equal to the Initial Interest
Rate specified above until the Initial Interest Reset Date specified above,
and thereafter at a rate per annum determined in accordance with the
provisions specified on the reverse hereof until (a) the principal hereof is
paid or duly made available for payment or (b) this Note has been cancelled
in accordance with the provisions set forth below.
The Issuer will pay interest in arrears monthly, quarterly,
semiannually or annually as specified above as the Interest Payment Period
on each Interest Payment Date (as specified above), commencing with the
first Interest Payment Date next succeeding the Interest Accrual Date
specified above, and on the Initial Maturity Date or the Extended Maturity
Date, as the case may be (each, a "Maturity Date"), or any redemption date;
provided, however, if the Interest Accrual Date occurs between a Record
Date, as defined below, and the next succeeding Interest Payment Date,
interest payments will commence on the second Interest Payment Date
succeeding the Interest Accrual Date to the registered holder of this Note
on the Record Date with respect to such second Interest Payment Date;
provided, further, that if an Interest Payment Date or the Maturity Date or
redemption date would fall on a day that is not a Business Day, as defined
on the reverse hereof, such Interest Payment Date, Maturity Date or
redemption date shall be the following day that is a Business Day, except
that if the Base Rate specified above is LIBOR and such next Business Day
falls in the next calendar month, the Interest Payment Date, Maturity Date
or redemption date shall be the immediately preceding day that is a
Business Day. As used herein, "Extended Maturity Date" means the Interest
Payment Date occurring in the month six months after the Initial Maturity
Date and each Interest Payment Date occurring in the month six months after
the immediately preceding Extended Maturity Date.
Interest on this Note will accrue from and including the
most recent date to which interest has been paid or duly provided for, or,
if no interest has been paid or duly provided for, from the Interest
Accrual Date, until (a) the principal hereof has been paid or duly made
available for payment or (b) this Note has been cancelled in accordance
with the provisions set forth below. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will,
subject to certain exceptions described herein, be paid to the person in
whose name this Note (or one or more predecessor Notes) is registered at
the close of business on the date 15 calendar days prior to such Interest
Payment Date (whether or not a Business Day) (each such date a "Record
Date"); provided, however, that interest payable on the Maturity Date (or
any redemption date) shall be payable to the person to whom the principal
hereof shall be payable.
On the Interest Payment Date occurring in the month six
months prior to the Initial Maturity Date (the "Initial Election Date"),
the maturity of this Note shall be extended to the Extended Maturity Date
occurring in the month twelve months following the Initial Election Date
and on the Interest Payment Date occurring in the month six months prior to
each Extended Maturity Date (an "Election Date," which term shall include
the Initial Election Date), the maturity of this Note shall be extended to
the Extended Maturity Date occurring in the month twelve months after such
Election Date, unless, in any such case, the holder hereof elects to
terminate the automatic extension of the maturity hereof or of any portion
hereof having a principal amount of $1,000 or any larger multiple of $1,000
in excess thereof by delivering to the Paying Agent, as defined on the
reverse hereof, not less than 23 nor more than 30 days prior to the
applicable Election Date (i) this Note with the form entitled "Option to
Elect Termination of Automatic Extension" below duly completed or (ii) a
telegram, telex, facsimile transmission or a letter from a member of a
national securities exchange or the National Association of Securities
Dealers, Inc. or a commercial bank or a trust company in the United States
of America setting forth the name of the holder of this Note, the principal
amount hereof, the certificate number of this Note or a description of this
Note's tenor or terms, a statement that the option to elect termination of
automatic extension is being exercised thereby, the principal amount hereof
with respect to which such option is being exercised and a guarantee that
this Note with the form entitled "Option to Elect Termination of Automatic
Extension" below duly completed will be received by the Paying Agent no
later than five Business Days after the date of such telegram, telex,
facsimile transmission or letter; provided that such telegram, telex,
facsimile transmission or letter shall not be effective unless this Note
and such form duly completed are received by the Paying Agent by such fifth
Business Day. Such option may be exercised by the holder for less than the
entire principal amount hereof provided that the principal amount for which
such option is not exercised is at least $1,000 or any larger amount that
is an integral multiple of $1,000. The exercise of such option may be
withdrawn before or after the applicable Election Date, pursuant to the
procedures described on the reverse hereof and in a Short-Term Note (as
defined below). If the option to terminate the automatic extension of the
maturity of any portion hereof is exercised and not withdrawn prior to the
applicable Election Date in accordance with such procedures, a new Note or
Notes in the form attached hereto as Exhibit A (each, a "Short-Term Note")
for the principal amount hereof for which such option was exercised and not
withdrawn shall be issued on such Election Date in the name of the holder
hereof and Schedule I hereto shall be annotated as of such Election Date to
reflect the corresponding decrease in the principal amount hereof. Each
such Short-Term Note shall have as its "Maturity Date" (as such term is
used in such Short-Term Note) the Interest Payment Date occurring in the
month six months after such Election Date and shall have as its Spread or
Spread Multiplier, as the case may be, the Spread or Spread Multiplier
applicable to this Note on the day prior to the issuance of such Short-Term
Note. If any exercise of the option to terminate the automatic extension
of the maturity hereof causes the principal amount of this Note to be
reduced to zero, this Note shall nevertheless not be cancelled until the
date on which all outstanding Short-Term Notes issued in exchange for this
Note shall have been paid in full.
Notwithstanding the foregoing, the maturity of this Note
shall not be extended beyond the Final Maturity Date specified above.
If the holder of any Short-Term Note exchanges all or a
portion of such Short-Term Note for an interest in this Note in accordance
with the terms of such Short-Term Note, Schedule I hereto shall be
annotated on the date of such exchange to reflect the corresponding
increase in the principal amount hereof.
Payment of the principal of this Note, any premium and the
interest due at the Maturity Date (or any redemption date), unless this
Note is denominated in a Specified Currency other than U.S. dollars and is
to be paid in whole or in part in such Specified Currency, will be made in
immediately available funds upon surrender of this Note at the office or
agency of the Paying Agent maintained for that purpose in the Borough of
Manhattan, The City of New York, or at the office or agency of such other
paying agent as the Issuer may determine in U.S. dollars. U.S. dollar
payments of interest, other than interest due at maturity or any date of
redemption, will be made by United States dollar check mailed to the
address of the person entitled thereto as such address shall appear in the
Note register. A holder of U.S. $10,000,000 or more in aggregate principal
amount of Notes having the same Interest Payment Date, the interest on
which is payable in U.S. dollars, will be entitled to receive payments of
interest, other than interest due at maturity or any date of redemption, by
wire transfer of immediately available funds if appropriate wire transfer
instructions have been received by the Paying Agent in writing not less
than 15 calendar days prior to the applicable Interest Payment Date.
If this Note is denominated in a Specified Currency other
than U.S. dollars, and the holder does not elect (in whole or in part) to
receive payment in U.S. dollars pursuant to the next succeeding paragraph,
payments of interest, principal or any premium with regard to this Note
will be made by wire transfer of immediately available funds to an account
maintained by the holder hereof with a bank located outside the United
States if appropriate wire transfer instructions have been received by the
Paying Agent in writing not less than 15 calendar days prior to the
applicable payment date, provided that, if such wire transfer instructions
are not received, such payments will be made by check payable in such
Specified Currency mailed to the address of the person entitled thereto as
such address shall appear in the Note register, and provided, further, that
payment of the principal of this Note, any premium and the interest due at
maturity (or on any redemption or repayment date) will be made upon
surrender of this Note at the office or agency referred to in the preceding
paragraph.
If so indicated on the face hereof, the holder of this Note,
if denominated in a Specified Currency other than U.S. dollars, may elect
to receive all or a portion of payments on this Note in U.S. dollars by
transmitting a written request to the Paying Agent, on or prior to the
Record Date or at least ten Business Days prior to the Maturity Date or any
redemption date, as the case may be. Such election shall remain in effect
unless such request is revoked by written notice to the Paying Agent as to
all or a portion of payments on this Note at least five Business Days prior
to such Record Date or at least ten days prior to the Maturity Date or any
redemption date, as the case may be.
If the holder elects to receive all or a portion of payments
of principal of and any premium and interest on this Note, if denominated
in a Specified Currency other than U.S. dollars, in U.S. dollars, the
Exchange Rate Agent will convert such payments into U.S. dollars. In the
event of such an election, payment in respect of this Note will be based
upon the exchange rate as determined by the Exchange Rate Agent based on
the highest bid quotation in The City of New York received by such Exchange
Rate Agent at approximately 11:00 a.m., New York City time, on the second
Business Day preceding the applicable payment date from three recognized
foreign exchange dealers (one of which may be the Exchange Rate Agent
unless such Exchange Rate Agent is an affiliate of the Issuer), for the
purchase by the quoting dealer of U.S. dollars for the Specified Currency
for settlement on such payment date in the amount of the Specified Currency
payable in the absence of such an election to such holder and at which the
applicable dealer commits to execute a contract. If such bid quotations
are not available, such payment will be made in the Specified Currency.
All currency exchange costs will be borne by the holder of this Note by
deductions from such payments.
If this Note ceases to be held by The Depository Trust
Company or its successor or the nominee of The Depository Trust Company or
its successor, this Note will be exchanged for one or more Notes of
authorized denominations having an aggregate principal amount equal to the
principal amount of this Note as then shown on Schedule I hereto, which new
Notes shall otherwise have the same terms as this Note, except that the
provisions of such new Notes regarding the termination of the automatic
extension of the maturity thereof shall be modified to the extent
appropriate for notes not required to be held in a securities depositary;
provided that the respective rights and obligations of the Issuer and the
holders of such new Notes shall be the same in all material respects as the
respective rights and obligations of the Issuer and the holder of this
Note. Such new Notes shall have stated principal amounts and shall be
registered in the names of the persons then having a beneficial interest in
this Note or in the names of their nominees.
Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place, including,
without limitation, the provisions relating to the subordination of this
Note to the Issuer's Senior Indebtedness, as defined on the reverse hereof.
Unless the certificate of authentication hereon has been
executed by the Authenticating Agent referred to on the reverse hereof by
manual signature, this Note shall not be entitled to any benefit under the
Subordinated Indenture, as defined on the reverse hereof, or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly
executed.
DATED: MORGAN STANLEY, DEAN WITTER,
DISCOVER & CO.
By:_____________________________
Name:
Title:
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Notes referred
to in the within-mentioned
Subordinated Indenture.
THE CHASE MANHATTAN BANK,
as Authentication Agent
By:_____________________________
Authorized Officer
[REVERSE OF SECURITY]
This Note is one of a duly authorized issue of the Subordinated
Global Medium-Term Notes, Series C, having maturities more than nine months
from the date of issue (the "Notes") of the Issuer. The Notes are issuable
under a Subordinated Indenture, dated as of April 15, 1989, as supplemented
by a First Supplemental Subordinated Indenture dated as of May 15, 1991 and a
Second Supplemental Subordinated Indenture dated as of April 15, 1996 between
Morgan Stanley Group Inc. (as predecessor of the Issuer) and The First
National Bank of Chicago, as Trustee (the "Trustee," which term includes any
successor trustee under the Subordinated Indenture as further supplemented by
a Third Supplemental Subordinated Indenture dated as of June 1, 1997 between
the Issuer and the Trustee (as so supplemented, the "Subordinated
Indenture"), to which Subordinated Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities of the
Issuer, the Trustee and holders of the Notes and the terms upon which the
Notes are, and are to be, authenticated and delivered. The Trustee has
appointed The Chase Manhattan Bank (formerly known as Chemical Bank) as
Authenticating Agent (the "Authenticating Agent," which term includes any
successor authenticating agent appointed by the Trustee) with respect to
the Notes, and the Issuer has appointed The Chase Manhattan Bank (formerly
known as Chemical Bank) at its corporate trust office in The City of New
York as the paying agent (the "Paying Agent," which term includes any
additional or successor Paying Agent appointed by the Issuer) with respect
to the Notes. The terms of individual Notes may vary with respect to
interest rates, interest rate formulas, issue dates, maturity dates, or
otherwise, all as provided in the Subordinated Indenture. To the extent
not inconsistent herewith, the terms of the Subordinated Indenture are
hereby incorporated by reference herein.
Unless otherwise provided on the face hereof, this Note will
not be subject to any sinking fund and, unless otherwise provided on the face
hereof in accordance with the provisions of the following paragraph, will not
be redeemable prior to maturity.
If so indicated on the face of this Note, this Note may be
redeemed in whole or in part at the option of the Issuer on the Redemption
Dates specified on the face hereof on the terms set forth on the face hereof,
together with interest accrued and unpaid hereon to the date of redemption.
Notice of redemption shall be mailed to the registered holders of the Notes
designated for redemption at their addresses as the same shall appear on the
Note register not less than 180 nor more than 210 days prior to the date fixed
for redemption, subject to all the conditions and provisions of the
Subordinated Indenture. In the event of redemption of this Note in part only,
a new Note or Notes for the amount of the unredeemed portion hereof shall be
issued in the name of the holder hereof upon the cancellation hereof.
This Note will bear interest at the rate determined in
accordance with the applicable provisions below by reference to the Base Rate
shown on the face hereof based on the Index Maturity, if any, shown on the
face hereof (i) plus or minus the Spread, if any, or (ii) multiplied by the
Spread Multiplier, if any, (a) specified on the face hereof, (b) if the Spread
or Spread Multiplier is reset in accordance with the procedures specified
below, then as determined pursuant to such procedures, or (c) if a holder of a
Short-Term Note has exchanged such Note for an interest in this Note in
response to an Optional Exchange Notice (as defined in such Short-Term Note),
then as set forth in such Optional Exchange Notice. Commencing with the
Initial Interest Reset Date specified on the face hereof, the rate at which
interest on this Note is payable shall be reset as of each Interest Reset Date
(as used herein, the term "Interest Reset Date" shall include the Initial
Interest Reset Date). The determination of the rate of interest at which this
Note will be reset on any Interest Reset Date shall be made on the Interest
Determination Date (as defined below) pertaining to such Interest Reset Date.
The Interest Reset Dates will be the Interest Reset Dates specified on the
face hereof; provided, however, that (a) the interest rate in effect for the
period from the Interest Accrual Date to the Initial Interest Reset Date
specified on the face hereof will be the Initial Interest Rate and (b) unless
otherwise specified on the face hereof, the interest rate in effect for the
ten calendar days immediately prior to maturity, redemption or repayment will
be that in effect on the tenth calendar day preceding such maturity,
redemption or repayment date. If any Interest Reset Date would otherwise be a
day that is not a Business Day, such Interest Reset Date shall be postponed to
the next succeeding day that is a Business Day, except that if the Base Rate
specified on the face hereof is LIBOR and such Business Day is in the next
succeeding calendar month, such Interest Reset Date shall be the next
preceding Business Day. As used herein, "Business Day" means any day, other
than a Saturday or Sunday, that is neither a legal holiday nor a day on which
banking institutions are authorized or required by law or regulation to close
in The City of New York and, with respect to Notes bearing interest calculated
by reference to LIBOR, in the City of London.
If so indicated on the face of this Note, the Issuer has the
option to reset the Spread or Spread Multiplier on this Note as of any
Election Date. Such option shall include the right to reset the Maximum
Interest Rate or Minimum Interest Rate on this Note. The Issuer may exercise
such option by notifying the Paying Agent of such exercise at least 45 but not
more than 60 days prior to an Election Date, such notice to be accompanied by
the form of the Reset Notice referred to below. Not later than 38 days prior
to such Election Date, the Paying Agent will mail to the holder hereof a
notice (the "Reset Notice"), first class mail, postage prepaid, setting forth
(a) the election of the Issuer to reset the Spread or Spread Multiplier and
(b) such new Spread or Spread Multiplier, together with any new Maximum
Interest Rate or Minimum Interest Rate.
If the face hereof indicates that the Issuer has the option to
reset the Spread or Spread Multiplier on this Note, then, if the holder of
this Note elects to terminate the automatic extension of the maturity hereof
or any portion hereof as of any Election Date, the Issuer may, not later than
the later of (a) the twentieth calendar day prior to such Election Date and
(b) the first Business Day following the twenty-third calendar day prior to
such Election Date, propose a new Spread or Spread Multiplier or revoke a
Spread or Spread Multiplier previously set forth in a Reset Notice and propose
a higher Spread or Spread Multiplier, in either case together with any new
Maximum Interest Rate or Minimum Interest Rate, by causing the Paying Agent to
send notice thereof, to the holder of this Note by first class mail, postage
prepaid, or by such other means as shall be agreed between the Issuer and the
Paying Agent. If the Issuer has proposed a new or higher Spread or Spread
Multiplier as described above, the holder hereof may withdraw his election to
terminate the automatic extension of the maturity hereof or any portion hereof
by giving written notice to such effect to the Paying Agent not less than 16
days prior to such Election Date (or if such sixteenth day is not a Business
Day, on the immediately preceding Business Day), in which case such new or
higher Spread or Spread Multiplier, together with any new Maximum Interest
Rate or Minimum Interest Rate, will apply to the entire principal amount of
this Note from such Election Date until the Maturity Date or until the Spread
or Spread Multiplier is further reset by the Issuer pursuant to the provisions
hereof or of a Short-Term Note.
The Interest Determination Date pertaining to an Interest Reset
Date for Notes bearing interest calculated by reference to the CD Rate,
Commercial Paper Rate, Federal Funds Rate, Prime Rate and CMT Rate will be the
second Business Day next preceding such Interest Reset Date. The Interest
Determination Date pertaining to an Interest Reset Date for Notes bearing
interest calculated by reference to LIBOR shall be the second London Banking
Day preceding such Interest Reset Date, except that the Interest Determination
Date pertaining to an Interest Reset Date for a LIBOR Note for which the Index
Currency is pounds sterling will be such Interest Reset Date. As used herein,
"London Banking Day" means any day on which dealings in deposits in the Index
Currency (as defined herein) are transacted in the London interbank market.
The Interest Determination Date pertaining to an Interest Reset Date for Notes
bearing interest calculated by reference to the Treasury Rate shall be the day
of the week in which such Interest Reset Date falls on which Treasury bills
normally would be auctioned; provided, however, that if as a result of a legal
holiday an auction is held on the Friday of the week preceding such Interest
Reset Date, the related Interest Determination Date shall be such preceding
Friday; and provided, further, that if an auction shall fall on any Interest
Reset Date, then the Interest Reset Date shall instead be the first Business
Day following the date of such auction.
Unless otherwise specified on the face hereof, the "Calculation
Date" pertaining to an Interest Determination Date will be the earlier of (i)
the tenth calendar day after such Interest Determination Date or, if such day
is not a Business Day, the next succeeding Business Day, or (ii) the Business
Day preceding the applicable Interest Payment Date or Maturity Date (or, with
respect to any principal amount to be redeemed or repaid, any redemption or
repayment date), as the case may be.
Determination of CD Rate. If the Base Rate specified on the
face hereof is the CD Rate, the CD Rate with respect to this Note shall be
determined on each Interest Determination Date and shall be the rate on
such date for negotiable certificates of deposit having the Index Maturity
specified on the face hereof as published by the Board of Governors of the
Federal Reserve System in "Statistical Release H.15(519), Selected Interest
Rates," or any successor publication of the Board of Governors of the
Federal Reserve System ("H.15(519)"), under the heading "CDs (Secondary
Market)," or, if not so published by 9:00 A.M., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, the CD
Rate will be the rate on such Interest Determination Date for negotiable
certificates of deposit of the Index Maturity specified on the face hereof
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" ("Composite Quotations") under the heading "Certificates of
Deposit." If neither of such rates is published by 3:00 P.M., New York City
time, on such Calculation Date, then the CD Rate on such Interest
Determination Date will be calculated by the Calculation Agent referred to
on the face hereof and will be the arithmetic mean of the secondary market
offered rates as of 10:00 A.M., New York City time, on such Interest
Determination Date for certificates of deposit in the denomination of
$5,000,000 with a remaining maturity closest to the Index Maturity
specified on the face hereof of three leading nonbank dealers in negotiable
U.S. dollar certificates of deposit in The City of New York selected by the
Calculation Agent for negotiable certificates of deposit of major United
States money center banks of the highest credit standing in the market for
negotiable certificates of deposit; provided, however, that if the dealers
selected as aforesaid by the Calculation Agent are not quoting as mentioned
in this sentence, the CD Rate in effect for the applicable period will be
the same as the CD Rate for the immediately preceding Interest Reset Period
(or, if there was no such Interest Reset Period, the rate of interest
payable hereon shall be the Initial Interest Rate).
Determination of Commercial Paper Rate. If the Base Rate
specified on the face hereof is the Commercial Paper Rate, the Commercial
Paper Rate with respect to this Note shall be determined on each Interest
Determination Date and shall be the Money Market Yield (as defined herein) of
the rate on such date for commercial paper having the Index Maturity specified
on the face hereof, as such rate shall be published in H.15(519) under the
heading "Commercial Paper," or if not so published prior to 9:00 A.M., New
York City time, on the Calculation Date pertaining to such Interest
Determination Date, the Commercial Paper Rate shall be the Money Market Yield
of the rate on such Interest Determination Date for commercial paper of the
Index Maturity specified on the face hereof as published in Composite
Quotations under the heading "Commercial Paper." If neither of such rates is
published by 3:00 P.M., New York City time, on such Calculation Date, then the
Commercial Paper Rate shall be the Money Market Yield of the arithmetic mean
of the offered rates as of 11:00 A.M., New York City time, on such Interest
Determination Date of three leading dealers in commercial paper in The City of
New York selected by the Calculation Agent for commercial paper of the Index
Maturity specified on the face hereof, placed for an industrial issuer whose
bond rating is "AA," or the equivalent, from a nationally recognized rating
agency; provided, however, that if the dealers selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this sentence, the
Commercial Paper Rate in effect for the applicable period will be the same as
the Commercial Paper Rate for the immediately preceding Interest Reset Period
(or, if there was no such Interest Reset Period, the rate of interest payable
hereon shall be the Initial Interest Rate).
"Money Market Yield" shall be the yield calculated in
accordance with the following formula:
D x 360
Money Market Yield = ------------- x 100
360 - (D x M)
where "D" refers to the applicable per annum rate for
commercial paper quoted on a bank discount basis and expressed as a decimal
and "M" refers to the actual number of days in the Index Maturity specified on
the face hereof.
Determination of Federal Funds Rate. If the Base Rate specified
on the face hereof is the Federal Funds Rate, the Federal Funds Rate with
respect to this Note shall be determined on each Interest Determination Date
and shall be the rate on such date for Federal Funds as published in H.15(519)
under the heading "Federal Funds (Effective)," or, if not so published by 9:00
A.M., New York City time, on the Calculation Date pertaining to such Interest
Determination Date, the Federal Funds Rate will be the rate on such Interest
Determination Date as published in Composite Quotations under the heading
"Federal Funds/Effective Rate." If neither of such rates is published by 3:00
P.M., New York City time, on such Calculation Date, the Federal Funds Rate for
such Interest Determination Date will be calculated by the Calculation Agent
and will be the arithmetic mean of the rates for the last transaction in
overnight Federal funds as of 11:00 A.M., New York City time, on such Interest
Determination Date arranged by three leading brokers in Federal funds
transactions in The City of New York selected by the Calculation Agent;
provided, however, that if the brokers selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this sentence, the Federal
Funds Rate in effect for the applicable period will be the same as the Federal
Funds Rate for the immediately preceding Interest Reset Period (or, if there
was no such Interest Reset Period, the rate of interest payable hereon shall
be the Initial Interest Rate).
Determination of LIBOR. If the Base Rate specified on the face
hereof is LIBOR, LIBOR with respect to this Note shall be determined on each
Interest Determination Date as follows:
(i) As of the Interest Determination Date, the Calculation
Agent will determine (a) if "LIBOR Reuters" is specified as the Reporting
Service on the face hereof, the arithmetic mean of the offered rates
(unless the specified Designated LIBOR Page (as defined below) by its terms
provides only for a single rate, in which case such single rate shall be
used) for deposits in the London interbank market in the Index Currency for
the period of the Index Maturity specified on the face hereof, commencing
on the second London Banking Day immediately following such Interest
Determination Date, which appear on the Designated LIBOR Page at
approximately 11:00 a.m., London time, on such Interest Determination Date,
if at least two such offered rates appear (unless, as aforesaid, only a
single rate is required) on such Designated LIBOR Page, or (b) if "LIBOR
Telerate" is specified as the Reporting Service on the face hereof, the
rate for deposits in the Index Currency for the period of the Index
Maturity, each as designated on the face hereof, commencing on the second
London Banking Day following such Interest Determination Date (or, if
pounds sterling is the Index Currency, commencing on such Interest
Determination Date), that appears on the Designated LIBOR Page at
approximately 11:00 a.m., London time, on such Interest Determination Date.
If fewer than two offered rates appear (if "LIBOR Reuters" is specified as
the Reporting Service on the face hereof and calculation of LIBOR is based
on the arithmetic mean of the offered rates) or if no rate appears (if the
Reporting Service on the face hereof specifies either (x) "LIBOR Reuters"
and the Designated LIBOR Page by its terms provides only for a single rate
or (y) "LIBOR Telerate"), LIBOR in respect of that Interest Determination
Date will be determined as if the parties had specified the rate described
in (ii) below.
(ii) With respect to an Interest Determination Date on which
fewer than two offered rates appear (if "LIBOR Reuters" is specified as the
Reporting Service on the face hereof and calculation of LIBOR is based on
the arithmetic mean of the offered rates) or no rate appears (if the
Reporting Service on the face hereof specifies either (x) "LIBOR Reuters"
and the Designated LIBOR Page by its terms provides only for a single rate
or (y) "LIBOR Telerate"), the Calculation Agent will request the principal
London offices of each of four major reference banks in the London
interbank market, as selected by the Calculation Agent (after consultation
with the Issuer), to provide the Calculation Agent with its offered
quotations for deposits in the Index Currency for the period of the Index
Maturity specified on the face hereof, commencing on the second London
Banking Day immediately following such Interest Determination Date (or, if
pounds sterling is the Index Currency, commencing on such Interest
Determination Date), to prime banks in the London interbank market at
approximately 11:00 a.m., London time, on such Interest Determination Date
and in a principal amount equal to an amount of not less than U.S.$1
million (or the equivalent in the Index Currency(if the Index Currency is
not the U.S. dollar)) that is representative of a single transaction in
such Index Currency in such market at such time. If at least two such
quotations are provided, LIBOR determined on such Interest Determination
Date will be the arithmetic mean of such quotations. If fewer than two
quotations are provided, LIBOR determined on such Interest Determination
Date will be the arithmetic mean of rates quoted at approximately 11:00
a.m. (or such other time specified on the face hereof), in the applicable
principal financial center for the country of the Index Currency on such
Interest Determination Date, by three major banks in such principal
financial center selected by the Calculation Agent (after consultation with
the Issuer) on such Interest Determination Date for loans in the Index
Currency to leading European banks, for the period of the Index Maturity
specified on the face hereof commencing on the second London Banking Day
immediately following such Interest Determination Date (or, if pounds
sterling is the Index Currency, commencing on such Interest Determination
Date) and in a principal amount of not less than U.S.$1 million (or the
equivalent in the Index Currency(if the Index Currency is not the U.S.
dollar)) that is representative of a single transaction in such Index
Currency in such market at such time; provided, however, that if the banks
selected as aforesaid by the Calculation Agent are not quoting rates as
mentioned in this sentence, "LIBOR" for such Interest Reset Period will be
the same as LIBOR for the immediately preceding Interest Reset Period (or,
if there was no such Interest Reset Period, the rate of interest payable on
the LIBOR Notes for which LIBOR is being determined shall be the Initial
Interest Rate). "Index Currency" means the currency (including composite
currencies) specified as Index Currency on the face hereof. If no such
currency is specified as Index Currency on the face hereof, the Index
Currency shall be U.S. dollars. "Designated LIBOR Page" means either (a) if
"LIBOR Reuters" is designated as the Reporting Service on the face hereof,
the display on the Reuters Monitor Money Rates Service for the purpose of
displaying the London interbank rates of major banks for the applicable
Index Currency, or (b) if "LIBOR Telerate" is designated as the Reporting
Service on the face hereof, the display on the Dow Jones Telerate Service
for the purpose of displaying the London interbank rates of major banks for
the applicable Index Currency. If neither LIBOR Reuters nor LIBOR Telerate
is specified as the Reporting Service on the face hereof, LIBOR for the
applicable Index Currency will be determined as if LIBOR Telerate (and, if
the U.S. dollar is the Index Currency, Page 3750) had been specified.
Determination of Prime Rate. If the Base Rate specified on
the face hereof is the Prime Rate, the Prime Rate with respect to this Note
shall be determined on each Interest Determination Date and shall be the
rate set forth in H.15(519) for such date opposite the caption "Bank Prime
Loan." If such rate is not yet published by 9:00 a.m., New York City time,
on the Calculation Date pertaining to such Interest Determination Date, the
Prime Rate for such Interest Determination Date will be the arithmetic mean
of the rates of interest publicly announced by each bank named on the
Reuters Screen USPRIME1 Page (as defined below) as such bank's prime rate
or base lending rate as in effect for such Interest Determination Date as
quoted on the Reuters Screen USPRIME1 Page on such Interest Determination
Date, or, if fewer than four such rates appear on the Reuters Screen
USPRIME1 Page for such Interest Determination Date, the rate shall be the
arithmetic mean of the prime rates quoted on the basis of the actual number
of days in the year divided by 360 as of the close of business on such
Interest Determination Date by at least two of the three major money center
banks in The City of New York selected by the Calculation Agent from which
quotations are requested. If fewer than two quotations are provided, the
Prime Rate shall be calculated by the Calculation Agent and shall be
determined as the arithmetic mean on the basis of the prime rates in The
City of New York by the appropriate number of substitute banks or trust
companies organized and doing business under the laws of the United States,
or any State thereof, in each case having total equity capital of at least
U.S. $500 million and being subject to supervision or examination by
Federal or State authority, selected by the Calculation Agent to quote such
rate or rates; provided, however, that if the banks or trust companies
selected as aforesaid by the Calculation Agent are not quoting rates as set
forth above, the "Prime Rate" in effect for such Interest Reset Period will
be the same as the Prime Rate for the immediately preceding Interest Reset
Period (or, if there was no such Interest Reset Period, the rate of
interest payable hereon shall be the Initial Interest Rate).
"Reuters Screen USPRIME1 Page" means the display designated as
Page "USPRIME1" on the Reuters Monitor Money Rates Service (or such other page
as may replace the USPRIME1 Page on that service for the purpose of displaying
prime rates or base lending rates of major United States banks).
Determination of Treasury Rate. If the Base Rate specified
on the face hereof is the Treasury Rate, the Treasury Rate with respect to
this Note shall be determined on each Interest Determination Date and shall
be the rate for the auction held on such date of direct obligations of the
United States ("Treasury Bills") having the Index Maturity specified on the
face hereof, as published in H.15(519) under the heading "Treasury Bills--
auction average (investment)," or if not so published by 9:00 a.m., New
York City time, on the Calculation Date pertaining to such Interest
Determination Date, the auction average rate on such Interest Determination
Date (expressed as a bond equivalent, on the basis of a year of 365 or 366
days, as applicable, and applied on a daily basis) as otherwise announced
by the United States Department of the Treasury. In the event that the
results of the auction of Treasury Bills having the Index Maturity
specified on the face hereof are not published or reported as provided
above by 3:00 p.m., New York City time, on such Calculation Date or if no
such auction is held on such Interest Determination Date, then the Treasury
Rate shall be calculated by the Calculation Agent and shall be a yield to
maturity (expressed as a bond equivalent, on the basis of a year of 365 or
366 days, as applicable, and applied on a daily basis) calculated using the
arithmetic mean of the secondary market bid rates, as of approximately 3:30
p.m., New York City time, on such Interest Determination Date, of three
leading primary United States government securities dealers selected by the
Calculation Agent for the issue of Treasury Bills with a remaining maturity
closest to the Index Maturity specified on the face hereof; provided,
however, that if the dealers selected as aforesaid by the Calculation Agent
are not quoting as mentioned in this sentence, the Treasury Rate for such
Interest Reset Date will be the same as the Treasury Rate for the
immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the rate of interest payable hereon shall be the
Initial Interest Rate).
Determination of CMT Rate. If the Base Rate specified on
the face hereof is the CMT Rate, the CMT Rate with respect to this Note
shall be determined on each Interest Determination Date and shall be the
rate displayed for the Index Maturity specified on the face hereof on the
designated Telerate Page (as defined below) under the caption ". . .
Treasury Constant Maturities and . . . Federal Reserve Board Release H.15"
under the column for the Designated CMT Maturity Index (as defined below)
for (i) if the Designated CMT Telerate Page is 7055, the rate on such
Interest Determination Date and (ii) if the Designated CMT Telerate Page is
7052, the week or the month, as applicable, ended immediately preceding the
week in which the related Interest Determination Date occurs. If such rate
is no longer displayed on the relevant page, or is not displayed by 3:00
p.m., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, then the CMT Rate for such Interest
Determination Date will be such Treasury Constant Maturity rate for the
Designated CMT Maturity Index as published in the relevant H.15(519). If
such rate is no longer published, or is not published by 3:00 p.m., New
York City time, on the related Calculation Date, then the CMT Rate for such
Interest Determination Date will be such Treasury Constant Maturity rate
for the Designated CMT Maturity Index (or other United States Treasury rate
for the Designated CMT Maturity Index) for the Interest Determination Date
with respect to the related Interest Reset Date as may then be published by
either the Board of Governors of the Federal Reserve System or the United
States Department of the Treasury that the Calculation Agent determines to
be comparable to the rate formerly displayed on the Designated CMT Telerate
Page and published in the relevant H.15(519). If such information is not
provided by 3:00 p.m., New York time, on the related Calculation Date, then
the CMT Rate for the Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity, based on the arithmetic
mean of the secondary market closing offer side prices as of approximately
3:30 p.m., New York City time, on the Interest Determination Date reported,
according to their written records, by three leading primary United States
government securities dealers (each, a "Reference Dealer") in The City of
New York (which may include affiliates of the Issuer) selected by the
Calculation Agent (from five such Reference Dealers selected by the
Calculation Agent, after consultation with the Issuer, and eliminating the
highest quotation (or, in the event of equality, one of the highest) and
the lowest quotation (or, in the event of equality, one of the lowest)),
for the most recently issued direct noncallable fixed rate obligations of
the United States ("Treasury Notes") with an original maturity of
approximately the Designated CMT Maturity Index and remaining term to
maturity of not less than such Designated CMT Maturity Index minus one
year. If the Calculation Agent cannot obtain three such Treasury notes
quotations, the CMT Rate for such Interest Determination Date will be
calculated by the Calculation Agent and will be a yield to maturity based
on the arithmetic mean of the secondary market offer side prices as of
approximately 3:30 p.m., New York City time, on the Interest Determination
Date of three Reference Dealers in The City of New York (from five such
Reference Dealers selected by the Calculation Agent, after consultation
with the Issuer, 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 $100,000,000. If three or
four (and not five) of such Reference Dealers are quoting as described
above, then the CMT Rate will be based on the arithmetic mean of the offer
prices obtained and neither the highest nor the lowest of such quotes will
be eliminated; provided, however, that if fewer than three Reference
Dealers selected by the Calculation Agent are quoting as described herein,
the CMT Rate for such Interest Reset Date will be the same as the CMT Rate
for the immediately preceding Interest Reset Period (or, if there was no
such Interest Reset Period, the rate of interest payable hereon shall be
the Initial Interest Rate). If two Treasury notes with an original
maturity as described in the second preceding sentence have remaining terms
to maturity equally close to the Designated CMT Maturity Index, the quotes
for the Treasury note with the shorter remaining term to maturity will be
used.
"Designated CMT Telerate Page" means the display on the Dow
Jones Telerate Service specified on the face hereof (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 on the face hereof, the Designated CMT Telerate Page shall be 7052,
for the most recent week.
"Designated CMT Maturity Index" shall be the original period to
maturity of the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30
years) specified on the face hereof with respect to which the CMT Rate will be
calculated. If no such maturity is specified on the face hereof, the
Designated CMT Maturity Index shall be two years.
Notwithstanding the foregoing, the interest rate hereon shall
not be greater than the Maximum Interest Rate, if any, or less than the
Minimum Interest Rate, if any, specified on the face hereof or, if the Maximum
Interest Rate or Minimum Interest Rate is reset in accordance with the
procedures referred to above, as determined pursuant to such procedures. The
Calculation Agent shall calculate the interest rate hereon in accordance with
the foregoing on or before each Calculation Date. The interest rate on this
Note will in no event be higher than the maximum rate permitted by New York
law, as the same may be modified by United States Federal law of general
application.
At the request of the holder hereof, the Calculation Agent will
provide to the holder hereof the interest rate hereon then in effect and, if
determined, the interest rate that will become effective as of the next
Interest Reset Date.
Unless otherwise indicated on the face hereof, interest
payments on this Note shall be the amount of interest accrued from and
including the Interest Accrual Date or from and including the last date to
which interest has been paid to but, excluding the Interest Payment Dates
or Maturity Date (or any earlier redemption date), as the case may be.
Accrued interest hereon for any period shall be the sum of the products
obtained by multiplying the interest factor calculated for each day in such
period by the principal amount hereof shown on Schedule I hereto for each
such day; provided that for the purpose of calculating the amount of
interest payable hereon, any decrease in the principal amount hereof
attributable to an exercise of the option to terminate the automatic
extension of the maturity hereof shall be effective on and as of the
Election Date corresponding to the exercise of such option, and any
increase in the principal amount hereof shall be effective on and as of the
Interest Payment Date immediately preceding the date of such increase. The
interest factor for each such day shall be computed by dividing the
interest rate applicable to such day by 360 if the Base Rate is CD Rate,
Commercial Paper Rate, Federal Funds Rate, Prime Rate or LIBOR, as
specified on the face hereof, or by the actual number of days in the year
if the Base Rate is the Treasury Rate or the CMT Rate, as specified on the
face hereof. All percentages resulting from any calculation of the rate of
interest on this Note will be rounded, if necessary, to the nearest one
hundred-thousandth of a percentage point (.0000001), with five one-
millionths of a percentage point rounded upward, and all dollar amounts
used in or resulting from such calculation on this Note will be rounded to
the nearest cent (with one-half cent rounded upward). The interest rate in
effect on any Interest Reset Date will be the applicable rate as reset on
such date. The interest rate applicable to any other day is the interest
rate from the immediately preceding Interest Reset Date (or, if none, the
Initial Interest Rate).
This Note and all other obligations of the Issuer hereunder
will constitute part of the subordinated debt of the Issuer, will be issued
under the Subordinated Indenture and will be subordinate and junior in
right of payment, to the extent and in the manner set forth in the
Subordinated Indenture, to all "Senior Indebtedness" of the Issuer. The
Subordinated Indenture defines "Senior Indebtedness" as obligations (other
than non-recourse obligations, the debt securities, including this Note,
issued under the Subordinated Indenture or any other obligations
specifically designated as being subordinate in right of payment to Senior
Indebtedness) of, or guaranteed or assumed by, the Issuer for borrowed
money or evidenced by bonds, debentures, notes or other similar
instruments, and amendments, renewals, extensions, modifications and
refundings of any such indebtedness or obligation.
This Note, and any Note or Notes issued upon transfer or
exchange hereof, is issuable only in fully registered form, without
coupons, and is issuable only in denominations of U.S. $1,000 and any
integral multiple of U.S. $1,000 in excess thereof. If this Note is
denominated in a Specified Currency other than U.S. dollars, then, unless a
higher minimum denomination is required by applicable law, it is issuable
only in denominations of the equivalent of U.S. $1,000 (rounded to an
integral multiple of 1,000 units of such Specified Currency), or any amount
in excess thereof which is an integral multiple of 1,000 units of such
Specified Currency, as determined by reference to the noon dollar buying
rate in New York City for cable transfers of such Specified Currency
published by the Federal Reserve Bank of New York (the "Market Exchange
Rate") on the Business Day immediately preceding the date of issuance;
provided, however, in the case of ECUs, the Market Exchange Rate shall be
the rate of exchange determined by the Commission of the European
Communities (or any successor thereto) as published in the Official Journal
of the European Communities, or any successor publication, on the Business
Day immediately preceding the date of issuance.
The Chase Manhattan Bank (formerly known as Chemical Bank)
has been appointed registrar for the Notes (the "Registrar," which term
includes any successor registrar appointed by the Issuer), and the
Registrar will maintain at its office in The City of New York a register
for the registration and transfer of Notes. This Note may be transferred
at the aforesaid office of the Registrar by surrendering this Note for
cancellation, accompanied by a written instrument of transfer in form
satisfactory to the Registrar and duly executed by the registered holder
hereof in person or by the holder's attorney duly authorized in writing,
and thereupon the Registrar shall issue in the name of the transferee or
transferees, in exchange herefor, a new Note or Notes having identical
terms and provisions and having a like aggregate principal amount in
authorized denominations, subject to the terms and conditions set forth
herein; provided, however, that the Registrar will not be required (i) to
register the transfer of or exchange any Note that has been called for
redemption in whole or in part, except the unredeemed portion of Notes
being redeemed in part, (ii) to register the transfer of or exchange any
Note if the holder thereof has exercised his right, if any, to require the
Issuer to repurchase such Note in whole or in part, except the portion of
such Note not required to be repurchased or (iii) to register the transfer
of or exchange Notes to the extent and during the period so provided in the
Subordinated Indenture with respect to the redemption of Notes. Notes are
exchangeable at said office for other Notes of other authorized
denominations of equal aggregate principal amount having identical terms
and provisions. All such exchanges and transfers of Notes will be free of
charge, but the Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge in connection therewith. All Notes
surrendered for exchange shall be accompanied by a written instrument of
transfer in form satisfactory to the Registrar and executed by the
registered holder in person or by the holder's attorney duly authorized in
writing. The date of registration of any Note delivered upon any exchange
or transfer of Notes shall be such that no gain or loss of interest results
from such exchange or transfer.
In case this Note shall at any time become mutilated,
defaced or be destroyed, lost or stolen and this Note or evidence of the
loss, theft or destruction thereof (together with the indemnity hereinafter
referred to and such other documents or proof as may be required in the
premises) shall be delivered to the Registrar, a new Note of like tenor
will be issued by the Issuer in exchange for this Note, but, if this Note
is destroyed, lost or stolen, only upon receipt of evidence satisfactory to
the Registrar and the Issuer that this Note was destroyed or lost or stolen
and, if required, upon receipt also of indemnity satisfactory to each of
them. All expenses and reasonable charges associated with procuring such
indemnity and with the preparation, authentication and delivery of a new
Note shall be borne by the owner of the Note mutilated, defaced, destroyed,
lost or stolen.
The Subordinated Indenture provides that, (a) if an Event of
Default (as defined in the Subordinated Indenture) due to the default in
payment of principal of, premium, if any, or interest on, any series of debt
securities issued under the Subordinated Indenture, including the series of
Subordinated Medium-Term Notes of which this Note forms a part, or due to the
default in the performance or breach of any other covenant or warranty of the
Issuer applicable to the debt securities of such series but not applicable to
all outstanding debt securities issued under the Subordinated Indenture shall
have occurred and be continuing, either the Trustee or the holders of not less
than 25% in principal amount of the debt securities of each affected series
(voting as a single class) may then declare the principal of all debt
securities of all such series and interest accrued thereon to be due and
payable immediately and (b) if an Event of Default due to a default in the
performance of any other of the covenants or agreements in the Senior
Indenture applicable to all outstanding debt securities issued thereunder,
including this Note, or due to certain events of bankruptcy, insolvency and
reorganization of the Issuer, shall have occurred and be continuing, either
the Trustee or the holders of not less than 25% in principal amount of all
debt securities issued under the Subordinated Indenture then outstanding
(treated as one class) may declare the principal of all such debt securities
and interest accrued thereon to be due and payable immediately, but upon
certain conditions such declarations may be annulled and past defaults may be
waived (except a continuing default in payment of principal (or premium, if
any) or interest on such debt securities) by the holders of a majority in
principal amount of the debt securities of all affected series then
outstanding.
The Subordinated Indenture permits the Issuer and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the debt securities of all series issued
under the Subordinated Indenture then outstanding and affected (voting as
one class), to execute supplemental indentures adding any provisions to or
changing in any manner the rights of the holders of each series so
affected; provided that the Issuer and the Trustee may not, without the
consent of the holder of each outstanding debt security affected thereby,
(a) extend the final maturity of any such debt security, or reduce the
principal amount thereof, or reduce the rate or extend the time of payment
of interest thereon, or reduce any amount payable on redemption thereof, or
change the currency of payment thereof, or impair or affect the rights of
any holder to institute suit for the payment thereof without the consent of
the holder of each debt security so affected or (b) reduce the aforesaid
percentage in principal amount of debt securities the consent of the
holders of which is required for any such supplemental indenture; provided,
however, that neither this Note nor the Subordinated Indenture may be
amended to alter the subordination provisions hereof or thereof without the
written consent of each holder of Senior Indebtedness then outstanding that
would be adversely affected thereby.
Except as set forth below, if the principal of, premium, if
any, or interest on, this Note is payable in a Specified Currency other
than U.S. dollars and such Specified Currency is not available to the
Issuer for making payments hereon due to the imposition of exchange
controls or other circumstances beyond the control of the Issuer or is no
longer used by the government of the country issuing such currency or for
the settlement of transactions by public institutions within the
international banking community, then the Issuer will be entitled to
satisfy its obligations to the holder of this Note by making such payments
in U.S. dollars on the basis of the Market Exchange Rate on the date of
such payment or, if the Market Exchange Rate is not available on such date,
as of the most recent practicable date; provided, however, that if such
Specified Currency is replaced by a single European currency (expected to
be named the Euro), the payment of principal of, premium, if any, or
interest on any Note denominated in such currency shall be effected in the
new single European currency in conformity with legally applicable measures
taken pursuant to, or by virtue of, the treaty establishing the European
Community (the "EC"), as amended by the treaty on European Union (as so
amended, the "Treaty"). Any payment made under such circumstances in U.S.
dollars (or, if applicable, such new single European currency) where the
required payment is in a Specified Currency other than U.S. dollars will
not constitute an Event of Default.
Subject to the provisions below, the value of the ECU, in which
the Notes may be denominated or may be payable, is equal to the value of the
ECU that is from time to time used as the unit of account of the EC. If the
ECU becomes a currency in its own right in accordance with the Treaty, all
references to ECU in the Notes shall be construed as references to such
currency.
With respect to each due date for the payment of principal
of, or interest on, the Notes on or after the first business day in
Brussels on which the ECU ceases to be used as the unit of account of the
EC, and has not become a currency in its own right replacing all or some of
the currencies of the member States of the EC, the Company shall choose a
substitute currency (the "Chosen Currency"), which may be any currency
which was, on the last day on which the ECU was used as the unit of account
of the EC, a component currency of the ECU or U.S. dollars, in which all
payments due on or after that date with respect to the Notes and coupons
shall be made. Notice of the Chosen Currency so selected shall be provided
by first class mail to each holder at the address of such holder which
appears on the books maintained by the Registrar and to the Paying Agent.
The amount of each payment in such Chosen Currency shall be computed on the
basis of the equivalent of the ECU in that currency, determined as
described below, as of the fourth business day in Brussels prior to the
date on which such payment is due.
On the first business day in Brussels on which the ECU
ceases to be used as the unit of account of the EC, and has not become a
currency in its own right replacing all or some of the currencies of the
member States of the EC, the Company shall select a Chosen Currency in
which all payments with respect to Notes and coupons having a due date
prior thereto but not yet presented for payment with respect to Notes and
coupons having a due date prior thereto but not yet presented for payment
are to be made. The amount of each payment in such Chosen Currency shall
be computed on the basis of the equivalent of the ECU in that currency,
determined as described below, as of such first business day.
The equivalent of the ECU in the relevant Chosen Currency as of
any date (the "Day of Valuation") shall be determined by, or on behalf of, the
Exchange Rate Agent on the following basis. The amounts and components
composing the ECU for this purpose (the "Components") shall be the amounts and
components that composed the ECU as of the last date on which the ECU was used
as the unit of account of the EC. The equivalent of the ECU in the Chosen
Currency shall be calculated by, first, aggregating the U.S. dollar
equivalents of the Components; and then, in the case of a Chosen Currency
other than U.S. dollars, using the rate used for determining the U.S. dollar
equivalent of the Components in the Chosen Currency as set forth below,
calculating the equivalent in the Chosen Currency of such aggregate amount in
U.S. dollars.
The "Exchange Rate Agent" shall be Morgan Stanley & Co.
Incorporated, unless otherwise indicated on the face hereof.
The U.S. dollar equivalent of each of the Components shall be
determined by, or on behalf of, the Exchange Rate Agent on the basis of the
middle spot delivery quotations prevailing at 2:30 p.m., Brussels time, on the
Day of Valuation, as obtained by, or on behalf of, the Exchange Rate Agent
from one or more major banks, as selected by the Company, in the country of
issue of the component currency in question.
If for any reason no direct quotations are available for a
Component as of a Day of Valuation from any of the banks selected for this
purpose, in computing the U.S. dollar equivalent of such Component, the
Exchange Rate Agent shall (except as provided below) use the most recent
direct quotations for such Component obtained by it or on its behalf,
provided that such quotations were prevailing in the country of issue not
more than two Business Days before such Day of Valuation. If such most
recent quotations were so prevailing in the country of issue more than two
Business Days before such Day of Valuation, the Exchange Rate Agent shall
determine the U.S. dollar equivalent of such Component on the basis of
cross rates derived from the middle spot delivery quotations for such
component currency and for the U.S. dollar prevailing at 2:30 p.m.,
Brussels time, on such Day of Valuation, as obtained by, or on behalf of,
the Exchange Rate Agent from one or more major banks, as selected by the
Company, in a country other than the country of issue of such component
currency. Notwithstanding the foregoing, the Exchange Rate Agent shall
determine the U.S. dollar equivalent of such Component on the basis of such
cross rates if the Company or such agent judges that the equivalent so
calculated is more representative than the U.S. dollar equivalent
calculated as provided in the first sentence of this paragraph. Unless
otherwise specified by the Company, if there is more than one market for
dealing in any component currency by reason of foreign exchange regulations
or for any other reason, the market to be referred to in respect of such
currency shall be that upon which a non-resident issuer of securities
denominated in such currency would purchase such currency in order to make
payments in respect of such securities.
Payments in the Chosen Currency will be made at the specified
office of a paying agent in the country of the Chosen Currency, or, if none,
or at the option of the holder, at the specified office of any Paying Agent
either by a check drawn on, or by transfer to an account maintained by the
holder with, a bank in the principal financial center of the country of the
Chosen Currency.
All determinations referred to above made by, or on behalf of,
the Company or by, or on behalf of, the Exchange Rate Agent shall be at such
entity's sole discretion and shall, in the absence of manifest error, be
conclusive to the extent permitted by law for all purposes and binding on the
holder of this Note and coupons, if any.
So long as this Note shall be outstanding, the Issuer will
cause to be maintained an office or agency for the payment of the principal of
and premium, if any, and interest on this Note as herein provided in the
Borough of Manhattan, The City of New York, and an office or agency in said
Borough of Manhattan for the registration, transfer and exchange as aforesaid
of the Notes. The Issuer may designate other agencies for the payment of said
principal, premium and interest at such place or places (subject to applicable
laws and regulations) as the Issuer may decide. So long as there shall be such
an agency, the Issuer shall keep the Trustee advised of the names and
locations of such agencies, if any are so designated.
With respect to moneys paid by the Issuer and held by the
Trustee or any Paying Agent for the payment of the principal of or interest or
premium, if any, on any Notes that remain unclaimed at the end of two years
after such principal, interest or premium shall have become due and payable
(whether at maturity or upon call for redemption or otherwise), (i) the
Trustee or such Paying Agent shall notify the holders of such Notes that such
moneys shall be repaid to the Issuer and any person claiming such moneys shall
thereafter look only to the Issuer for payment thereof and (ii) such moneys
shall be so repaid to the Issuer. Upon such repayment all liability of the
Trustee or such Paying Agent with respect to such moneys shall thereupon
cease, without, however, limiting in any way any obligation that the Issuer
may have to pay the principal of or interest or premium, if any, on this Note
as the same shall become due.
No provision of this Note or of the Subordinated Indenture
shall alter or impair the obligation of the Issuer, which is absolute and
unconditional, to pay the principal of, premium, if any, and interest on this
Note at the time, place, and rate, and in the coin or currency, herein
prescribed unless otherwise agreed between the Issuer and the registered
holder of this Note.
Prior to due presentment of this Note for registration of
transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee
may treat the holder in whose name this Note is registered as the owner hereof
for all purposes, whether or not this Note be overdue, and none of the Issuer,
the Trustee or any such agent shall be affected by notice to the contrary.
No recourse shall be had for the payment of the principal of,
premium, if any, or the interest on this Note, for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the Subordinated
Indenture or any indenture supplemental thereto, against any incorporator,
shareholder, officer or director, as such, past, present or future, of the
Issuer or of any successor corporation, either directly or through the Issuer
or any successor corporation, whether by virtue of any constitution, statute
or rule of law or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part of
the consideration for the issue hereof, expressly waived and released.
This Note shall for all purposes be governed by, and construed
in accordance with, the laws of the State of New York.
All terms used in this Note which are defined in the
Subordinated Indenture and not otherwise defined herein shall have the
meanings assigned to them in the Subordinated Indenture.
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written
out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as
tenants in common
UNIF GIFT MIN ACT - ________________________ Custodian _______________
(Cust) (Minor)
Under Uniform Gifts to Minors Act ____________________________________
(State)
Additional abbreviations may also be used though not in the
above list.
___________________
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto
________________________________________
[PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE]
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
[PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE]
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing such person attorney to transfer such note on the books of the
Issuer, with full power of substitution in the premises.
Dated:___________________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Note in every particular without
alteration or enlargement or any change whatsoever.
OPTION TO ELECT TERMINATION OF AUTOMATIC EXTENSION
The undersigned hereby elects to terminate the automatic
extension of the maturity of the within Note (or the portion thereof
specified below) with the effect provided in the within Note by
surrendering the within Note to the Paying Agent at The Chase Manhattan
Bank (formerly known as Chemical Bank), 55 Water Street, New York, New York
10041, Attention: Corporate Trustee Administration Department, or such
other address of which the Issuer shall from time to time notify the
holders of the Notes, together with this form of "Option to Elect
Termination of Automatic Extension" duly completed by the holder of the
within Note.
If the automatic extension of the maturity of less than the
entire principal amount of the within Note is to be terminated, specify the
portion thereof (which shall be $100,000 or an integral multiple of $1,000
in excess thereof) as to which the holder elects to terminate the automatic
extension of the maturity $______; and specify the denomination or
denominations (which shall be $100,000 or an integral multiple of $1,000 in
excess thereof) of the Notes in the form attached to the within Note as
Exhibit A to be issued to the holder for the portion of the within Note as
to which the automatic extension of maturity is being terminated (in the
absence of any such specification one such Note will be issued for the
portion as to which the automatic extension of maturity is being
terminated) $__________.
Dated:___________________________ ______________________________
NOTICE: The signature on this
Option to Elect Termination of
Automatic Extension must
correspond with the name as
written upon the face of the
within Note in every particular,
without alteration or enlargement
or any change whatever.
SCHEDULE I
SCHEDULE OF EXCHANGES
The initial principal amount of this Note is $__________. The
following exchanges of a portion of this Note for an interest in a Short-Term
Note and the following exchanges of an interest in a Short-Term Note for an
interest in this Note have been made:
EXHIBIT A TO SUBORDINATED VARIABLE RATE RENEWABLE NOTE
[FORM OF FACE OF SECURITY]
REGISTERED REGISTERED
No. SUBVRR Cusip
U.S. $_________
Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York,
New York) to the issuer or its agent for registration of transfer, exchange
or payment, and any certificate issued is registered in the name of Cede &
Co. or such other name as requested by an authorized representative of The
Depository Trust Company and any payment is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL, since the registered owner hereof, Cede & Co., has an
interest herein.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID," "ORIGINAL YIELD TO MATURITY"
AND "INITIAL ACCRUAL PERIOD OID" (COMPUTED UNDER THE APPROXIMATE METHOD)
SET FORTH BELOW HAVE BEEN COMPLETED SOLELY FOR THE PURPOSES OF APPLYING
THE FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
SUBORDINATED VARIABLE RATE RENEWABLE
GLOBAL MEDIUM-TERM NOTE, SERIES C
Morgan Stanley, Dean Witter, Discover & Co., a Delaware
corporation (together with its successors and assigns, the "Issuer"), for
value received, hereby promises to pay to
, or registered assignees, the principal sum specified in Schedule I hereto on
the Maturity Date specified above and to pay interest on the principal amount
hereof outstanding from time to time, from the Interest Accrual Date specified
above at a rate per annum equal to the Initial Interest Rate, as defined
below, until the Initial Interest Reset Date specified above, and thereafter
at a rate per annum determined in accordance with the provisions specified on
the reverse hereof until the earlier of (a) the date on which the principal
hereof is paid or duly made available for payment and (b) the Interest Payment
Date immediately preceding the date on which the principal amount hereof is
reduced to zero, in each case, together with the unpaid amount of interest, if
any, payable on the principal amount hereof during the period that the
Issuer's obligation to pay such principal amount was evidenced by a
predecessor Note that provided for the automatic extension of the maturity
thereof (the "Renewable Note"), which amount shall be payable on the first
date succeeding the Interest Accrual Date specified above on which interest on
this Note is paid and shall be payable to the person receiving such interest
payment. The Issuer will pay interest hereon in arrears monthly, quarterly,
semiannually or annually as specified above as the Interest Payment Period on
each Interest Payment Date (as specified above), commencing with the first
Interest Payment Date next succeeding the Interest Accrual Date specified
above, and on the Maturity Date or any redemption date; provided, however, if
the Interest Accrual Date occurs between a Record Date, as defined below, and
the next succeeding Interest Payment Date, interest payments will commence on
the second Interest Payment Date succeeding the Interest Accrual Date to the
registered holder of this Note on the Record Date with respect to such second
Interest Payment Date; provided, further, that if an Interest Payment Date or
the Maturity Date would fall on a day that is not a Business Day, as defined
on the reverse hereof, such Interest Payment Date or Maturity Date shall be
the following day that is a Business Day, except that if the Base Rate
specified above is LIBOR and such next Business Day falls in the next calendar
month, the Interest Payment Date or Maturity Date shall be the immediately
preceding day that is a Business Day. As used herein, "Initial Interest Rate"
means the rate of interest determined using the Spread or Spread Multiplier,
as the case may be, specified in the Renewable Note and using the Base Rate
determined in accordance with the provisions of the Renewable Note (i) on the
Interest Reset Date with respect to the Renewable Note occurring on the
Interest Accrual Date specified above or (ii) if no such Interest Reset Date
occurred on the Interest Accrual Date, on the Interest Reset Date with respect
to the Renewable Note occurring immediately preceding the Interest Accrual
Date.
Interest on this Note will accrue from and including the most
recent date to which interest has been paid or duly provided for, or, if no
interest has been paid or duly provided for, from the Interest Accrual Date,
until the earlier of (a) the date on which the principal hereof has been paid
or duly made available for payment and (b) the Interest Payment Date
immediately preceding the date on which the principal amount hereof is reduced
to zero in accordance with the provisions set forth below. The interest so
payable, and punctually paid or duly provided for, on any Interest Payment
Date will, subject to certain exceptions described herein, be paid to the
person in whose name this Note (or one or more predecessor Notes) is
registered at the close of business on the date 15 calendar days prior to such
Interest Payment Date (whether or not a Business Day) (each such date a
"Record Date"); provided, however, that interest payable on the Maturity Date
will be payable to the person to whom the principal hereof shall be payable.
On any date following the Original Issue Date and prior to the
Record Date immediately preceding the Maturity Date, the holder hereof may,
with the consent of the Issuer, exchange this Note or any portion hereof
having a principal amount of $1,000 or any larger multiple of $1,000 in excess
thereof for an interest in the Renewable Note equal to the principal amount
hereof so exchanged by delivering to the Paying Agent, as defined on the
reverse hereof, (i) this Note with the form entitled "Request to Exchange"
below duly completed or (ii) a telegram, telex, facsimile transmission or a
letter from a member of a national securities exchange or the National
Association of Securities Dealers, Inc. or a commercial bank or a trust
company in the United States of America setting forth the name of the holder
of this Note, the principal amount hereof, the certificate number of this Note
or a description of this Note's tenor or terms, a statement that a request to
exchange is being made thereby, the principal amount hereof with respect to
which such request is being made and a guarantee that this Note with the form
entitled "Request to Exchange" below duly completed will be received by the
Paying Agent no later than five Business Days after the date of such telegram,
telex, facsimile transmission or letter; provided that such telegram, telex,
facsimile transmission or letter shall not be effective unless this Note and
such form duly completed are received by the Paying Agent by such fifth
Business Day. Such exchange may occur with respect to less than the entire
principal amount hereof provided that the principal amount for which such
exchange does not occur is at least $1,000 or any larger amount that is an
integral multiple of $1,000. Notwithstanding the foregoing, a request to
exchange all or a portion of this Note for an interest in the Renewable Note
may not be made during the period from and including a Record Date to but
excluding the immediately succeeding Interest Payment Date. If a request to
exchange any portion hereof is granted by the Issuer, then, on the date of
such exchange, Schedule I hereto shall be annotated to reflect the
corresponding decrease in the principal amount hereof, and Schedule I to the
Renewable Note shall be annotated to reflect the corresponding increase in the
principal amount thereof.
Payment of the principal of this Note, any premium and the
interest due at the Maturity Date (or any redemption date), unless this
Note is denominated in a Specified Currency other than U.S. Dollars and is
to be paid in whole, or in part in such Specified Currency, will be made in
immediately available funds upon surrender of this Note at the office or
agency of the Paying Agent maintained for that purpose in the Borough of
Manhattan, The City of New York, or at the office or agency of such other
paying agent as the Issuer may determine in U.S. dollars. U.S. dollar
payments of interest, other than interest due at maturity or any date of
redemption, will be made by United States dollar check mailed to the
address of the person entitled thereto as such address shall appear in the
Note register. A holder of U.S. $10,000,000 or more in aggregate principal
amount of Notes having the same Interest Payment Date, the interest on
which is paid in U.S. dollars, will be entitled to receive payments of
interest, other than interest due at maturity or any date of redemption, by
wire transfer of immediately available funds if appropriate wire transfer
instructions have been received by the Paying Agent in writing not less
than 15 calendar days prior to the applicable Interest Payment Date.
If this Note is denominated in a Specified Currency other
than U.S. dollars, and the holder does not elect (in whole or in part) to
receive payment in U.S. dollars pursuant to the next succeeding paragraph,
payments of interest, principal or any premium with regard to this Note
will be made by wire transfer of immediately available funds to an account
maintained by the holder hereof with a bank located outside the United
States if appropriate wire transfer instructions have been received by the
Paying Agent in writing not less than 15 calendar days prior to the
applicable payment date, provided that, if such wire transfer instructions
are not received, such payments will be made by check payable in such
Specified Currency mailed to the address of the person entitled thereto as
such address shall appear in the Note register, and provided, further, that
payment of the principal of this Note, any premium and the interest due at
maturity (or on any redemption or repayment date) will be made upon
surrender of this Note at the office or agency referred to in the preceding
paragraph.
If so indicated on the face hereof, the holder of this Note,
if denominated in a Specified Currency other than U.S. dollars, may elect
to receive all or a portion of payments on this Note in U.S. dollars by
transmitting a written request to the Paying Agent, on or prior to the
Record Date or at least ten Business Days prior to the Maturity Date or any
redemption date, as the case may be. Such election shall remain in effect
unless such request is revoked by written notice to the Paying Agent as to
all or a portion of payments on this Note at least five Business Days prior
to such Record Date or at least ten days prior to the Maturity Date or any
redemption date, as the case may be.
If the holder elects to receive all or a portion of payments
of principal of and any premium and interest on this Note, if denominated
in a Specified Currency other than U.S. dollars, in U.S. dollars, the
Exchange Rate Agent will convert such payments into U.S. dollars. In the
event of such an election, payment in respect of this Note will be based
upon the exchange rate as determined by the Exchange Rate Agent based on
the highest bid quotation in The City of New York received by such Exchange
Rate Agent at approximately 11:00 a.m., New York City time, on the second
Business Day preceding the applicable payment date from three recognized
foreign exchange dealers (one of which may be the Exchange Rate Agent
unless such Exchange Rate Agent is an affiliate of the Issuer), for the
purchase by the quoting dealer of U.S. dollars for the Specified Currency
for settlement on such payment date in the amount of the Specified Currency
payable in the absence of such an election to such holder and at which the
applicable dealer commits to execute a contract. If such bid quotations
are not available, such payment will be made in the Specified Currency.
All currency exchange costs will be borne by the holder of this Note by
deductions from such payments.
If this Note ceases to be held by The Depository Trust
Company or its successor or the nominee of The Depository Trust Company or
its successor, this Note will be exchanged for one or more Notes of
authorized denominations having an aggregate principal amount equal to the
principal amount of this Note as then shown on Schedule I hereto, which new
Notes shall otherwise have the same terms as this Note, except that the
provisions of such new Notes regarding the exchange thereof for an interest
in a note providing for the automatic extension of the maturity thereof (a
"New Renewable Note") shall be modified to the extent appropriate for notes
not required to be held in a securities depositary; provided that the
respective rights and obligations of the Issuer and the holders of such new
Notes shall be the same in all material respects as the respective rights
and obligations of the Issuer and the holder of this Note. The terms of
the New Renewable Note shall be the same as the terms of the Renewable
Note, except that the principal amount thereof shall equal the principal
amount of the new Notes exchanged therefor and the provisions of such New
Renewable Notes regarding the automatic extension of the maturity thereof
shall be modified to the extent appropriate for notes not required to be
held in a securities depositary; provided that the respective rights and
obligations of the Issuer and the holders of such New Renewable Notes shall
be the same in all material respects as the respective rights and
obligations of the Issuer and the holder of the Renewable Note. Such new
Notes shall have stated principal amounts and shall be registered in the
names of the persons then having a beneficial interest in this Note or in
the names of their nominees.
Reference is hereby made to the further provisions of this Note
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place, including,
without limitation, the provisions relating to the subordination of this Note
to the Issuer's Senior Indebtedness, as defined on the reverse hereof.
Unless the certificate of authentication hereon has been
executed by the Authenticating Agent referred to on the reverse hereof by
manual signature, this Note shall not be entitled to any benefit under the
Subordinated Indenture, as defined on the reverse hereof, or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly
executed.
DATED: MORGAN STANLEY, DEAN WITTER,
DISCOVER & CO.
By:_____________________________
Name:
Title:
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Notes referred
to in the within-mentioned
Subordinated Indenture.
THE CHASE MANHATTAN BANK,
as Authentication Agent
By:_____________________________
Authorized Officer
[FORM OF REVERSE OF SECURITY]
This Note is one of a duly authorized issue of the Subordinated
Global Medium-Term Notes, Series C, having maturities more than nine months
from the date of issue (the "Notes") of the Issuer. The Notes are issuable
under a Subordinated Indenture, dated as of April 15, 1989, as supplemented
by a First Supplemental Subordinated Indenture dated as of May 15, 1991 and a
Second Supplemental Subordinated Indenture dated as of April 15, 1996 between
Morgan Stanley Group Inc. (as predecessor of the Issuer) and The First
National Bank of Chicago, as Trustee (the "Trustee," which term includes any
successor trustee under the Subordinated Indenture) as further supplemented
by a Third Supplemental Subordinated Indenture dated as of June 1, 1997
between the Issuer and the Trustee (as so supplemented, the "Subordinated
Indenture"), to which Subordinated Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities of the Issuer, the Trustee and
holders of the Notes and the terms upon which the Notes are, and are to be,
authenticated and delivered. The Trustee has appointed The Chase Manhattan
Bank (formerly known as Chemical Bank) as Authenticating Agent (the
"Authenticating Agent," which term includes any successor authenticating agent
appointed by the Trustee) with respect to the Notes, and the Issuer has
appointed The Chase Manhattan Bank (formerly known as Chemical Bank) at its
corporate trust office in The City of New York as the paying agent (the
"Paying Agent," which term includes any additional or successor Paying Agent
appointed by the Issuer) with respect to the Notes. The terms of individual
Notes may vary with respect to interest rates, interest rate formulas, issue
dates, maturity dates, or otherwise, all as provided in the Subordinated
Indenture. To the extent not inconsistent herewith, the terms of the
Subordinated Indenture are hereby incorporated by reference herein.
Unless otherwise provided, this Note will not be subject to
any sinking fund and will not be redeemable prior to maturity.
This Note will bear interest at the rate determined in
accordance with the applicable provisions below by reference to the Base
Rate shown on the face hereof based on the Index Maturity, if any, shown on
the face hereof (i) plus or minus the Spread, if any, or (ii) multiplied by
the Spread Multiplier, if any, specified on the face hereof. Commencing
with the Initial Interest Reset Date specified on the face hereof, the rate
at which interest on this Note is payable shall be reset as of each
Interest Reset Date (as used herein, the term "Interest Reset Date" shall
include the Initial Interest Reset Date). The determination of the rate of
interest at which this Note will be reset on any Interest Reset Date shall
be made, on the Interest Determination Date (as defined below) pertaining
to such Interest Reset Date. The Interest Reset Dates will be the Interest
Reset Dates specified on the face hereof; provided, however, that (a) the
interest rate in effect for the period from the Interest Accrual Date to
the Initial Interest Reset Date specified on the face hereof will be the
Initial Interest Rate and (b) unless otherwise specified on the face
hereof, the interest rate in effect for the ten calendar days immediately
prior to maturity, redemption or repayment will be that in effect on the
tenth calendar day preceding such maturity, redemption or repayment date.
If any Interest Reset Date would otherwise be a day that is not a Business
Day, such Interest Reset Date shall be postponed to the next succeeding day
that is a Business Day, except that if the Base Rate specified on the face
hereof is LIBOR and such Business Day is in the next succeeding calendar
month, such Interest Reset Date shall be the next preceding Business Day.
As used herein, "Business Day" means any day, other than a Saturday or
Sunday, and that is neither a legal holiday nor a day on which banking
institutions are authorized or required by law or regulation to close in
The City of New York and, with respect to Notes bearing interest calculated
by reference to LIBOR, in the City of London.
If so indicated on the face of this Note, the Issuer may
from time to time offer to reset the Spread or Spread Multiplier, as the
case may be, on the Renewable Note by causing the Paying Agent to send to
the holder hereof a notice (an "Optional Exchange Notice") by first class
mail, postage prepaid, or by such other means as shall be agreed between
the Issuer and the Paying Agent, setting forth (a) the new Spread or Spread
Multiplier to be applied to the Renewable Note, together with any change in
the Maximum Interest Rate or Minimum Interest Rate, and (b) the date, if
any, on which such offer will expire. In order to accept such offer, the
holder hereof must exchange this Note in whole or in part for an interest
in the Renewable Note in accordance with the third paragraph on the face of
this Note by delivering to the Paying Agent the notice referred to in
clause (i) or (ii) of such paragraph prior to the earlier of the expiration
date, if any, of such offer and the Record Date immediately preceding the
Maturity Date.
The Interest Determination Date pertaining to an Interest
Reset Date for Notes bearing interest calculated by reference to the CD
Rate, Commercial Paper Rate, Federal Funds Rate, Prime Rate and CMT Rate
will be the second Business Day next preceding such Interest Reset Date.
The Interest Determination Date pertaining to an Interest Reset Date for
Notes bearing interest calculated by reference to LIBOR shall be the second
London Banking Day preceding such Interest Reset Date except that the
Interest Determination Date pertaining to an Interest Reset Date for a
LIBOR Note for which the Index Currency is pounds Sterling will be such
Interest Reset Date. As used herein, "London Banking Day" means any day on
which dealings in deposits in the Index Currency (as defined herein) are
transacted in the London interbank market. The Interest Determination Date
pertaining to an Interest Reset Date for Notes bearing interest calculated
by reference to the Treasury Rate shall be the day of the week in which
such Interest Reset Date falls on which Treasury bills normally would be
auctioned; provided, however, that if as a result of a legal holiday an
auction is held on the Friday of the week preceding such Interest Reset
Date, the related Interest Determination Date shall be such preceding
Friday; and provided, further, that if an auction shall fall on any
Interest Reset Date, then the Interest Reset Date shall instead be the
first Business Day following the date of such auction.
Unless otherwise specified on the face hereof, the
"Calculation Date" pertaining to an Interest Determination Date will be the
earlier of (i) the tenth calendar day after such Interest Determination
Date or, if such day is not a Business Day, the next succeeding Business
Day, or (ii) the Business Day preceding the applicable Interest Payment
Date or Maturity Date (or, with respect to any principal amount to be
redeemed or repaid, any redemption or repayment date), as the case may be.
Determination of CD Rate. If the Base Rate specified on the
face hereof is the CD Rate, the CD Rate with respect to this Note shall be
determined on each Interest Determination Date and shall be the rate on
such date for negotiable certificates of deposit having the Index Maturity
specified on the face hereof as published by the Board of Governors of the
Federal Reserve System in "Statistical Release H.15(519), Selected Interest
Rates," or any successor publication of the Board of Governors of the
Federal Reserve System ("H.15(519)"), under the heading "CDs (Secondary
Market)," or, if not so published by 9:00 A.M., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, the CD
Rate will be the rate on such Interest Determination Date for negotiable
certificates of deposit of the Index Maturity specified on the face hereof
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" ("Composite Quotations") under the heading "Certificates of
Deposit." If neither of such rates is published by 3:00 P.M., New York City
time, on such Calculation Date, then the CD Rate on such Interest
Determination Date will be calculated by the Calculation Agent referred to
on the face hereof and will be the arithmetic mean of the secondary market
offered rates as of 10:00 A.M., New York City time, on such Interest
Determination Date for certificates of deposit in the denomination of
$5,000,000 with a remaining maturity closest to the Index Maturity
specified on the face hereof of three leading nonbank dealers in negotiable
U.S. dollar certificates of deposit in The City of New York selected by the
Calculation Agent for negotiable certificates of deposit of major United
States money center banks of the highest credit standing in the market for
negotiable certificates of deposit; provided, however, that if the dealers
selected as aforesaid by the Calculation Agent are not quoting as mentioned
in this sentence, the CD Rate in effect for the applicable period will be
the same as the CD Rate for the immediately preceding Interest Reset Period
(or, if there was no such Interest Reset Period, the rate of interest
payable hereon shall be the Initial Interest Rate).
Determination of Commercial Paper Rate. If the Base Rate
specified on the face hereof is the Commercial Paper Rate, the Commercial
Paper Rate with respect to this Note shall be determined on each Interest
Determination Date and shall be the Money Market Yield (as defined herein)
of the rate on such date for commercial paper having the Index Maturity
specified on the face hereof, as such rate shall be published in H.15(519)
under the heading "Commercial Paper," or if not so published prior to 9:00
A.M., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, the Commercial Paper Rate shall be the Money
Market Yield of the rate on such Interest Determination Date for commercial
paper of the Index Maturity specified on the face hereof as published in
Composite Quotations under the heading "Commercial Paper." If neither of
such rates is published by 3:00 P.M., New York City time, on such
Calculation Date, then the Commercial Paper Rate shall be the Money Market
Yield of the arithmetic mean of the offered rates as of 11:00 A.M., New
York City time, on such Interest Determination Date of three leading
dealers in commercial paper in The City of New York selected by the
Calculation Agent for commercial paper of the Index Maturity specified on
the face hereof, placed for an industrial issuer whose bond rating is "AA,"
or the equivalent, from a nationally recognized rating agency; provided,
however, that if the dealers selected as aforesaid by the Calculation Agent
are not quoting as mentioned in this sentence, the Commercial Paper Rate in
effect for the applicable period will be the same as the Commercial Paper
Rate for the immediately preceding Interest Reset Period (or, if there was
no such Interest Reset Period, the rate of interest payable hereon shall be
the Initial Interest Rate).
"Money Market Yield" shall be the yield calculated in
accordance with the following formula:
Money Market Yield = D x 360
------------- x 100
360 - (D x M)
where "D" refers to the applicable per annum rate for
commercial paper quoted on a bank discount basis and expressed as a decimal
and "M" refers to the actual number of days in the Index Maturity specified
on the face hereof.
Determination of Federal Funds Rate. If the Base Rate
specified on the face hereof is the Federal Funds Rate, the Federal Funds
Rate with respect to this Note shall be determined on each Interest
Determination Date and shall be the rate on such date for Federal Funds as
published in H.15(519) under the heading "Federal Funds (Effective)," or,
if not so published by 9:00 A.M., New York City time, on the Calculation
Date pertaining to such Interest Determination Date, the Federal Funds Rate
will be the rate on such Interest Determination Date as published in
Composite Quotations under the heading "Federal Funds/Effective Rate." If
neither of such rates is published by 3:00 P.M., New York City time, on
such Calculation Date, the Federal Funds Rate for such Interest
Determination Date will be calculated by the Calculation Agent and will be
the arithmetic mean of the rates for the last transaction in overnight
Federal funds as of 11:00 A.M., New York City time, on such Interest
Determination Date arranged by three leading brokers in Federal funds
transactions in The City of New York selected by the Calculation Agent;
provided, however, that if the brokers selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this sentence, the
Federal Funds Rate in effect for the applicable period will be the same as
the Federal Funds Rate for the immediately preceding Interest Reset Period
(or, if there was no such Interest Reset Period, the rate of interest
payable hereon shall be the Initial Interest Rate).
Determination of LIBOR. If the Base Rate specified on the
face hereof is LIBOR, LIBOR with respect to this Note shall be determined
on each Interest Determination Date as follows:
(i) As of the Interest Determination Date, the
Calculation Agent will determine (a) if "LIBOR Reuters" is specified as
the Reporting Service on the face hereof, the arithmetic mean of the
offered rates (unless the specified Designated LIBOR Page (as defined
below) by its terms provides only for a single rate, in which case such
single rate shall be used) for deposits in the London interbank market
in the Index Currency for the period of the Index Maturity specified on
the face hereof, commencing on the second London Banking Day
immediately following such Interest Determination Date, which appear on
the Designated LIBOR Page at approximately 11:00 a.m., London time, on
such Interest Determination Date, if at least two such offered rates
appear (unless, as aforesaid, only a single rate is required) on such
Designated LIBOR Page, or (b) if "LIBOR Telerate" is specified as the
Reporting Service on the face hereof, the rate for deposits in the
Index Currency for the period of the Index Maturity, each as designated
on the face hereof, commencing on the second London Banking Day
following such Interest Determination Date (or, if pounds Sterling is
the Index Currency, commencing on such Interest Determination Date),
that appears on the Designated LIBOR Page at approximately 11:00 a.m.,
London time, on such Interest Determination Date. If fewer than two
offered rates appear (if "LIBOR Reuters" is specified as the Reporting
Service on the face hereof and calculation of LIBOR is based on the
arithmetic mean of the offered rates) or if no rate appears (if the
Reporting Service on the face hereof specifies either (x) "LIBOR
Reuters" and the Designated LIBOR Page by its terms provides only for a
single rate or (y) "LIBOR Telerate"), LIBOR in respect of that Interest
Determination Date will be determined as if the parties had specified
the rate described in (ii) below.
(ii) With respect to an Interest Determination Date on
which fewer than two offered rates appear (if "LIBOR Reuters" is
specified as the Reporting Service on the face hereof and calculation
of LIBOR is based on the arithmetic mean of the offered rates) or no
rate appears (if the Reporting Service on the face hereof specifies
either (x) "LIBOR Reuters" and the Designated LIBOR Page by its terms
provides only for a single rate or (y) "LIBOR Telerate"), the
Calculation Agent will request the principal London offices of each of
four major reference banks in the London interbank market, as selected
by the Calculation Agent (after consultation with the Issuer), to
provide the Calculation Agent with its offered quotations for deposits
in the Index Currency for the period of the Index Maturity specified on
the face hereof, commencing on the second London Banking Day
immediately following such Interest Determination Date (or, if pounds
Sterling is the Index Currency, commencing on such Interest
Determination Date), to prime banks in the London interbank market at
approximately 11:00 a.m., London time, on such Interest Determination
Date and in a principal amount equal to an amount of not less than
U.S.$1 million (or the equivalent in the Index Currency (if the Index
Currency is not U.S. dollars)) that is representative of a single
transaction in such Index Currency in such market at such time. If at
least two such quotations are provided, LIBOR determined on such
Interest Determination Date will be the arithmetic mean of such
quotations. If fewer than two quotations are provided, LIBOR
determined on such Interest Determination Date will be the arithmetic
mean of rates quoted at approximately 11:00 a.m. (or such other time
specified on the face hereof), in the applicable principal financial
center for the country of the Index Currency on such Interest
Determination Date, by three major banks in such principal financial
center selected by the Calculation Agent (after consultation with the
Issuer) on such Interest Determination Date for loans in the Index
Currency to leading European banks, for the period of the Index
Maturity specified on the face hereof commencing on the second London
Banking Day immediately following such Interest Determination Date (or,
if pounds Sterling is the Index Currency, commencing on such Interest
Determination Date) and in a principal amount of not less than U.S.$1
million (or the equivalent in the Index Currency (if the Index Currency
is not U.S. Dollars)) that is representative of a single transaction
in such Index Currency in such market at such time; provided, however,
that if the banks selected as aforesaid by the Calculation Agent are
not quoting rates as mentioned in this sentence, "LIBOR" for such
Interest Reset Period will be the same as LIBOR for the immediately
preceding Interest Reset Period (or, if there was no such Interest
Reset Period, the rate of interest payable on the LIBOR Notes for which
LIBOR is being determined shall be the Initial Interest Rate). "Index
Currency" means the currency (including composite currencies) specified
as Index Currency on the face hereof. If no such currency is specified
as Index Currency on the face hereof, the Index Currency shall be U.S.
dollars. "Designated LIBOR Page" means either (a) if "LIBOR Reuters" is
designated as the Reporting Service on the face hereof, the display on
the Reuters Monitor Money Rates Service for the purpose of displaying
the London interbank rates of major banks for the applicable Index
Currency, or (b) if "LIBOR Telerate" is designated as the Reporting
Service on the face hereof, the display on the Dow Jones Telerate
Service for the purpose of displaying the London interbank rates of
major banks for the applicable Index Currency. If neither LIBOR
Reuters nor LIBOR Telerate is specified as the Reporting Service on the
face hereof, LIBOR for the applicable Index Currency will be determined
as if LIBOR Telerate (and, if the U.S. dollar is the Index Currency,
Page 3750) had been specified.
Determination of Prime Rate. If the Base Rate specified on
the face hereof is the Prime Rate, the Prime Rate with respect to this Note
shall be determined on each Interest Determination Date and shall be the
rate set forth in H.15(519) for such date opposite the caption "Bank Prime
Loan." If such rate is not yet published by 9:00 A.M., New York City time,
on the Calculation Date pertaining to such Interest Determination Date, the
Prime Rate for such Interest Determination Date will be the arithmetic mean
of the rates of interest publicly announced by each bank named on the
Reuters Screen USPRIME1 Page (as defined below) as such bank's prime rate
or base lending rate as in effect for such Interest Determination Date as
quoted on the Reuters Screen USPRIME1 Page on such Interest Determination
Date, or, if fewer than four such rates appear on the Reuters Screen
USPRIME1 Page for such Interest Determination Date, the rate shall be the
arithmetic mean of the prime rates quoted on the basis of the actual number
of days in the year divided by 360 as of the close of business on such
Interest Determination Date by at least two of the three major money center
banks in The City of New York selected by the Calculation Agent from which
quotations are requested. If fewer than two quotations are provided, the
Prime Rate shall be calculated by the Calculation Agent and shall be
determined as the arithmetic mean on the basis of the prime rates in The
City of New York by the appropriate number of substitute banks or trust
companies organized and doing business under the laws of the United States,
or any State thereof, in each case having total equity capital of at least
U.S. $500 million and being subject to supervision or examination by
Federal or State authority, selected by the Calculation Agent to quote such
rate or rates; provided, however, that if the banks or trust companies
selected as aforesaid by the Calculation Agent are not quoting rates as set
forth above, the "Prime Rate" in effect for such Interest Reset Period will
be the same as the Prime Rate for the immediately preceding Interest Reset
Period (or, if there was no such Interest Reset Period, the rate of
interest payable hereon shall be the Initial Interest Rate).
"Reuters Screen USPRIME1 Page" means the display designated
as Page "USPRIME1" on the Reuters Monitor Money Rates Service (or such
other page as may replace the USPRIME1 Page on that service for the purpose
of displaying prime rates or base lending rates of major United States
banks).
Determination of Treasury Rate. If the Base Rate specified
on the face hereof is the Treasury Rate, the Treasury Rate with respect to
this Note shall be determined on each Interest Determination Date and shall
be the rate for the auction held on such date of direct obligations of the
United States ("Treasury Bills") having the Index Maturity specified on the
face hereof, as published in H.15(519) under the heading "Treasury Bills--
auction average (investment)," or if not so published by 9:00 A.M., New
York City time, on the Calculation Date pertaining to such Interest
Determination Date, the auction average rate on such Interest Determination
Date (expressed as a bond equivalent, on the basis of a year of 365 or 366
days, as applicable, and applied on a daily basis) as otherwise announced
by the United States Department of the Treasury. In the event that the
results of the auction of Treasury Bills having the Index Maturity
specified on the face hereof are not published or reported as provided
above by 3:00 P.M., New York City time, on such Calculation Date or if no
such auction is held on such Interest Determination Date, then the Treasury
Rate shall be calculated by the Calculation Agent and shall be a yield to
maturity (expressed as a bond equivalent, on the basis of a year of 365 or
366 days, as applicable, and applied on a daily basis) calculated using the
arithmetic mean of the secondary market bid rates, as of approximately 3:30
P.M., New York City time, on such Interest Determination Date, of three
leading primary United States government securities dealers selected by the
Calculation Agent for the issue of Treasury Bills with a remaining maturity
closest to the Index Maturity specified on the face hereof; provided,
however, that if the dealers selected as aforesaid by the Calculation Agent
are not quoting as mentioned in this sentence, the Treasury Rate for such
Interest Reset Date will be the same as the Treasury Rate for the
immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the rate of interest payable hereon shall be the
Initial Interest Rate).
Determination of CMT Rate. If the Base Rate specified on
the face hereof is the CMT Rate, the CMT Rate with respect to this Note
shall be determined on each Interest Determination Date and shall be the
rate displayed for the Index Maturity specified on the face hereof on the
Designated CMT Telerate Page (as defined below) under the caption ". . .
Treasury Constant Maturities and . . . Federal Reserve Board Release
H.15," under the column for the Designated CMT Maturity Index (as defined
below) for (i) if the Designated CMT Telerate Page is 7055, the rate on
such Interest Determination Date and (ii) if the Designated CMT Telerate
Page is 7052, the week or the month, as applicable, ended immediately
preceding the week in which the related Interest Determination Date occurs.
If such rate is no longer displayed on the relevant page, or is not
displayed by 3:00 p.m., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, then the CMT Rate for such
Interest Determination Date will be such Treasury Constant Maturity rate
for the Designated CMT Maturity Index as published in the relevant
H.15(519). If such rate is no longer published, or is not published by
3:00 p.m., New York City time, on the related Calculation Date, then the
CMT Rate for such Interest Determination Date will be such Treasury
Constant Maturity rate for the Designated CMT Maturity Index (or other
United States Treasury rate for the Designated CMT Maturity Index) for the
Interest Determination Date with respect to the related Interest Reset Date
as may then be published by either the Board of Governors of the Federal
Reserve System or the United States Department of the Treasury that the
Calculation Agent determines to be comparable to the rate formerly
displayed on the Designated CMT Telerate Page and published in the relevant
H.15(519). If such information is not provided by 3:00 p.m., New York
time, on the related Calculation Date, then the CMT Rate for the Interest
Determination Date will be calculated by the Calculation Agent and will be
a yield to maturity, based on the arithmetic mean of the secondary market
closing offer side prices as of approximately 3:30 p.m., New York City
time, on the Interest Determination Date reported, according to their
written records, by three leading primary United States government
securities dealers (each, a "Reference Dealer") in The City of New York
(which may include affiliates of the Issuer) selected by the Calculation
Agent (from five such Reference Dealers selected by the Calculation Agent,
after consultation with the Issuer, and eliminating the highest quotation
(or, in the event of equality, one of the highest) and the lowest quotation
(or, in the event of equality, one of the lowest)), for the most recently
issued direct noncallable fixed rate obligations of the United States
("Treasury Notes") with an original maturity of approximately the
Designated CMT Maturity Index and remaining term to maturity of not less
than such Designated CMT Maturity Index minus one year. If the Calculation
Agent cannot obtain three such Treasury Notes quotations, the CMT Rate for
such Interest Determination Date will be calculated by the Calculation
Agent and will be a yield to maturity based on the arithmetic mean of the
secondary market offer side prices as of approximately 3:30 p.m., New York
City time, on the Interest Determination Date of three Reference Dealers in
The City of New York (from five such Reference Dealers selected by the
Calculation Agent, after consultation with the Issuer, 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 $100,000,000. If three or four (and not five) of such
Reference Dealers are quoting as described above, then the CMT Rate will be
based on the arithmetic mean of the offer prices obtained and neither the
highest nor the lowest of such quotes will be eliminated; provided,
however, that if fewer than three Reference Dealers selected by the
Calculation Agent are quoting as described herein, the CMT Rate for such
Interest Reset Date will be the same as the CMT Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset
Period, the rate of interest payable hereon shall be the Initial Interest
Rate). If two Treasury Notes with an original maturity as described in the
second preceding sentence have remaining terms to maturity equally close to
the Designated CMT Maturity Index, the quotes for the Treasury note with
the shorter remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow
Jones Telerate Service specified on the face hereof (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 on the face hereof, the Designated CMT Telerate Page
shall be 7052, for the most recent week.
"Designated CMT Maturity Index" shall be the original period
to maturity of the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20
or 30 years) specified on the face hereof with respect to which the CMT
Rate will be calculated. If no such maturity is specified on the face
hereof, the Designated CMT Maturity Index shall be two years.
Notwithstanding the foregoing, the interest rate hereon
shall not be greater than the Maximum Interest Rate, if any, or less than
the Minimum Interest Rate, if any, specified on the face hereof. The
Calculation Agent shall calculate the interest rate hereon in accordance
with the foregoing on or before each Calculation Date. The interest rate
on this Note will in no event be higher than the maximum rate permitted by
New York law, as the same may be modified by United States Federal law of
general application.
At the request of the holder hereof, the Calculation Agent
will provide to the holder hereof the interest rate hereon then in effect
and, if determined, the interest rate that will become effective as of the
next Interest Reset Date.
Unless otherwise indicated on the face hereof, interest
payments on this Note shall be the amount of interest accrued from and
including the Interest Accrual Date or from and including the last date to
which interest has been paid to but, excluding the Interest Payment Dates
or Maturity Date, as the case may be. Accrued interest hereon for any
period shall be the sum of the products obtained by multiplying the
interest factor calculated for each day in such period by the principal
amount hereof shown on Schedule I hereto for each such day; provided that
for the purpose of calculating the amount of interest payable hereon, any
decrease in the principal amount hereof attributable to an exchange of a
portion of this Note for an interest in the Renewable Note shall be
effective on and as of the Interest Payment Date immediately preceding the
date of such decrease. The interest factor for each such day shall be
computed by dividing the interest rate applicable to such day by 360 if the
Base Rate is CD Rate, Commercial Paper Rate, Federal Funds Rate, Prime Rate
or LIBOR, as specified on the face hereof, or by the actual number of days
in the year if the Base Rate is the Treasury Rate or the CMT Rate, as
specified on the face hereof. All percentages resulting from any
calculation of the rate of interest on this Note will be rounded, if
necessary, to the nearest one hundred-thousandth of a percentage point
(.0000001), with five one-millionths of a percentage point rounded upward,
and all dollar amounts used in or resulting from such calculation on this
Note will be rounded to the nearest cent (with one-half cent rounded
upward). The interest rate in effect on any Interest Reset Date will be
the applicable rate as reset on such date. The interest rate applicable to
any other day is the interest rate from the immediately preceding Interest
Reset Date (or, if none, the Initial Interest Rate).
This Note and all other obligations of the Issuer hereunder
will constitute part of the subordinated debt of the Issuer, will be issued
under the Subordinated Indenture and will be subordinate and junior in
right of payment, to the extent and in the manner set forth in the
Subordinated Indenture, to all "Senior Indebtedness" of the Issuer. The
Subordinated Indenture defines "Senior Indebtedness" as obligations (other
than non-recourse obligations, the debt securities, including this Note,
issued under the Subordinated Indenture or any other obligations
specifically designated as being subordinate in right of payment to Senior
Indebtedness) of, or guaranteed or assumed by, the Issuer for borrowed
money or evidenced by bonds, debentures, notes or other similar
instruments, and amendments, renewals, extensions, modifications and
refundings of any such indebtedness or obligation.
This Note, and any Note or Notes issued upon transfer or
exchange hereof, is issuable only in fully registered form, without
coupons, and is issuable only in denominations of U.S. $1,000 and any
integral multiple of U.S. $1,000 in excess thereof. If this Note is
denominated in a Specified Currency other than U.S. dollars, then, unless a
higher minimum denomination is required by applicable law, it is issuable
only in denominations of the equivalent of U.S. $1,000 (rounded to an
integral multiple of 1,000 units of such Specified Currency), or any amount
in excess thereof which is an integral multiple of 1,000 units of such
Specified Currency, as determined by reference to the noon dollar buying
rate in New York City for cable transfers of such Specified Currency
published by the Federal Reserve Bank of New York (the "Market Exchange
Rate") on the Business Day immediately preceding the date of issuance;
provided, however, in the case of ECUs, the Market Exchange Rate shall be
the rate of exchange determined by the Commission of the European
Communities (or any successor thereto) as published in the Official Journal
of the European Communities, or any successor publication, on the Business
Day immediately preceding the date of issuance.
The Chase Manhattan Bank (formerly known as Chemical Bank)
has been appointed registrar for the Notes (the "Registrar," which term
includes any successor registrar appointed by the Issuer), and the
Registrar will maintain at its office in The City of New York a register
for the registration and transfer of Notes. This Note may be transferred
at the aforesaid office of the Registrar by surrendering this Note for
cancellation, accompanied by a written instrument of transfer in form
satisfactory to the Registrar and duly executed by the registered holder
hereof in person or by the holder's attorney duly authorized in writing,
and thereupon the Registrar shall issue in the name of the transferee or
transferees, in exchange herefor, a new Note or Notes having identical
terms and provisions and having a like aggregate principal amount in
authorized denominations, subject to the terms and conditions set forth
herein; provided, however, that the Registrar will not be required (i) to
register the transfer of or exchange any Note that has been called for
redemption in whole or in part, except the unredeemed portion of Notes
being redeemed in part, (ii) to register the transfer of or exchange any
Note if the holder thereof has exercised his right, if any, to require the
Issuer to repurchase such Note in whole or in part, except the portion of
such Note not required to be repurchased or (iii) to register the transfer
of or exchange Notes to the extent and during the period so provided in the
Subordinated Indenture with respect to the redemption of Notes. Notes are
exchangeable at said office for other Notes of other authorized
denominations of equal aggregate principal amount having identical terms
and provisions. All such exchanges and transfers of Notes will be free of
charge, but the Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge in connection therewith. All Notes
surrendered for exchange shall be accompanied by a written instrument of
transfer in form satisfactory to the Registrar and executed by the
registered holder in person or by the holder's attorney duly authorized in
writing. The date of registration of any Note delivered upon any exchange
or transfer of Notes shall be such that no gain or loss of interest results
from such exchange or transfer.
In case this Note shall at any time become mutilated,
defaced or be destroyed, lost or stolen and this Note or evidence of the
loss, theft or destruction thereof (together with the indemnity hereinafter
referred to and such other documents or proof as may be required in the
premises) shall be delivered to the Registrar, a new Note of like tenor
will be issued by the Issuer in exchange for this Note, but, if this Note
is destroyed, lost or stolen, only upon receipt of evidence satisfactory to
the Registrar and the Issuer that this Note was destroyed or lost or stolen
and, if required, upon receipt also of indemnity satisfactory to each of
them. All expenses and reasonable charges associated with procuring such
indemnity and with the preparation, authentication and delivery of a new
Note shall be borne by the owner of the Note mutilated, defaced, destroyed,
lost or stolen.
The Subordinated Indenture provides that, (a) if an Event of
Default (as defined in the Subordinated Indenture) due to the default in
payment of principal of, premium, if any, or interest on, any series of
debt securities issued under the Subordinated Indenture, including the
series of Subordinated Medium-Term Notes of which this Note forms a part,
or due to the default in the performance or breach of any other covenant or
warranty of the Issuer applicable to the debt securities of such series but
not applicable to all outstanding debt securities issued under the
Subordinated Indenture shall have occurred and be continuing, either the
Trustee or the holders of not less than 25% in principal amount of the debt
securities of each affected series (voting as a single class) may then
declare the principal of all debt securities of all such series and
interest accrued thereon to be due and payable immediately and (b) if an
Event of Default due to a default in the performance of any other of the
covenants or agreements in the Subordinated Indenture applicable to all
outstanding debt securities issued thereunder, including this Note, or due
to certain events of bankruptcy, insolvency and reorganization of the
Issuer, shall have occurred and be continuing, either the Trustee or the
holders of not less than 25% in principal amount of all debt securities
issued under the Subordinated Indenture then outstanding (treated as one
class) may declare the principal of all such debt securities and interest
accrued thereon to be due and payable immediately, but upon certain
conditions such declarations may be annulled and past defaults may be
waived (except a continuing default in payment of principal (or premium, if
any) or interest on such debt securities) by the holders of a majority in
principal amount of the debt securities of all affected series then
outstanding.
The Subordinated Indenture permits the Issuer and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the debt securities of all series issued
under the Subordinated Indenture then outstanding and affected (voting as
one class), to execute supplemental indentures adding any provisions to or
changing in any manner the rights of the holders of each series so
affected; provided that the Issuer and the Trustee may not, without the
consent of the holder of each outstanding debt security affected thereby,
(a) extend the final maturity of any such debt security, or reduce the
principal amount thereof, or reduce the rate or extend the time of payment
of interest thereon, or reduce any amount payable on redemption thereof, or
change the currency of payment thereof, or impair or affect the rights of
any holder to institute suit for the payment thereof without the consent of
the holder of each debt security so affected or (b) reduce the aforesaid
percentage in principal amount of debt securities the consent of the
holders of which is required for any such supplemental indenture; provided,
however, that neither this Note nor the Subordinated Indenture may be
amended to alter the subordination provisions hereof or thereof without the
written consent of each holder of Senior Indebtedness then outstanding that
would be adversely affected thereby.
Except as set forth below, if the principal of, premium, if
any, or interest on, this Note is payable in a Specified Currency other
than U.S. dollars and such Specified Currency is not available to the
Issuer for making payments hereon due to the imposition of exchange
controls or other circumstances beyond the control of the Issuer or is no
longer used by the government of the country issuing such currency or for
the settlement of transactions by public institutions within the
international banking community, then the Issuer will be entitled to
satisfy its obligations to the holder of this Note by making such payments
in U.S. dollars on the basis of the Market Exchange Rate on the date of
such payment or, if the Market Exchange Rate is not available on such date,
as of the most recent practicable date; provided, however, that if such
Specified Currency is replaced by a single European currency (expected to
be named the Euro), the payment of principal of, premium, if any, or
interest on any Note denominated in such currency shall be effected in the
new single European currency in conformity with legally applicable measures
taken pursuant to, or by virtue of, the treaty establishing the European
Community (the "EC"), as amended by the treaty on European Union (as so
amended, the "Treaty"). Any payment made under such circumstances in U.S.
dollars (or, if applicable, such new single European currency) where the
required payment is in a Specified Currency other than U.S. dollars will
not constitute an Event of Default.
Subject to the provisions below, the value of the ECU, in
which the Notes may be denominated or may be payable, is equal to the value
of the ECU that is from time to time used as the unit of account of the EC.
If the ECU becomes a currency in its own right in accordance with the
Treaty, all references to ECU in the Notes shall be construed as references
to such currency.
With respect to each due date for the payment of principal
of, or interest on, the Notes on or after the first business day in
Brussels on which the ECU ceases to be used as the unit of account of the
EC, and has not become a currency in its own right replacing all or some of
the currencies of the member States of the EC, the Company shall choose a
substitute currency (the "Chosen Currency"), which may be any currency
which was, on the last day on which the ECU was used as the unit of account
of the EC, a component currency of the ECU or U.S. dollars, in which all
payments due on or after that date with respect to the Notes and coupons
shall be made. Notice of the Chosen Currency so selected shall be provided
by first class mail to each holder at the address of such holder which
appears on the books maintained by the Registrar and to the Paying Agent.
The amount of each payment in such Chosen Currency shall be computed on the
basis of the equivalent of the ECU in that currency, determined as
described below, as of the fourth business day in Brussels prior to the
date on which such payment is due.
On the first business day in Brussels on which the ECU
ceases to be used as the unit of account of the EC, and has not become a
currency in its own right replacing all or some of the currencies of the
member States of the EC, the Company shall select a Chosen Currency in
which all payments with respect to Notes and coupons having a due date
prior thereto but not yet presented for payment with respect to Notes and
coupons having a due date prior thereto but not yet presented for payment
are to be made. The amount of each payment in such Chosen Currency shall
be computed on the basis of the equivalent of the ECU in that currency,
determined as described below, as of such first business day.
The equivalent of the ECU in the relevant Chosen Currency as
of any date (the "Day of Valuation") shall be determined by, or on behalf
of, the Exchange Rate Agent on the following basis. The amounts and
components composing the ECU for this purpose (the "Components") shall be
the amounts and components that composed the ECU as of the last date on
which the ECU was used as the unit of account of the EC. The equivalent of
the ECU in the Chosen Currency shall be calculated by, first, aggregating
the U.S. dollar equivalents of the Components; and then, in the case of a
Chosen Currency other than U.S. dollars, using the rate used for
determining the U.S. dollar equivalent of the Components in the Chosen
Currency as set forth below, calculating the equivalent in the Chosen
Currency of such aggregate amount in U.S. dollars.
[The "Exchange Rate Agent" shall be Morgan Stanley & Co.
Incorporated, unless otherwise indicated on the face hereof.]
The U.S. dollar equivalent of each of the Components shall
be determined by, or on behalf of, the Exchange Rate Agent on the basis of
the middle spot delivery quotations prevailing at 2:30 p.m., Brussels time,
on the Day of Valuation, as obtained by, or on behalf of, the Exchange Rate
Agent from one or more major banks, as selected by the Company, in the
country of issue of the component currency in question.
If for any reason no direct quotations are available for a
Component as of a Day of Valuation from any of the banks selected for this
purpose, in computing the U.S. dollar equivalent of such Component, the
Exchange Rate Agent shall (except as provided below) use the most recent
direct quotations for such Component obtained by it or on its behalf,
provided that such quotations were prevailing in the country of issue not
more than two Business Days before such Day of Valuation. If such most
recent quotations were so prevailing in the country of issue more than two
Business Days before such Day of Valuation, the Exchange Rate Agent shall
determine the U.S. dollar equivalent of such Component on the basis of
cross rates derived from the middle spot delivery quotations for such
component currency and for the U.S. dollar prevailing at 2:30 p.m.,
Brussels time, on such Day of Valuation, as obtained by, or on behalf of,
the Exchange Rate Agent from one or more major banks, as selected by the
Company, in a country other than the country of issue of such component
currency. Notwithstanding the foregoing, the Exchange Rate Agent shall
determine the U.S. dollar equivalent of such Component on the basis of such
cross rates if the Company or such agent judges that the equivalent so
calculated is more representative than the U.S. dollar equivalent
calculated as provided in the first sentence of this paragraph. Unless
otherwise specified by the Company, if there is more than one market for
dealing in any component currency by reason of foreign exchange regulations
or for any other reason, the market to be referred to in respect of such
currency shall be that upon which a non-resident issuer of securities
denominated in such currency would purchase such currency in order to make
payments in respect of such securities.
Payments in the Chosen Currency will be made at the
specified office of a paying agent in the country of the Chosen Currency,
or, if none, or at the option of the holder, at the specified office of any
Paying Agent either by a check drawn on, or by transfer to an account
maintained by the holder with, a bank in the principal financial center of
the country of the Chosen Currency.
All determinations referred to above made by, or on behalf
of, the Company or by, or on behalf of, the Exchange Rate Agent shall be at
such entity's sole discretion and shall, in the absence of manifest error,
be conclusive to the extent permitted by law for all purposes and binding
on the holder of this Note and coupons, if any.
So long as this Note shall be outstanding, the Issuer will
cause to be maintained an office or agency for the payment of the principal
of and premium, if any, and interest on this Note as herein provided in the
Borough of Manhattan, The City of New York, and an office or agency in said
Borough of Manhattan for the registration, transfer and exchange as
aforesaid of the Notes. The Issuer may designate other agencies for the
payment of said principal, premium and interest at such place or places
(subject to applicable laws and regulations) as the Issuer may decide. So
long as there shall be such an agency, the Issuer shall keep the Trustee
advised of the names and locations of such agencies, if any are so
designated.
With respect to moneys paid by the Issuer and held by the
Trustee or any Paying Agent for the payment of the principal of or interest
or premium, if any, on any Notes that remain unclaimed at the end of two
years after such principal, interest or premium shall have become due and
payable (whether at maturity or upon call for redemption or otherwise), (i)
the Trustee or such Paying Agent shall notify the holders of such Notes
that such moneys shall be repaid to the Issuer and any person claiming such
moneys shall thereafter look only to the Issuer for payment thereof and
(ii) such moneys shall be so repaid to the Issuer. Upon such repayment all
liability of the Trustee or such Paying Agent with respect to such moneys
shall thereupon cease, without, however, limiting in any way any obligation
that the Issuer may have to pay the principal of or interest or premium, if
any, on this Note as the same shall become due.
No provision of this Note or of the Subordinated Indenture
shall alter or impair the obligation of the Issuer, which is absolute and
unconditional, to pay the principal of, premium, if any, and interest on
this Note at the time, place, and rate, and in the coin or currency, herein
prescribed unless otherwise agreed between the Issuer and the registered
holder of this Note.
Prior to due presentment of this Note for registration of
transfer, the Issuer, the Trustee and any agent of the Issuer or the
Trustee may treat the holder in whose name this Note is registered as the
owner hereof for all purposes, whether or not this Note be overdue, and
none of the Issuer, the Trustee or any such agent shall be affected by
notice to the contrary.
No recourse shall be had for the payment of the principal
of, premium, if any, or the interest on this Note, for any claim based
hereon, or otherwise in respect hereof, or based on or in respect of the
Subordinated Indenture or any indenture supplemental thereto, against any
incorporator, shareholder, officer or director, as such, past, present or
future, of the Issuer or of any successor corporation, either directly or
through the Issuer or any successor corporation, whether by virtue of any
constitution, statute or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the
acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
This Note shall for all purposes be governed by, and
construed in accordance with, the laws of the State of New York.
All terms used in this Note which are defined in the
Subordinated Indenture and not otherwise defined herein shall have the
meanings assigned to them in the Subordinated Indenture.
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written
out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as
tenants in common
UNIF GIFT MIN ACT - ________________________ Custodian _______________
(Cust) (Minor)
Under Uniform Gifts to Minors Act ____________________________________
(State)
Additional abbreviations may also be used though not in the
above list.
___________________
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto
________________________________________
[PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE]
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
[PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE]
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing such person attorney to transfer such note on the books of the
Issuer, with full power of substitution in the premises.
Dated:___________________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Note in every particular without
alteration or enlargement or any change whatsoever.
REQUEST TO EXCHANGE
The undersigned hereby requests to exchange the within Note (or
the portion thereof specified below) with the effect provided in the within
Note by surrendering the within Note to the Paying Agent at The Chase
Manhattan Bank (formerly known as Chemical Bank), 55 Water Street, New York,
New York 10041, Attention: Corporate Trustee Administration Department, or
such other address of which the Issuer shall from time to time notify the
holders of the Notes, together with this form of "Request to Exchange" duly
completed by the holder of the within Note.
If less than the entire principal amount of the within Note is
requested to be exchanged, specify the portion thereof (which shall be
$100,000 or an integral multiple of $1,000 in excess thereof) to be exchanged
$______.
Dated:___________________________ -------------------------------
NOTICE: The signature on this
Request to Exchange must
correspond with the name as
written upon the face of the
within Note in every particular,
without alteration or enlargement
or any change whatever.
SCHEDULE I
SCHEDULE OF EXCHANGES
The initial principal amount of this Note is ________________.
The following exchanges of a portion of this Note for an interest in the
Renewable Note have been made: