1
 
PROSPECTUS SUPPLEMENT
 
(TO PROSPECTUS DATED JUNE 24, 1997)
                                 $1,000,000,000
 
                                 CONSECO, INC.
                       SENIOR MEDIUM-TERM NOTES, SERIES A
                    SUBORDINATED MEDIUM-TERM NOTES, SERIES A
                   DUE NINE MONTHS OR MORE FROM DATE OF ISSUE       CONSECO LOGO
                            ------------------------
 
   Conseco, Inc. (the "Company") may offer from time to time up to
$1,000,000,000 aggregate initial offering price, or the equivalent thereof in
one or more foreign or composite currencies, of its Senior Medium-Term Notes,
Series A Due Nine Months or More From Date of Issue (the "Senior Notes") and its
Subordinated Notes, Series A Due Nine Months or More From Date of Issue (the
"Subordinated Notes" and, together with the Senior Notes, the "Notes"). Such
aggregate initial offering price is subject to reduction as a result of the sale
by the Company of other Securities described in the accompanying Prospectus.
Each Note will mature on any day nine months or more from the date of issue, as
specified in the applicable pricing supplement hereto (each, a "Pricing
Supplement"), and may be subject to redemption at the option of the Company or
repayment at the option of the Holder thereof, in each case, in whole or in
part, prior to its Stated Maturity Date, if specified in the applicable Pricing
Supplement. In addition, each Note will be denominated and/or payable in United
States dollars or a foreign or composite currency, as specified in the
applicable Pricing Supplement. The Notes, other than Foreign Currency Notes,
will be issued in minimum denominations of $1,000 and integral multiples
thereof, unless otherwise specified in the applicable Pricing Supplement, while
Foreign Currency Notes will be issued in the minimum denominations specified in
the applicable Pricing Supplement.
   The Company may issue Notes that bear interest at fixed rates ("Fixed Rate
Notes") or at floating rates ("Floating Rate Notes"). The applicable Pricing
Supplement will specify whether a Floating Rate Note is a Regular Floating Rate
Note, a Floating Rate/Fixed Rate Note or an Inverse Floating Rate Note and
whether the rate of interest thereon is determined by reference to one or more
of the CD Rate, the CMT Rate, the Commercial Paper Rate, the Eleventh District
Cost of Funds Rate, the Federal Funds Rate, LIBOR, the Prime Rate or the
Treasury Rate (each, an "Interest Rate Basis"), or any other interest rate basis
or formula, as adjusted by any Spread and/or Spread Multiplier. Interest on each
Floating Rate Note will accrue from its date of issue and, unless otherwise
specified in the applicable Pricing Supplement, will be payable monthly,
quarterly, semiannually or annually in arrears, as specified in the applicable
Pricing Supplement, and on the Maturity Date. Unless otherwise specified in the
applicable Pricing Supplement, the rate of interest on each Floating Rate Note
will be reset daily, weekly, monthly, quarterly, semiannually or annually, as
specified in the applicable Pricing Supplement. Interest on each Fixed Rate Note
will accrue from its date of issue and, unless otherwise specified in the
applicable Pricing Supplement, will be payable semiannually in arrears on
January 15 and July 15 of each year and on the Maturity Date. The Company may
also issue Discount Notes, Indexed Notes and Amortizing Notes.
   The interest rate, or formula for the determination of the interest rate, if
any, applicable to each Note and the other variable terms thereof will be
established by the Company on the date of issue of such Note and will be
specified in the applicable Pricing Supplement. Interest rates or formulas and
other terms of Notes are subject to change by the Company, but no such change
will affect any Note previously issued or as to which an offer to purchase has
been accepted by the Company.
   Each Note will be issued in book-entry form (a "Book-Entry Note") or in fully
registered certificated form (a "Certificated Note"), as specified in the
applicable Pricing Supplement. Each Book-Entry Note will be represented by one
or more fully registered global securities (the "Global Securities") deposited
with or on behalf of The Depository Trust Company (or such other depositary
identified in the applicable Pricing Supplement) (the "Depositary") and
registered in the name of the Depositary or the Depositary's nominee. Interests
in the Global Securities will be shown on, and transfers thereof will be
effected only through, records maintained by the Depositary (with respect to its
participants) and the Depositary's participants (with respect to beneficial
owners). Except in limited circumstances, Book-Entry Notes will not be
exchangeable for Certificated Notes.
 
   SEE "RISK FACTORS RELATING TO THE NOTES" COMMENCING ON PAGE S-2 FOR A
DISCUSSION OF CERTAIN RISKS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN
INVESTMENT IN THE NOTES OFFERED HEREBY.
                            ------------------------
  THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
 EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
   AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
   ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, THE PROSPECTUS OR ANY
  SUPPLEMENT HERETO. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
 


=================================================================================================================================
                                                     PRICE TO                AGENTS' DISCOUNTS               PROCEEDS TO
                                                    PUBLIC(1)              AND COMMISSIONS(1)(2)            COMPANY(1)(3)
                                                                                            
- ---------------------------------------------------------------------------------------------------------------------------------
Per Note..................................             100%                     .125%-.750%                99.875%-99.250%
- ---------------------------------------------------------------------------------------------------------------------------------
Total(4)..................................        $1,000,000,000           $1,250,000-$7,500,000      $998,750,000-$992,500,000
=================================================================================================================================

 
(1)Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
   Chase Securities Inc., Deutsche Morgan Grenfell Inc., First Union Capital
   Markets Corp., Goldman, Sachs & Co., NationsBanc Montgomery Securities, Inc.,
   Salomon Brothers Inc and Smith Barney, Inc. (the "Agents"), individually or
   in a syndicate, may purchase Notes, as principal, from the Company for resale
   to investors and other purchasers at varying prices relating to prevailing
   market prices at the time of resale as determined by the applicable Agent or,
   if so specified in the applicable Pricing Supplement, for resale at a fixed
   offering price. Unless otherwise specified in the applicable Pricing
   Supplement, any Note sold to an Agent as principal will be purchased by such
   Agent at a price equal to 100% of the principal amount thereof less a
   percentage of the principal amount equal to the commission applicable to an
   agency sale (as described below) of a Note of identical maturity. If agreed
   to by the Company and an Agent, such Agent may utilize its reasonable efforts
   on an agency basis to solicit offers to purchase the Notes at 100% of the
   principal amount thereof, unless otherwise specified in the applicable
   Pricing Supplement. The Company will pay a commission to an Agent, ranging
   from .125% to .750% of the principal amount of a Note, depending upon its
   stated maturity, sold through an Agent. Commissions with respect to Notes
   with stated maturities in excess of 30 years that are sold through such Agent
   will be negotiated between the Company and such Agent at the time of such
   sale. See "Supplemental Plan of Distribution."
(2) The Company has agreed to indemnify the Agents against, and to provide
    contribution with respect to, certain liabilities, including liabilities
    under the Securities Act of 1933, as amended. See "Supplemental Plan of
    Distribution."
(3) Before deducting expenses payable by the Company estimated at $1,333,333.
(4) Or the equivalent thereof in one or more foreign or composite currencies.
                            ------------------------
 
    The Notes are being offered on a continuing basis by the Company to or
through the Agents. Unless otherwise specified in the applicable Pricing
Supplement, the Notes will not be listed on any securities exchange. There is no
assurance that the Notes offered hereby will be sold or, if sold, that there
will be a secondary market for the Notes or liquidity in the secondary market if
one develops. The Company reserves the right to cancel or modify the offer made
hereby without notice. The Company or an Agent, if it solicits the offer on an
agency basis, may reject any offer to purchase Notes in whole or in part. See
"Supplemental Plan of Distribution."
                            ------------------------
MERRILL LYNCH & CO.
         CHASE SECURITIES INC.
                   DEUTSCHE MORGAN GRENFELL
                             FIRST UNION CAPITAL MARKETS CORP.
                                      GOLDMAN, SACHS & CO.
                                            NATIONSBANC MONTGOMERY
                                                  SALOMON BROTHERS INC
                            ------------------------     SMITH BARNEY, INC.
 
          The date of this Prospectus Supplement is November 18, 1997.
   2
 
     CERTAIN PERSONS PARTICIPATING IN AN OFFERING OF NOTES PURCHASED BY ONE OR
MORE AGENTS AS PRINCIPAL MAY MAINTAIN OR OTHERWISE AFFECT THE PRICE OF SUCH
NOTES, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN
SUCH NOTES, AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH ANY SUCH
OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "SUPPLEMENTAL PLAN OF
DISTRIBUTION."
 
     FOR NORTH CAROLINA RESIDENTS: THE NOTES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH CAROLINA,
NOR HAS THE COMMISSIONER OF INSURANCE RULED UPON THE ACCURACY OR THE ADEQUACY OF
THIS DOCUMENT.
 
                            ------------------------
 
                             CAUTIONARY STATEMENTS
                      REGARDING FORWARD-LOOKING STATEMENTS
 
     All statements, trend analyses and other information contained or
incorporated by reference in this Prospectus Supplement, the accompanying
Prospectus and elsewhere (such as in other filings with the Securities and
Exchange Commission, press releases, presentations or oral statements) relative
to markets for the Company's products and trends in the Company's operations or
financial results, as well as other statements including words such as
"anticipate," "believe," "plan," "estimate," "expect," "intend," and other
similar expressions, constitute forward-looking statements under the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are
subject to known and unknown risks, uncertainties and other factors which may
cause actual results to be materially different from those contemplated by the
forward-looking statements. Such factors include, among other things: (1)
general economic conditions and other factors, including prevailing interest
rate levels, stock market performance and health care inflation, which may
affect the ability of the Company to sell its products, the market value of the
Company's investments and the lapse rate and profitability of the Company's
policies; (2) the Company's ability to achieve anticipated levels of operational
efficiencies at recently acquired companies, as well as through other
cost-saving initiatives; (3) customer response to new products, distribution
channels and marketing initiatives; (4) mortality, morbidity, usage of health
care services and other factors which may affect the profitability of the
Company's insurance products; (5) changes in the federal income tax laws and
regulations which may affect the relative tax advantages of some of the
Company's products; (6) increasing competition in the sale of the Company's
products; (7) regulatory changes or actions, including those relating to
regulation of financial services affecting (among other things) bank sales and
underwriting of insurance products, regulation of the sale, underwriting and
pricing of insurance products, and health care regulation affecting the
Company's supplemental health insurance products; (8) the availability and terms
of future acquisitions; and (9) the risk factors or uncertainties listed from
time to time in the Company's other filings with the Securities and Exchange
Commission.
 
                                  RISK FACTORS
                             RELATING TO THE NOTES
 
     This Prospectus Supplement does not describe all of the risks of an
investment in Notes, whether resulting from such Notes being denominated or
payable in or determined by reference to a currency or composite currency other
than United States dollars or to one or more interest rate, currency or other
indices or formulas, or otherwise. The Company and the Agents disclaim any
responsibility to advise prospective investors of such risks as they exist at
the date of this Prospectus Supplement or as they change from time to time.
Prospective investors should consult their own financial and legal advisors as
to the risks entailed by an investment in such Notes and the suitability of
investing in such Notes in light of their particular circumstances. Such Notes
are not an appropriate investment for investors who are unsophisticated with
respect to foreign currency transactions or transactions involving the
applicable interest rate or currency index or other indices or formulas.
Prospective investors should carefully consider, among other factors, the
matters described below.
 
                                       S-2
   3
 
STRUCTURE RISKS
 
     An investment in Notes indexed, as to principal, premium, if any, and/or
interest, if any, to one or more interest rate, currency (including exchange
rates and swap indices between currencies or composite currencies) or other
indices or formulas, either directly or inversely, entails significant risks
that are not associated with similar investments in a conventional fixed rate or
floating rate debt security. Such risks include, without limitation, the
possibility that such indices or formulas may be subject to significant changes,
that no interest will be payable in respect of such Notes or will be payable at
a rate lower than one applicable to a conventional fixed rate or floating rate
debt security issued by the Company at the same time, that repayment of the
principal and/or premium, if any, in respect of such Notes may occur at times
other than that expected by the Holders (as defined in the accompanying
Prospectus), and that the Holders could lose all or a substantial portion of
principal and/or premium, if any, payable with respect to such Notes on the
Maturity Date (as defined under "Description of Notes -- General"). Such risks
depend on a number of interrelated factors, including economic, financial and
political events, over which the Company has no control. Additionally, if the
formula used to determine the amount of principal, premium, if any, and/or
interest, if any, payable with respect to such Notes contains a multiplier or
leverage factor, the effect of any change in the applicable index or indices or
formula or formulas will be magnified. In recent years, values of certain
indices and formulas have been highly volatile and such volatility may be
expected to continue in the future. Fluctuations in the value of any particular
index or formula that have occurred in the past are not necessarily indicative,
however, of fluctuations that may occur in the future.
 
     Any optional redemption feature of Notes might affect the market value of
such Notes. Since the Company may be expected to redeem such Notes when
prevailing interest rates are relatively low, Holders generally will not be able
to reinvest the redemption proceeds in a comparable security at an effective
interest rate as high as the current interest rate on such Notes.
 
     The Notes will not have an established trading market when issued, and
there can be no assurance of a secondary market for the Notes or the liquidity
of the secondary market if one develops. See "Supplemental Plan of
Distribution."
 
     The secondary market, if any, for Notes will be affected by a number of
factors independent of the creditworthiness of the Company and the value of the
applicable index or indices or formula or formulas, including the complexity and
volatility of each such index or formula, the method of calculating the
principal, premium, if any, and/or interest, if any, in respect of such Notes,
the time remaining to the maturity of such Notes, the outstanding amount of such
Notes, any redemption features of such Notes, the amount of other debt
securities linked to such index or formula and the level, direction and
volatility of market interest rates generally. Such factors also will affect the
market value of such Notes. In addition, certain Notes may be designed for
specific investment objectives or strategies and, therefore, may have a more
limited secondary market and experience more price volatility than conventional
debt securities. Holders may not be able to sell such Notes readily or at prices
that will enable them to realize their anticipated yield. No investor should
purchase Notes unless such investor understands and is able to bear the risk
that such Notes may not be readily saleable, that the value of such Notes will
fluctuate over time and that such fluctuations may be significant.
 
EXCHANGE RATES AND EXCHANGE CONTROLS
 
     An investment in Foreign Currency Notes (as defined under "Description of
Notes -- General") entails significant risks that are not associated with a
similar investment in a debt security denominated and payable in United States
dollars. Such risks include, without limitation, the possibility of significant
changes in the rate of exchange between the United States dollar and the
Specified Currency (as defined under "Description of Notes -- General") and the
possibility of the imposition or modification of exchange controls by the
applicable governments or monetary authorities. Such risks generally depend on
factors over which the Company has no control, such as economic, financial and
political events and the supply and demand for the applicable currencies or
composite currencies. In addition, if the formula used to determine the amount
of principal, premium, if any, and/or interest, if any, payable with respect to
Foreign Currency Notes contains a
 
                                       S-3
   4
 
multiplier or leverage factor, the effect of any change in the applicable
currencies or composite currencies will be magnified. In recent years, rates of
exchange between the United States dollar and foreign or composite currencies
have been highly volatile and such volatility may be expected to continue in the
future. Fluctuations in any particular exchange rate that have occurred in the
past are not necessarily indicative, however, of fluctuations that may occur in
the future. Depreciation of the Specified Currency applicable to a Foreign
Currency Note against the United States dollar would result in a decrease in the
United States dollar-equivalent yield of such Foreign Currency Note, in the
United States dollar-equivalent value of the principal and premium, if any,
payable on the Maturity Date of such Foreign Currency Note, and, generally, in
the United States dollar-equivalent market value of such Foreign Currency Note.
 
     Governments or monetary authorities have imposed from time to time, and may
in the future impose or revise, exchange controls at or prior to the date on
which any payment of principal of, or premium, if any, or interest, if any, on,
a Foreign Currency Note is due, which could affect exchange rates as well as the
availability of the Specified Currency on such date. Even if there are no
exchange controls, it is possible that the Specified Currency would not be
available on the applicable payment date due to other circumstances beyond the
control of the Company. In such cases, the Company will be entitled to satisfy
its obligations in respect of such Foreign Currency Note in United States
dollars. See "Special Provisions Relating to Foreign Currency Notes --
Availability of Specified Currency."
 
CREDIT RATINGS
 
     The credit ratings assigned to the Company's medium-term note program may
not reflect the potential impact of all risks related to structure and other
factors on the value of the Notes. Accordingly, prospective investors should
consult their own financial and legal advisors as to the risks entailed by an
investment in the Notes and the suitability of investing in such Notes in light
of their particular circumstances.
 
SUBORDINATION
 
     All Subordinated Debt Securities (as defined under "Description of Notes --
General"), including the Subordinated Notes, issued and to be issued under the
Subordinated Indenture (as defined under "Description of Notes") will be
unsecured 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 (as hereinafter defined) of the Company and, along with the Senior
Notes, will be effectively subordinated to all existing and future liabilities
and obligations of the Company's subsidiaries. At September 30, 1997, the
aggregate amount of Senior Indebtedness and liabilities and obligations of the
Company's subsidiaries that would have effectively ranked senior to the
Subordinated Notes was approximately $29 billion. "Senior Indebtedness" means
(i) all indebtedness of the Company, whether outstanding on the date of the
Subordinated Indenture or thereafter created, incurred or assumed, that is for
borrowed money, or evidenced by a note or similar instrument given in connection
with the acquisition of any business, properties or assets, including
securities, (ii) any indebtedness of any other person of the kind described in
the preceding clause (i) for the payment of which the Company is responsible or
liable as guarantor or otherwise and (iii) amendments, renewals, extensions and
refundings of any such indebtedness. Senior Indebtedness shall continue to be
Senior Indebtedness and to be entitled to the benefits of the subordination
provisions of the Subordinated Indenture irrespective of any amendment,
modification or waiver of any term of the Senior Indebtedness or extension or
renewal of the Senior Indebtedness. Senior Indebtedness does not include (A) any
indebtedness of the Company to any of its subsidiaries, (B) indebtedness
incurred for the purchase of goods or materials or for services obtained in the
ordinary course of business and (C) any indebtedness which by its terms is
expressly made pari passu with or subordinated to the Subordinated Debt
Securities.
 
                                       S-4
   5
 
                                USE OF PROCEEDS
 
     The net proceeds received by the Company from the sale of any Notes offered
hereby are expected to be used towards the reduction of indebtedness, for the
financing of acquisitions and for other general corporate purposes.
 
                              DESCRIPTION OF NOTES
 
     The Senior Notes will be issued as a series of Senior Debt Securities under
an Indenture, dated as of November 13, 1997, as amended or modified from time to
time (the "Senior Indenture"), between the Company and LTCB Trust Company, as
trustee (the "Senior Trustee"). The Subordinated Notes will be issued as a
series of Subordinated Debt Securities under an Indenture dated as of November
14, 1996, as amended or modified from time to time (the "Subordinated Indenture"
and, together with the Senior Indenture, the "Indentures"), between the Company
and State Street Bank and Trust Company, successor to Fleet National Bank, as
trustee (the "Subordinated Trustee" and, together with the Senior Trustee, the
"Trustees"). Each Indenture is subject to, and governed by, the Trust Indenture
Act of 1939, as amended. The following summary of certain provisions of the
Notes and the Indentures does not purport to be complete and is subject to, and
is qualified in its entirety by reference to, the actual provisions of the Notes
and the applicable Indenture. Capitalized terms used but not defined herein
shall have the meanings given to them in the accompanying Prospectus, the Notes
or the applicable Indenture, as the case may be. The terms "Senior Debt
Securities" and "Subordinated Debt Securities," as used in this Prospectus
Supplement, refers to all debt securities, including the Notes, issued and
issuable from time to time under the Senior Indenture and the Subordinated
Indenture, respectively. The following description of Notes will apply to each
Note offered hereby unless otherwise specified in the applicable Pricing
Supplement.
 
GENERAL
 
     All Senior Debt Securities, including the Senior Notes, issued and to be
issued under the Senior Indenture will be unsecured and will rank pari passu
with all other unsecured and unsubordinated obligations of the Company. All
Subordinated Debt Securities, including the Subordinated Notes, issued and to be
issued under the Subordinated Indenture will be unsecured 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 Company,
including the Senior Debt Securities. The Indentures do not limit the aggregate
initial offering price of Senior Debt Securities or Subordinated Debt Securities
that may be issued respectively thereunder, nor do they limit the incurrence or
issuance of other secured or unsecured debt of the Company. Senior Debt
Securities or Subordinated Debt Securities may be issued under the Senior
Indenture or the Subordinated Indenture, respectively, from time to time in one
or more series up to the aggregate initial offering price from time to time
authorized by the Company for each series. The Company may, from time to time,
without the consent of the Holders of the Notes, provide for the issuance of
Notes or other Senior Debt Securities or Subordinated Debt Securities, as the
case may be, under the applicable Indenture in addition to the $1,000,000,000
aggregate initial offering price of Notes offered hereby.
 
     The Notes are currently limited to up to $1,000,000,000 aggregate initial
offering price, or the equivalent thereof in one or more foreign or composite
currencies. Each Note will mature on any day nine months or more from its date
of issue (the "Stated Maturity Date"), as specified in the applicable Pricing
Supplement, unless the principal thereof (or any installment of principal
thereof) becomes due and payable prior to the Stated Maturity Date, whether by
the declaration of acceleration of maturity, notice of redemption at the option
of the Company, notice of the Holder's option to elect repayment or otherwise
(the Stated Maturity Date or such prior date, as the case may be, is herein
referred to as the "Maturity Date" with respect to the principal of such Note
repayable on such date). Unless otherwise specified in the applicable Pricing
Supplement, interest-bearing Notes will either be Fixed Rate Notes or Floating
Rate Notes, as specified in the applicable Pricing Supplement. The Company may
also issue Discount Notes, Indexed Notes and Amortizing Notes (as such terms are
hereinafter defined).
 
                                       S-5
   6
 
     Unless otherwise specified in the applicable Pricing Supplement, the Notes
will be denominated in, and payments of principal, premium, if any, and/or
interest, if any, in respect thereof will be made in, United States dollars. The
Notes also may be denominated in, and payments of principal, premium, if any,
and/or interest, if any, in respect thereof may be made in, one or more foreign
or composite currencies ("Foreign Currency Notes"). See "Special Provisions
Relating to Foreign Currency Notes -- Payment of Principal, Premium, if any, and
Interest, if any." The currency or composite currency in which a particular Note
is denominated (or, if such currency or composite currency is no longer legal
tender for the payment of public and private debts, such other currency or
composite currency of the relevant country which is then legal tender for the
payment of such debts) is herein referred to as the "Specified Currency" with
respect to such Note. References herein to "United States dollars", "U.S.
dollars" or "$" are to the lawful currency of the United States of America (the
"United States").
 
     Unless otherwise specified in the applicable Pricing Supplement, purchasers
are required to pay for the Notes in the applicable Specified Currencies. At the
present time, there are limited facilities in the United States for the
conversion of United States dollars into foreign or composite currencies and
vice versa, and commercial banks do not generally offer non-United States dollar
checking or savings account facilities in the United States. The Agent from or
through which a Foreign Currency Note is purchased will be prepared to arrange
for the conversion of United States dollars into the Specified Currency in order
to enable the purchaser to pay for such Foreign Currency Note, provided that a
request is made to such Agent on or prior to the fifth Business Day (as
hereinafter defined) preceding the date of delivery of such Foreign Currency
Note, or by such other day as determined by such Agent. Each such conversion
will be made by such Agent on such terms and subject to such conditions,
limitations and charges as such Agent may from time to time establish in
accordance with its regular foreign exchange practices. All costs of exchange
will be borne by the purchaser of each such Foreign Currency Note. See "Special
Provisions Relating to Foreign Currency Notes."
 
     Interest rates offered by the Company with respect to the Notes may differ
depending upon, among other factors, the aggregate principal amount of Notes
purchased in any single transaction. Notes with different variable terms other
than interest rates may also be offered concurrently to different investors.
Interest rates or formulas and other terms of Notes are subject to change by the
Company from time to time, but no such change will affect any Note previously
issued or as to which an offer to purchase has been accepted by the Company.
 
     Each Note will be issued as a Book-Entry Note represented by one or more
fully registered Global Securities or as a fully registered Certificated Note.
The minimum denominations of each Note other than a Foreign Currency Note will
be $1,000 and integral multiples thereof, unless otherwise specified in the
applicable Pricing Supplement, while the minimum denominations of each Foreign
Currency Note will be specified in the applicable Pricing Supplement.
 
     Payments of principal of, and premium, if any, and interest, if any, on,
Book-Entry Notes will be made by the Company through the appropriate Trustee to
the Depositary. See "-- Book-Entry Notes." In the case of Certificated Notes,
payment of principal and premium, if any, due on the Maturity Date will be made
in immediately available funds upon presentation and surrender thereof (and, in
the case of any repayment on an Optional Repayment Date (as hereinafter
defined), upon submission of a duly completed election form in accordance with
the provisions described below) at the office or agency maintained by the
Company for such purpose in the Borough of Manhattan, The City of New York,
currently, with respect to Senior Notes, the corporate trust office of the
Senior Trustee located at 165 Broadway, 47th Floor New York, New York 10006 and,
with respect to Subordinated Notes, the corporate trust office of the
Subordinated Trustee located at State Street Bank and Trust Company, N.A., 61
Broadway, 15th floor, Corporate Trust Window, New York, New York 10006. Payment
of interest, if any, due on the Maturity Date of a Certificated Note will be
made to the person to whom payment of the principal thereof and premium, if any,
thereon shall be made. Payment of interest, if any, due on a Certificated Note
on any Interest Payment Date (as hereinafter defined) other than the Maturity
Date will be made by check mailed to the address of the Holder entitled thereto
as such address shall appear in the Security Register of the Company.
Notwithstanding the foregoing, a Holder of $10,000,000 (or, if the Specified
Currency is other than United States dollars, the equivalent thereof in such
Specified Currency) or more in aggregate principal amount of Certificated Notes
(whether having identical or different
 
                                       S-6
   7
 
terms and provisions) will be entitled to receive interest payments, if any, on
any Interest Payment Date other than the Maturity Date by wire transfer of
immediately available funds if appropriate wire transfer instructions have been
received in writing by the appropriate Trustee not less than 15 days prior to
such Interest Payment Date. Any such wire transfer instructions received by such
Trustee shall remain in effect until revoked by such Holder. For special payment
terms applicable to Foreign Currency Notes, see "Special Provisions Relating to
Foreign Currency Notes -- Payment of Principal, Premium, if any, and Interest,
if any."
 
     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, regulation or executive order to close in The
City of New York; provided, however, that, with respect to Foreign Currency
Notes, such day is also not a day on which banking institutions are authorized
or required by law, regulation or executive order to close in the Principal
Financial Center (as hereinafter defined) of the country issuing the Specified
Currency (unless the Specified Currency is European Currency Units ("ECU"), in
which case such day is also not a day that appears as an ECU non-settlement day
on the display designated as "ISDE" on the Reuter Monitor Money Rates Service
(or is not a day designated as an ECU non-settlement day by the ECU Banking
Association) or, if ECU non-settlement days do not appear on that page (and are
not so designated), a day that is not a day on which payments in ECU cannot be
settled in the international interbank market); provided, further, that, with
respect to Notes as to which LIBOR is an applicable Interest Rate Basis, such
day is also a London Business Day (as hereinafter defined). "London Business
Day" means a day on which dealings in the Designated LIBOR Currency (as
hereinafter defined) are transacted in the London interbank market.
 
     "Principal Financial Center" means (i) the capital city of the country
issuing the Specified Currency (except as described in the immediately preceding
paragraph with respect to ECU) or (ii) the capital city of the country to which
the Designated LIBOR Currency, if applicable, relates (or, in the case of ECU,
Luxembourg), except, in each case, that with respect to United States dollars,
Australian dollars, Canadian dollars, Deutsche marks, Dutch guilders, Italian
lire and Swiss francs, the "Principal Financial Center" shall be The City of New
York, Sydney, Toronto, Frankfurt, Amsterdam, Milan (solely in the case of clause
(i) above) and Zurich, respectively.
 
     Book-Entry Notes may be transferred or exchanged only through the
Depositary. See "-- Book-Entry Notes." Registration of transfer or exchange of
Certificated Notes will be made at the office or agency maintained by the
Company for such purpose in the Borough of Manhattan, The City of New York,
currently, with respect to Senior Notes the corporate trust office of the Senior
Trustee located at 165 Broadway, 47th Floor, New York, New York 10006 and, with
respect to Subordinated Notes, the corporate trust office of the Subordinated
Trustee located at State Street Bank and Trust Company, N.A., 61 Broadway, 15th
floor, Corporate Trust Window, New York, New York 10006. No service charge will
be made by the Company or either Trustee for any such registration of transfer
or exchange of Notes, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
therewith (other than exchanges pursuant to the applicable Indenture not
involving any transfer).
 
     The defeasance and covenant defeasance provisions contained in the Senior
Indenture and the Subordinated Indenture shall apply to the Senior Notes and the
Subordinated Notes, respectively.
 
REDEMPTION AT THE OPTION OF THE COMPANY
 
     Unless otherwise specified in the applicable Pricing Supplement, the Notes
will not be subject to any sinking fund. The Notes will be redeemable at the
option of the Company prior to the Stated Maturity Date only if an Initial
Redemption Date is specified in the applicable Pricing Supplement. If so
specified, the Notes will be subject to redemption at the option of the Company
on any date on and after the applicable Initial Redemption Date in whole or from
time to time in part in increments of $1,000 or such other minimum denomination
specified in such Pricing Supplement (provided that any remaining principal
amount thereof shall be at least $1,000 or such minimum denomination), at the
applicable Redemption Price (as hereinafter defined), together with unpaid
interest accrued thereon to the date of redemption, on written notice given to
the Holders thereof not more than 60 nor less than 30 calendar days prior to the
date of redemption and in
 
                                       S-7
   8
 
accordance with the provisions of the applicable Indenture. "Redemption Price",
with respect to a Note, means an amount equal to the Initial Redemption
Percentage specified in the applicable Pricing Supplement (as adjusted by the
Annual Redemption Percentage Reduction, if applicable) multiplied by the unpaid
principal amount to be redeemed. The Initial Redemption Percentage, if any,
applicable to a Note shall decline at each anniversary of the Initial Redemption
Date by an amount equal to the applicable Annual Redemption Percentage
Reduction, if any, until the Redemption Price is equal to 100% of the unpaid
principal amount to be redeemed. For a discussion of the redemption of Discount
Notes, see "-- Discount Notes."
 
REPAYMENT AT THE OPTION OF THE HOLDER
 
     The Notes will be repayable by the Company at the option of the Holders
thereof prior to the Stated Maturity Date only if one or more Optional Repayment
Dates are specified in the applicable Pricing Supplement. If so specified, the
Notes will be subject to repayment at the option of the Holders thereof on any
Optional Repayment Date in whole or from time to time in part in increments of
$1,000 or such other minimum denomination specified in the applicable Pricing
Supplement (provided that any remaining principal amount thereof shall be at
least $1,000 or such other minimum denomination), at a repayment price equal to
100% of the unpaid principal amount, or such other repayment price specified in
the applicable Pricing Supplement, to be repaid, together with unpaid interest
accrued thereon to the date of repayment. For any Note to be repaid, such Note
must be received, together with the form thereon entitled "Option to Elect
Repayment" duly completed, by the appropriate Trustee at its office maintained
for such purpose in the Borough of Manhattan, The City of New York, currently,
with respect to Senior Notes, the corporate trust office of the Senior Trustee
located at 165 Broadway, 47th Floor, New York, New York 10006 and, with respect
to Subordinated Notes, the corporate trust office of the Subordinated Trustee
located at State Street Bank and Trust Company, N.A., 61 Broadway, 15th floor,
Corporate Trust Window, New York, New York 10006, not more than 60 nor less than
30 calendar days prior to the date of repayment. Exercise of such repayment
option by the Holder will be irrevocable. For a discussion of the repayment of
Discount Notes, see "-- Discount Notes."
 
     Only the Depositary may exercise the repayment option in respect of Global
Securities representing Book-Entry Notes. Accordingly, Beneficial Owners (as
hereinafter defined) of Global Securities that desire to have all or any portion
of the Book-Entry Notes represented by such Global Securities repaid must
instruct the Participant (as hereinafter defined) through which they own their
interest to direct the Depositary to exercise the repayment option on their
behalf by delivering the related Global Security and duly completed election
form to the appropriate Trustee as aforesaid. In order to ensure that such
Global Security and election form are received by such Trustee on a particular
day, the applicable Beneficial Owner must so instruct the Participant through
which it owns its interest before such Participant's deadline for accepting
instructions for that day. Different firms may have different deadlines for
accepting instructions from their customers. Accordingly, Beneficial Owners
should consult the Participants through which they own their interest for the
respective deadlines for such Participants. All instructions given to
Participants from Beneficial Owners of Global Securities relating to the option
to elect repayment shall be irrevocable. In addition, at the time such
instructions are given, each such Beneficial Owner shall cause the Participant
through which it owns its interest to transfer such Beneficial Owner's interest
in the Global Security or Securities representing the related Book-Entry Notes,
on the Depositary's records, to the appropriate Trustee. See "-- Book-Entry
Notes."
 
     If applicable, the Company will comply with the requirements of Section
14(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and the rules promulgated thereunder, and any other securities laws or
regulations in connection with any such repayment.
 
     The Company may at any time purchase Notes at any price or prices in the
open market or otherwise. Notes so purchased by the Company may, at the
discretion of the Company, be held, resold or surrendered to the appropriate
Trustee for cancellation.
 
                                       S-8
   9
 
INTEREST
 
  General
 
     Unless otherwise specified in the applicable Pricing Supplement, each
interest-bearing Note will bear interest from its date of issue at the rate per
annum, in the case of a Fixed Rate Note, or pursuant to the interest rate
formula, in the case of a Floating Rate Note, in each case as specified in the
applicable Pricing Supplement, until the principal thereof is paid or duly made
available for payment. Unless otherwise specified in the applicable Pricing
Supplement, interest payments in respect of Fixed Rate Notes and Floating Rate
Notes will be made in an amount equal to the interest accrued from and including
the immediately preceding Interest Payment Date in respect of which interest has
been paid or duly made available for payment (or from and including the date of
issue, if no interest has been paid or duly made available for payment) to but
excluding the applicable Interest Payment Date or the Maturity Date, as the case
may be (each, an "Interest Period").
 
     Interest on Fixed Rate Notes and Floating Rate Notes will be payable in
arrears on each Interest Payment Date and on the Maturity Date. Unless otherwise
specified in the applicable Pricing Supplement, the first payment of interest on
any such Note originally issued between a Record Date (as hereinafter defined)
and the related Interest Payment Date will be made on the Interest Payment Date
immediately following the next succeeding Record Date to the Holder on such next
succeeding Record Date. Unless otherwise specified in the applicable Pricing
Supplement, a "Record Date" shall be the fifteenth calendar day (whether or not
a Business Day) immediately preceding the related Interest Payment Date.
 
  Fixed Rate Notes
 
     Interest on Fixed Rate Notes will be payable on January 15 and July 15 of
each year or on such other date(s) specified in the applicable Pricing
Supplement (each, an "Interest Payment Date" with respect to Fixed Rate Notes)
and on the Maturity Date. Unless otherwise specified in the applicable Pricing
Supplement, interest on Fixed Rate Notes will be computed on the basis of a
360-day year of twelve 30-day months.
 
     If any Interest Payment Date or the Maturity Date of a Fixed Rate Note
falls on a day that is not a Business Day, the required payment of principal,
premium, if any, and/or interest will be made on the next succeeding Business
Day as if made on the date such payment was due, and no interest will accrue on
such payment for the period from and after such Interest Payment Date or the
Maturity Date, as the case may be, to the date of such payment on the next
succeeding Business Day.
 
  Floating Rate Notes
 
     Interest on Floating Rate Notes will be determined by reference to the
applicable Interest Rate Basis or Interest Rate Bases, which may, as described
below, include (i) the CD Rate, (ii) the CMT Rate, (iii) the Commercial Paper
Rate, (iv) the Eleventh District Cost of Funds Rate, (v) the Federal Funds Rate,
(vi) LIBOR, (vii) the Prime Rate, (viii) the Treasury Rate, or (ix) such other
Interest Rate Basis or interest rate formula as may be specified in the
applicable Pricing Supplement. The applicable Pricing Supplement will specify
certain terms with respect to which each Floating Rate Note is being delivered,
including: whether such Floating Rate Note is a "Regular Floating Rate Note," a
"Floating Rate/Fixed Rate Note" or an "Inverse Floating Rate Note," the Fixed
Rate Commencement Date, if applicable, Fixed Interest Rate, if applicable,
Interest Rate Basis or Bases, Initial Interest Rate, if any, Initial Interest
Reset Date, Interest Reset Dates, Interest Payment Dates, Index Maturity,
Maximum Interest Rate and/or Minimum Interest Rate, if any, and Spread and/or
Spread Multiplier, if any, as such terms are defined below. If one or more of
the applicable Interest Rate Bases is LIBOR or the CMT Rate, the applicable
Pricing Supplement will also specify the Designated LIBOR Currency and
Designated LIBOR Page or the Designated CMT Maturity Index and Designated CMT
Telerate Page, respectively, as such terms are defined below.
 
                                       S-9
   10
 
     The interest rate borne by the Floating Rate Notes will be determined as
follows:
 
          (i) Unless such Floating Rate Note is designated as a "Floating
     Rate/Fixed Rate Note" or an "Inverse Floating Rate Note", or as having an
     Addendum attached or having "Other/Additional Provisions" apply, in each
     case relating to a different interest rate formula, such Floating Rate Note
     will be designated as a "Regular Floating Rate Note" and, except as
     described below or in the applicable Pricing Supplement, will bear interest
     at the rate determined by reference to the applicable Interest Rate Basis
     or Bases (a) plus or minus the applicable Spread, if any, and/or (b)
     multiplied by the applicable Spread Multiplier, if any. Commencing on the
     Initial Interest Reset Date, the rate at which interest on such Regular
     Floating Rate Note shall be payable shall be reset as of each Interest
     Reset Date; provided, however, that the interest rate in effect for the
     period, if any, from the date of issue to the Initial Interest Reset Date
     will be the Initial Interest Rate.
 
          (ii) If such Floating Rate Note is designated as a "Floating
     Rate/Fixed Rate Note," then, except as described below or in the applicable
     Pricing Supplement, such Floating Rate Note will bear interest at the rate
     determined by reference to the applicable Interest Rate Basis or Bases (a)
     plus or minus the applicable Spread, if any, and/or (b) multiplied by the
     applicable Spread Multiplier, if any. Commencing on the Initial Interest
     Reset Date, the rate at which interest on such Floating Rate/Fixed Rate
     Note shall be payable shall be reset as of each Interest Reset Date;
     provided, however, that (y) the interest rate in effect for the period, if
     any, from the date of issue to the Initial Interest Reset Date will be the
     Initial Interest Rate and (z) the interest rate in effect for the period
     commencing on the Fixed Rate Commencement Date to the Maturity Date shall
     be the Fixed Interest Rate, if such rate is specified in the applicable
     Pricing Supplement or, if no such Fixed Interest Rate is specified, the
     interest rate in effect thereon on the day immediately preceding the Fixed
     Rate Commencement Date.
 
          (iii) If such Floating Rate Note is designated as an "Inverse Floating
     Rate Note," then, except as described below or in the applicable Pricing
     Supplement, such Floating Rate Note will bear interest at the Fixed
     Interest Rate minus the rate determined by reference to the applicable
     Interest Rate Basis or Bases (a) plus or minus the applicable Spread, if
     any, and/or (b) multiplied by the applicable Spread Multiplier, if any;
     provided, however, that, unless otherwise specified in the applicable
     Pricing Supplement, the interest rate thereon will not be less than zero.
     Commencing on the Initial Interest Reset Date, the rate at which interest
     on such Inverse Floating Rate Note shall be payable shall be reset as of
     each Interest Reset Date; provided, however, that the interest rate in
     effect for the period, if any, from the date of issue to the Initial
     Interest Reset Date will be the Initial Interest Rate.
 
     The "Spread" is the number of basis points to be added to or subtracted
from the related Interest Rate Basis or Bases applicable to such Floating Rate
Note. The "Spread Multiplier" is the percentage of the related Interest Rate
Basis or Bases applicable to such Floating Rate Note by which such Interest Rate
Basis or Bases will be multiplied to determine the applicable interest rate on
such Floating Rate Note. The "Index Maturity" is the period to maturity of the
instrument or obligation with respect to which the related Interest Rate Basis
or Bases will be calculated.
 
     Unless otherwise specified in the applicable Pricing Supplement, the
interest rate with respect to each Interest Rate Basis will be determined in
accordance with the applicable provisions below. Except as set forth above or in
the applicable Pricing Supplement, the interest rate in effect on each day shall
be (i) if such day is an Interest Reset Date, the interest rate determined as of
the Interest Determination Date (as hereinafter defined) immediately preceding
such Interest Reset Date or (ii) if such day is not an Interest Reset Date, the
interest rate determined as of the Interest Determination Date immediately
preceding the most recent Interest Reset Date.
 
     The applicable Pricing Supplement will specify whether the rate of interest
on the related Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semiannually or annually or on such other specified basis (each, an
"Interest Reset Period") and the dates on which such rate of interest will be
reset (each, an "Interest Reset Date"). Unless otherwise specified in the
applicable Pricing Supplement, the Interest Reset Dates will be, in the case of
Floating Rate Notes which reset: (i) daily, each Business Day; (ii) weekly, the
Wednesday of each week (with the exception of weekly reset Floating Rate Notes
as to which the Treasury
 
                                      S-10
   11
 
Rate is an applicable Interest Rate Basis, which will reset the Tuesday of each
week, except as described below); (iii) monthly, the third Wednesday of each
month (with the exception of monthly reset Floating Rate Notes as to which the
Eleventh District Cost of Funds Rate is an applicable Interest Rate Basis, which
will reset on the first calendar day of the month); (iv) quarterly, the third
Wednesday of March, June, September and December of each year; (v) semiannually,
the third Wednesday of the two months specified in the applicable Pricing
Supplement; and (vi) annually, the third Wednesday of the month specified in the
applicable Pricing Supplement; provided however, that, with respect to Floating
Rate/Fixed Rate Notes, the rate of interest thereon will not reset after the
applicable Fixed Rate Commencement Date. If any Interest Reset Date for any
Floating Rate Note would otherwise be a day that is not a Business Day, such
Interest Reset Date will be postponed to the next succeeding Business Day,
except that in the case of a Floating Rate Note as to which LIBOR is an
applicable Interest Rate Basis and such Business Day falls in the next
succeeding calendar month, such Interest Reset Date will be the immediately
preceding Business Day.
 
     The interest rate applicable to each Interest Reset Period commencing on
the related Interest Reset Date will be the rate determined by the Calculation
Agent (as hereinafter defined) as of the applicable Interest Determination Date
and calculated on or prior to the Calculation Date (as hereinafter defined),
except with respect to LIBOR and the Eleventh District Cost of Funds Rate, which
will be calculated on such Interest Determination Date. The "Interest
Determination Date" with respect to the CD Rate, the CMT Rate, the Commercial
Paper Rate, the Federal Funds Rate and the Prime Rate will be the second
Business Day immediately preceding the applicable Interest Reset Date; the
"Interest Determination Date" with respect to the Eleventh District Cost of
Funds Rate will be the last working day of the month immediately preceding the
applicable Interest Reset Date on which the Federal Home Loan Bank of San
Francisco (the "FHLB of San Francisco") publishes the Index (as hereinafter
defined); and the "Interest Determination Date" with respect to LIBOR will be
the second London Business Day immediately preceding the applicable Interest
Reset Date, unless the Designated LIBOR Currency is British pounds sterling, in
which case the "Interest Determination Date" will be the applicable Interest
Reset Date. With respect to the Treasury Rate, the "Interest Determination Date"
will be the day in the week in which the applicable Interest Reset Date falls on
which day Treasury Bills (as hereinafter defined) are normally auctioned
(Treasury Bills are normally sold at an auction held on Monday of each week,
unless that day is a legal holiday, in which case the auction is normally held
on the following Tuesday, except that such auction may be held on the preceding
Friday); provided, however, that if an auction is held on the Friday of the week
preceding the applicable Interest Reset Date, the "Interest Determination Date"
will be such preceding Friday; provided, further, that if the Interest
Determination Date would otherwise fall on an Interest Reset Date, then such
Interest Reset Date will be postponed to the next succeeding Business Day. The
"Interest Determination Date" pertaining to a Floating Rate Note the interest
rate of which is determined by reference to two or more Interest Rate Bases will
be the most recent Business Day which is at least two Business Days prior to the
applicable Interest Reset Date for such Floating Rate Note on which each
Interest Rate Basis is determinable. Each Interest Rate Basis will be determined
as of such date, and the applicable interest rate will take effect on the
applicable Interest Reset Date.
 
     Notwithstanding the foregoing, a Floating Rate Note may also have either or
both of the following: (i) a Maximum Interest Rate, or ceiling, that may accrue
during any Interest Period and (ii) a Minimum Interest Rate, or floor, that may
accrue during any Interest Period. In addition to any Maximum Interest Rate that
may apply to any Floating Rate Note, the interest rate on Floating Rate Notes
will in no event be higher than the maximum rate permitted by New York law, as
the same may be modified by United States law of general application.
 
     Except as provided below or in the applicable Pricing Supplement, interest
will be payable, in the case of Floating Rate Notes which reset: (i) daily,
weekly or monthly, on the third Wednesday of each month or on the third
Wednesday of March, June, September and December of each year, as specified in
the applicable Pricing Supplement; (ii) quarterly, on the third Wednesday of
March, June, September and December of each year; (iii) semiannually, on the
third Wednesday of the two months of each year specified in the applicable
Pricing Supplement; and (iv) annually, on the third Wednesday of the month of
each year specified in the applicable Pricing Supplement (each, an "Interest
Payment Date" with respect to Floating Rate
 
                                      S-11
   12
 
Notes) and, in each case, on the Maturity Date. If any Interest Payment Date
other than the Maturity Date for any Floating Rate Note would otherwise be a day
that is not a Business Day, such Interest Payment Date will be postponed to the
next succeeding Business Day, except that in the case of a Floating Rate Note as
to which LIBOR is an applicable Interest Rate Basis and such Business Day falls
in the next succeeding calendar month, such Interest Payment Date will be the
immediately preceding Business Day. If the Maturity Date of a Floating Rate Note
falls on a day that is not a Business Day, the required payment of principal,
premium, if any, and interest will be made on the next succeeding Business Day
as if made on the date such payment was due, and no interest will accrue on such
payment for the period from and after the Maturity Date to the date of such
payment on the next succeeding Business Day.
 
     All percentages resulting from any calculation on Floating Rate Notes will
be rounded to the nearest one hundred-thousandth of a percentage point, with
five-one millionths of a percentage point rounded upwards (e.g., 9.876545% (or
 .09876545) would be rounded to 9.87655% (or .0987655)), and all amounts used in
or resulting from such calculation on Floating Rate Notes will be rounded, in
the case of United States dollars, to the nearest cent or, in the case of a
foreign or composite currency, to the nearest unit (with one-half cent or unit
being rounded upwards).
 
     With respect to each Floating Rate Note, accrued interest is calculated by
multiplying its principal amount by an accrued interest factor. Such accrued
interest factor is computed by adding the interest factor calculated for each
day in the applicable Interest Period. Unless otherwise specified in the
applicable Pricing Supplement, the interest factor for each such day will be
computed by dividing the interest rate applicable to such day by 360, in the
case of Floating Rate Notes for which an applicable Interest Rate Basis is the
CD Rate, the Commercial Paper Rate, the Eleventh District Cost of Funds Rate,
the Federal Funds Rate, LIBOR or the Prime Rate, or by the actual number of days
in the year in the case of Floating Rate Notes for which an applicable Interest
Rate Basis is the CMT Rate or the Treasury Rate. Unless otherwise specified in
the applicable Pricing Supplement, the interest factor for Floating Rate Notes
for which the interest rate is calculated with reference to two or more Interest
Rate Bases will be calculated in each period in the same manner as if only the
applicable Interest Rate Basis specified in the applicable Pricing Supplement
applied.
 
     Unless otherwise specified in the applicable Pricing Supplement, The
Long-Term Credit Bank of Japan, Ltd. will be the "Calculation Agent" with
respect to any Floating Rate Note that is a Senior Note and Fleet National Bank
will be the "Calculation Agent" with respect to any Floating Rate Note that is a
Subordinated Note. Upon request of the Holder of any Floating Rate Note, the
Calculation Agent will disclose the interest rate then in effect and, if
determined, the interest rate that will become effective as a result of a
determination made for the next succeeding Interest Reset Date with respect to
such Floating Rate Note. Unless otherwise specified in the applicable Pricing
Supplement, the "Calculation Date," if applicable, pertaining to any Interest
Determination Date will be the earlier of (i) the tenth calendar day after such
Interest Determination Date or, if such day is not a Business Day, the next
succeeding Business Day or (ii) the Business Day immediately preceding the
applicable Interest Payment Date or the Maturity Date, as the case may be.
 
     Unless otherwise specified in the applicable Pricing Supplement, the
Calculation Agent shall determine each Interest Rate Basis in accordance with
the following provisions.
 
     CD RATE. Unless otherwise specified in the applicable Pricing Supplement,
"CD Rate" means, with respect to any Interest Determination Date relating to a
Floating Rate Note for which the interest rate is determined with reference to
the CD Rate (a "CD Rate Interest Determination Date"), the rate on such date for
negotiable United States dollar certificates of deposit having the Index
Maturity specified in the applicable Pricing Supplement as published by the
Board of Governors of the Federal Reserve System in "Statistical Release
H.15(519), Selected Interest Rates" or any successor publication ("H.15(519)")
under the heading "CDs (Secondary Market)," or, if not published by 3:00 P.M.,
New York City time, on the related Calculation Date, the rate on such CD Rate
Interest Determination Date for negotiable United States dollar certificates of
deposit of the Index Maturity specified in the applicable Pricing Supplement as
published by the Federal Reserve Bank of New York in its daily statistical
release "Composite 3:30 P.M. Quotations for U.S. Government Securities" or any
successor publication ("Composite Quotations") under the heading "Certificates
of Deposit." If such rate is not yet published in either H.15(519) or Composite
Quotations by 3:00 P.M.,
 
                                      S-12
   13
 
New York City time, on the related Calculation Date, then the CD Rate on such CD
Rate Interest Determination Date will be calculated by the Calculation Agent and
will be the arithmetic mean of the secondary market offered rates as of 10:00
A.M., New York City time, on such CD Rate Interest Determination Date, of three
leading nonbank dealers in negotiable United States dollar certificates of
deposit in The City of New York (which may include the Agents or their
affiliates) selected by the Calculation Agent for negotiable United States
dollar certificates of deposit of major United States money center banks for
negotiable certificates of deposit with a remaining maturity closest to the
Index Maturity specified in the applicable Pricing Supplement in an amount that
is representative for a single transaction in that market at that time;
provided, however, that if the dealers so selected by the Calculation Agent are
not quoting as mentioned in this sentence, the CD Rate determined as of such CD
Rate Interest Determination Date will be the CD Rate in effect on such CD Rate
Interest Determination Date.
 
     CMT RATE. Unless otherwise specified in the applicable Pricing Supplement,
"CMT Rate" means, with respect to any Interest Determination Date relating to a
Floating Rate Note for which the interest rate is determined with reference to
the CMT Rate (a "CMT Rate Interest Determination Date"), the rate displayed on
the Designated CMT Telerate Page under the caption "...Treasury Constant
Maturities...Federal Reserve Board Release H.15...Mondays Approximately 3:45
P.M.," under the column for the Designated CMT Maturity Index for (i) if the
Designated CMT Telerate Page is 7055, the rate on such CMT Rate Interest
Determination Date and (ii) if the Designated CMT Telerate Page is 7052, the
weekly or monthly average, as specified in the applicable Pricing Supplement,
for the week or the month, as applicable, ended immediately preceding the week
or the month, as applicable, in which the related CMT Rate Interest
Determination Date falls. 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 related
Calculation Date, then the CMT Rate for such CMT Rate Interest Determination
Date will be such treasury constant maturity rate for the Designated CMT
Maturity Index as published in 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 on such CMT Rate Interest Determination Date will be
such treasury constant maturity rate for the Designated CMT Maturity Index (or
other United States Treasury rate for the Designated CMT Maturity Index) for the
CMT Rate Interest Determination Date with respect to such Interest Reset Date as
may then be published by either the Board of 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 H.15(519). If such information is
not provided by 3:00 P.M., New York City time, on the related Calculation Date,
then the CMT Rate on the CMT Rate Interest Determination Date will be calculated
by the Calculation Agent and will be a yield to maturity, based on the
arithmetic mean of the secondary market offered rates as of approximately 3:30
P.M., New York City time, on such CMT Rate Interest Determination Date reported,
according to their written records, by three leading primary United States
government securities dealers in The City of New York (which may include the
Agents or their affiliates) (each, a "Reference Dealer") selected by the
Calculation Agent (from five such Reference Dealers selected by the Calculation
Agent and eliminating the highest quotation (or, in the event of equality, one
of the highest) and the lowest quotation (or, in the event of equality, one of
the lowest)), for the most recently issued direct noncallable fixed rate
obligations of the United States ("Treasury Notes") with an original maturity of
approximately the Designated CMT Maturity Index and a remaining term to maturity
of not less than such Designated CMT Maturity Index minus one year. If the
Calculation Agent is unable to obtain three such Treasury Note quotations, the
CMT Rate on such CMT Rate Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity based on the arithmetic mean
of the secondary market offered rates as of approximately 3:30 P.M., New York
City time, on such CMT Rate Interest Determination Date of three Reference
Dealers in The City of New York (from five such Reference Dealers selected by
the Calculation Agent and eliminating the highest quotation (or, in the event of
equality, one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for Treasury Notes with an original maturity of
the number of years that is the next highest to the Designated CMT Maturity
Index and a remaining term to maturity closest to the Designated CMT Maturity
Index and in an amount of at least $100 million. If three or four (and not five)
of such Reference Dealers are quoting as described above, then the CMT Rate will
be based on the arithmetic mean of the offered rates obtained and
 
                                      S-13
   14
 
neither the highest nor the lowest of such quotes will be eliminated; provided,
however, that if fewer than three Reference Dealers so selected by the
Calculation Agent are quoting as mentioned herein, the CMT Rate determined as of
such CMT Rate Interest Determination Date will be the CMT Rate in effect on such
CMT Rate Interest Determination Date. If two Treasury Notes with an original
maturity as described in the second preceding sentence have remaining terms to
maturity equally close to the Designated CMT Maturity Index, the Calculation
Agent will obtain quotations for the Treasury Note with the shorter remaining
term to maturity.
 
     "Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service (or any successor service) on the page specified in the applicable
Pricing Supplement (or any other page as may replace such page on such service)
for the purpose of displaying Treasury Constant Maturities as reported in
H.15(519). If no such page is specified in the applicable Pricing Supplement,
the Designated CMT Telerate Page shall be 7052 for the most recent week.
 
     "Designated CMT Maturity Index" means the original period to maturity of
the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years)
specified in the applicable Pricing Supplement with respect to which the CMT
Rate will be calculated or, if no such maturity is specified in the applicable
Pricing Supplement, 2 years.
 
     COMMERCIAL PAPER RATE. Unless otherwise specified in the applicable Pricing
Supplement, "Commercial Paper Rate" means, with respect to any Interest
Determination Date relating to a Floating Rate Note for which the interest rate
is determined with reference to the Commercial Paper Rate (a "Commercial Paper
Rate Interest Determination Date"), the Money Market Yield (as hereinafter
defined) on such date of the rate for commercial paper having the Index Maturity
specified in the applicable Pricing Supplement as published in H.15(519) under
the heading "Commercial Paper -- Nonfinancial". In the event that such rate is
not published by 3:00 P.M., New York City time, on the related Calculation Date,
then the Commercial Paper Rate on such Commercial Paper Rate Interest
Determination Date will be the Money Market Yield of the rate for commercial
paper having the Index Maturity specified in the applicable Pricing Supplement
as published in Composite Quotations under the heading "Commercial Paper" (with
an Index Maturity of one month or three months being deemed to be equivalent to
an Index Maturity of 30 days or 90 days, respectively). If such rate is not yet
published in either H.15(519) or Composite Quotations by 3:00 P.M., New York
City time, on the related Calculation Date, then the Commercial Paper Rate on
such Commercial Paper Rate Interest Determination Date will be calculated by the
Calculation Agent and will be the Money Market Yield of the arithmetic mean of
the offered rates at approximately 11:00 A.M., New York City time, on such
Commercial Paper Rate Interest Determination Date of three leading dealers of
commercial paper in The City of New York (which may include the Agents or their
affiliates) selected by the Calculation Agent for commercial paper having the
Index Maturity specified in the applicable Pricing Supplement placed for an
industrial issuer whose bond rating is "Aa", or the equivalent, from a
nationally recognized statistical rating organization; provided, however, that
if the dealers so selected by the Calculation Agent are not quoting as mentioned
in this sentence, the Commercial Paper Rate determined as of such Commercial
Paper Rate Interest Determination Date will be the Commercial Paper Rate in
effect on such Commercial Paper Rate Interest Determination Date.
 
     "Money Market Yield" means a yield (expressed as a percentage) calculated
in accordance with the following formula:
 
                                 
                              D X 360
  Money Market Yield  =    -------------   X   100
                           360 - (D X M)

  
 
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the applicable Interest Reset Period.
 
     ELEVENTH DISTRICT COST OF FUNDS RATE. Unless otherwise specified in the
applicable Pricing Supplement, "Eleventh District Cost of Funds Rate" means,
with respect to any Interest Determination Date relating to a Floating Rate Note
for which the interest rate is determined with reference to the Eleventh
District Cost of Funds Rate (an "Eleventh District Cost of Funds Rate Interest
Determination Date"), the rate equal to the
 
                                      S-14
   15
 
monthly weighted average cost of funds for the calendar month immediately
preceding the month in which such Eleventh District Cost of Funds Rate Interest
Determination Date falls, as set forth under the caption "11th District" on
Telerate Page 7058 as of 11:00 A.M., San Francisco time, on such Eleventh
District Cost of Funds Rate Interest Determination Date. If such rate does not
appear on Telerate Page 7058 on such Eleventh District Cost of Funds Rate
Interest Determination Date, then the Eleventh District Cost of Funds Rate on
such Eleventh District Cost of Funds Rate Interest Determination Date shall be
the monthly weighted average cost of funds paid by member institutions of the
Eleventh Federal Home Loan Bank District that was most recently announced (the
"Index") by the FHLB of San Francisco as such cost of funds for the calendar
month immediately preceding such Eleventh District Cost of Funds Rate Interest
Determination Date. If the FHLB of San Francisco fails to announce the Index on
or prior to such Eleventh District Cost of Funds Rate Interest Determination
Date for the calendar month immediately preceding such Eleventh District Cost of
Funds Rate Interest Determination Date, the Eleventh District Cost of Funds Rate
determined as of such Eleventh District Cost of Funds Rate Interest
Determination Date will be the Eleventh District Cost of Funds Rate in effect on
such Eleventh District Cost of Funds Rate Interest Determination Date.
 
     FEDERAL FUNDS RATE. Unless otherwise specified in the applicable Pricing
Supplement, "Federal Funds Rate" means, with respect to any Interest
Determination Date relating to a Floating Rate Note for which the interest rate
is determined with reference to the Federal Funds Rate (a "Federal Funds Rate
Interest Determination Date"), the rate on such date for United States dollar
federal funds as published in H.15(519) under the heading "Federal Funds
(Effective)" or, if not published by 3:00 P.M., New York City time, on the
related Calculation Date, the rate on such Federal Funds Rate Interest
Determination Date as published in Composite Quotations under the heading
"Federal Funds/Effective Rate." If such rate is not published in either
H.15(519) or Composite Quotations by 3:00 P.M., New York City time, on the
related Calculation Date, then the Federal Funds Rate on such Federal Funds Rate
Interest Determination Date will be calculated by the Calculation Agent and will
be the arithmetic mean of the rates for the last transaction in overnight United
States dollar federal funds arranged by three leading brokers of federal funds
transactions in The City of New York (which may include the Agents or their
affiliates) selected by the Calculation Agent prior to 9:00 A.M., New York City
time, on such Federal Funds Rate Interest Determination Date; provided, however,
that if the brokers so selected by the Calculation Agent are not quoting as
mentioned in this sentence, the Federal Funds Rate determined as of such Federal
Funds Rate Interest Determination Date will be the Federal Funds Rate in effect
on such Federal Funds Rate Interest Determination Date.
 
     LIBOR. Unless otherwise specified in the applicable Pricing Supplement,
"LIBOR" means the rate determined in accordance with the following provisions:
 
          (i) With respect to any Interest Determination Date relating to a
     Floating Rate Note for which the interest rate is determined with reference
     to LIBOR (a "LIBOR Interest Determination Date"), LIBOR will be either: (a)
     if "LIBOR Reuters" is specified in the applicable Pricing Supplement, the
     arithmetic mean of the offered rates (unless the Designated LIBOR Page by
     its terms provides only for a single rate, in which case such single rate
     shall be used) for deposits in the Designated LIBOR Currency having the
     Index Maturity specified in such Pricing Supplement, commencing on the
     applicable Interest Reset Date, that appear (or, if only a single rate is
     required as aforesaid, appears) on the Designated LIBOR Page as of 11:00
     A.M., London time, on such LIBOR Interest Determination Date, or (b) if
     "LIBOR Telerate" is specified in the applicable Pricing Supplement or if
     neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the applicable
     Pricing Supplement as the method for calculating LIBOR, the rate for
     deposits in the Designated LIBOR Currency having the Index Maturity
     specified in such Pricing Supplement, commencing on such Interest Reset
     Date, that appears on the Designated LIBOR Page as of 11:00 A.M., London
     time, on such LIBOR Interest Determination Date. If fewer than two such
     offered rates so appear, or if no such rate so appears, as applicable,
     LIBOR on such LIBOR Interest Determination Date will be determined in
     accordance with the provisions described in clause (ii) below.
 
          (ii) With respect to a LIBOR Interest Determination Date on which
     fewer than two offered rates appear, or no rate appears, as the case may
     be, on the Designated LIBOR Page as specified in clause (i) above, the
     Calculation Agent will request the principal London offices of each of four
     major reference
 
                                      S-15
   16
 
     banks (which may include affiliates of the Agents) in the London interbank
     market, as selected by the Calculation Agent, to provide the Calculation
     Agent with its offered quotation for deposits in the Designated LIBOR
     Currency for the period of the Index Maturity specified in the applicable
     Pricing Supplement, commencing on the applicable Interest Reset Date, to
     prime banks in the London interbank market at approximately 11:00 A.M.,
     London time, on such LIBOR Interest Determination Date and in a principal
     amount that is representative for a single transaction in the Designated
     LIBOR Currency in such market at such time. If at least two such quotations
     are so provided, then LIBOR on such LIBOR Interest Determination Date will
     be the arithmetic mean of such quotations. If fewer than two such
     quotations are so provided, then LIBOR on such LIBOR Interest Determination
     Date will be the arithmetic mean of the rates quoted at approximately 11:00
     A.M., in the applicable Principal Financial Center, on such LIBOR Interest
     Determination Date by three major banks (which may include affiliates of
     the Agents) in such Principal Financial Center selected by the Calculation
     Agent for loans in the Designated LIBOR Currency to leading European banks,
     having the Index Maturity specified in the applicable Pricing Supplement
     and in a principal amount that is representative for a single transaction
     in the Designated LIBOR Currency in such market at such time; provided,
     however, that if the banks so selected by the Calculation Agent are not
     quoting as mentioned in this sentence, LIBOR determined as of such LIBOR
     Interest Determination Date will be LIBOR in effect on such LIBOR Interest
     Determination Date.
 
     "Designated LIBOR Currency" means the currency or composite currency
specified in the applicable Pricing Supplement as to which LIBOR shall be
calculated or, if no such currency or composite currency is specified in the
applicable Pricing Supplement, United States dollars.
 
     "Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified in the
applicable Pricing Supplement, the display on the Reuter Monitor Money Rates
Service (or any successor service) on the page specified in such Pricing
Supplement (or any other page as may replace such page on such service) for the
purpose of displaying the London interbank rates of major banks for the
Designated LIBOR Currency, or (b) if "LIBOR Telerate" is specified in the
applicable Pricing Supplement or neither "LIBOR Reuters" nor "LIBOR Telerate" is
specified in the applicable Pricing Supplement as the method for calculating
LIBOR, the display on the Dow Jones Telerate Service (or any successor service)
on the page specified in such Pricing Supplement (or any other page as may
replace such page on such service) for the purpose of displaying the London
interbank rates of major banks for the Designated LIBOR Currency.
 
     PRIME RATE. Unless otherwise specified in the applicable Pricing
Supplement, "Prime Rate" means, with respect to any Interest Determination Date
relating to a Floating Rate Note for which the interest rate is determined with
reference to the Prime Rate (a "Prime Rate Interest Determination Date"), the
rate on such date as such rate is published in H.15(519) under the heading "Bank
Prime Loan." If such rate is not published prior to 3:00 P.M., New York City
time, on the related Calculation Date, then the Prime Rate shall be the
arithmetic mean of the rates of interest publicly announced by each bank that
appears on the Reuters Screen USPRIME1 Page (as hereinafter defined) as such
bank's prime rate or base lending rate as in effect for such Prime Rate Interest
Determination Date. If fewer than four such rates appear on the Reuters Screen
USPRIME1 Page for such Prime Rate Interest Determination Date, then the Prime
Rate shall be the arithmetic mean of the prime rates or base lending rates
quoted on the basis of the actual number of days in the year divided by a
360-day year as of the close of business on such Prime Rate Interest
Determination Date by four major money center banks (which may include
affiliates of the Agents) in The City of New York selected by the Calculation
Agent. If fewer than four such quotations are so provided, then the Prime Rate
shall be the arithmetic mean of four prime rates quoted on the basis of the
actual number of days in the year divided by a 360-day year as of the close of
business on such Prime Rate Interest Determination Date as furnished in The City
of New York by the major money center banks, if any, that have provided such
quotations and by a reasonable number of substitute banks or trust companies
(which may include affiliates of the Agents) to obtain four such prime rate
quotations, provided such substitute banks or trust companies are organized and
doing business under the laws of the United States, or any State thereof, each
having total equity capital of at least $500 million and being subject to
supervision or examination by Federal or State authority, selected by the
Calculation Agent to provide such rate or rates; provided, however, that if the
banks
 
                                      S-16
   17
 
or trust companies so selected by the Calculation Agent are not quoting as
mentioned in this sentence, the Prime Rate determined as of such Prime Rate
Interest Determination Date will be the Prime Rate in effect on such Prime Rate
Interest Determination Date.
 
     "Reuters Screen USPRIME1 Page" means the display on the Reuter Monitor
Money Rates Service (or any successor service) on the "USPRIME1" page (or such
other page as may replace the USPRIME1 page on such service) for the purpose of
displaying prime rates or base lending rates of major United States banks.
 
     TREASURY RATE. Unless otherwise specified in the applicable Pricing
Supplement, "Treasury Rate" means, with respect to any Interest Determination
Date relating to a Floating Rate Note for which the interest rate is determined
by reference to the Treasury Rate (a "Treasury Rate Interest Determination
Date"), the rate from the auction held on such Treasury Rate Interest
Determination Date (the "Auction") of direct obligations of the United States
("Treasury Bills") having the Index Maturity specified in the applicable Pricing
Supplement, as such rate is published in H.15(519) under the heading "Treasury
Bills-auction average (investment)" or, if not published by 3:00 P.M., New York
City time, on the related Calculation Date, the auction average rate of such
Treasury Bills (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 in the
applicable Pricing Supplement are not reported as provided by 3:00 P.M., New
York City time, on the related Calculation Date, or if no such Auction is held,
then the Treasury Rate will be calculated by the Calculation Agent and will be a
yield to maturity (expressed as a bond equivalent on the basis of a year of 365
or 366 days, as applicable, and applied on a daily basis) of the arithmetic mean
of the secondary market bid rates, as of approximately 3:30 P.M., New York City
time, on such Treasury Rate Interest Determination Date, of three leading
primary United States government securities dealers (which may include the
Agents or their affiliates) selected by the Calculation Agent, for the issue of
Treasury Bills with a remaining maturity closest to the Index Maturity specified
in the applicable Pricing Supplement; provided, however, that if the dealers so
selected by the Calculation Agent are not quoting as mentioned in this sentence,
the Treasury Rate determined as of such Treasury Rate Interest Determination
Date will be the Treasury Rate in effect on such Treasury Rate Interest
Determination Date.
 
OTHER/ADDITIONAL PROVISIONS; ADDENDUM
 
     Any provisions with respect to the Notes, including the specification and
determination of one or more Interest Rate Bases, the calculation of the
interest rate applicable to a Floating Rate Note, the Interest Payment Dates,
the Stated Maturity Date, any redemption or repayment provisions or any other
term relating thereto, may be modified and/or supplemented as specified under
"Other/Additional Provisions" on the face thereof or in an Addendum relating
thereto, if so specified on the face thereof and described in the applicable
Pricing Supplement.
 
DISCOUNT NOTES
 
     The Company may offer Notes ("Discount Notes") from time to time that have
an Issue Price (as specified in the applicable Pricing Supplement) that is less
than 100% of the principal amount thereof (i.e. par) by more than a percentage
equal to the product of 0.25% and the number of full years to the Stated
Maturity Date. Discount Notes may not bear any interest currently or may bear
interest at a rate that is below market rates at the time of issuance. The
difference between the Issue Price of a Discount Note and par is referred to
herein as the "Discount." In the event of redemption, repayment or acceleration
of maturity of a Discount Note, the amount payable to the Holder of such
Discount Note will be equal to the sum of (i) the Issue Price (increased by any
accruals of Discount) and, in the event of any redemption of such Discount Note
(if applicable), multiplied by the Initial Redemption Percentage (as adjusted by
the Annual Redemption Percentage Reduction, if applicable) and (ii) any unpaid
interest accrued thereon to the date of such redemption, repayment or
acceleration of maturity, as the case may be.
 
     Unless otherwise specified in the applicable Pricing Supplement, for
purposes of determining the amount of Discount that has accrued as of any date
on which a redemption, repayment or acceleration of maturity
 
                                      S-17
   18
 
occurs for a Discount Note, such Discount will be accrued using a constant yield
method. The constant yield will be calculated using a 30-day month, 360-day year
convention, a compounding period that, except for the Initial Period (as
hereinafter defined), corresponds to the shortest period between Interest
Payment Dates for the applicable Discount Note (with ratable accruals within a
compounding period), a coupon rate equal to the initial coupon rate applicable
to such Discount Note and an assumption that the maturity of such Discount Note
will not be accelerated. If the period from the date of issue to the initial
Interest Payment Date for a Discount Note (the "Initial Period") is shorter than
the compounding period for such Discount Note, a proportionate amount of the
yield for an entire compounding period will be accrued. If the Initial Period is
longer than the compounding period, then such period will be divided into a
regular compounding period and a short period with the short period being
treated as provided in the preceding sentence. The accrual of the applicable
Discount may differ from the accrual of original issue discount for purposes of
the Internal Revenue Code of 1986, as amended (the "Code"), certain Discount
Notes may not be treated as having original issue discount within the meaning of
the Code, and Notes other than Discount Notes may be treated as issued with
original issue discount for federal income tax purposes. See "United States
Federal Income Tax Considerations".
 
INDEXED NOTES
 
     The Company may from time to time offer Notes ("Indexed Notes") with the
amount of principal, premium and/or interest payable in respect thereof to be
determined with reference to the price or prices of specified commodities or
stocks, to the exchange rate of one or more designated currencies (including a
composite currency such as the ECU) relative to an indexed currency or to other
items, in each case as specified in the applicable Pricing Supplement. In
certain cases, Holders of Indexed Notes may receive a principal payment on the
Maturity Date that is greater than or less than the principal amount of such
Indexed Notes depending upon the relative value on the Maturity Date of the
specified indexed item. Information as to the method for determining the amount
of principal, premium, if any, and/or interest, if any, payable in respect of
Indexed Notes, certain historical information with respect to the specified
indexed item and any material tax considerations associated with an investment
in Indexed Notes will be specified in the applicable Pricing Supplement. See
also "Risk Factors."
 
AMORTIZING NOTES
 
     The Company may from time to time offer Notes ("Amortizing Notes") with the
amount of principal thereof and interest thereon payable in installments over
the term of such Notes. Unless otherwise specified in the applicable Pricing
Supplement, interest on each Amortizing Note will be computed on the basis of a
360-day year of twelve 30-day months. Payments with respect to Amortizing Notes
will be applied first to interest due and payable thereon and then to the
reduction of the unpaid principal amount thereof. Further information concerning
additional terms and provisions of Amortizing Notes will be specified in the
applicable Pricing Supplement, including a table setting forth repayment
information for such Amortizing Notes.
 
BOOK-ENTRY NOTES
 
     The Company has established a depositary arrangement with The Depository
Trust Company with respect to the Book-Entry Notes, the terms of which are
summarized below. Any additional or differing terms of the depositary
arrangement with respect to the Book-Entry Notes will be described in the
applicable Pricing Supplement.
 
     Upon issuance, all Book-Entry Notes of like tenor and terms up to
$200,000,000 aggregate principal amount will be represented by a single Global
Security. Each Global Security representing Book-Entry Notes will be deposited
with, or on behalf of, the Depositary and will be registered in the name of the
Depositary or a nominee of the Depositary. No Global Security may be transferred
except as a whole by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or such nominee to a successor
of the Depositary or a nominee of such successor.
 
                                      S-18
   19
 
     So long as the Depositary or its nominee is the registered owner of a
Global Security, the Depositary or its nominee, as the case may be, will be the
sole Holder of the Book-Entry Notes represented thereby for all purposes under
the applicable Indenture. Except as otherwise provided below, the Beneficial
Owners of the Global Security or Securities representing Book-Entry Notes will
not be entitled to receive physical delivery of Certificated Notes and will not
be considered the Holders thereof for any purpose under the applicable
Indenture, and no Global Security representing Book-Entry Notes shall be
exchangeable or transferable. Accordingly, each Beneficial Owner must rely on
the procedures of the Depositary and, if such Beneficial Owner is not a
Participant, on the procedures of the Participant through which such Beneficial
Owner owns its interest in order to exercise any rights of a Holder under such
Global Security or the applicable Indenture. The laws of some jurisdictions
require that certain purchasers of securities take physical delivery of such
securities in certificated form. Such limits and laws may impair the ability to
transfer beneficial interests in a Global Security representing Book-Entry
Notes.
 
     Unless otherwise specified in the applicable Pricing Supplement, each
Global Security representing Book-Entry Notes will be exchangeable for
Certificated Notes of like tenor and terms and of differing authorized
denominations in a like aggregate principal amount, only if (i) the Depositary
notifies the Company that it is unwilling or unable to continue as Depositary
for the Global Securities or the Company becomes aware that the Depositary has
ceased to be a clearing agency registered under the Exchange Act and, in any
such case, the Company shall not have appointed a successor to the Depositary
within 60 days thereafter, (ii) the Company, in its sole discretion, determines
that the Global Securities shall be exchangeable for Certificated Notes or (iii)
an Event of Default shall have occurred and be continuing with respect to the
Notes under the applicable Indenture. Upon any such exchange, the Certificated
Notes shall be registered in the names of the Beneficial Owners of the Global
Security or Securities representing Book-Entry Notes, which names shall be
provided by the Depositary's relevant Participants (as identified by the
Depositary) to the appropriate Trustee.
 
     The following is based on information furnished by the Depositary:
 
          The Depositary will act as securities depository for the Book-Entry
     Notes. The Book-Entry Notes will be issued as fully registered securities
     registered in the name of Cede & Co. (the Depositary's partnership
     nominee). One fully registered Global Security will be issued for each
     issue of Book-Entry Notes, each in the aggregate principal amount of such
     issue, and will be deposited with the Depositary. If, however, the
     aggregate principal amount of any issue exceeds $200,000,000, one Global
     Security will be issued with respect to each $200,000,000 of principal
     amount and an additional Global Security will be issued with respect to any
     remaining principal amount of such issue.
 
          The Depositary is a limited-purpose trust company organized under the
     New York Banking Law, a "banking organization" within the meaning of the
     New York Banking Law, a member of the Federal Reserve System, a "clearing
     corporation" within the meaning of the New York Uniform Commercial Code,
     and a "clearing agency" registered pursuant to the provisions of Section
     17A of the Exchange Act. The Depositary holds securities that its
     participants ("Participants") deposit with the Depositary. The Depositary
     also facilitates the settlement among Participants of securities
     transactions, such as transfers and pledges, in deposited securities
     through electronic computerized book-entry changes in Participants'
     accounts, thereby eliminating the need for physical movement of securities
     certificates. Direct Participants of the Depositary ("Direct Participants")
     include securities brokers and dealers, banks, trust companies, clearing
     corporations and certain other organizations. The Depositary is owned by a
     number of its Direct Participants and by the New York Stock Exchange, Inc.,
     the American Stock Exchange, Inc., and the National Association of
     Securities Dealers, Inc. Access to the Depositary's system is also
     available to others such as securities brokers and dealers, banks and trust
     companies that clear through or maintain a custodial relationship with a
     Direct Participant, either directly or indirectly ("Indirect
     Participants"). The rules applicable to the Depositary and its Participants
     are on file with the Securities and Exchange Commission.
 
          Purchases of Book-Entry Notes under the Depositary's system must be
     made by or through Direct Participants, which will receive a credit for
     such Book-Entry Notes on the Depositary's records. The
 
                                      S-19
   20
 
     ownership interest of each actual purchaser of each Book-Entry Note
     represented by a Global Security ("Beneficial Owner") is in turn to be
     recorded on the records of Direct Participants and Indirect Participants.
     Beneficial Owners will not receive written confirmation from the Depositary
     of their purchase, but Beneficial Owners are expected to receive written
     confirmations providing details of the transaction, as well as periodic
     statements of their holdings, from the Direct Participants or Indirect
     Participants through which such Beneficial Owner entered into the
     transaction. Transfers of ownership interests in a Global Security
     representing Book-Entry Notes are to be accomplished by entries made on the
     books of Participants acting on behalf of Beneficial Owners. Beneficial
     Owners of a Global Security representing Book-Entry Notes will not receive
     Certificated Notes representing their ownership interests therein, except
     in the event that use of the book-entry system for such Book-Entry Notes is
     discontinued.
 
          To facilitate subsequent transfers, all Global Securities representing
     Book-Entry Notes which are deposited with, or on behalf of, the Depositary
     are registered in the name of the Depositary's nominee, Cede & Co. The
     deposit of Global Securities with, or on behalf of, the Depositary and
     their registration in the name of Cede & Co. effect no change in beneficial
     ownership. The Depositary has no knowledge of the actual Beneficial Owners
     of the Global Securities representing the Book-Entry Notes; the
     Depositary's records reflect only the identity of the Direct Participants
     to whose accounts such Book-Entry Notes are credited, which may or may not
     be the Beneficial Owners. The Participants will remain responsible for
     keeping account of their holdings on behalf of their customers.
 
          Conveyance of notices and other communications by the Depositary to
     Direct Participants, by Direct Participants to Indirect Participants, and
     by Direct Participants and Indirect Participants to Beneficial Owners will
     be governed by arrangements among them, subject to any statutory or
     regulatory requirements as may be in effect from time to time.
 
          Neither the Depositary nor Cede & Co. will consent or vote with
     respect to the Global Securities representing the Book-Entry Notes. Under
     its usual procedures, the Depositary mails an Omnibus Proxy to the Company
     as soon as possible after the applicable record date. The Omnibus Proxy
     assigns Cede & Co.'s consenting or voting rights to those Direct
     Participants to whose accounts the Book-Entry Notes are credited on the
     applicable record date (identified in a listing attached to the Omnibus
     Proxy).
 
          Principal, premium, if any, and/or interest, if any, payments on the
     Global Securities representing the Book-Entry Notes will be made in
     immediately available funds to the Depositary. The Depositary's practice is
     to credit Direct Participants' accounts on the applicable payment date in
     accordance with their respective holdings shown on the Depositary's records
     unless the Depositary has reason to believe that it will not receive
     payment on such date. Payments by Participants to Beneficial Owners will be
     governed by standing instructions and customary practices, as is the case
     with securities held for the accounts of customers in bearer form or
     registered in "street name", and will be the responsibility of such
     Participant and not of the Agents, the Depositary, either Trustee or the
     Company, subject to any statutory or regulatory requirements as may be in
     effect from time to time. Payment of principal, premium, if any, and/or
     interest, if any, to the Depositary is the responsibility of the Company
     and the appropriate Trustee, disbursement of such payments to Direct
     Participants shall be the responsibility of the Depositary, and
     disbursement of such payments to the Beneficial Owners shall be the
     responsibility of Direct Participants and Indirect Participants.
 
          If applicable, redemption notices shall be sent to Cede & Co. If less
     than all of the Book-Entry Notes of like tenor and terms are being
     redeemed, the Depositary's practice is to determine by lot the amount of
     the interest of each Direct Participant in such issue to be redeemed.
 
          A Beneficial Owner shall give notice of any option to elect to have
     its Book-Entry Notes repaid by the Company, through its Participant, to the
     appropriate Trustee, and shall effect delivery of such Book-Entry Notes by
     causing the Direct Participant to transfer the Participant's interest in
     the Global Security or Securities representing such Book-Entry Notes, on
     the Depositary's records, to such Trustee. The requirement for physical
     delivery of Book-Entry Notes in connection with a demand for repayment will
     be deemed satisfied when the ownership rights in the Global Security or
     Securities representing such Book-Entry Notes are transferred by Direct
     Participants on the Depositary's records.
 
                                      S-20
   21
 
          The Depositary may discontinue providing its services as securities
     depository with respect to the Book-Entry Notes at any time by giving
     reasonable notice to the Company or the appropriate Trustee. Under such
     circumstances, in the event that a successor securities depository is not
     obtained, Certificated Notes are required to be printed and delivered.
 
          The Company may decide to discontinue use of the system of book-entry
     transfers through the Depositary (or a successor securities depository). In
     that event, Certificated Notes will be printed and delivered.
 
     The information in this section concerning the Depositary and the
Depositary's system has been obtained from sources that the Company believes to
be reliable, but the Company takes no responsibility for the accuracy thereof.
 
             SPECIAL PROVISIONS RELATING TO FOREIGN CURRENCY NOTES
 
GENERAL
 
     Unless otherwise specified in the applicable Pricing Supplement, Foreign
Currency Notes will not be sold in, or to residents of, the country issuing the
applicable currency. The information set forth in this Prospectus Supplement is
directed to prospective purchasers who are United States residents and, with
respect to Foreign Currency Notes, is by necessity incomplete. The Company and
the Agents disclaim any responsibility to advise prospective purchasers who are
residents of countries other than the United States with respect to any matters
that may affect the purchase, holding or receipt of payments of principal of,
and premium, if any, and interest, if any, on, Foreign Currency Notes. Such
persons should consult their own financial and legal advisors with regard to
such matters. See "Risk Factors--Exchange Rates and Exchange Controls."
 
PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST, IF ANY
 
     Unless otherwise specified in the applicable Pricing Supplement, the
Company is obligated to make payments of principal of, and premium, if any, and
interest, if any, on, a Foreign Currency Note in the Specified Currency. Any
such amounts payable by the Company in the Specified Currency will be converted
by the exchange rate agent named in the applicable Pricing Supplement (the
"Exchange Rate Agent") into United States dollars for payment to Holders unless
otherwise specified in the applicable Pricing Supplement or the Holder of such
Foreign Currency Note elects, in the manner hereinafter described, to receive
such amounts in the Specified Currency.
 
     Any United States dollar amount to be received by a Holder of a Foreign
Currency Note will be based on the highest bid quotation in The City of New York
received by the 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 whom may be the Exchange Rate
Agent) selected by the Exchange Rate Agent and approved by the Company for the
purchase by the quoting dealer of the Specified Currency for United States
dollars for settlement on such payment date in the aggregate amount of such
Specified Currency payable to all Holders of Foreign Currency Notes scheduled to
receive United States dollar payments and at which the applicable dealer commits
to execute a contract. All currency exchange costs will be borne by the Holders
of such Foreign Currency Notes by deductions from such payments. If three such
bid quotations are not available, payments will be made in the Specified
Currency.
 
     Holders of Foreign Currency Notes may elect to receive all or a specified
portion of any payment of principal, premium, if any, and/or interest, if any,
in the Specified Currency by submitting a written request for such payment to
the appropriate Trustee at its corporate trust office in The City of New York on
or prior to the applicable Record Date or at least fifteen calendar days prior
to the Maturity Date, as the case may be. Such written request may be mailed or
hand delivered or sent by cable, telex or other form of facsimile transmission.
Holders of Foreign Currency Notes may elect to receive all or a specified
portion of all future payments in the Specified Currency and need not file a
separate election for each payment. Such election will remain in effect until
revoked by written notice to the appropriate Trustee, but written notice of any
such
 
                                      S-21
   22
 
revocation must be received by such Trustee on or prior to the applicable Record
Date or at least fifteen calendar days prior to the Maturity Date, as the case
may be. Holders of Foreign Currency Notes to be held in the name of a broker or
nominee should contact such broker or nominee to determine whether and how an
election to receive payments in the Specified Currency may be made.
 
     Unless otherwise specified in the applicable Pricing Supplement, if the
Specified Currency is other than United States dollars, a Beneficial Owner of
the related Global Security or Securities which elects to receive payments of
principal, premium, if any, and/or interest, if any, in the Specified Currency
must notify the Participant through which it owns its interest on or prior to
the applicable Record Date or at least fifteen calendar days prior to the
Maturity Date, as the case may be, of such Beneficial Owner's election. Such
Participant must notify the Depositary of such election on or prior to the third
Business Day after such Record Date or at least twelve calendar days prior to
the Maturity Date, as the case may be, and the Depositary will notify the
appropriate Trustee of such election on or prior to the fifth Business Day after
such Record Date or at least ten calendar days prior to the Maturity Date, as
the case may be. If complete instructions are received by the Participant from
the Beneficial Owner and forwarded by the Participant to the Depositary, and by
the Depositary to the appropriate Trustee, on or prior to such dates, then such
Beneficial Owner will receive payments in the Specified Currency.
 
     Payments of the principal of, and premium, if any, and/or interest, if any,
on, Foreign Currency Notes which are to be made in United States dollars will be
made in the manner specified herein with respect to Notes denominated in United
States dollars. See "Description of Notes--General." Payments of interest, if
any, on Foreign Currency Notes which are to be made in the Specified Currency on
an Interest Payment Date other than the Maturity Date will be made by check
mailed to the address of the Holders of such Foreign Currency Notes as they
appear in the Security Register, subject to the right to receive such interest
payments by wire transfer of immediately available funds under the circumstances
described under "Description of Notes--General." Payments of principal of, and
premium, if any, and/or interest, if any, on, Foreign Currency Notes which are
to be made in the Specified Currency on the Maturity Date will be made by wire
transfer of immediately available funds to an account with a bank designated at
least fifteen calendar days prior to the Maturity Date by each Holder thereof,
provided that such bank has appropriate facilities therefor and that the
applicable Foreign Currency Note is presented and surrendered at the office or
agency maintained by the Company for such purpose in the Borough of Manhattan,
The City of New York, currently, with respect to Senior Notes, the corporate
trust office of the Senior Trustee located at 165 Broadway 47th floor, New York,
New York 10006 and, with respect to Subordinated Notes, the corporate trust
office of the Subordinated Trustee located at State Street Bank and Trust
Company, N.A., 61 Broadway, 15th floor, Corporate Trust Window, New York, New
York 10006, in time for the appropriate Trustee to make such payments in such
funds in accordance with its normal procedures.
 
AVAILABILITY OF SPECIFIED CURRENCY
 
     Except as set forth below, if the Specified Currency for a Foreign Currency
Note is not available for the required payment of principal, premium, if any,
and/or interest, if any, in respect thereof due to the imposition of exchange
controls or other circumstances beyond the control of the Company, the Company
will be entitled to satisfy its obligations to the Holder of such Foreign
Currency Note by making such payment in United States dollars on the basis of
the Market Exchange Rate, computed by the Exchange Rate Agent, on the second
Business Day prior to such payment or, if such Market Exchange Rate is not then
available, on the basis of the most recently available Market Exchange Rate, or
as otherwise specified in the applicable Pricing Supplement.
 
     If the Specified Currency for a Foreign Currency Note is a composite
currency that is not available for the required payment of principal, premium,
if any, and/or interest, if any, in respect thereof due to the imposition of
exchange controls or other circumstances beyond the control of the Company, the
Company will be entitled to satisfy its obligations to the Holder of such
Foreign Currency Note by making such payment in United States dollars on the
basis of the equivalent of the composite currency in United States dollars. The
component currencies of the composite currency for this purpose (the "Component
Currencies") shall be the currency amounts that were components of the composite
currency as of the last day on which the composite
 
                                      S-22
   23
 
currency was used. The equivalent of the composite currency in United States
dollars shall be calculated by aggregating the United States dollar equivalents
of the Component Currencies. The United States dollar equivalent of each of the
Component Currencies shall be determined by the Exchange Rate Agent on the basis
of the Market Exchange Rate on the second Business Day prior to the required
payment or, if such Market Exchange Rate is not then available, on the basis of
the most recently available Market Exchange Rate for each such Component
Currency, or as otherwise specified in the applicable Pricing Supplement.
 
     If the official unit of any Component Currency is altered by way of
combination or subdivision, the number of units of the currency as a Component
Currency shall be divided or multiplied in the same proportion. If two or more
Component Currencies are consolidated into a single currency, the amounts of
those currencies as Component Currencies shall be replaced by an amount in such
single currency equal to the sum of the amounts of the consolidated Component
Currencies expressed in such single currency. If any Component Currency is
divided into two or more currencies, the amount of the original Component
Currency shall be replaced by the amounts of such two or more currencies, the
sum of which shall be equal to the amount of the original Component Currency.
 
     The "Market Exchange Rate" for a Specified Currency other than United
States dollars means the noon dollar buying rate in The City of New York for
cable transfers for such Specified Currency as certified for customs purposes
(or, if not so certified, as otherwise determined) by the Federal Reserve Bank
of New York. Any payment made in United States dollars under the circumstances
set forth above where the required payment is in a Specified Currency other than
United States dollars will not constitute an Event of Default under the
applicable Indenture with respect to the Notes.
 
     All determinations referred to above made by the Exchange Rate Agent shall
be at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on the Holders of the Foreign Currency
Notes.
 
JUDGMENTS
 
     Under current New York law, a state court in the State of New York
rendering a judgment in respect of a Foreign Currency Note would be required to
render such judgment in the Specified Currency, and such foreign currency
judgment would be converted into United States dollars at the exchange rate
prevailing on the date of entry of such judgment. Accordingly, the Holder of
such Foreign Currency Note would be subject to exchange rate fluctuations
between the date of entry of such foreign currency judgment and the time the
amount of such foreign currency judgment is paid to such Holder in United States
dollars and converted by such Holder into the Specified Currency. It is not
certain, however, whether a non-New York state court would follow the same rules
and procedures with respect to conversions of foreign currency judgments.
 
     The Company will indemnify the Holder of any Note against any loss incurred
by such Holder as a result of any judgment or order being given or made for any
amount due under such Note and such judgment or order requiring payment in a
currency or composite currency (the "Judgment Currency") other than the
Specified Currency, and as a result of any variation between (i) the rate of
exchange at which the Specified Currency amount is converted into the Judgment
Currency for the purpose of such judgment or order, and (ii) the rate of
exchange at which the Holder of such Note, on the date of payment of such
judgment or order, is able to purchase the Specified Currency with the amount of
the Judgment Currency actually received by such Holder, as the case may be.
 
            CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
 
     The following summary describes the principal United States federal income
tax consequences of the purchase, ownership and disposition of Notes to
beneficial owners ("holders") of Notes purchasing Notes at their original
issuance. This summary is based on the Internal Revenue Code of 1986, as amended
(the "Code"), legislative history, administrative pronouncements, judicial
decisions and final, temporary and proposed Treasury Regulations, changes to any
of which subsequent to the date of this Prospectus Supplement may affect the tax
consequences described herein. Any such change may apply retroactively.
 
                                      S-23
   24
 
     This summary discusses only the principal United States federal income tax
consequences to holders holding Notes as capital assets within the meaning of
Section 1221 of the Code. It does not address all of the tax consequences that
may be relevant to a holder in light of the holder's particular circumstances or
to holders subject to special rules (including pension plans and other
tax-exempt investors, banks, thrifts, insurance companies, real estate
investment trusts, regulated investment companies, dealers in securities,
currencies and persons so treated for federal income tax purposes, persons whose
functional currency (as defined in Section 985 of the Code) is other than the
United States dollar, and persons who hold Notes as part of a straddle, hedging
or conversion transaction).
 
     Persons considering the purchase of Notes should consult their tax advisors
with regard to the application of United States federal income tax laws to their
particular situations as well as any tax consequences to them arising under the
laws of any state, local or foreign taxing jurisdiction. State, local and
foreign income tax laws may differ substantially from the corresponding federal
income tax laws, and this discussion does not purport to describe any aspect of
the tax laws of any state, local or foreign jurisdiction.
 
     As used herein, the term "United States Holder" means a holder of a Note
who or which is, for United States federal income tax purposes, (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or of any
political subdivision thereof or (iii) an estate or trust described in Section
7701(a)(30) of the Code. The term also includes certain holders who are former
citizens of the United States whose income and gain from the Notes will be
subject to United States taxation.
 
TAXATION OF INTEREST
 
     The taxation of interest on a Note depends on whether the interest is
"qualified stated interest" (as defined below). Interest on a Note that
constitutes qualified stated interest is includible in a United States Holder's
income as ordinary income when actually or constructively received (if such
Holder uses the cash method of accounting for federal income tax purposes) or
when accrued (if such Holder uses an accrual method of accounting for federal
income tax purposes). Interest that is not qualified stated interest is
includible in a United States Holder's income under the rules governing
"original issue discount," described below, regardless of such Holder's method
of accounting. Notwithstanding the foregoing, interest that is payable on a Note
with a maturity of one year or less from its issue date (a "Short-Term Note") is
includible in a United States Holder's income under rules described below under
"Short-Term Notes."
 
  Definition of Qualified Stated Interest
 
     Interest on a Note is "qualified stated interest" if the interest is
unconditionally payable, or will be constructively received under Section 451 of
the Code, in cash or in property (other than debt instruments of the Company) at
least annually at a single fixed rate (in the case of a Fixed Rate Note) or at a
single "qualified floating rate" or "objective rate" (in the case of a Floating
Rate Note that qualifies as a variable rate debt instrument). If a Floating Rate
Note that qualifies as a variable rate debt instrument provides for interest
other than at a single qualified floating rate or single objective rate, special
rules apply to determine the portion of such interest that is qualified stated
interest. See "Original Issue Discount -- Floating Rate Notes that are VRDIs,"
below.
 
  Definition of Variable Rate Debt Instrument (VRDI), Qualified Floating Rate
and Objective Rate
 
     A Floating Rate Note is a variable rate debt instrument ("VRDI") if all
four of the following conditions are met. First, the "issue price" (as defined
under "Original Issue Discount") of the Note must not exceed the total
noncontingent principal payments by more than an amount equal to the lesser of
(i) .015 multiplied by the product of the total noncontingent principal payments
and the number of complete years to maturity from the issue date (as defined
under "Original Issue Discount") (or, in the case of a Note that provides for
payment of any amount other than qualified stated interest before maturity, its
weighted average maturity) and (ii) 15% of the total noncontingent principal
payments.
 
                                      S-24
   25
 
     Second, except as provided in the preceding paragraph, the Note must not
provide for any principal payments that are contingent.
 
     Third, the Note must provide for stated interest (compounded or paid at
least annually) at (a) one or more qualified floating rates, (b) a single fixed
rate and one or more qualified floating rates, (c) a single objective rate or
(d) a single fixed rate and a single objective rate that is a "qualified inverse
floating rate" (as defined below).
 
     Fourth, the Note must provide that a qualified floating rate or objective
rate in effect at any time during the term of the Note is set at the value of
the rate on any day that is no earlier than three months prior to the first day
on which that value is in effect and no later than one year following that first
day.
 
     Subject to certain exceptions, a variable rate of interest on a Note is a
"qualified floating rate" if variations in the value of the rate can reasonably
be expected to measure contemporaneous fluctuations in the cost of newly
borrowed funds in the currency in which the Note is denominated. A variable rate
is considered a qualified rate if the variable rate equals (i) the product of an
otherwise qualified floating rate and a fixed multiple (i.e., a Spread
Multiplier) that is greater than .65 but not more than 1.35 or (ii) the product
described in clause (i) plus or minus a fixed rate (i.e., a Spread). If the
variable rate equals the product of an otherwise qualified floating rate and a
single Spread Multiplier greater than 1.35 or less than or equal to .65,
however, such rate generally is an objective rate, described more fully below. A
variable rate is not considered a qualified floating rate if the variable rate
is subject to a cap, floor, governor (i.e., a restriction on the amount of
increase or decrease in the stated interest rate) or similar restriction that is
reasonably expected as of the issue date to cause the yield on the Note to be
significantly more or less than the expected yield determined without the
restriction (other than a cap, floor or governor that is fixed throughout the
term of the Note).
 
     Subject to certain exceptions, an "objective rate" is a rate (other than a
qualified floating rate) that is determined using a single fixed formula and
that is based on objective financial or economic information that is neither
within the control of the issuer (or a related party) nor unique to the
circumstances of the issuer (or a related party). For example, an objective rate
generally includes a rate that is based on one or more qualified floating rates
or on the yield of actively traded personal property (within the meaning of
Section 1092(d)(1) of the Code). Notwithstanding the first sentence of this
paragraph, a rate is not an objective rate if it is reasonably expected that the
average value of the rate during the first half of the Note's term will be
either significantly less than or significantly greater than the average value
of the rate during the final half of the Note's term. The Internal Revenue
Service may designate rates other than those specified above that will be
treated as objective rates. As of the date of this Prospectus Supplement, no
such other rates have been designated. An objective rate is a "qualified inverse
floating rate" if (a) the rate is equal to a fixed rate minus a qualified
floating rate and (b) the variations in the rate can reasonably be expected to
reflect inversely contemporaneous variations in the cost of newly borrowed funds
(disregarding any caps, floors, governors or similar restrictions that would
not, as described above, cause a rate to fail to be a qualified floating rate).
 
     If interest on a Note is stated at a fixed rate for an initial period of
one year or less, followed by a variable rate that is either a qualified
floating rate or an objective rate for a subsequent period, and the value of the
variable rate on the issue date is intended to approximate the fixed rate, the
fixed rate and the variable rate together are treated as a single qualified
floating rate or objective rate.
 
ORIGINAL ISSUE DISCOUNT
 
     Original issue discount with respect to a Note is the excess, if any, of a
Note's "stated redemption price at maturity" over its "issue price." A Note's
"stated redemption price at maturity" is the sum of all payments provided by the
Note (whether designated as interest or as principal) other than payments of
qualified stated interest. The "issue price" and "issue date" of a Note are the
first price and the first settlement date or closing date (whichever is
applicable), respectively, at which a substantial amount of the Notes in the
issuance that includes the Note is sold for money (excluding sales to bond
houses, brokers or similar persons or organizations acting in the capacity of
underwriters, placement agents or wholesalers).
 
                                      S-25
   26
 
     United States Holders of Notes with original issue discount (other than
Short-Term Notes, as defined below) generally will be required to include such
original issue discount in income as it accrues in accordance with the constant
yield method described below, before the receipt of the related cash payments. A
United States Holder's tax basis in a Note is increased by each accrual of
original issue discount and decreased by each payment other than a payment of
qualified stated interest.
 
     The amount of original issue discount with respect to a Note will be
treated as zero if the original issue discount is less than an amount equal to
 .0025 multiplied by the product of the stated redemption price at maturity and
the number of complete years to maturity (or weighted average maturity, in the
case of a Note that provides for payment of any amount other than qualified
stated interest prior to maturity). If the amount of original issue discount
with respect to a Note is less than that amount, all payments of stated interest
are treated as payments of qualified stated interest and the original issue
discount that is not included in payments of stated interest is included in
income as capital gain as principal payments are made. The amount includible
with respect to a principal payment equals the product of the total amount of
original issue discount and a fraction, the numerator of which is the amount of
such principal payment and the denominator of which is the stated principal
amount of the Note.
 
  Fixed Rate Notes
 
     In the case of a Fixed Rate Note with original issue discount, the amount
of original issue discount includible in the income of a United States Holder
for any taxable year is determined under the constant yield method, as follows.
First, the "yield to maturity" of the Note is computed. The yield to maturity is
the discount rate that, when used in computing the present value of all interest
and principal payments to be made under the Note (including payments of
qualified stated interest) produces an amount equal to the issue price of the
Note. The yield to maturity is constant over the term of the Note and, when
expressed as a percentage, must be calculated to at least two decimal places.
 
     Second, the term of the Note is divided into "accrual periods." Accrual
periods may be of any length and may vary in length over the term of the Note,
provided that each accrual period is no longer than one year and that each
scheduled payment of principal or interest occurs either on the final day of an
accrual period or on the first day of an accrual period.
 
     Third, the total amount of original issue discount on the Note is allocated
among accrual periods. In general, the original issue discount allocable to an
accrual period equals the product of the "adjusted issue price" of the Note at
the beginning of the accrual period and the yield to maturity of the Note, less
the amount of any qualified stated interest allocable to the accrual period. The
adjusted issue price of a Note at the beginning of the first accrual period is
its issue price. Thereafter, the adjusted issue price of the Note is its issue
price, increased by the amount of original issue discount previously includible
in the gross income of any holder and decreased by the amount of any payment
previously made on the Note other than a payment of qualified stated interest.
For purposes of computing the adjusted issue price of a Note, the amount of
original issue discount previously includible in the gross income of any holder
is determined without regard to "premium" and "acquisition premium," as those
terms are defined below under "Premium and Acquisition Premium."
 
     Fourth, the "daily portions" of original issue discount are determined by
allocating to each day in an accrual period its ratable portion of the original
issue discount allocable to the accrual period.
 
     A United States Holder includes in income in any taxable year the daily
portions of original issue discount for each day during the taxable year that
such Holder held Notes. Under the constant yield method described above, United
States Holders generally are required to include in income increasingly greater
amounts of original issue discount in successive accrual periods.
 
     In the case of a Note that is redeemable at the option of the Company or
repayable by the Company at the option of the holder, the maturity and the yield
to maturity of the Note are determined by assuming that the Company and the
holder will exercise or not exercise the options available to them in a manner
that minimizes the yield, in the case of options available to the Company, or
maximizes the yield, in the case of
 
                                      S-26
   27
 
options available to the holder. Unless specified to the contrary in the
applicable Pricing Supplement, the Redemption Price payable by the Company upon
the exercise of any option to redeem is at all times at least equal to the
principal amount of the note redeemed plus accrued interest and the repayment
price payable by the Company upon exercise of the holder's option is at all
times equal to the principal amount of the Note so repaid plus accrued interest.
Accordingly, the existence of such options should not generally affect the
determination of the maturity and the yield to maturity of Notes having an issue
price equal to 100% of the principal amount.
 
  Floating Rate Notes that are VRDIs
 
     The taxation of original issue discount (including interest that is not
qualified stated interest) on a Floating Rate Note depends on whether the Note
is a "VRDI," as defined above.
 
     In the case of a VRDI that provides for qualified stated interest, the
amount of qualified stated interest and original issue discount, if any,
includible in income during a taxable year are determined under the rules
applicable to Fixed Rate Notes by assuming that the variable rate is a fixed
rate equal to (i) in the case of a qualified floating rate or a qualified
inverse floating rate, the value, as of the issue date, of the qualified
floating rate or qualified inverse floating rate, and (ii) in the case of an
objective rate (other than a qualified inverse floating rate), the rate that
reflects the yield that is reasonably expected for the Note. Qualified stated
interest allocable to an accrual period is increased (or decreased) if the
interest actually paid during an accrual period exceeds (or is less than) the
interest assumed to be paid during the accrual period.
 
     If a VRDI does not provide for qualified stated interest as described above
and does not provide for a fixed rate, the amount of interest and original issue
discount accruals are determined by constructing an equivalent fixed rate debt
instrument, as follows.
 
     First, a fixed rate substitute for each variable rate provided by the Note
is determined. The fixed rate substitute for each qualified floating rate
provided by the Note is the value of that qualified floating rate on the issue
date. If the Note provides for two or more qualified floating rates with
different intervals between interest adjustment dates (e.g., the 30-day
Commercial Paper Rate and quarterly LIBOR), the fixed rate substitutes are based
on intervals that are equal in length (e.g., the 90-day Commercial Paper Rate
and quarterly LIBOR, or the 30-day Commercial Paper Rate and monthly LIBOR). The
fixed rate substitute for an objective rate that is a qualified inverse floating
rate is the value of the qualified inverse floating rate on the issue date. The
fixed rate substitute for an objective rate (other than a qualified inverse
floating rate) is a fixed rate that reflects the yield that is reasonably
expected for the Note.
 
     Second, a hypothetical equivalent fixed rate debt instrument is constructed
that has terms identical to those provided under the Note, except that the
equivalent fixed rate debt instrument provides for the fixed rate substitutes
determined in the first step, in lieu of the qualified floating rates or
objective rate provided by the Note.
 
     Third, the amount of qualified stated interest and original issue discount
for the equivalent fixed rate debt instrument are determined under the rules
described above for Fixed Rate Notes. These amounts are taken into account as if
the United States Holder held the equivalent fixed rate debt instrument. See
"Taxation of Interest" and "Original Issue Discount -- Fixed Rate Notes," above.
 
     Fourth, appropriate adjustments are made for the actual values of the
variable rates. In this step, qualified stated interest or original issue
discount allocable to an accrual period is increased (or decreased) if the
interest actually accrued or paid during the accrual period exceeds (or is less
than) the interest assumed to be accrued or paid during the accrual period under
the equivalent fixed rate debt instrument.
 
     If a VRDI provides for stated interest either at one or more qualified
floating rates or at a qualified inverse floating rate, and in addition provides
for stated interest at a single fixed rate, the amount of interest and original
issue discount accruals are determined as in the preceding four paragraphs with
the modification that the VRDI is treated, for purposes of the first three steps
of the determination, as if it provided for a qualified floating rate (or
qualified inverse floating rate) rather than the fixed rate. The qualified
floating rate (or qualified inverse floating rate) replacing the fixed rate must
be such that the fair market value of the VRDI as
 
                                      S-27
   28
 
of the issue date would be approximately the same as the fair market value of an
otherwise identical debt instrument that provides for the qualified floating
rate (or qualified inverse floating rate) rather than the fixed rate.
 
  Contingent Notes
 
     A Floating Rate Note that is not a VRDI (a "Contingent Note"), will be
taxable under the rules applicable to contingent payment debt instruments (the
"Contingent Debt Regulations"), as follows.
 
     First, the Company is required to determine, as of the issue date, the
comparable yield for the Contingent Note. The comparable yield is generally the
yield at which the Company would issue a fixed rate debt instrument with terms
and conditions similar to those of the Contingent Note (including the level of
subordination, term, timing of payments and general market conditions) but not
taking into consideration the risk of the contingencies or the liquidity of the
Contingent Note. Further, the comparable yield may not be less than the
applicable Federal Rate announced monthly by the Internal Revenue Service (the
"AFR"). In certain cases where Contingent Notes are marketed or sold in
substantial part to tax-exempt investors or other investors for whom the
prescribed inclusion of interest is not expected to have a substantial effect on
their United States tax liability, the comparable yield for the Contingent Note
is, without proper evidence to the contrary, presumed to be the AFR.
 
     Second, solely for tax purposes, the Company constructs a projected
schedule of payments determined under the Contingent Debt Regulations for the
Contingent Note (the "Schedule"). The Schedule is determined as of the issue
date and generally remains in place throughout the term of the Contingent Note.
If a right to a contingent payment is based on market information, the amount of
the projected payment is the forward price of the contingent payment. If a
contingent payment is not based on market information, the amount of the
projected payment is the expected value of the contingent payment as of the
issue date. The Schedule must produce the comparable yield determined as set
forth above. Otherwise, the Schedule must be adjusted under the rules set forth
in the Contingent Debt Regulations.
 
     Third, under the usual rules applicable to Notes issued with original issue
discount and based on the Schedule, the interest income on the Contingent Note
for each accrual period is determined by multiplying the comparable yield of the
Contingent Note (adjusted for the length of the accrual period) by the
Contingent Note's adjusted issue price at the beginning of the accrual period
(determined under rules set forth in the Contingent Debt Regulations). The
amount so determined is then allocated on a ratable basis to each day in the
accrual period that the United States Holder held the Contingent Note.
 
     Fourth, appropriate adjustments are made to the interest income determined
under the foregoing rules to account for any differences between the Schedule
and actual contingent payments. Under the rules set forth in the Contingent Debt
Regulations, interest income is generally increased (or decreased) if the actual
contingent payment is more (or less) than the projected payment. Differences
between the actual amounts of any contingent payments made in a calendar year
and the projected amounts of such payments are generally aggregated and taken
into account, in the case of a positive difference, as additional interest
income, or, in the case of a negative difference, first as a reduction in
interest income for such year and thereafter, subject to certain limitations, as
ordinary loss.
 
     The Contingent Debt Regulations require the Company to provide each holder
of a Contingent Note with the Schedule. If the Company does not create the
Schedule or the Schedule is unreasonable, a United States Holder must set its
own projected payment schedule and explicitly disclose the fact that the United
States Holder's schedule is being used and the reason therefor. Unless otherwise
prescribed by the Internal Revenue Service, the United States Holder must make
such disclosure on a statement attached to the United States Holder's timely
filed federal income tax return for the taxable year in which the Contingent
Note was acquired.
 
     In general, any gain realized by a United States Holder on the sale,
exchange, redemption, or retirement of a Contingent Note is interest income. In
general, any loss on a Contingent Note accounted for under the method described
above is ordinary loss to the extent it does not exceed such holder's prior
interest inclusions
 
                                      S-28
   29
 
on the Contingent Note (net of negative adjustments). Special rules apply in
determining the tax basis of a Contingent Note and the amount realized on the
retirement of a Contingent Note.
 
  Other Rules
 
     The Treasury Regulations relating to the tax treatment of original issue
discount contain certain language ("aggregation rules") stating in general that,
with some exception, if more than one type of Notes is issued in connection with
the same transaction or related transactions, such Notes may be treated as a
single debt instrument with a single issue price, maturity date, yield to
maturity and stated redemption price at maturity for purposes of calculating and
accruing any original issue discount. Unless otherwise provided in the
applicable Pricing Supplement, the Company does not expect to treat different
types of Notes as being subject to the aggregation rules for purposes of
computing original issue discount.
 
MARKET DISCOUNT
 
     If a United States Holder acquires a Note having a maturity date of more
than one year from the date of its issuance and has a tax basis in the Note that
is, in the case of a Note that does not have original issue discount, less than
its stated redemption price at maturity, or, in the case of a Note that has
original issue discount, less than an amount which generally equals its adjusted
issue price (as defined above), the amount of such difference is treated as
"market discount" for federal income tax purposes, unless such difference is
less than 1/4 of one percent of the stated redemption price at maturity
multiplied by the number of complete years to maturity (from the date of
acquisition).
 
     Under the market discount rules of the Code, a United States Holder is
required to treat any principal payment (or, in the case of a Note that has
original issue discount, any payment that is not qualified stated interest) on,
or any gain on the sale, exchange, redemption, retirement or other disposition
of, a Note as ordinary income to the extent of the accrued market discount that
has not previously been included in income. Thus, partial principal payments are
treated as ordinary income to the extent of accrued market discount that has not
previously been included in income. If the Note is disposed of by the United
States Holder in certain otherwise nontaxable transactions, accrued market
discount is includible as ordinary income by the United States Holder as if such
Holder had sold the Note at its then fair market value.
 
     In general, the amount of market discount that has accrued is determined on
a ratable basis. A United States Holder may, however, elect to determine the
amount of accrued market discount on a constant yield to maturity basis. This
election is made on a Note-by-Note basis and is irrevocable.
 
     A United States Holder may not be allowed to deduct immediately a portion
of the interest expense on any indebtedness incurred or continued to purchase or
to carry Notes with market discount. A United States Holder may elect to include
market discount in income currently as it accrues, in which case the interest
deferral rule set forth in the preceding sentence will not apply. Such an
election will apply to all debt instruments acquired by the United States Holder
on or after the first day of the first taxable year to which such election
applies and is irrevocable without the consent of the Internal Revenue Service.
A United States Holder's tax basis in a Note will be increased by the amount of
market discount included in such Holder's income under such an election.
 
     The application of the foregoing rules may be different in the case of
Contingent Notes where a holder's tax basis in a Contingent Notes is less than
the Contingent Note's adjusted issue price (determined under special rules set
out in the Contingent Debt Regulations). Accordingly, prospective purchasers of
Contingent Notes should consult with their tax advisors with respect to the
application of the market discount rules to such Notes.
 
PREMIUM AND ACQUISITION PREMIUM
 
     A United States Holder will be treated as having purchased a Note at a
"premium" (or "amortizable bond premium") if the Note's adjusted basis,
immediately after its purchase by such Holder, exceeds the sum of all amounts
payable on the Note after the purchase date other than payments of qualified
stated interest.
 
                                      S-29
   30
 
United States Holders may elect to amortize the premium over the remaining term
of the Note (where such Note is not callable prior to its maturity date), as a
reduction in the amount of the interest payments otherwise includible in income,
and the United States Holders will not be required to include in income original
issue discount (if any) with respect to any Note purchased at an amortizable
bond premium. If such Note may be called by the Company prior to maturity after
the United States Holder has acquired it, the amount of amortizable bond premium
is determined with reference to either the amount payable at maturity, or, if it
results in a smaller premium attributable to the period through the earlier call
date, with reference to the amount payable on the earlier call date. If a United
States Holder makes this election, the premium would be allocated among all the
interest payments on the Note, on the basis of the United States Holders's yield
to maturity, with compounding at the close of each accrual period. A United
States Holder who elects to amortize premium must reduce the tax basis of the
Note by the amount of the premium amortized in any year. If this election is
made with respect to any Note, it will also apply to all debt instruments held
by the United States Holder at the beginning of the first taxable year to which
the election applies and to all debt instruments acquired by the United States
Holder, and will be binding for all subsequent taxable years unless the election
is revoked with the consent of the Internal Revenue Service.
 
     On June 27, 1996, the Internal Revenue Service published in the Federal
Register proposed regulations on the amortization of amortizable bond premium.
The proposed regulations describe the constant yield method under which such
premium is amortized and provide that the resulting offset to interest income
can be taken into account only as a United States Holder takes the corresponding
interest income into account under such Holder's regular accounting method. In
the case of instruments that may be redeemed at the option of the issuer or a
holder prior to maturity, the proposed regulations provide that the premium is
calculated by assuming that the issuer or holder will exercise or not exercise
its redemption rights in the manner that maximizes the United States Holder's
yield. The regulations are proposed to be effective for debt instruments
acquired on or after the date 60 days after the date final regulations are
published in the Federal Register. However, if a United States Holder elects to
amortize bond premium for the taxable year containing such effective date, the
regulations would apply to all the United States Holder's debt instruments held
on or after the first day of that taxable year. It cannot be predicted at this
time whether these regulations will become effective or what, if any,
modifications may be made to them prior to their becoming effective.
 
     If a United States Holder purchases a Note issued with original issue
discount at an "acquisition premium," the amount of original issue discount that
the United States Holder includes in gross income is reduced to reflect the
acquisition premium. A Note is purchased at an acquisition premium if its
adjusted basis, immediately after its purchase, is (a) less than or equal to the
sum of all amounts payable on the Note after the purchase date other than
payments of qualified stated interest and (b) greater than the Note's "adjusted
issue price" (as described above under "Original Issue Discount -- Fixed Rate
Notes").
 
     If a Note is purchased at an acquisition premium, the United States Holder
reduces the amount of original issue discount otherwise includible in income
during an accrual period by a fraction. The numerator of this fraction is the
excess of the adjusted basis of the Note immediately after its acquisition by
the purchaser over the adjusted issue price of the Note. The denominator of the
fraction is the excess of the sum of all amounts payable on the Note after the
purchase date, other than payments of qualified stated interest, over the Note's
adjusted issue price.
 
     As an alternative to reducing the amount of original issue discount
otherwise includible in income by this fraction, the United States Holder may
elect to compute original issue discount accruals by treating the purchase as a
purchase at original issuance and applying the constant yield method described
above under "Original Issue Discount -- Fixed Rate Notes."
 
     The application of the foregoing rules may be different in the case of
Contingent Notes where a holder's tax basis in a Contingent Note is greater than
the Contingent Note's adjusted issue price (determined under special rules set
out in the Contingent Debt Regulations). Accordingly, prospective purchasers of
Contingent Notes should consult with their own tax advisors with respect to the
application of the acquisition premium and amortizable bond premium rules to
such Notes.
 
                                      S-30
   31
 
ELECTION TO TREAT ALL INTEREST AS ORIGINAL ISSUE DISCOUNT
 
     United States Holders may elect to include in gross income all interest
that accrues on a Note, including any stated interest, acquisition discount,
original issue discount, market discount, de minimis original issue discount, de
minimis market discount and unstated interest (as adjusted by amortizable bond
premium and acquisition premium), by using the constant yield method described
above under "Original Issue Discount." Such an election for a Note with
amortizable bond premium results in a deemed election to amortize bond premium
for all debt instruments owned and later acquired by the United States Holder
with amortizable bond premium and may be revoked only with the permission of the
Internal Revenue Service. Similarly, such an election for a Note with market
discount results in a deemed election to accrue market discount in income
currently for such Note and for all other bonds acquired by the United States
Holder with market discount on or after the first day of the taxable year to
which such election first applies, and may be revoked only with the permission
of the Internal Revenue Service. A United States Holder's tax basis in a Note is
increased by each accrual of the amounts treated as original issue discount
under the constant yield election described in this paragraph.
 
     The application of the foregoing rules may be different in the case of
Contingent Notes. Accordingly, prospective purchasers should consult with their
tax advisors with respect to the application of the market discount, acquisition
premium and amortizable bond premium rules to such Notes.
 
SALE, EXCHANGE, REDEMPTION OR RETIREMENT OF NOTES
 
     A United States Holder generally recognizes gain or loss upon the sale,
exchange, redemption or retirement of a Note equal to the difference between the
amount realized upon such sale, exchange, redemption or retirement and the
United States Holder's adjusted basis in the Note. Such adjusted basis in the
Note generally equals the cost of the Note, increased by original issue
discount, acquisition discount or market discount previously included in respect
thereof, and reduced (but not below zero) by any payments on the Note other than
payments of qualified stated interest and by any premium that the United States
Holder has taken into account. To the extent attributable to accrued but unpaid
qualified stated interest, the amount realized by the United States Holder is
treated as a payment of interest. Subject to the discussion under "Foreign
Currency Notes" below, generally, any gain or loss is capital gain or loss
except as provided under "Market Discount" above and "Short-Term Notes," below.
The excess of net long-term capital gains over net short-term capital losses is
taxed at a lower rate than ordinary income for certain non-corporate taxpayers.
The distinction between capital gain or loss and ordinary income or loss is also
relevant for purposes of, among other things, limitations on the deductibility
of capital losses.
 
     The application of the foregoing rules may be different in the case of
Contingent Notes. Accordingly, prospective purchasers of Contingent Notes should
consult with their tax advisors with respect to rules governing the sale,
exchange, redemption or retirement of such Notes.
 
SHORT-TERM NOTES
 
     In the case of a Note with a maturity of one year or less from its issue
date (a "Short-Term Note"), no interest is treated as qualified stated interest,
and therefore all interest is included in original issue discount. United States
Holders that report income for federal income tax purposes on an accrual method
and certain other United States Holders, including banks and dealers in
securities, are required to include original issue discount in income on such
Short-Term Notes on a straight-line basis, unless an election is made to accrue
the original issue discount according to a constant yield method based on daily
compounding.
 
     Any other United States Holder of a Short-Term Note is not required to
accrue original issue discount for federal income tax purposes, unless it elects
to do so. In the case of a United States Holder that is not required, and does
not elect, to include original issue discount in income currently, any gain
realized on the sale, exchange or retirement of a Short-Term Note is ordinary
income to the extent of the original issue discount accrued on a straight-line
basis (or, if elected, according to a constant yield method based on daily
compounding) through the date of sale, exchange or retirement. In addition,
United States Holders that are not required, and do not elect, to include
original issue discount in income currently are required to defer
 
                                      S-31
   32
 
deductions for any interest paid on indebtedness incurred or continued to
purchase or carry a Short-Term Note in an amount not exceeding the deferred
interest income with respect to such Short-Term Note (which includes both the
accrued original issue discount and accrued interest that are payable but that
have not been included in gross income), until such deferred interest income is
realized. A United States Holder of a Short-Term Note may elect to apply the
foregoing rules (except for the rule characterizing gain on sale, exchange or
retirement as ordinary) with respect to "acquisition discount" rather than
original issue discount. Acquisition discount is the excess of the stated
redemption price at maturity of the Short-Term Note over the United States
Holder's basis in the Short-Term Note. This election applies to all obligations
acquired by the taxpayer on or after the first day of the first taxable year to
which such election applies, unless revoked with the consent of the Internal
Revenue Service. A United States Holder's tax basis in a Short-Term Note is
increased by the amount included in such Holder's income on such a Note.
 
INTEGRATION OF NOTES WITH OTHER FINANCIAL INSTRUMENTS
 
     Any United States Holder of Notes that also acquires or has acquired any
financial instrument which, in combination with such Notes, would permit the
calculation of a single yield to maturity or could generally constitute a VRDI
of an equivalent term, may in certain circumstances treat such Notes and such
financial instrument as an integrated debt instrument for purposes of the Code,
with a single determination of issue price and the character and timing of
income, deductions, gains and losses. (For purposes of determining original
issue discount, none of the payments under the integrated debt instrument will
be treated as qualified stated interest.) Moreover, the Internal Revenue Service
may require in certain circumstances that a United States Holder who owns Notes
integrate such Notes with a financial instrument held or acquired by such Holder
or related party. United States Holders should consult their tax advisors as to
the possible integration of the Notes under the Contingent Debt Regulations.
 
FOREIGN CURRENCY NOTES
 
     The following summary describes special rules that apply, in addition to
the rules described above, to Foreign Currency Notes. The treatment of a debt
instrument, such as a Foreign Currency Note, that provides for interest payments
that are not fixed in amount at the time that the debt instrument is issued
(like the treatment of a Floating Rate Note) depends on whether the debt
instrument qualifies as a VRDI. A Foreign Currency Note qualifying as a VRDI is
subject to the rules discussed above in "Taxation of Interest" and "Original
Issue Discount" in addition to the rules discussed below. Foreign Currency Notes
not qualifying as VRDIs may be subject to the rules discussed above in "Original
Issue Discount -- Floating Rate Notes that are Not VRDIs" in addition to the
rules discussed below.
 
  Interest Includible In Income Upon Receipt
 
     An interest payment on a Foreign Currency Note that is not required to be
included in income by the United States Holder prior to the receipt of such
payment (e.g., qualified stated interest received by a cash method United States
Holder) is includible in income by the United States Holder based on the United
States dollar value of the foreign currency determined on the date such payment
is received, regardless of whether the payment is in fact converted to United
States dollars at that time. Such United States dollar value is the United
States Holder's tax basis in the foreign currency received.
 
  Interest Includible In Income Prior To Receipt
 
     In the case of interest income on a Foreign Currency Note that is required
to be included in income by the United States Holder prior to the receipt of
payment (e.g., stated interest on a Foreign Currency Note held by an accrual
basis United States Holder or accrued original issue discount or accrued market
discount that is includible in income as it accrues), a United States Holder is
required to include in income the United States dollar value of the amount of
interest income that has accrued and is otherwise required to be taken into
account with respect to a Foreign Currency Note during an accrual period. Unless
the United States Holder makes the election discussed in the next paragraph, the
United States dollar value of such accrued income is determined by translating
such income at the average rate of exchange for the accrual period or, with
respect
 
                                      S-32
   33
 
to an accrual period that spans two taxable years, at the average rate for the
portion of the accrual period within the taxable year. The average rate of
exchange for the accrual period (or partial period) is the simple average of the
spot exchange rates for each business day of such period (or other method if
such method is reasonably derived and consistently applied). Such United States
Holder recognizes, as ordinary gain or loss, foreign currency exchange gain or
loss with respect to accrued interest income on the date such income is actually
received. The amount of gain or loss recognized equals the difference between
the United States dollar value of the foreign currency payment received in
respect of such accrual period determined based on the exchange rate on the date
such payment is received and the United States dollar value of interest income
that has accrued during such accrual period (as determined above).
 
     Under the so-called "spot rate convention election," a United States Holder
may, in lieu of applying the rules described in the preceding paragraph, elect
to translate accrued interest income into United States dollars at the exchange
rate in effect on the last day of the relevant accrual period for original issue
discount, market discount or accrued interest, or in the case of an accrual
period that spans two taxable years, at the exchange rate in effect on the last
day of the taxable year. Such United States Holder will recognize ordinary
income or loss with respect to accrued interest income on the date such income
is actually received, equal to the difference (if any) between the United States
dollar value of the foreign currency payment received (determined on the date
such payment is received) and the United States dollar value of interest income
translated at the relevant spot rate described in the preceding sentence.
Additionally, if a payment of such income is actually received within five
business days of the last day of the accrual period or taxable year, an electing
United States Holder may instead translate such income into United States
dollars at the exchange rate in effect on the day of actual receipt. Any such
election applies to all debt instruments held by the United States Holder at the
beginning of the first taxable year to which the election applies or thereafter
acquired by the United States Holder and is irrevocable without the consent of
the Internal Revenue Service.
 
  Purchase, Sale, Exchange, Redemption or Retirement
 
     A United States Holder that converts United States dollars to a foreign
currency and immediately uses that currency to purchase a Foreign Currency Note
denominated in the same foreign currency normally does not recognize gain or
loss in connection with such conversion and purchase. However, a United States
Holder that purchases a Foreign Currency Note with previously owned foreign
currency does recognize ordinary income or loss in an amount equal to the
difference, if any, between such Holder's tax basis in the foreign currency and
the United States dollar market value of the Foreign Currency Note on the date
of the purchase. A United States Holder's tax basis in a Foreign Currency Note
(and the amount of any subsequent adjustment to such Holder's tax basis) is the
United States dollar value of the foreign currency amount paid for such Foreign
Currency Note (or of the foreign currency amount of the adjustment) determined
on the date of such purchase or adjustment. In the case of an adjustment
resulting from accrual of original issue discount or market discount, such
adjustment is made at the rate at which such original issue discount or market
discount is translated into United States dollars under the rules described
above.
 
     Gain or loss realized upon the sale, exchange, redemption or retirement of,
or the receipt of principal on, a Foreign Currency Note, to the extent
attributable to fluctuations in currency exchange rates, is generally ordinary
income or loss. Gain or loss attributable to fluctuations in exchange rates
equals the difference between (i) the United States dollar value of the foreign
currency purchase price for such Note, determined on the date such Note is
disposed of, and (ii) the United States dollar value of the foreign currency
purchase price for such Note, determined on the date such United States Holder
acquired such Note. Any portion of the proceeds of such sale, exchange,
redemption or retirement attributable to accrued interest income may result in
exchange gain or loss under the rules set forth above. Such foreign currency
gain or loss is recognized only to the extent of the overall gain or loss
realized by a United States Holder on the sale, exchange, redemption or
retirement of the Foreign Currency Note. In general, the source of such foreign
currency gain or loss is determined by reference to the residence of the United
States Holder or the "qualified business unit" of such Holder on whose books the
Note is properly reflected. Any gain or loss realized by a United States Holder
in excess of such foreign currency gain or loss is capital gain or loss (except
to the extent of any accrued market discount not previously included in such
Holder's income or, in the case of a Short-Term Note
 
                                      S-33
   34
 
having original issue discount, to the extent of any original issue discount not
previously included in such Holder's income).
 
     The tax basis of a United States Holder in any foreign currency received on
the sale, exchange, redemption or retirement of a Foreign Currency Note is equal
to the United States dollar value of such foreign currency, determined at the
time of such sale, exchange, redemption or retirement. Treasury Regulations
provide a special rule for purchases and sales of publicly traded securities by
a cash method taxpayer under which units of foreign currency paid or received
are translated into United States dollars at the spot rate on the settlement
date of the purchase or sale. Accordingly, no exchange gain or loss results from
currency fluctuations between the trade date and the settlement of such a
purchase or sale. An accrual method taxpayer may elect the same treatment
required of a cash method taxpayer with respect to the purchase and sale of
publicly traded securities provided the election is applied consistently. Such
election cannot be changed without consent of the Internal Revenue Service.
United States Holders should consult their tax advisors concerning the
applicability to Foreign Currency Notes of the special rules summarized in this
paragraph.
 
     Market discount, acquisition premium and amortizable bond premium of a
Foreign Currency Note are determined in the relevant foreign currency. The
amount of such market discount or acquisition premium that is included in (or
reduces) income currently is to be determined for any accrual period in the
relevant foreign currency and then translated into United States dollars on the
basis of the average exchange rate in effect during such accrual period or with
reference to the spot rate convention election as described above. Exchange gain
or loss realized with respect to such accrued market discount or acquisition
premium is determined and recognized in accordance with the rules relating to
accrued interest described above. The amount of accrued market discount (other
than market discount that is included in income currently) taken into account
upon the receipt of any partial principal payment or upon the sale, exchange,
redemption, retirement or other disposition of a Foreign Currency Note is the
United States dollar value of such accrued market discount, determined on the
date of receipt of such partial principal payment or upon the sale, exchange,
redemption, retirement or other disposition, and no portion thereof is treated
as exchange gain or loss. Exchange gain or loss with respect to amortizable bond
premium is determined by treating the portion of premium amortized with respect
to any period as a return of principal. With respect to a United States Holder
of a Foreign Currency Note that does not elect to amortize premium, the amount
of premium, if any, is treated as a capital loss when such Note matures.
 
     The Treasury Regulations promulgated under Section 988 of the Code do not
discuss the tax consequences of the acquisition of a Foreign Currency Note that
is denominated either in a so-called hyperinflationary currency or in more than
one currency, or that does not qualify as a VRDI and thus is treated as a
Contingent Note. Foreign Currency Notes containing such features may be subject
to rules that differ from the general rules described above. United States
Holders intending to purchase Foreign Currency Notes with such a feature should
examine the applicable Pricing Supplement and should consult their own tax
advisors with respect to the purchase, ownership and disposition of such a
Foreign Currency Note.
 
FOREIGN HOLDERS
 
     As used herein, the term "non-United States Holder" means a holder of a
Note that is not a United States Holder, for United States federal income tax
purposes.
 
     In general, non-United States Holders will not be subject to United States
federal withholding tax with respect to payments of principal and interest
(including original issue discount) on Notes, provided that certain conditions
are met. Under current United States federal income tax law now in effect, and
subject to the rules under Section 871(h)(4) requiring withholding with respect
to certain contingent interests (summarized below) and to the discussion of
backup withholding in the following section, payments of principal and interest
(including original issue discount) with respect to a Note by the Company or by
any paying agent to any non-United States Holder are not subject to United
States federal withholding tax, provided, in the case of interest (including
original issue discount), that (i) such Holder does not actually or
constructively own 10% or more of the total combined voting power of all classes
of stock of the Company entitled to vote, (ii) such Holder is not for federal
income tax purposes a controlled foreign corporation
 
                                      S-34
   35
 
related, directly or indirectly, to the Company through stock ownership, (iii)
such Holder is not a bank receiving interest described in Section 881(c)(3)(A)
of the Code and (iv) either (A) the beneficial owner of the Note certifies,
under penalties of perjury, to the Company or paying agent, as the case may be,
that such owner is a non-United States Holder and provides such owner's name and
address, or (B) a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business (a "financial institution") and holds the Note, certifies, under
penalties of perjury, to the Company or paying agent, as the case may be, that
such certificate has been received from the beneficial owner by it or by a
financial institution between it and the beneficial owner and furnishes the
payor with a copy thereof. A certificate described in this paragraph is
effective only with respect to payments of interest (including original issue
discount) made to the certifying non-United States Holder after the issuance of
the certificate in the calendar year of its issuance and the two immediately
succeeding calendar years. Under temporary Treasury Regulations, the foregoing
certification may be provided by the beneficial owner of a Note on Internal
Revenue Service Form W-8.
 
     On October 14, 1997, the Internal Revenue Service published in the Federal
Register final regulations (the "1997 Final Regulations") which affect the
United States taxation of non-United States Holders. The 1997 Final Regulations
are effective for payments after December 31, 1998, regardless of the issue date
of the instrument with respect to which such payments are made, subject to
certain transition rules (see below). The discussion under this heading and
under "Backup Withholding and Information Reporting," below, is not intended to
be a complete discussion of the provisions of the 1997 Final Regulations, and
prospective holders of the Notes are urged to consult their tax advisors
concerning the tax consequences of their investment in light of the 1997 Final
Regulations.
 
     The 1997 Final Regulations provide documentation procedures designed to
simplify compliance by withholding agents. The 1997 Final Regulations generally
do not affect the documentation rules described above, but add other
certification options. Under one such option, a withholding agent will be
allowed to rely on an intermediary withholding certificate furnished by a
"qualified intermediary" (as defined below) on behalf of one or more beneficial
owners (or other intermediaries) without having to obtain the beneficial owner
certificate described above. "Qualified intermediaries" include: (i) foreign
financial institutions or foreign clearing organizations (other than a United
States branch or United States office of such institution or organization) or
(ii) foreign branches or offices of United States financial institutions or
foreign branches or offices of United States clearing organizations, which, as
to both (i) and (ii), have entered into withholding agreements with the Internal
Revenue Service. In addition to certain other requirements, qualified
intermediaries must obtain withholding certificates, such as revised Internal
Revenue Service Form W-8 (see below), from each beneficial owner. Under another
option, an authorized foreign agent of a United States withholding agent will be
permitted to act on behalf of the United States withholding agent, provided
certain conditions are met.
 
     For purposes of the certification requirements, the 1997 Final Regulations
generally treat, as the beneficial owners of payments on a Note, those persons
that, under United States tax principles, are the taxpayers with respect to such
payments, rather than persons such as nominees or agents legally entitled to
such payments. In the case of payments to an entity classified as a foreign
partnership under United States tax principles, the partners, rather than the
partnership, generally will be required to provide the required certifications
to qualify for the withholding exemption described above. A payment to a United
States partnership, however, is treated for these purposes as payment to a
United States payee, even if the partnership has one or more foreign partners.
The 1997 Final Regulations provide certain presumptions with respect to
withholding for holders not furnishing the required certifications to qualify
for the withholding exemption described above. In addition, the 1997 Final
Regulations will replace a number of current tax certification forms (including
Internal Revenue Service Form W-8 and Internal Revenue Service Form 4224,
discussed below) with a single, revised Internal Revenue Service Form W-8
(which, in certain circumstances, requires information in addition to that
previously required). Under the 1997 Final Regulations, this Form W-8 will
remain valid until the last day of the third calendar year following the year in
which the certificate is signed.
 
                                      S-35
   36
 
     The 1997 Final Regulations provide transition rules concerning existing
certificates, such as Internal Revenue Service Form W-8 and Internal Revenue
Service Form 4224. Valid withholding certificates that are held on December 31,
1998 will generally remain valid until the earlier of December 31, 1999 or the
date of expiration of the certificate under the law in effect prior to January
1, 1999. Further, certificates dated prior to January 1, 1998 will generally
remain valid until the end of 1998, irrespective of the fact that their validity
expires during 1998.
 
     Notwithstanding the foregoing, interest described in Section 871(h)(4) of
the Code is subject to United States withholding tax at a 30% rate (or such
lower rate as may be provided by an applicable treaty). In general, interest
described in Section 871(h)(4) of the Code includes (subject to certain
exceptions) any interest the amount of which is determined by reference to
receipts, sales or other cash flow of the issuer or a related person, any income
or profits of the issuer or a related person, any change in the value of any
property of the issuer or a related person or any dividends, partnership
distribution or similar payments made by the issuer or a related person.
Interest described in Section 871(h)(4) of the Code may include other types of
contingent interest identified by the Internal Revenue Service in future
Treasury Regulations.
 
     If a non-United States Holder is engaged in a trade or business in the
United States and interest (including original issue discount) on the Note is
effectively connected with the conduct of such trade or business, the non-United
States Holder, although exempt from the withholding tax discussed in the
preceding paragraphs, is subject to United States federal income tax on such
interest (including original issue discount) in the same manner as if it were a
United States Holder. In lieu of the certificate described above, such Holder
must provide a properly executed Internal Revenue Service Form 4224 in order to
claim an exemption from withholding tax. In addition, if such Holder is a
foreign corporation, it may be subject to a branch profits tax equal to 30% (or
such lower rate as may be specified by an applicable treaty) of its effectively
connected earnings and profits for the taxable year, subject to adjustments. For
this purpose, interest (including original issue discount) on, and any gain
recognized on the sale, exchange, redemption, retirement or other disposition
of, a Note is included in the earnings and profits of such Holder if such
interest (including original issue discount) or gain is effectively connected
with the conduct by such Holder of a trade or business in the United States.
 
     Generally, any gain or income (other than that attributable to accrued
interest or original issue discount, which is taxable in the manner described
above) realized upon the sale, exchange, redemption, retirement or other
disposition of a Note is not subject to federal income tax unless (i) such gain
or income is effectively connected with a trade or business in the United States
of the non-United States Holder or (ii) in the case of a non-United States
Holder who is a nonresident alien individual, the non-United States Holder is
present in the United States for 183 days or more in the taxable year of such
sale, exchange, redemption, retirement or other disposition and either (a) such
individual has a "tax home" (as defined in Section 911(d)(3) of the Code) in the
United States or (b) the gain is attributable to an office or other fixed place
of business maintained by such individual in the United States.
 
     Under the 1997 Final Regulations, withholding of United States federal
income tax may apply to payments on a taxable sale or other disposition of a
Note by a non-United States Holder who does not provide appropriate
certification to the withholding agent with respect to such transaction.
 
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
 
     Under current United States federal income tax law, information reporting
requirements apply to interest (including original issue discount) and principal
payments made to, and to the proceeds of sales before maturity by, certain
non-corporate United States Holders. In addition, a 31% backup withholding tax
applies if (i) the non-corporate United States Holder fails to furnish such
person's Taxpayer Identification Number ("TIN") (which, for an individual, is
his or her Social Security Number) to the payor in the manner required, (ii) the
non-corporate United States Holder furnishes an incorrect TIN and the payor is
so notified by the Internal Revenue Service, (iii) the payor is notified by the
Internal Revenue Service that such person
 
                                      S-36
   37
 
has failed properly to report payments of interest and dividends or (iv) in
certain circumstances, the non-corporate United States Holder fails to certify,
under penalties of perjury, that such person has not been notified by the
Internal Revenue Service that such person is subject to backup withholding for
failure properly to report interest and dividend payments. Backup withholding
does not apply with respect to payments made to certain exempt recipients, such
as corporations and tax-exempt organizations.
 
     In the case of a non-United States Holder, under current United States
federal income tax law, backup withholding and information reporting do not
apply to payments of principal and interest (including original issue discount)
with respect to a Note, or to payments on the sale, exchange, redemption or
retirement of a Note, if such Holder has provided the required certification
under penalties of perjury that such Holder is a non-United States Holder or has
otherwise established an exemption.
 
     Under current United States federal income tax law, (i) principal or
interest payments (including original issue discount) on a Note collected
outside the United States by a foreign office of a custodian, nominee or broker
acting on behalf of a beneficial owner of a Note and (ii) payments on the sale,
exchange, redemption or retirement of a Note to or through a foreign office of a
broker are not generally subject to backup withholding or information reporting.
However, if such custodian, nominee or broker is a United States person, a
controlled foreign corporation for United States tax purposes, or a foreign
person 50% of more of whose gross income is effectively connected with the
conduct of a United States trade or business for a specified three-year period,
such custodian, nominee or broker may be subject to certain information
reporting (but not backup withholding) requirements with respect to such
payments, unless such custodian, nominee or broker has in its records
documentary evidence that the beneficial owner is not a United States person and
certain conditions are met or the beneficial owner otherwise establishes an
exemption.
 
     In the case of a non-United States Holder, under the 1997 Final
Regulations, backup withholding and information reporting will not apply to
payments of principal and interest (including original issue discount) with
respect to a Note if such Holder provides the required certification to
establish an exemption from the withholding of United States federal income tax
or otherwise establishes an exemption. As noted above, the 1997 Final
Regulations are effective for payments after December 31, 1998, subject to
certain transition rules.
 
     Under the 1997 Final Regulations, payments of principal and interest
(including original issue discount) with respect to a Note made to a custodian,
nominee or broker will not be subject to backup withholding or information
reporting, irrespective of the place of payment or the location of the office of
the custodian, nominee or broker, although payments of interest (including
original issue discount) with respect to a Note paid to a foreign intermediary
(whether or not a qualified intermediary) will be subject to withholding of
United States federal income tax at the rate of 30% unless the beneficial owner
(whether or not a United States person) establishes an exemption by furnishing a
withholding certificate or other appropriate documentation. Unless the
beneficial owner establishes an exemption, a payment by a custodian, nominee or
broker may be subject to information reporting and, unless (i) the payment has
been subject to withholding of United States federal income tax at the rate of
30% or (ii) the payment is made outside the United States to an offshore account
in a financial institution that maintains certain procedures related to account
documentation, to backup withholding as well.
 
     Under the 1997 Final Regulations, payments on the sale, exchange,
redemption or retirement of a Note to or through a broker may be subject to
information reporting and backup withholding unless (i) the transaction is
effected outside the United States and the broker is not a United States person,
a controlled foreign corporation for United States tax purposes, a United States
branch of a foreign bank or foreign insurance company, a foreign partnership
controlled by United States persons or engaged in a United States trade or
business or a foreign person 50% or more of whose gross income is effectively
connected with the conduct of a United States trade or business for a specified
three-year period or (ii)the beneficial owner otherwise establishes an
exemption.
 
     Backup withholding tax is not an additional tax. Rather, any amounts
withheld from a payment to a person under backup withholding rules are allowed
as a refund or a credit against such person's United States federal income tax,
provided that the required information is furnished to the Internal Revenue
Service.
 
                                      S-37
   38
 
     THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR
SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES ,
INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS
AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
 
                       SUPPLEMENTAL PLAN OF DISTRIBUTION
 
     The Notes are being offered on a continuing basis for sale by the Company
to or through Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Chase Securities Inc., Deutsche Morgan Grenfell Inc., First Union
Capital Markets Corp., Goldman, Sachs & Co., NationsBanc Montgomery Securities,
Inc., Salomon Brothers Inc and Smith Barney, Inc. (the "Agents"). The Agents,
individually or in a syndicate, may purchase Notes, as principal, from the
Company from time to time for resale to investors and other purchasers at
varying prices relating to prevailing market prices at the time of resale as
determined by the applicable Agent or, if so specified in the applicable Pricing
Supplement, for resale at a fixed offering price. If agreed to by the Company
and an Agent, such Agent may also utilize its reasonable efforts on an agency
basis to solicit offers to purchase the Notes at 100% of the principal amount
thereof, unless otherwise specified in the applicable Pricing Supplement. The
Company will pay a commission to an Agent, ranging from .125% to .750% of the
principal amount of each Note, depending upon its stated maturity, sold through
such Agent as an agent of the Company. Commissions with respect to Notes with
stated maturities in excess of 30 years that are sold through an Agent as an
agent of the Company will be negotiated between the Company and such Agent at
the time of such sale.
 
     Unless otherwise specified in the applicable Pricing Supplement, any Note
sold to an Agent as principal will be purchased by such Agent at a price equal
to 100% of the principal amount thereof less a percentage of the principal
amount equal to the commission applicable to an agency sale of a Note of
identical maturity. An Agent may sell Notes it has purchased from the Company as
principal to certain dealers less a concession equal to all or any portion of
the discount received in connection with such purchase. Such Agent may allow,
and such dealers may reallow, a discount to certain other dealers. After the
initial offering of Notes, the offering price (in the case of Notes to be resold
on a fixed offering price basis), the concession and the reallowance may be
changed.
 
     The Company reserves the right to withdraw, cancel or modify the offer made
hereby without notice and may reject offers in whole or in part (whether placed
directly with the Company or through an Agent). Each Agent will have the right,
in its discretion reasonably exercised, to reject in whole or in part any offer
to purchase Notes received by it on an agency basis.
 
     Unless otherwise specified in the applicable Pricing Supplement, payment of
the purchase price of the Notes will be required to be made in immediately
available funds in the Specified Currency in The City of New York on the date of
settlement. See "Description of Notes--General."
 
     Upon issuance, the Notes will not have an established trading market.
Unless otherwise specified in the applicable Pricing Supplement, the Notes will
not be listed on any securities exchange. The Agents may from time to time
purchase and sell Notes in the secondary market, but the Agents are not
obligated to do so, and there can be no assurance that there will be a secondary
market for the Notes or that there will be liquidity in the secondary market if
one develops. From time to time, the Agents may make a market in the Notes, but
the Agents are not obligated to do so and may discontinue any market-making
activity at any time.
 
     In connection with an offering of Notes purchased by one or more Agents as
principal on a fixed offering price basis, such Agent(s) will be permitted to
engage in certain transactions that stabilize the price of Notes. Such
transactions may consist of bids or purchases for the purpose of pegging, fixing
or maintaining the price of Notes. If the Agent creates or the Agents create, as
the case may be, a short position in Notes, i.e., if it sells or they sell Notes
in an aggregate principal amount exceeding that set forth in the applicable
Pricing Supplement, such Agent(s) may reduce that short position by purchasing
Notes in the open market. In
 
                                      S-38
   39
 
general, purchases of Notes for the purpose of stabilization or to reduce a
short position could cause the price of Notes to be higher than it might be in
the absence of such purchases.
 
     Neither the Company nor any of the Agents makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described in the immediately preceding paragraph may have on the price of Notes.
In addition, neither the Company nor any of the Agents makes any representation
that the Agents will engage in any such transactions or that such transactions,
once commenced, will not be discontinued without notice.
 
     The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). The Company has
agreed to indemnify the Agents against, and to provide contribution with respect
to, certain liabilities (including liabilities under the Securities Act). The
Company has agreed to reimburse the Agents for certain other expenses.
 
     In the ordinary course of its business, the Agents and their affiliates
have engaged and may in the future engage in investment and commercial banking
transactions with the Company and certain of its affiliates. In particular,
affiliates of certain of the Agents participate in the Company's revolving
credit facility and, accordingly, if any proceeds from the sale of Notes are
applied by the Company to repay amounts borrowed under such facility, such
affiliates will receive a proportionate share of repaid amounts. Because certain
of the Agents are affiliated with banking institutions with which the Company
maintains credit facilities, it is possible that more than 10% of the net
proceeds from the sale of the Notes may be used to repay indebtedness owed by
the Company to such banking institutions. Accordingly, the offering of the Notes
is being made in accordance with the requirements of Rule 2710(c)(8) of the
National Association of Securities Dealers, Inc.
 
     From time to time, the Company may issue and sell other Securities
described in the accompanying Prospectus, and the amount of Notes offered hereby
is subject to reduction as a result of such sales.
 
                                 LEGAL MATTERS
 
     The validity of the Notes will be passed upon for the Company by John J.
Sabl, Executive Vice President, General Counsel and Secretary of the Company,
and for the Agents by Sidley & Austin, Chicago, Illinois. In rendering their
opinions, Sidley & Austin and Mr. Sabl will rely as to matters of Indiana law on
the opinion of Karl W. Kindig, Senior Vice President, Legal of Conseco Services,
LLC, a subsidiary of the Company. Certain other matters with respect to the
offering will be passed upon by Locke Reynolds Boyd & Weisell, Indianapolis,
Indiana. Messrs. Sabl and Kindig are full-time employees and own shares, and
have options to purchase shares, of Common Stock of the Company. Sidley & Austin
provides legal services to the Company in certain other matters.
 
                                      S-39
   40
 
PROSPECTUS
 
                                 $1,500,000,000
 
                                 CONSECO, INC.
 DEBT SECURITIES, PREFERRED STOCK, DEPOSITARY SHARES, COMMON STOCK AND WARRANTS
 
                           CONSECO FINANCING TRUST IV
                           CONSECO FINANCING TRUST V
                           CONSECO FINANCING TRUST VI
                          CONSECO FINANCING TRUST VII
           PREFERRED SECURITIES FULLY AND UNCONDITIONALLY GUARANTEED
                                BY CONSECO, INC.
                            ------------------------
 
     Conseco, Inc., an Indiana corporation ("Conseco" or the "Company"), may
offer and sell from time to time, in one or more series, (i) its debt
securities, consisting of debentures, notes and/or other evidences of
indebtedness representing unsecured obligations of Conseco (the "Debt
Securities"), (ii) shares of its preferred stock, no par value per share
("Preferred Stock"), which may be represented by depositary shares (the
"Depositary Shares") as described herein, (iii) shares of its common stock, no
par value per share ("Common Stock"), and (iv) warrants to purchase Debt
Securities, Preferred Stock, Common Stock or other securities or rights
("Warrants").
 
     Conseco Financing Trust IV, Conseco Financing Trust V, Conseco Financing
Trust VI and Conseco Financing Trust VII (each, a "Conseco Trust"), statutory
business trusts formed under the laws of the State of Delaware, may offer, from
time to time, preferred securities, representing preferred undivided beneficial
interests in the assets of the respective Conseco Trusts ("Preferred
Securities"). The payment of periodic cash distributions ("Distributions") with
respect to Preferred Securities out of moneys held by each of the Conseco
Trusts, and payments on liquidation, redemption or otherwise with respect to
such Preferred Securities, will be guaranteed by the Company to the extent
described herein (each, a "Trust Guarantee"). See "Description of Preferred
Securities" and "Description of Trust Guarantees." The Company's obligations
under the Trust Guarantees will rank junior and subordinate in right of payment
to all other liabilities of the Company and pari passu with its obligations
under the senior most preferred or preference stock of the Company. See
"Description of Trust Guarantees -- Status of the Trust Guarantees."
Subordinated Debt Securities (as defined herein) may be issued and sold by the
Company in one or more series to a Conseco Trust or a trustee of such Conseco
Trust in connection with the investment of the proceeds from the offering of
Preferred Securities and Common Securities (as defined herein) of such Conseco
Trust. The Subordinated Debt Securities purchased by a Conseco Trust may be
subsequently distributed pro rata to holders of Preferred Securities and Common
Securities in connection with the dissolution of such Conseco Trust. The Debt
Securities, Preferred Stock, Depositary Shares, Common Stock, Warrants and
Preferred Securities are herein collectively referred to as the "Securities."
 
     Certain specific terms of the particular Securities in respect of which
this Prospectus is being delivered will be set forth in an accompanying
supplement to this Prospectus (the "Prospectus Supplement"), which will
describe, without limitation and where applicable, the following: (i) in the
case of Debt Securities, the specific designation, aggregate principal amount,
ranking as senior or subordinated Debt Securities, denomination, maturity,
premium, if any, interest rate (which may be fixed or variable), time and method
of calculating interest, if any, place or places where principal of, premium, if
any, and interest, if any, on such Debt Securities will be payable, the
currencies or currency units in which principal of, premium, if any, and
interest, if any, on such Debt Securities will be payable, any terms of
redemption or conversion, any sinking fund provisions, the purchase price, any
listing on a securities exchange, any right of the Company to defer payment of
interest on the Debt Securities and the maximum length of such deferral period
and other special terms; (ii) in the case of Preferred Stock and Depositary
Shares, the specific designation, stated value and
   41
 
liquidation preference per share and number of shares offered, the purchase
price, dividend rate (which may be fixed or variable), method of calculating
payment of dividends, place or places where dividends on such Preferred Stock
will be payable, any terms of redemption, dates on which dividends shall be
payable and dates from which dividends shall accrue, any listing on a securities
exchange, voting and other rights, including conversion or exchange rights, if
any, and other special terms, including whether interests in the Preferred Stock
will be represented by Depositary Shares and, if so, the fraction of a share of
Preferred Stock represented by each Depositary Share; (iii) in the case of
Common Stock, the number of shares offered, the initial offering price, market
price and dividend information; (iv) in the case of Warrants, the specific
designation, the number, purchase price, exercise price and other terms thereof,
any listing of the Warrants or the underlying Securities on a securities
exchange or any other terms in connection with the offering, sale and exercise
of the Warrants, as well as the terms on which and the Securities for which such
Warrants may be exercised; and (v) in the case of Preferred Securities, the
specific designation, number of securities, liquidation amount per security, the
purchase price, any listing on a securities exchange, distribution rate (or
method of calculation thereof), dates on which distributions shall be payable
and dates from which distributions shall accrue, any voting rights, terms for
any conversion or exchange into other securities, any redemption, exchange or
sinking fund provisions, any other rights, preferences, privileges, limitations
or restrictions relating to the Preferred Securities and the terms upon which
the proceeds of the sale of the Preferred Securities shall be used to purchase a
specific series of Subordinated Debt Securities of the Company.
 
     The offering price to the public of the Securities will be limited to U.S.
$1,500,000,000 in the aggregate (or its equivalent (based on the applicable
exchange rate at the time of issue), if Securities are offered for consideration
denominated in one or more foreign currencies or currency units as shall be
designated by the Company). The Debt Securities may be denominated in United
States dollars or, at the option of the Company if so specified in the
applicable Prospectus Supplement, in one or more foreign currencies or currency
units. The Debt Securities may be issued in registered form or bearer form, or
both. If so specified in the applicable Prospectus Supplement, Debt Securities
of a series may be issued in whole or in part in the form of one or more
temporary or permanent global securities.
 
     The Securities may be sold to or through underwriters, through dealers or
agents or directly to purchasers. See "Plan of Distribution." The names of any
underwriters, dealers or agents involved in the sale of the Securities in
respect of which this Prospectus is being delivered and any applicable fee,
commission or discount arrangements with them will be set forth in a Prospectus
Supplement. See "Plan of Distribution" for possible indemnification arrangements
for dealers, underwriters and agents.
 
     This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
                            ------------------------
  THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
 EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
   AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
                               CRIMINAL OFFENSE.
 
                 The date of this Prospectus is June 24, 1997.
 
                                        2
   42
 
FOR NORTH CAROLINA RESIDENTS: THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH CAROLINA,
NOR HAS THE COMMISSIONER OF INSURANCE RULED UPON THE ACCURACY OR THE ADEQUACY OF
THIS DOCUMENT.
 
     State insurance holding company laws and regulations applicable to the
Company generally provide that no person may acquire control of the Company, and
thus indirect control of its insurance subsidiaries, unless such person has
provided certain required information to, and such acquisition is approved (or
not disapproved) by, the appropriate insurance regulatory authorities.
Generally, any person acquiring beneficial ownership of 10% or more of the
Common Stock would be presumed to have acquired such control, unless the
appropriate insurance regulatory authorities upon advance application determine
otherwise.
 
     NO DEALER, SALESMAN OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, ANY
ACCOMPANYING PROSPECTUS SUPPLEMENT OR THE DOCUMENTS INCORPORATED OR DEEMED
INCORPORATED BY REFERENCE HEREIN. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY UNDERWRITER, DEALER OR AGENT. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN
THE REGISTERED SECURITIES TO WHICH IT RELATES, OR AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THOSE SECURITIES TO WHICH IT RELATES, IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN
THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
 
                             AVAILABLE INFORMATION
 
     The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by Conseco with the Commission can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at
the following regional offices of the Commission: New York Regional Office, 7
World Trade Center, 13th Floor, New York, New York 10048; and Chicago Regional
Office, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such material can be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, upon
payment of the prescribed rates. In addition, the Commission maintains a Web
site at http://www.sec.gov that contains reports, proxy and information
statements and other information regarding registrants, including the Company,
that file electronically with the Commission. Copies of such reports, proxy
statements and other information can also be inspected at the offices of the New
York Stock Exchange, 20 Broad Street, New York, New York 10005.
 
     The Company and the Conseco Trusts have filed with the Commission a
Registration Statement on Form S-3 under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Securities offered hereby. This
Prospectus, which constitutes part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement and the
exhibits thereto, certain parts of which are omitted in accordance with the
rules and regulations of the Commission. Statements contained herein or in any
Prospectus Supplement concerning the provisions of any document do not purport
to be complete and, in each instance, are qualified in all respects by reference
to the copy of such document filed as an exhibit to the Registration Statement
or otherwise filed with the Commission. For further information with respect to
the Company, the Conseco Trusts and the Securities, reference is hereby made to
such Registration Statement, including the exhibits thereto and the documents
incorporated herein by reference, which can be examined at the Commission's
principal office, 450 Fifth Street, N.W., Washington, D.C. 20549, or copies of
which can be obtained from the Commission at such office upon payment of the
fees prescribed by the Commission.
 
     No separate financial statements of the Conseco Trusts have been included
or incorporated by reference herein. The Company does not consider that such
financial statements would be material to holders of the
 
                                        3
   43
 
Preferred Securities because (i) all of the voting securities of the Conseco
Trusts will be owned, directly or indirectly, by the Company, a reporting
company under the Exchange Act, (ii) the Conseco Trusts have and will have no
independent operations but exist for the sole purpose of issuing securities
representing undivided beneficial interests in their assets and investing the
proceeds thereof in Subordinated Debt Securities issued by the Company, and
(iii) the Company's obligations described herein and in any accompanying
prospectus supplement, under the Declaration (including the obligation to pay
expenses of the Conseco Trusts), the Subordinated Indenture and any supplemental
indentures thereto, the Subordinated Debt Securities issued to the Conseco Trust
and the Trust Guarantees taken together, constitute a full and unconditional
guarantee by the Company of payments due on the Preferred Securities. See
"Description of Preferred Securities of the Conseco Trusts" and "Description of
Trust Guarantees."
 
                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
 
     The following documents previously filed by the Company with the Commission
pursuant to the Exchange Act are incorporated herein by this reference:
 
     1.   Annual Report on Form 10-K for the fiscal year ended December 31, 1996
including Part III thereof which is incorporated by reference from the Company's
proxy statement dated April 10, 1997 for its annual meeting of shareholders (the
"Company's Annual Report");
 
     2.   Quarterly Report on Form 10-Q for the quarter ended March 31, 1997;
 
     3.   Current Reports on Form 8-K dated April 1, 1997 and April 30, 1997;
and
 
     4.   The description of the Company's Common Stock in its Registration
Statements filed pursuant to Section 12 of the Exchange Act, and any amendment
or report filed for the purpose of updating any such description.
 
     All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date hereof and prior to the
termination of the offering made hereby shall be deemed to be incorporated by
reference in this Prospectus or any Prospectus Supplement and to be part hereof
from the date of filing of such documents.
 
     Any statement contained herein, or in a document incorporated or deemed to
be incorporated by reference herein, shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus or
any Prospectus Supplement. To the extent that any proxy statement is
incorporated by reference herein, such incorporation shall not include any
information contained in such proxy statement that is not, pursuant to the
Commission's rules, deemed to be "filed" with the Commission or subject to the
liabilities of Section 18 of the Exchange Act.
 
     The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the documents incorporated herein by reference (other than
exhibits to such documents unless such exhibits are specifically incorporated by
reference into such documents). Any such request should be directed to James W.
Rosensteele, Senior Vice President, Corporate Communications, Conseco, Inc.,
11825 N. Pennsylvania Street, Carmel, Indiana 46032 (telephone number: (317)
817-2893).
 
                                        4
   44
 
                                  THE COMPANY
 
     The Company is a financial services holding company. The Company develops,
markets and administers annuity, individual health insurance and individual life
insurance products. The Company's operating strategy is to grow the insurance
business within its subsidiaries by focusing its resources on the development
and expansion of profitable products and strong distribution channels. The
Company has supplemented such growth by acquiring companies that have profitable
niche products, strong distribution systems and progressive management teams who
can work with the Company to implement the Company's operating and growth
strategies. Once a company has been acquired, the Company's operating strategy
has been to consolidate and streamline management and administrative functions,
to realize superior investment returns through active asset management, to
eliminate unprofitable products and distribution channels, and to expand and
develop the profitable distribution channels and products.
 
     The Company's principal executive offices are located at 11825 N.
Pennsylvania Street, Carmel, Indiana 46032. Its telephone number is (317)
817-6100.
 
                               THE CONSECO TRUSTS
 
     Each of the Conseco Trusts is a statutory business trust formed under
Delaware law pursuant to (i) a declaration of trust (each a "Declaration")
executed by the Company as sponsor for such trust (the "Sponsor"), and the
Conseco Trustees (as defined herein) of such trust and (ii) the filing of a
certificate of trust with the Secretary of State of the State of Delaware on May
23, 1997. Each Conseco Trust exists for the exclusive purposes of (i) issuing
and selling the Preferred Securities and common securities representing common
undivided beneficial interests in the assets of such Conseco Trust (the "Common
Securities" and, together with the Preferred Securities, the "Trust
Securities"), (ii) using the gross proceeds from the sale of the Trust
Securities to acquire the Subordinated Debt Securities and (iii) engaging in
only those other activities necessary, appropriate, convenient or incidental
thereto. All of the Common Securities will be directly or indirectly owned by
the Company. The Common Securities will rank pari passu, and payments will be
made thereon pro rata, with the Preferred Securities, except that, if an event
of default under the Declaration has occurred and is continuing, the rights of
the holders of the Common Securities to payment in respect of distributions and
payments upon liquidation, redemption and otherwise will be subordinated to the
rights of the holders of the Preferred Securities. The Company will directly or
indirectly acquire Common Securities, in an aggregate liquidation amount equal
to at least 3% of the total capital of each Conseco Trust.
 
     Each Conseco Trust has a term of approximately 55 years but may terminate
earlier, as provided in the Declaration. Each Conseco Trust's business and
affairs will be conducted by the trustees (the "Conseco Trustees") appointed by
the Company as the direct or indirect holder of all of the Common Securities.
The holder of the Common Securities will be entitled to appoint, remove or
replace any of, or increase or reduce the number of, the Conseco Trustees of
each Conseco Trust. The duties and obligations of the Conseco Trustees shall be
governed by the Declaration of such Conseco Trust. A majority of the Conseco
Trustees (the "Regular Trustees") of each Conseco Trust will be persons who are
employees or officers of or who are affiliated with the Company. One Conseco
Trustee of each Conseco Trust will be a financial institution that is not
affiliated with the Company and has a minimum amount of combined capital and
surplus of not less than $50,000,000, which shall act as property trustee and as
indenture trustee for the purposes of compliance with the provisions of Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), pursuant to the
terms set forth in the applicable Prospectus Supplement (the "Property
Trustee"). In addition, unless the Property Trustee maintains a principal place
of business in the State of Delaware and otherwise meets the requirements of
applicable law, one Conseco Trustee of each Conseco Trust will be an entity
having a principal place of business in, or a natural person resident of, the
State of Delaware (the "Delaware Trustee"). The Company will pay all fees and
expenses related to the Conseco Trusts and the offering of the Trust Securities.
 
     The Property Trustee for each Conseco Trust is Fleet National Bank, 777
Main Street, Hartford, Connecticut 06115. The Delaware Trustee for each Conseco
Trust is First Union Trust Company, National Association, and its address in the
State of Delaware is One Rodney Square, 920 King Street, Wilmington, Delaware
19801. The principal place of business of each Conseco Trust shall be c/o
Conseco, Inc., 11825 N. Pennsylvania Street, Carmel, Indiana 46032; telephone
(317) 817-6100.
 
                                        5
   45
 
                                USE OF PROCEEDS
 
     Unless otherwise indicated in the accompanying Prospectus Supplement, the
net proceeds received by the Company from the sale of any Debt Securities,
Common Stock, Preferred Stock, Depositary Shares or Warrants offered hereby are
expected to be used for general corporate purposes. The proceeds from the sale
of Preferred Securities by the Conseco Trusts will be invested in the
Subordinated Debt Securities of the Company. Except as may otherwise be
described in the Prospectus Supplement relating to such Preferred Securities,
the Company expects to use the net proceeds from the sale of such Subordinated
Debt Securities to the Conseco Trusts for general corporate purposes. Any
specific allocation of the proceeds to a particular purpose that has been made
at the date of any Prospectus Supplement will be described therein.
 
             RATIOS OF EARNINGS TO FIXED CHARGES, EARNINGS TO FIXED
                     CHARGES AND PREFERRED STOCK DIVIDENDS
            AND EARNINGS TO FIXED CHARGES, PREFERRED STOCK DIVIDENDS
               AND DISTRIBUTIONS ON COMPANY-OBLIGATED MANDATORILY
              REDEEMABLE PREFERRED SECURITIES OF SUBSIDIARY TRUSTS
 
     The following table sets forth the Company's ratios of earnings to fixed
charges, earnings to fixed charges and preferred stock dividends and earnings to
fixed charges, preferred stock dividends and distributions on Company-obligated
mandatorily redeemable preferred securities of subsidiary trusts for each of the
five years ended December 31, 1996 and for the three months ended March 31, 1996
and 1997.
 


                                                                                    THREE MONTHS
                                                  YEAR ENDED DECEMBER 31,          ENDED MARCH 31,
                                           -------------------------------------   ---------------
                                           1992    1993    1994    1995    1996     1996     1997
                                           -----   -----   -----   -----   -----   ------   ------
                                                                       
Ratio of earnings to fixed charges:
  As reported............................  1.54X   2.19X   2.26X   1.57X   1.61X    1.69X    1.89X
  Excluding interest on annuities and
     financial products(1)(2)............  6.24X   8.85X   4.55X   3.80X   4.55X    4.51X    7.36X
Ratio of earnings to fixed charges and
  preferred dividends:
     As reported.........................  1.50X   2.04X   1.95X   1.50X   1.50X    1.54X    1.84X
     Excluding interest on annuities and
       financial products(1)(2)..........  5.09X   6.00X   3.14X   3.06X   3.14X    3.01X    6.21X
Ratio of earnings to fixed charges,
  preferred dividends and distributions
  on Company-obligated mandatorily
  redeemable preferred securities of
  subsidiary trusts:
     As reported.........................  1.50X   2.04X   1.95X   1.50X   1.49X    1.54X    1.74X
     Excluding interest on annuities and
       financial products(1)(2)..........  5.09X   6.00X   3.14X   3.06X   3.06X    3.01X    4.54X

 
- ---------------
(1) These ratios are included to assist the reader in analyzing the impact of
    interest on annuities and financial products (which is not generally
    required to be paid in cash in the period it is recognized). Such ratios are
    not intended to, and do not, represent the following ratios prepared in
    accordance with generally accepted accounting principles ("GAAP"): the ratio
    of earnings to fixed charges; the ratio of earnings to fixed charges and
    preferred dividends; or the ratio of earnings to fixed charges, preferred
    dividends and distributions on Company-obligated mandatorily redeemable
    preferred securities of subsidiary trusts.
 
(2) Excludes interest credited to annuity and financial products of $506.8
    million, $408.5 million, $134.7 million, $585.4 million and $668.6 million
    for the years ended December 31, 1992, 1993, 1994, 1995 and 1996,
    respectively, and $139.1 million and $189.9 million for the three months
    ended March 31, 1996 and 1997, respectively.
 
                                        6
   46
 
                           DESCRIPTION OF DEBT SECURITIES
 
     The Debt Securities offered hereby, consisting of notes, debentures and
other evidences of indebtedness, are to be issued in one or more series
constituting either senior Debt Securities ("Senior Debt Securities") or
subordinated Debt Securities ("Subordinated Debt Securities"). The Debt
Securities will be issued pursuant to indentures described below (as applicable,
the "Senior Indenture" or the "Subordinated Indenture", each, an "Indenture"
and, together, the "Indentures"), in each case between the Company and the
trustee identified therein (the "Trustee"), the forms of which have been filed
as exhibits to the Registration Statement of which this Prospectus forms a part.
Except for the subordination provisions of the Subordinated Indenture, for which
there are no counterparts in the Senior Indenture, the provisions of the
Subordinated Indenture are substantially identical in substance to the
provisions of the Senior Indenture that bear the same section numbers.
 
     The statements herein relating to the Debt Securities and the following
summaries of certain general provisions of the Indentures do not purport to be
complete and are subject to, and are qualified in their entirety by reference
to, all the provisions of the Indentures (as they may be amended or supplemented
from time to time), including the definitions therein of certain terms
capitalized in this Prospectus. All article and section references appearing
herein are to articles and sections of the applicable Indenture and whenever
particular Sections or defined terms of the Indentures (as they may be amended
or supplemented from time to time) are referred to herein or in a Prospectus
Supplement, such Sections or defined terms are incorporated herein or therein by
reference.
 
GENERAL
 
     The Debt Securities will be unsecured obligations of the Company. The
Indentures do not limit the aggregate amount of Debt Securities which may be
issued thereunder, nor do they limit the incurrence or issuance of other secured
or unsecured debt of the Company. The Debt Securities issued under the Senior
Indenture will be unsecured and will rank pari passu with all other unsecured
and unsubordinated obligations of the Company. The Debt Securities issued under
the Subordinated Indenture 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 Company. See "-- Subordination under the Subordinated
Indenture."
 
     Reference is made to the applicable Prospectus Supplement which will
accompany this Prospectus for a description of the specific series of Debt
Securities being offered thereby, including: (1) the title, designation and
purchase price, of such Debt Securities; (2) any limit upon the aggregate
principal amount of such Debt Securities; (3) the date or dates on which the
principal of and premium, if any, on such Debt Securities will mature or the
method of determining such date or dates; (4) the rate or rates (which may be
fixed or variable) at which such Debt Securities will bear interest, if any, or
the method of calculating such rate or rates; (5) the date or dates from which
interest, if any, will accrue or the method by which such date or dates will be
determined; (6) the date or dates on which interest, if any, will be payable and
the record date or dates therefor; (7) the place or places where principal of,
premium, if any, and interest, if any, on such Debt Securities will be payable;
(8) the right, if any, of the Company to defer payment of interest on Debt
Securities and the maximum length of any such deferral period; (9) the period or
periods within which, the price or prices at which, the currency or currencies
(including currency unit or units) in which, and the terms and conditions upon
which, such Debt Securities may be redeemed, in whole or in part, at the option
of the Company; (10) the obligation, if any, of the Company to redeem or
purchase such Debt Securities pursuant to any sinking fund or analogous
provisions or upon the happening of a specified event and the period or periods
within which, the price or prices at which and the other terms and conditions
upon which, such Debt Securities shall be redeemed or purchased, in whole or in
part, pursuant to such obligations; (11) the denominations in which such Debt
Securities are authorized to be issued; (12) the currency or currency unit for
which Debt Securities may be purchased or in which Debt Securities may be
denominated and/or the currency or currencies (including currency unit or units)
in which principal of, premium, if any, and interest, if any, on such Debt
Securities will be payable and whether the Company or the holders of any such
Debt Securities may elect to receive payments in respect of such Debt Securities
in a currency or currency unit other than that in which such Debt Securities are
stated to be payable; (13) if other than the principal amount
 
                                        7
   47
 
thereof, the portion of the principal amount of such Debt Securities which will
be payable upon declaration of the acceleration of the maturity thereof or the
method by which such portion shall be determined; (14) the person to whom any
interest on any such Debt Security shall be payable if other than the person in
whose name such Debt Security is registered on the applicable record date; (15)
any addition to, or modification or deletion of, any Event of Default or any
covenant of the Company specified in the Indenture with respect to such Debt
Securities; (16) the application, if any, of such means of defeasance or
covenant defeasance as may be specified for such Debt Securities; (17) whether
such Debt Securities are to be issued in whole or in part in the form of one or
more temporary or permanent global securities and, if so, the identity of the
depositary for such global security or securities; (18) any United States
Federal income tax considerations applicable to holders of the Debt Securities;
and (19) any other special terms pertaining to such Debt Securities. Unless
otherwise specified in the applicable Prospectus Supplement, the Debt Securities
will not be listed on any securities exchange. (Section 3.1.)
 
     Unless otherwise specified in the applicable Prospectus Supplement, Debt
Securities will be issued in fully-registered form without coupons. Where Debt
Securities of any series are issued in bearer form, the special restrictions and
considerations, including special offering restrictions and special Federal
income tax considerations, applicable to any such Debt Securities and to payment
on and transfer and exchange of such Debt Securities will be described in the
applicable Prospectus Supplement. Bearer Debt Securities will be transferable by
delivery. (Section 3.5.)
 
     Debt Securities may be sold at a substantial discount below their stated
principal amount, bearing no interest or interest at a rate which at the time of
issuance is below market rates. Certain Federal income tax consequences and
special considerations applicable to any such Debt Securities, or to Debt
Securities issued at par that are treated as having been issued at a discount,
will be described in the applicable Prospectus Supplement.
 
     If the purchase price of any of the Debt Securities is payable in one or
more foreign currencies or currency units or if any Debt Securities are
denominated in one or more foreign currencies or currency units or if the
principal of, premium, if any, or interest, if any, on any Debt Securities is
payable in one or more foreign currencies or currency units, or by reference to
commodity prices, equity indices or other factors, the restrictions, elections,
certain U.S. Federal income tax considerations, specific terms and other
information with respect to such issue of Debt Securities and such foreign
currency or currency units or commodity prices, equity indices or other factors
will be set forth in the applicable Prospectus Supplement. In general, holders
of such series of Debt Securities may receive a principal amount on any
principal payment date, or a payment of premium, if any, on any premium interest
payment date or a payment of interest on any interest payment date, that is
greater than or less than the amount of principal, premium, if any, or interest
otherwise payable on such dates, depending on the value on such dates of the
applicable currency, commodity, equity index or other factor.
 
PAYMENT, REGISTRATION, TRANSFER AND EXCHANGE
 
     Unless otherwise provided in the applicable Prospectus Supplement, payments
in respect of the Debt Securities will be made in the designated currency at the
office or agency of the Company maintained for that purpose as the Company may
designate from time to time, except that, at the option of the Company, interest
payments, if any, on Debt Securities in registered form may be made (i) by
checks mailed to the holders of Debt Securities entitled thereto at their
registered addresses or (ii) by wire transfer to an account maintained by the
person entitled thereto as specified in the Register. (Sections 3.7(a) and 9.2.)
Unless otherwise indicated in the applicable Prospectus Supplement, payment of
any installment of interest on Debt Securities in registered form will be made
to the person in whose name such Debt Security is registered at the close of
business on the regular record date for such interest. (Section 3.7(a).)
 
     Payment in respect of Debt Securities in bearer form will be made in the
currency and in the manner designated in the Prospectus Supplement, subject to
any applicable laws and regulations, at such paying agencies outside the United
States as the Company may appoint from time to time. The paying agents outside
the United States initially appointed by the Company for a series of Debt
Securities will be named in the
 
                                        8
   48
 
Prospectus Supplement. The Company may at any time designate additional paying
agents or rescind the designation of any paying agents, except that, if Debt
Securities of a series are issuable as Registered Securities, the Company will
be required to maintain at least one paying agent in each Place of Payment for
such series and, if Debt Securities of a series are issuable as Bearer
Securities, the Company will be required to maintain a paying agent in a Place
of Payment outside the United States where Debt Securities of such series and
any coupons appertaining thereto may be presented and surrendered for payment.
(Section 9.2.)
 
     Unless otherwise provided in the applicable Prospectus Supplement, Debt
Securities in registered form will be transferable or exchangeable at the agency
of the Company maintained for such purpose as designated by the Company from
time to time. (Sections 3.5 and 9.2.) Debt Securities may be transferred or
exchanged without service charge, other than any tax or other governmental
charge imposed in connection therewith. (Section 3.5.)
 
GLOBAL DEBT SECURITIES
 
     The Debt Securities of a series may be issued in whole or in part in the
form of one or more fully registered global securities (a "Registered Global
Security") that will be deposited with a depository (the "Depository") or with a
nominee for the Depository identified in the applicable Prospectus Supplement.
In such a case, one or more Registered Global Securities will be issued in a
denomination or aggregate denominations equal to the portion of the aggregate
principal amount of outstanding Debt Securities of the series to be represented
by such Registered Global Security or Securities. (Section 3.3 of each
Indenture.) Unless and until it is exchanged in whole or in part for Debt
Securities in definitive certificated form, a Registered Global Security may not
be registered for transfer or exchange except as a whole by the Depository for
such Registered Global Security to a nominee of such Depository or by a nominee
of such Depository to such Depository or another nominee of such Depository or
by such Depository or any such nominee to a successor Depository for such series
or a nominee of such successor Depository and except in the circumstances
described in the applicable Prospectus Supplement. (Section 3.5.)
 
     The specific terms of the depository arrangement with respect to any
portion of a series of Debt Securities to be represented by a Registered Global
Security will be described in the applicable Prospectus Supplement. The Company
expects that the following provisions will apply to such depository
arrangements.
 
     Ownership of beneficial interests in a Registered Global Security will be
limited to participants or persons that may hold interests through participants
(as such term is defined below). Upon the issuance of any Registered Global
Security, and the deposit of such Registered Global Security with or on behalf
of the Depository for such Registered Global Security, the Depository will
credit, on its book-entry registration and transfer system, the respective
principal amounts of the Debt Securities represented by such Registered Global
Security to the accounts of institutions ("participants") that have accounts
with the Depository or its nominee. The accounts to be credited will be
designated by the underwriters or agents engaging in the distribution of such
Debt Securities or by the Company, if such Debt Securities are offered and sold
directly by the Company. Ownership of beneficial interests by participants in
such Registered Global Security will be shown on, and the transfer of such
beneficial interests will be effected only through, records maintained by the
Depository for such Registered Global Security or by its nominee. Ownership of
beneficial interests in such Registered Global Security by persons that hold
through participants will be shown on, and the transfer of such beneficial
interests within such participants will be effected only through, records
maintained by such participants. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
certificated form. The foregoing limitations and such laws may impair the
ability to transfer beneficial interests in such Registered Global Security.
 
     So long as the Depository for a Registered Global Security, or its nominee,
is the registered owner of such Registered Global Security, such Depository or
such nominee, as the case may be, will be considered the sole owner or holder of
the Debt Securities represented by such Registered Global Security for all
purposes under the applicable Indenture. Unless otherwise specified in the
applicable Prospectus Supplement and except as specified below, owners of
beneficial interests in such Registered Global Security will not be entitled to
have Debt Securities of the series represented by such Registered Global
Security registered in their names, will not
 
                                        9
   49
 
receive or be entitled to receive physical delivery of Debt Securities of such
series in certificated form and will not be considered the holders thereof for
any purposes under the relevant Indenture. (Section 3.8.) Accordingly, each
person owning a beneficial interest in such Registered Global Security must rely
on the procedures of the Depository and, if such person is not a participant, on
the procedures of the participant through which such person owns its interest,
to exercise any rights of a holder under the relevant Indenture. The Depository
may grant proxies and otherwise authorize participants to give or take any
request, demand, authorization, direction, notice, consent, waiver or other
action which a holder is entitled to give or take under the relevant Indenture.
The Company understands that, under existing industry practices, if the Company
requests any action of holders or if any owner of a beneficial interest in such
Registered Global Security desires to give any notice or take any action which a
holder is entitled to give or take under the relevant Indenture, the Depository
would authorize the participants to give such notice or take such action, and
such participants would authorize beneficial owners owning through such
participants to give such notice or take such action or would otherwise act upon
the instructions of beneficial owners owning through them.
 
     Unless otherwise specified in the applicable Prospectus Supplement,
payments with respect to principal, premium, if any, and interest, if any, on
Debt Securities represented by a Registered Global Security registered in the
name of a Depository or its nominee will be made to such Depository or its
nominee, as the case may be, as the registered owner of such Registered Global
Security.
 
     The Company expects that the Depositary for any Debt Securities represented
by a Registered Global Security, upon receipt of any payment of principal,
premium or interest, will immediately credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Registered Global Security as shown on the records
of such Depositary. The Company also expects that payments by participants to
owners of beneficial interests in such Registered Global Security held through
such participants will be governed by standing instructions and customary
practices, as is now the case with the securities held for the accounts of
customers registered in "street names," and will be the responsibility of such
participants. None of the Company, the respective Trustees or any agent of the
Company or the respective Trustees shall have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial interests of a Registered Global Security, or for maintaining,
supervising or reviewing any records relating to such beneficial interests.
(Section 3.8.)
 
     Unless otherwise specified in the applicable Prospectus Supplement, if the
Depository for any Debt Securities represented by a Registered Global Security
is at any time unwilling or unable to continue as Depository or ceases to be a
clearing agency registered under the Exchange Act and a duly registered
successor Depository is not appointed by the Company within 90 days, the Company
will issue such Debt Securities in definitive certificated form in exchange for
such Registered Global Security. In addition, the Company may at any time and in
its sole discretion determine not to have any of the Debt Securities of a series
represented by one or more Registered Global Securities and, in such event, will
issue Debt Securities of such series in definitive certificated form in exchange
for all of the Registered Global Security or Securities representing such Debt
Securities. (Section 3.5.)
 
     The Debt Securities of a series may also be issued in whole or in part in
the form of one or more bearer global securities (a "Bearer Global Security")
that will be deposited with a depository, or with a nominee for such depository,
identified in the applicable Prospectus Supplement. Any such Bearer Global
Security may be issued in temporary or permanent form. (Section 3.4.) The
specific terms and procedures, including the specific terms of the depository
arrangement, with respect to any portion of a series of Debt Securities to be
represented by one or more Bearer Global Securities will be described in the
applicable Prospectus Supplement.
 
CONSOLIDATION, MERGER OR SALE BY THE COMPANY
 
     The Company shall not consolidate with or merge into any other corporation
or sell its assets substantially as an entirety, unless: (i) the corporation
formed by such consolidation or into which the Company is merged or the
corporation which acquires its assets is organized in the United States; (ii)
the corporation formed by such consolidation or into which the Company is merged
or which acquires the Company's assets substantially
 
                                       10
   50
 
as an entirety expressly assumes all of the obligations of the Company under
each Indenture; (iii) immediately after giving effect to such transaction, no
Default or Event of Default shall have happened and be continuing, and (iv) if,
as a result of such transaction, properties or assets of the Company would
become subject to an encumbrance which would not be permitted by the terms of
any series of Debt Securities, the Company or the successor corporation, as the
case may be, shall take such steps as are necessary to secure such Debt
Securities equally and ratably with all indebtedness secured thereunder. Upon
any such consolidation, merger or sale, the successor corporation formed by such
consolidation, or into which the Company is merged or to which such sale is
made, shall succeed to, and be substituted for the Company under each Indenture.
(Section 7.1.)
 
EVENTS OF DEFAULT, NOTICE AND CERTAIN RIGHTS ON DEFAULT
 
     Each Indenture provides that, if an Event of Default specified therein
occurs with respect to the Debt Securities of any series and is continuing, the
Trustee for such series or the holders of 25% in aggregate principal amount of
all of the outstanding Debt Securities of that series, by written notice to the
Company (and to the Trustee for such series, if notice is given by such holders
of Debt Securities), may declare the principal of (or, if the Debt Securities of
that series are Original Issue Discount Securities or Indexed Securities, such
portion of the principal amount specified in the Prospectus Supplement) and
accrued interest on all the Debt Securities of that series to be due and payable
(provided, with respect to any Debt Securities issued under the Subordinated
Indenture, that the payment of principal and interest on such Debt Securities
shall remain subordinated to the extent provided in Article 12 of the
Subordinated Indenture). (Section 5.2.)
 
     Events of Default with respect to Debt Securities of any series are defined
in each Indenture as being: (a) default for 30 days in payment of any interest
on any Debt Security of that series or any coupon appertaining thereto or any
additional amount payable with respect to Debt Securities of such series as
specified in the applicable Prospectus Supplement when due; (b) default in
payment of principal, or premium, if any, at maturity or on redemption or
otherwise, or in the making of a mandatory sinking fund payment of any Debt
Securities of that series when due; (c) default for 60 days after notice to the
Company by the Trustee for such series, or by the holders of 25% in aggregate
principal amount of the Debt Securities of such series then outstanding, in the
performance of any other agreement in the Debt Securities of that series, in the
Indenture or in any supplemental indenture or board resolution referred to
therein under which the Debt Securities of that series may have been issued; (d)
default resulting in acceleration of other indebtedness of the Company for
borrowed money where the aggregate principal amount so accelerated exceeds $25
million and such acceleration is not rescinded or annulled within 30 days after
the written notice thereof to the Company by the Trustee or to the Company and
the Trustee by the holders of 25% in aggregate principal amount of the Debt
Securities of such series then outstanding, provided that such Event of Default
will be remedied, cured or waived if the default that resulted in the
acceleration of such other indebtedness is remedied, cured or waived; and (e)
certain events of bankruptcy, insolvency or reorganization of the Company.
(Section 5.1.) The definition of "Event of Default" in each Indenture
specifically excludes a default under a secured debt under which the obligee has
recourse (exclusive of recourse for ancillary matters such as environmental
indemnities, misapplication of funds, costs of enforcement, etc.) only to the
collateral pledged for repayment, and where the fair market value of such
collateral does not exceed two percent of Total Assets (as defined in the
Indenture) at the time of the default. Events of Default with respect to a
specified series of Debt Securities may be added to the Indenture and, if so
added, will be described in the applicable Prospectus Supplement. (Sections 3.1
and 5.1(7).)
 
     Each Indenture provides that the Trustee will, within 90 days after the
occurrence of a Default with respect to the Debt Securities of any series, give
to the holders of the Debt Securities of that series notice of all Defaults
known to it unless such Default shall have been cured or waived; provided that
except in the case of a Default in payment on the Debt Securities of that
series, the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding such notice is in
the interests of the holders of the Debt Securities of that series. (Section
6.6.) "Default" means any event which is, or after notice or passage of time or
both, would be, an Event of Default. (Section 1.1.)
 
     Each Indenture provides that the holders of a majority in aggregate
principal amount of the Debt Securities of each series affected (with each such
series voting as a class) may, subject to certain limited
 
                                       11
   51
 
conditions, direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee for such series, or exercising any trust or
power conferred on such Trustee. (Section 5.8.)
 
     Each Indenture includes a covenant that the Company will file annually with
the Trustee a certificate as to the Company's compliance with all conditions and
covenants of such Indenture. (Section 9.5.)
 
     The holders of a majority in aggregate principal amount of any series of
Debt Securities by notice to the Trustee for such series may waive, on behalf of
the holders of all Debt Securities of such series, any past Default or Event of
Default with respect to that series and its consequences except a Default or
Event of Default in the payment of the principal of, premium, if any, or
interest, if any, on any Debt Security, and except in respect of an Event of
Default resulting from the breach of a covenant or provision of either Indenture
which, pursuant to the applicable Indenture, cannot be amended or modified
without the consent of the holders of each outstanding Debt Security of such
series affected. (Section 5.7.)
 
MODIFICATION OF THE INDENTURES
 
     Each Indenture contains provisions permitting the Company and the Trustee
to enter into one or more supplemental indentures without the consent of the
holders of any of the Debt Securities in order (i) to evidence the succession of
another corporation to the Company and the assumption of the covenants of the
Company by a successor to the Company; (ii) to add to the covenants of the
Company or surrender any right or power of the Company; (iii) to add additional
Events of Default with respect to any series of Debt Securities; (iv) to add or
change any provisions to such extent as necessary to permit or facilitate the
issuance of Debt Securities in bearer form; (v) to change or eliminate any
provision affecting only Debt Securities not yet issued; (vi) to secure the Debt
Securities; (vii) to establish the form or terms of Debt Securities; (viii) to
evidence and provide for successor Trustees; (ix) if allowed without penalty
under applicable laws and regulations, to permit payment in respect of Debt
Securities in bearer form in the United States; (x) to correct any defect or
supplement any inconsistent provisions or to make any other provisions with
respect to matters or questions arising under such Indenture, provided that such
action does not adversely affect the interests of any holder of Debt Securities
of any series; or (xi) to cure any ambiguity or correct any mistake. The
Subordinated Indenture also permits the Company and the Trustee thereunder to
enter into such supplemental indentures to modify the subordination provisions
contained in the Subordinated Debenture except in a manner adverse to any
outstanding Debt Securities. (Section 8.1.)
 
     Each Indenture also contains provisions permitting the Company and the
Trustee, with the consent of the holders of a majority in aggregate principal
amount of the outstanding Debt Securities affected by such supplemental
indenture (with the Debt Securities of each series voting as a class), to
execute supplemental indentures adding any provisions to or changing or
eliminating any of the provisions of such Indenture or any supplemental
indenture or modifying the rights of the holders of Debt Securities of such
series, except that, without the consent of the holder of each Debt Security so
affected, no such supplemental indenture may: (i) change the time for payment of
principal or premium, if any, or interest on any Debt Security; (ii) reduce the
principal of, or any installment of principal of, or premium, if any, or
interest on any Debt Security, or change the manner in which the amount of any
of the foregoing is determined; (iii) reduce the amount of premium, if any,
payable upon the redemption of any Debt Security; (iv) reduce the amount of
principal payable upon acceleration of the maturity of any Original Issue
Discount or Index Security; (v) change the currency or currency unit in which
any Debt Security or any premium or interest thereon is payable; (vi) impair the
right to institute suit for the enforcement of any payment on or with respect to
any Debt Security; (vii) reduce the percentage in principal amount of the
outstanding Debt Securities affected thereby the consent of whose holders is
required for modification or amendment of such Indenture or for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults; (viii) change the obligation of the Company to maintain an office or
agency in the places and for the purposes specified in such Indenture; (ix)
modify the provisions relating to the subordination of outstanding Debt
Securities of any series in a manner adverse to the holders thereof; or (x)
modify the provisions relating to waiver of certain defaults or any of the
foregoing provisions. (Section 8.2.)
 
                                       12
   52
 
SUBORDINATION UNDER THE SUBORDINATED INDENTURE
 
     In the Subordinated Indenture, the Company will covenant and agree that any
Subordinated Debt Securities issued thereunder are subordinate and junior in
right of payment to the prior payment in full of all Senior Indebtedness to the
extent provided in the Subordinated Indenture. (Section 12.1 of the Subordinated
Indenture.) The Subordinated Indenture defines the term "Senior Indebtedness" as
the principal, premium, if any, and interest on: (i) all indebtedness of the
Company, whether outstanding on the date of the issuance of Subordinated Debt
Securities or thereafter created, incurred or assumed, which is for money
borrowed, or evidenced by a note or similar instrument given in connection with
the acquisition of any business, properties or assets, including securities;
(ii) any indebtedness of others of the kinds described in the preceding clause
(i) for the payment of which the Company is responsible or liable as guarantor
or otherwise; and (iii) amendments, renewals, extensions and refundings of any
such indebtedness, [unless in any instrument or instruments evidencing or
securing such indebtedness or pursuant to which the same is outstanding, or in
any such amendment, renewal, extension or refunding, it is expressly provided
that such indebtedness is not superior in right of payment to Subordinated Debt
Securities.] The Senior Indebtedness shall continue to be Senior Indebtedness
and entitled to the benefits of the subordination provisions irrespective of any
amendment, modification or waiver of any term of the Senior Indebtedness or
extension or renewal of the Senior Indebtedness. (Section 12.2 of the
Subordinated Indenture.)
 
     If (i) the Company defaults in the payment of any principal, or premium, if
any, or interest on any Senior Indebtedness when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or declaration or
otherwise or (ii) an event of default occurs with respect to any Senior
Indebtedness permitting the holders thereof to accelerate the maturity thereof
and written notice of such event of default (requesting that payments on
Subordinated Debt Securities cease) is given to the Company by the holders of
Senior Indebtedness, then unless and until such default in payment or event of
default shall have been cured or waived or shall have ceased to exist, no direct
or indirect payment (in cash, property or securities, by set-off or otherwise)
shall be made or agreed to be made on account of the Subordinated Debt
Securities or interest thereon or in respect of any repayment, redemption,
retirement, purchase or other acquisition of Subordinated Debt Securities.
(Section 12.4 of the Subordinated Indenture.)
 
     In the event of (i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding relating
to the Company, its creditors or its property, (ii) any proceeding for the
liquidation, dissolution or other winding-up of the Company, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings,
(iii) any assignment by the Company for the benefit of creditors or (iv) any
other marshalling of the assets of the Company, all Senior Indebtedness
(including, without limitation, interest accruing after the commencement of any
such proceeding, assignment or marshalling of assets) shall first be paid in
full before any payment or distribution, whether in cash, securities or other
property, shall be made by the Company on account of Subordinated Debt
Securities. In any such event, any payment or distribution, whether in cash,
securities or other property (other than securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinate, at least to the extent provided in the
subordination provisions of the Subordinated Indenture with respect to the
indebtedness evidenced by Subordinated Debt Securities, to the payment of all
Senior Indebtedness at the time outstanding and to any securities issued in
respect thereof under any such plan of reorganization or readjustment), which
would otherwise (but for the subordination provisions) be payable or deliverable
in respect of Subordinated Debt Securities (including any such payment or
distribution which may be payable or deliverable by reason of the payment of any
other indebtedness of the Company being subordinated to the payment of
Subordinated Debt Securities) shall be paid or delivered directly to the holders
of Senior Indebtedness, or to their representative or trustee, in accordance
with the priorities then existing among such holders until all Senior
Indebtedness shall have been paid in full. (Section 12.3 of the Subordinated
Indenture.) No present or future holder of any Senior Indebtedness shall be
prejudiced in the right to enforce subordination of the indebtedness evidenced
by Subordinated Debt Securities by any act or failure to act on the part of the
Company. (Section 12.9 of the Subordinated Indenture.)
 
                                       13
   53
 
     Senior Indebtedness shall not be deemed to have been paid in full unless
the holders thereof shall have received cash, securities or other property equal
to the amount of such Senior Indebtedness then outstanding. Upon the payment in
full of all Senior Indebtedness, the holders of Subordinated Debt Securities
shall be subrogated to all the rights of any holders of Senior Indebtedness to
receive any further payments or distributions applicable to the Senior
Indebtedness until all Subordinated Debt Securities shall have been paid in
full, and such payments or distributions received by any holder of Subordinated
Debt Securities, by reason of such subrogation, of cash, securities or other
property which otherwise would be paid or distributed to the holders of Senior
Indebtedness, shall, as between the Company and its creditors other than the
holders of Senior Indebtedness, on the one hand, and the holders of Subordinated
Debt Securities, on the other, be deemed to be a payment by the Company on
account of Senior Indebtedness, and not on account of Subordinated Debt
Securities. (Section 12.7 of the Subordinated Indenture.)
 
     The Subordinated Indenture provides that the foregoing subordination
provisions, insofar as they relate to any particular issue of Subordinated Debt
Securities, may be changed prior to such issuance. Any such change would be
described in the applicable Prospectus Supplement relating to such Subordinated
Debt Securities.
 
DEFEASANCE AND COVENANT DEFEASANCE
 
     If indicated in the applicable Prospectus Supplement, the Company may elect
either (i) to defease and be discharged from any and all obligations with
respect to the Debt Securities of or within any series (except as otherwise
provided in the relevant Indenture) ("defeasance") or (ii) to be released from
its obligations with respect to certain covenants applicable to the Debt
Securities of or within any series ("covenant defeasance"), upon the deposit
with the relevant Trustee (or other qualifying trustee), in trust for such
purpose, of money and/or Government Obligations which through the payment of
principal and interest in accordance with their terms will provide money in an
amount sufficient, without reinvestment, to pay the principal of and any premium
or interest on such Debt Securities to Maturity or redemption, as the case may
be, and any mandatory sinking fund or analogous payments thereon. As a condition
to defeasance or covenant defeasance, the Company must deliver to the Trustee an
Opinion of Counsel to the effect that the Holders of such Debt Securities will
not recognize income, gain or loss for Federal income tax purposes as a result
of such defeasance or covenant defeasance and will be subject to Federal income
tax on the same amounts and in the same manner and at the same times as would
have been the case if such defeasance or covenant defeasance had not occurred.
Such Opinion of Counsel, in the case of defeasance under clause (i) above, must
refer to and be based upon a ruling of the Internal Revenue Service or a change
in applicable Federal income tax law occurring after the date of the relevant
Indenture. (Article 4.) If indicated in the applicable Prospectus Supplement, in
addition to obligations of the United States or an agency or instrumentality
thereof, Government Obligations may include obligations of the government or an
agency or instrumentality of the government issuing the currency or currency
unit in which Debt Securities of such series are payable. (Section 3.1.)
 
     In addition, with respect to the Subordinated Indenture, in order to be
discharged no event or condition shall exist that, pursuant to certain
provisions described under "-- Subordination under the Subordinated Indenture"
above, would prevent the Company from making payments of principal of (and
premium, if any) and interest on Subordinated Debt Securities at the date of the
irrevocable deposit referred to above. (Section 4.6(j) of the Subordinated
Indenture.)
 
     The Company may exercise its defeasance option with respect to such Debt
Securities notwithstanding its prior exercise of its covenant defeasance option.
If the Company exercises its defeasance option, payment of such Debt Securities
may not be accelerated because of a Default or an Event of Default. (Section
4.4.) If the Company exercises its covenant defeasance option, payment of such
Debt Securities may not be accelerated by reason of a Default or an Event of
Default with respect to the covenants to which such covenant defeasance is
applicable. However, if such acceleration were to occur by reason of another
Event of Default, the realizable value at the acceleration date of the money and
Government Obligations in the defeasance trust could be less than the principal
and interest then due on such Debt Securities, in that the required deposit in
the defeasance trust is based upon scheduled cash flow rather than market value,
which will vary depending upon interest rates and other factors.
 
                                       14
   54
 
THE TRUSTEES
 
     LTCB Trust Company will be the Trustee under the Senior Indenture. Fleet
National Bank will be the Trustee under the Subordinated Indenture. The Company
may also maintain banking and other commercial relationships with each of the
Trustees and their affiliates in the ordinary course of business.
 
                          DESCRIPTION OF CAPITAL STOCK
 
     At May 16, 1997, the authorized capital stock of the Company was
1,020,000,000 shares, consisting of:
 
     (a)  20,000,000 shares of Preferred Stock, of which 2,177,500 shares of
        Preferred Redeemable Increased Dividend Equity Securities, 7% PRIDES,
        were outstanding; and
 
     (b)  1,000,000,000 shares of Common Stock, of which 179,880,594 shares were
        outstanding.
 
     In general, the classes of authorized capital stock are afforded
preferences with respect to dividends and liquidation rights in the order listed
above. The Board of Directors of the Company is empowered, without approval of
the shareholders, to cause the Preferred Stock to be issued in one or more
series, with the numbers of shares of each series and the rights, preferences
and limitations of each series to be determined by it including, without
limitation, the dividend rights, conversion rights, redemption rights and
liquidation preferences, if any, of any wholly unissued series of Preferred
Stock (or of the entire class of Preferred Stock if none of such shares have
been issued), the number of shares constituting each such series and the terms
and conditions of the issue thereof. The descriptions set forth below do not
purport to be complete and are qualified in their entirety by reference to the
Amended and Restated Articles of Incorporation of the Company, as amended (the
"Articles of Incorporation").
 
     The Prospectus Supplement relating to an offering of Common Stock will
describe terms relevant thereto, including the number of shares offered, the
initial offering price, market price and dividend information.
 
     The applicable Prospectus Supplement will describe the following terms of
any Preferred Stock in respect of which this Prospectus is being delivered (to
the extent applicable to such Preferred Stock): (i) the specific designation,
number of shares, seniority and purchase price; (ii) any liquidation preference
per share; (iii) any date of maturity; (iv) any redemption, repayment or sinking
fund provisions; (v) any dividend rate or rates and the dates on which any such
dividends will be payable (or the method by which such rates or dates will be
determined); (vi) any voting rights; (vii) if other than the currency of the
United States of America, the currency or currencies, including composite
currencies, in which such Preferred Stock is denominated and/or in which
payments will or may be payable; (viii) the method by which amounts in respect
of such Preferred Stock may be calculated and any commodities, currencies or
indices, or value, rate or price, relevant to such calculation; (ix) whether the
Preferred Stock is convertible or exchangeable and, if so, the securities or
rights into which such Preferred Stock is convertible or exchangeable (which may
include other Preferred Stock, Debt Securities, Common Stock or other securities
or rights of the Company (including rights to receive payment in cash or
securities based on the value, rate or price of one or more specified
commodities, currencies or indices) or a combination of the foregoing), and the
terms and conditions upon which such conversions or exchanges will be effected,
including the initial conversion or exchange prices or rates, the conversion or
exchange period and any other related provisions; (x) the place or places where
dividends and other payments on the Preferred Stock will be payable; and (xi)
any additional voting, dividend, liquidation, redemption and other rights,
preferences, privileges, limitations and restrictions.
 
     As described under "Description of Depositary Shares", the Company may, at
its option, elect to offer Depositary Shares evidenced by depositary receipts
("Depositary Receipts"), each representing an interest (to be specified in the
applicable Prospectus Supplement relating to the particular series of the
Preferred Stock) in a share of the particular series of the Preferred Stock
issued and deposited with a Preferred Stock Depositary (as defined herein).
 
     All shares of Preferred Stock offered hereby, or issuable upon conversion,
exchange or exercise of Securities, will, when issued, be fully paid and
non-assessable.
 
                                       15
   55
 
COMMON STOCK
 
     Dividends. Except as provided below, holders of Common Stock are entitled
to receive dividends and other distributions in cash, stock or property of the
Company, when, as and if declared by the Board of Directors out of assets or
funds of the Company legally available therefor and shall share equally on a per
share basis in all such dividends and other distributions (subject to the rights
of holders of Preferred Stock).
 
     Voting Rights.  At every meeting of shareholders, every holder of Common
Stock is entitled to one vote per share. Subject to any voting rights which may
be granted to holders of Preferred Stock any action submitted to shareholders is
approved if the number of votes cast in favor of such action exceeds the number
of votes against, except where other provision is made by law and subject to
applicable quorum requirements.
 
     Liquidation Rights.  In the event of any liquidation, dissolution or
winding-up of the business of the Company, whether voluntary or involuntary (any
such event, a "Liquidation"), the holders of Common Stock are entitled to share
equally in the assets available for distribution after payment of all
liabilities and provision for the liquidation preference of any shares of
Preferred Stock then outstanding.
 
     Miscellaneous.  The holders of Common Stock have no preemptive rights,
cumulative voting rights, subscription rights, or conversion rights and the
Common Stock is not subject to redemption.
 
     The transfer agent and registrar with respect to the Common Stock and the
PRIDES is First Union National Bank of North Carolina.
 
     All shares of Common Stock offered hereby, or issuable upon conversion,
exchange or exercise of Securities, will, when issued, be fully paid and
non-assessable. The Common Stock is traded on the New York Stock Exchange under
the symbol "CNC".
 
PRIDES
 
     General.  The PRIDES are shares of convertible preferred stock and rank
prior to the Common Stock as to payment of dividends and distribution of assets
upon liquidation. The shares of PRIDES mandatorily convert into shares of Common
Stock on February 1, 2000, (the "Mandatory Conversion Date"), and the Company
has the option to redeem the shares of PRIDES, in whole or in part, at any time
and from time to time on or after February 1, 1999 and prior to the Mandatory
Conversion Date pursuant to the terms described below and payable in shares of
Common Stock. In addition, the shares of PRIDES are convertible into shares of
Common Stock at the option of the holder at any time prior to the Mandatory
Conversion Date as set forth below.
 
     Dividends.  Holders of shares of PRIDES are entitled to receive annual
cumulative dividends at a rate per annum of 7% of the stated liquidation
preference (equivalent to $4.279 per each share of PRIDES) payable quarterly in
arrears on each February 1, May 1, August 1, and November 1.
 
     Mandatory Conversion.  On the Mandatory Conversion Date, unless previously
redeemed or converted, each outstanding share of PRIDES will mandatorily convert
into (i) two shares of Common Stock, subject to adjustment in certain events,
and (ii) the right to receive cash in an amount equal to all accrued and unpaid
dividends thereon (other than previously declared dividends payable to a holder
of record as of a prior date).
 
     Optional Redemption.  Shares of PRIDES are not redeemable prior to February
1, 1999. At any time and from time to time on or after February 1, 1999 and
ending immediately prior to the Mandatory Conversion Date, the Company may
redeem any or all of the outstanding shares of PRIDES. Upon any such redemption,
each holder will receive, in exchange for each share of PRIDES, the number of
shares of Common Stock equal to the Call Price (which is the sum of (i) $62.195,
declining after February 1, 1999 to $61.125 until the Mandatory Conversation
Date and (ii) all accrued and unpaid dividends thereon (other than previously
declared dividends payable to a holder of record as of a prior date)) divided by
the current market price on the applicable date of determination, but in no
event less than 3.42 shares of Common Stock, subject to adjustment. The number
of shares of Common Stock to be delivered in payment of the applicable Call
Price will be determined on the basis of the current market price of the Common
Stock prior to the announcement of the redemption.
 
                                       16
   56
 
     Conversion at the Option of the Holder.  At any time prior to the Mandatory
Conversion Date, unless previously redeemed, each share of PRIDES is convertible
at the option of the holder thereof into 3.42 shares of Common Stock (the
"Optional Conversion Rate"), equivalent to the conversion price of $17.8728 per
share of Common Stock, subject to adjustment as described herein. The right of
holders to convert shares of PRIDES called for redemption will terminate
immediately prior to the close of business on the redemption date.
 
     Voting Rights.  The holders of shares of PRIDES will have the right with
the holders of Common Stock to vote in the election of directors and upon each
other matter coming before any meeting of the holders of Common Stock on the
basis of 4/5 of one vote for each share of PRIDES. On such matters, the holders
of shares of PRIDES and the holders of Common Stock will vote together as one
class except as otherwise provided by law or the Company's Articles of
Incorporation. In addition, (i) whenever dividends on the shares of PRIDES or
any other series of the Company's preferred stock with like voting rights are in
arrears and unpaid for six quarterly dividend periods, and in certain other
circumstances, the holders of the shares of PRIDES (voting separately as a class
with the holders of all other series of the Company's preferred stock with like
voting rights that are exercisable) will be entitled to vote, on the basis of
one vote for each share of PRIDES, for the election of two directors of the
Company, such directors to be in addition to the number of directors
constituting the Board of Directors immediately prior to the accrual of such
right, and (ii) the holders of the shares of PRIDES may have voting rights with
respect to certain alterations of the Company's Articles of Incorporation and
certain other matters, voting on the same basis or separately as a series.
 
     Liquidation Preference and Ranking.  The shares of PRIDES rank prior to the
Common Stock as to payment of dividends and distribution of assets upon
liquidation. The liquidation preference of each share of PRIDES is an amount
equal to the sum of (i) $61.125 per share and (ii) all accrued and unpaid
dividends thereon.
 
CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION AND BY-LAWS OF CONSECO
 
     Certain provisions of the Articles of Incorporation and the Code of By-laws
of the Company (the "By-laws") may make it more difficult to effect a change in
control of the Company if the Board of Directors determines that such action
would not be in the best interests of the shareholders. It could be argued,
contrary to the belief of the Board of Directors, that such provisions are not
in the best interests of the shareholders to the extent that they will have the
effect of tending to discourage possible takeover bids, which might be at prices
involving a premium over then recent market quotations for the Common Stock. The
most important of those provisions are described below.
 
     The Articles of Incorporation authorize the establishment of a classified
Board of Directors pursuant to the By-laws. The By-laws, in turn, provide that
the Directors serve staggered three-year terms, with the members of only one
class being elected in any year.
 
     A classified Board of Directors may increase the difficulty of removing
incumbent directors, providing such directors with enhanced ability to retain
their positions. A classified Board of Directors may also make the acquisition
of control of the Company by a third party by means of a proxy contest more
difficult. In addition, the classification may make it more difficult to replace
a majority of directors for business reasons unrelated to a change in control.
 
     The Articles of Incorporation provide that holders of the Company's voting
stock shall not be entitled to vote on certain business transactions (defined to
include, among other things, certain mergers, consolidations, sales, leases,
transfers or other dispositions of a substantial part of the Company's assets)
with certain related persons (which includes persons beneficially owning more
than 10% of the Company's outstanding voting stock), nor may such business
combination transactions be effected, unless (i) the relevant business
combination shall have been approved by two-thirds of the continuing directors
or (ii) the aggregate amount of the cash and the fair value of any consideration
other than cash to be received by any holder of the Company's Common Stock or
Preferred Stock in the business combination for each such share of Common Stock
or Preferred Stock shall be at least equal to the highest per share price paid
by the related person in
 
                                       17
   57
 
order to acquire any shares of Common Stock or Preferred Stock, as the case may
be, beneficially owned by such related person.
 
     As discussed above, Preferred Stock may be issued from time to time in one
or more series with such rights, preferences, limitations and restrictions as
may be determined by the Board of Directors. The issuance of Preferred Stock
could be used, under certain circumstances, as a method of delaying or
preventing a change of control of the Company and could have a detrimental
effect on the rights of holders of Common Stock, including loss of voting
control.
 
     The provisions of the Articles of Incorporation regarding the classified
Board of Directors and certain business combination transactions may not be
amended without the affirmative approval of holders of not less than 80% of the
outstanding voting stock of the Company.
 
     The By-laws may be amended by majority vote of the Board of Directors.
 
CERTAIN PROVISIONS OF CORPORATE AND INSURANCE LAWS
 
     In addition to the Articles of Incorporation and By-laws, certain
provisions of Indiana law may delay, deter or prevent a merger, tender offer or
other takeover attempt of the Company.
 
     Under the Indiana Business Corporation Law (the "IBCL"), a director may, in
considering the best interests of a corporation, consider the effects of any
action on shareholders, employees, suppliers and customers of the corporation,
on communities in which offices or other facilities of the corporation are
located, and any other factors the director considers pertinent.
 
     The IBCL provides that no business combination (defined to include certain
mergers, sales of assets, sales of 5% or more of outstanding stock, loans,
recapitalizations or liquidations or dissolutions) involving a corporation and
an interested shareholder (defined to include any holder of 10% or more of such
corporation's voting stock) may be entered into unless (1) it has been approved
by the board of directors of the corporation or (2) (a) five years have expired
since the acquisition of shares of the corporation by the interested
shareholder, (b) all requirements of the corporation's articles of incorporation
relating to business combinations have been satisfied and (c) either (i) a
majority of shareholders of the corporation (excluding the interested
shareholder) approve the business combination or (ii) all shareholders are paid
fair value (as defined in the statute) for their stock. However, such law does
not restrict any offer to purchase all of a corporation's shares.
 
     The IBCL also provides that when a target corporation (such as the
Company), incorporated in Indiana and having its principal place of business,
principal office or substantial assets in Indiana, has a certain threshold of
ownership by Indiana residents, any acquisition which, together with its
previous holdings, gives the acquiror at least 20% of the target's voting stock
triggers a shareholder approval mechanism. If the acquiror files a statutorily
required disclosure statement, the target's management has 50 days within which
to hold a special meeting of shareholders at which all disinterested
shareholders of the target (those not affiliated with the acquiror or any
officer or inside director of the target) consider and vote upon whether the
acquiror shall have voting rights with respect to the shares of the target held
by it. Without shareholder approval, the shares acquired by the acquiror have no
voting rights. If the acquiror fails to file the statutorily required disclosure
statement, the target can redeem the acquiror's shares at a price to be
determined according to procedures devised by the target. In order for these
provisions of the IBCL not to apply to a particular Indiana company, the company
must affirmatively so provide in its articles of incorporation or bylaws.
 
     In addition, the insurance laws and regulations of the jurisdictions in
which the Company's insurance subsidiaries do business may impede or delay a
business combination involving the Company.
 
                        DESCRIPTION OF DEPOSITARY SHARES
 
     The description set forth below of certain provisions of the Deposit
Agreement (as defined below) and of the Depositary Shares and Depositary
Receipts summarizes the material terms of the Deposit Agreement and of the
Depositary Shares and Depositary Receipts and is qualified in its entirety by
reference to the form of
 
                                       18
   58
 
Deposit Agreement and form of Depositary Receipts relating to each series of the
Preferred Stock, as well as the Articles of Incorporation or any required
amendment thereto describing the applicable series of Preferred Stock.
 
GENERAL
 
     The Company may, as its option, elect to have shares of Preferred Stock be
represented by Depositary Shares. The shares of any series of the Preferred
Stock underlying the Depositary Shares will be deposited under a separate
deposit agreement (the "Deposit Agreement") to be entered into by the Company
and a bank or trust company selected by the Company (the "Preferred Stock
Depositary") a form of which will be filed as an exhibit to a Current Report on
Form 8-K. The Prospectus Supplement relating to a series of Depositary Shares
will set forth the name and address of the Preferred Stock Depositary. Subject
to the terms of the Deposit Agreement, each owner of a Depositary Share will be
entitled, proportionately, to all the rights, preferences and privileges of the
Preferred Stock represented thereby (including dividend, voting, redemption,
conversion, exchange and liquidation rights).
 
     The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the Deposit Agreement, each of which will represent the fractional
interest in the number of shares of a particular series of the Preferred Stock
described in the applicable Prospectus Supplement.
 
DIVIDENDS AND OTHER DISTRIBUTIONS
 
     The Preferred Stock Depositary will distribute all cash dividends or other
cash distributions in respect of the series of Preferred Stock represented by
the Depositary Shares to the record holders of Depositary Receipts in
proportion, insofar as possible, to the number of Depositary Shares owned by
such holders. The Depositary, however, will distribute only such amount as can
be distributed without attributing to any Depositary Share a fraction of one
cent, and any balance not so distributed will be added to and treated as part of
the next sum received by the Depositary for distribution to record holders of
Depositary Receipts then outstanding.
 
     In the event of a distribution other than in cash in respect of the
Preferred Stock, the Preferred Stock Depositary will distribute property
received by it to the record holders of Depositary Receipts in proportion,
insofar as possible, to the number of Depositary Shares owned by such holders,
unless the Preferred Stock Depositary determines (after consultation with the
Company) that it is not feasible to make such distribution, in which case the
Preferred Stock Depositary may, with the approval of the Company, adopt such
method as it deems equitable and practicable for the purpose of effecting such
distribution, including a public or private sale, of such property, and
distribution of the net proceeds from such sale to such holders.
 
     The amount so distributed to record holders of Depositary Receipts in any
of the foregoing cases will be reduced by any amount required to be withheld by
the Company or the Preferred Stock Depositary on account of taxes.
 
CONVERSION AND EXCHANGE
 
     If any series of Preferred Stock underlying the Depositary Shares is
subject to provisions relating to its conversion or exchange, as set forth in
the applicable Prospectus Supplement relating thereto, each record holder of
Depositary Receipts will have the right or obligation to convert or exchange the
Depositary Shares represented by such Depositary Receipts pursuant to the terms
thereof.
 
REDEMPTION OF DEPOSITARY SHARES
 
     If any series of Preferred Stock underlying the Depositary Shares is
subject to redemption, the Depositary Shares will be redeemed from the proceeds
received by the Preferred Stock Depositary resulting from the redemption, in
whole or in part, of the Preferred Stock held by the Preferred Stock Depositary.
Whenever the Company redeems Preferred Stock from the Preferred Stock
Depositary, the Preferred Stock Depositary will redeem as of the same redemption
date a proportionate number of Depositary Shares representing the shares
 
                                       19
   59
 
of Preferred Stock that were redeemed. If less than all the Depositary Shares
are to be redeemed, the Depositary Shares to be redeemed will be selected by lot
or pro rata as may be determined by the Company.
 
     After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to receive the
redemption price upon such redemption. Any funds deposited by the Company with
the Preferred Stock Depositary for any Depositary Shares which the holders
thereof fail to redeem shall be returned to the Company after a period of two
years from the date such funds are so deposited.
 
VOTING
 
     Upon receipt of notice of any meeting at which the holders of any shares of
Preferred Stock underlying the Depositary Shares are entitled to vote, the
Preferred Stock Depositary will mail the information contained in such notice to
the record holders of the Depositary Receipts. Each record holder of such
Depositary Receipts on the record date (which will be the same date as the
record date for the Preferred Stock) will be entitled to instruct the Preferred
Stock Depositary as to the exercise of the voting rights pertaining to the
number of shares of Preferred Stock underlying such holder's Depositary Shares.
The Preferred Stock Depositary will endeavor, insofar as practicable, to vote
the number of shares of Preferred Stock underlying such Depositary Shares in
accordance with such instructions, and the Company will agree to take all
reasonable action which may be deemed necessary by the Preferred Stock
Depositary in order to enable the Preferred Stock Depositary to do so. The
Preferred Stock Depositary will abstain from voting any of the Preferred Stock
to the extent it does not receive specific written instructions from holders of
Depositary Receipts representing such Preferred Stock.
 
RECORD DATE
 
     Whenever (i) any cash dividend or other cash distribution shall become
payable, any distribution other than cash shall be made, or any rights,
preferences or privileges shall be offered with respect to the Preferred Stock,
or (ii) the Preferred Stock Depositary shall receive notice of any meeting at
which holders of Preferred Stock are entitled to vote or of which holders of
Preferred Stock are entitled to notice, or of the mandatory conversion of, or
any election on the part of the Company to call for the redemption of, any
Preferred Stock, the Preferred Stock Depositary shall in each such instance fix
a record date (which shall be the same as the record date for the Preferred
Stock) for the determination of the holders of Depositary Receipts (x) that
shall be entitled to receive such dividend, distribution, rights, preferences or
privileges or the net proceeds of the sale thereof or (y) that shall be entitled
to give instructions for the exercise of voting rights at any such meeting or to
receive notice of such meeting or of such redemption or conversion, subject to
the provisions of the Deposit Agreement.
 
WITHDRAWAL OF PREFERRED STOCK
 
     Upon surrender of Depositary Receipts at the principal office of the
Preferred Stock Depositary, upon payment of any unpaid amount due the Preferred
Stock Depositary, and subject to the terms of the Deposit Agreement, the owner
of the Depositary Shares evidenced thereby is entitled to delivery of the number
of whole shares of Preferred Stock and all money and other property, if any,
represented by such Depositary Shares. Partial shares of Preferred Stock will
not be issued. If the Depositary Receipts delivered by the holder evidence a
number of Depositary Shares in excess of the number of Depositary Shares
representing the number of whole shares of Preferred Stock to be withdrawn, the
Preferred Stock Depositary will deliver to such holder at the same time a new
Depositary Receipt evidencing such excess number of Depositary Shares. Holders
of Preferred Stock thus withdrawn will not thereafter be entitled to deposit
such shares under the Deposit Agreement or to receive Depositary Receipts
evidencing Depositary Shares therefor.
 
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
 
     The Deposit Agreement will provide that the form of Depositary Receipt and
any provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Preferred Stock
 
                                       20
   60
 
Depositary. However, any amendment which imposes or increases any fees, taxes or
other charges payable by the holders of Depositary Receipts (other than taxes
and other governmental charges, fees and other expenses payable by such holders
as stated under "Charges of Preferred Stock Depositary"), or which otherwise
prejudices any substantial existing right of holders of Depositary Receipts,
will not take effect as to outstanding Depositary Receipts until the expiration
of 90 days after notice of such amendment has been mailed to the record holders
of outstanding Depositary Receipts.
 
     Whenever so directed by the Company, the Preferred Stock Depositary will
terminate the Deposit Agreement by mailing notice of such termination to the
record holders of all Depositary Receipts then outstanding at least 30 days
prior to the date fixed in such notice for such termination. The Preferred Stock
Depositary may likewise terminate the Deposit Agreement if at any time 45 days
shall have expired after the Preferred Stock Depositary shall have delivered to
the Company a written notice of its election to resign and a successor
depositary shall not have been appointed and accepted its appointment. If any
Depositary Receipts remain outstanding after the date of termination, the
Preferred Stock Depositary thereafter will discontinue the transfer of
Depositary Receipts, will suspend the distribution of dividends to the holders
thereof, and will not give any further notices (other than notice of such
termination) or perform any further acts under the Deposit Agreement except as
provided below and except that the Preferred Stock Depositary will continue (i)
to collect dividends on the Preferred Stock and any other distributions with
respect thereto and (ii) to deliver the Preferred Stock together with such
dividends and distributions and the net proceeds of any sales of rights,
preferences, privileges or other property, without liability for interest
thereon, in exchange for Depositary Receipts surrendered. At any time after the
expiration of two years from the date of termination, the Preferred Stock
Depositary may sell the Preferred Stock then held by it at public or private
sales, at such place or places and upon such terms as it deems proper, and may
thereafter hold the net proceeds of any such sale, together with any money and
other property then held by it, without liability for interest thereon, for the
pro rata benefit of the holders of Depositary Receipts which have not been
surrendered.
 
CHARGES OF PREFERRED STOCK DEPOSITARY
 
     The Company will pay all charges of the Preferred Stock Depositary
including charges in connection with the initial deposit of the Preferred Stock,
the initial issuance of the Depositary Receipts, the distribution of information
to the holders of Depositary Receipts with respect to matters on which Preferred
Stock is entitled to vote, withdrawals of the Preferred Stock by the holders of
Depositary Receipts or redemption or conversion of the Preferred Stock, except
for taxes (including transfer taxes, if any) and other governmental charges and
such other charges as are expressly provided in the Deposit Agreement to be at
the expense of holders of Depositary Receipts or persons depositing Preferred
Stock.
 
MISCELLANEOUS
 
     The Preferred Stock Depositary will make available for inspection by
holders of Depositary Receipts, at its Corporate Office and its New York Office,
all reports and communications from the Company which are delivered to the
Preferred Stock Depositary as the holder of Preferred Stock.
 
     Neither the Preferred Stock Depositary nor the Company will be liable if it
is prevented or delayed by law or any circumstance beyond its control in
performing its obligations under the Deposit Agreement. The obligations of the
Preferred Stock Depositary under the Deposit Agreement are limited to performing
its duties thereunder without negligence or bad faith. The obligations of the
Company under the Deposit Agreement are limited to performing its duties
thereunder in good faith. Neither the Company nor the Preferred Stock Depositary
is obligated to prosecute or defend any legal proceeding in respect of any
Depositary Shares or Preferred Stock unless satisfactory indemnity is furnished.
The Company and the Preferred Stock Depositary are entitled to rely upon advice
of or information from counsel, accountants or other persons believed to be
competent and on documents believed to be genuine.
 
     The Preferred Stock Depositary may resign at any time or be removed by the
Company, effective upon the acceptance by its successor of its appointment;
provided, that if a successor Preferred Stock Depositary has not been appointed
or accepted such appointment within 45 days after the Preferred Stock Depositary
has
 
                                       21
   61
 
delivered a notice of election to resign to the Company, the Preferred Stock
Depositary may terminate the Deposit Agreement. See "Amendment and Termination
of the Deposit Agreement" above.
 
                            DESCRIPTION OF WARRANTS
 
GENERAL
 
     The Company may issue Warrants to purchase Debt Securities, Preferred
Stock, Common Stock or any combination thereof, and such Warrants may be issued
independently or together with any such Securities and may be attached to or
separate from such Securities. Each series of Warrants will be issued under a
separate warrant agreement (each a "Warrant Agreement") to be entered into
between the Company and a warrant agent ("Warrant Agent") a form of which will
be filed as an exhibit to a Current Report on Form 8-K. The Warrant Agent will
act solely as an agent of the Company in connection with the Warrants of each
such series and will not assume any obligation or relationship of agency for or
with holders or beneficial owners of Warrants. The following sets forth certain
general terms and provisions of the Warrants offered hereby. Further terms of
the Warrants and the applicable Warrant Agreement will be set forth in the
applicable Prospectus Supplement.
 
     The applicable Prospectus Supplement will describe the terms of any
Warrants in respect of which this Prospectus is being delivered, including the
following: (i) the title of such Warrants; (ii) the aggregate number of such
Warrants; (iii) the price or prices at which such Warrants will be issued; (iv)
the currency or currencies, including composite currencies, in which the price
of such Warrants may be payable; (v) the designation and terms of the Securities
(other than Preferred Securities and Common Securities) purchasable upon
exercise of such Warrants; (vi) the price at which and the currency or
currencies, including composite currencies, in which the Securities (other than
Preferred Securities and Common Securities) purchasable upon exercise of such
Warrants may be purchased; (vii) the date on which the right to exercise such
Warrants shall commence and the date on which such right shall expire; (viii)
whether such Warrants will be issued in registered form or bearer form; (ix) if
applicable, the minimum or maximum amount of such Warrants which may be
exercised at any one time; (x) if applicable, the designation and terms of the
Securities (other than Preferred Securities and Common Securities) with which
such Warrants are issued and the number of such Warrants issued with each such
Security; (xi) if applicable, the date on and after which such Warrants and the
related Securities (other than Preferred Securities and Common Securities) will
be separately transferable; (xii) information with respect to book-entry
procedures, if any; (xiii) if applicable, a discussion of certain United States
federal income tax considerations; and (xiv) any other terms of such Warrants,
including terms, procedures and limitations relating to the exchange and
exercise of such Warrants.
 
           DESCRIPTION OF PREFERRED SECURITIES OF THE CONSECO TRUSTS
 
GENERAL
 
     Each Conseco Trust may issue, from time to time, only one series of
Preferred Securities having terms described in the Prospectus Supplement
relating thereto. The Declaration of each Conseco Trust authorizes the Regular
Trustees of such Conseco Trust to issue on behalf of such Conseco Trust one
series of Preferred Securities. Each Declaration will be qualified as an
indenture under the Trust Indenture Act. The Property Trustee, an independent
trustee, will act as indenture trustee for the Preferred Securities for purposes
of compliance with the provisions of the Trust Indenture Act. The Preferred
Securities will have such terms, including distributions, redemption, voting,
liquidation rights and such other preferred, deferred or other special rights or
such restrictions as shall be established by the Regular Trustees in accordance
with the applicable Declaration or as shall be set forth in the Declaration or
made part of the Declaration by the Trust Indenture Act. Reference is made to
any Prospectus Supplement relating to the Preferred Securities of a Conseco
Trust for specific terms of the Preferred Securities, including, to the extent
applicable, (i) the distinctive designation of such Preferred Securities, (ii)
the number of Preferred Securities issued by such Conseco Trust, (iii) the
annual distribution rate (or method of determining such rate) for Preferred
Securities issued by such Conseco Trust and the date or dates upon which such
distributions shall be payable
 
                                       22
   62
 
(provided, however, that distributions on such Preferred Securities shall,
subject to any deferral provisions, and any provisions for payment of defaulted
distributions, be payable on a quarterly basis to holders of such Preferred
Securities as of a record date in each quarter during which such Preferred
Securities are outstanding), (iv) any right of such Conseco Trust to defer
quarterly distributions on the Preferred Securities as a result of an interest
deferral right exercised by the Company on the Subordinated Debt Securities held
by such Conseco Trust; (v) whether distributions on Preferred Securities shall
be cumulative, and, in the case of Preferred Securities having such cumulative
distribution rights, the date or dates or method of determining the date or
dates from which distributions on Preferred Securities shall be cumulative, (vi)
the amount or amounts which shall be paid out of the assets of such Conseco
Trust to the holders of Preferred Securities upon voluntary or involuntary
dissolution, winding-up or termination of such Conseco Trust, (vii) the
obligation or option, if any, of such Conseco Trust to purchase or redeem
Preferred Securities and the price or prices at which, the period or periods
within which and the terms and conditions upon which Preferred Securities shall
be purchased or redeemed, in whole or in part, pursuant to such obligation or
option with such redemption price to be specified in the applicable Prospectus
Supplement, (viii) the voting rights, if any, of Preferred Securities in
addition to those required by law, including the number of votes per Preferred
Security and any requirement for the approval by the holders of Preferred
Securities as a condition to specified action or amendments to the Declaration,
(ix) the terms and conditions, if any, upon which Subordinated Debt Securities
held by such Conseco Trust may be distributed to holders of Preferred
Securities, and (x) any other relevant rights, preferences, privileges,
limitations or restrictions of Preferred Securities consistent with the
Declaration or with applicable law. All Preferred Securities offered hereby will
be guaranteed by the Company to the extent set forth below under "Description of
Trust Guarantees." The Trust Guarantee issued to each Conseco Trust, when taken
together with the Company's back-up undertakings, consisting of its obligations
under each Declaration (including the obligation to pay expenses of each Conseco
Trust), the Indenture and any applicable supplemental indentures thereto and the
Subordinated Debt Securities issued to any Conseco Trust will provide a full and
unconditional guarantee by the Company of amounts due on the Preferred
Securities issued by each Conseco Trust. The payment terms of the Preferred
Securities will be the same as the Subordinated Debt Securities issued to the
applicable Conseco Trust by the Company.
 
     Each Declaration authorizes the Regular Trustees to issue on behalf of the
applicable Trust one series of Common Securities having such terms including
distributions, redemption, voting, liquidation rights or such restrictions as
shall be established by the Regular Trustees in accordance with the Declaration
or as shall otherwise be set forth therein. The terms of the Common Securities
issued by each Conseco Trust will be substantially identical to the terms of the
Preferred Securities issued by such Conseco Trust, and the Common Securities
will rank pari passu, and payments will be made thereon pro rata, with the
Preferred Securities except that, if an event of default under such Declaration
has occurred and is continuing, the rights of the holders of the Common
Securities to payment in respect of distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the Preferred Securities. The Common Securities will also carry the right to
vote and to appoint, remove or replace any of the Conseco Trustees of such
Conseco Trust. All of the Common Securities of each Conseco Trust will be
directly or indirectly owned by the Company.
 
     The financial statements of any Conseco Trust that issues Preferred
Securities will be reflected in the Company's consolidated financial statements
with the Preferred Securities shown as Company-obligated mandatorily-redeemable
preferred securities of a subsidiary trust under minority interest in
consolidated subsidiaries. In a footnote to the Company's audited financial
statements there will be included statements that the applicable Conseco Trust
is wholly-owned by the Company and that the sole asset of such Conseco Trust is
the Subordinated Debt Securities (indicating the principal amount, interest rate
and maturity date thereof).
 
                        DESCRIPTION OF TRUST GUARANTEES
 
     Set forth below is a summary of information concerning the Trust Guarantees
that will be executed and delivered by the Company for the benefit of the
holders, from time to time, of Preferred Securities. Each Trust Guarantee will
be qualified as an indenture under the Trust Indenture Act. Fleet National Bank
will act as
 
                                       23
   63
 
independent indenture trustee for Trust Indenture Act purposes under each Trust
Guarantee (the "Preferred Securities Guarantee Trustee"). The terms of each
Trust Guarantee will be those set forth in such Trust Guarantee and those made
part of such Trust Guarantee by the Trust Indenture Act. The following summary
does not purport to be complete and is subject to and qualified in its entirety
by reference to the provisions of the form of Trust Guarantee, a copy of which
has been filed as an exhibit to the Registration Statement of which this
Prospectus is a part, and the Trust Indenture Act. Each Trust Guarantee will be
held by the Preferred Securities Guarantee Trustee for the benefit of the
holders of the Preferred Securities of the applicable Conseco Trust.
 
GENERAL
 
     Pursuant to each Trust Guarantee, the Company will agree, to the extent set
forth therein, to pay in full to the holders of the Preferred Securities, the
Guarantee Payments (as defined below) (except to the extent paid by such Conseco
Trust), as and when due, regardless of any defense, right of set-off or
counterclaim which such Conseco Trust may have or assert. The following payments
or distributions with respect to the Preferred Securities (the "Guarantee
Payments"), to the extent not paid by such Conseco Trust, will be subject to the
Trust Guarantee (without duplication): (i) any accrued and unpaid distributions
that are required to be paid on such Preferred Securities, to the extent such
Conseco Trust shall have funds available therefor, (ii) the redemption price,
including all accrued and unpaid distributions to the date of redemption (the
"Redemption Price"), to the extent such Conseco Trust has funds available
therefor, with respect to any Preferred Securities called for redemption by such
Conseco Trust and (iii) upon a voluntary or involuntary dissolution, winding-up
or termination of such Conseco Trust (other than in connection with such
distribution of Subordinated Debt Securities to the holders of Preferred
Securities or the redemption of all of the Preferred Securities upon maturity or
redemption of the Subordinated Debt Securities) the lesser of (a) the aggregate
of the liquidation amount and all accrued and unpaid distributions on such
Preferred Securities to the date of payment, to the extent such Conseco Trust
has funds available therefor or (b) the amount of assets of such Conseco Trust
remaining for distribution to holders of such Preferred Securities in
liquidation of such Conseco Trust. The Company's obligation to make a Guarantee
Payment may be satisfied by direct payment of the required amounts by the
Company to the holders of Preferred Securities or by causing the applicable
Conseco Trust to pay such amounts to such holders.
 
     Each Trust Guarantee will not apply to any payment of distributions except
to the extent the applicable Conseco Trust shall have funds available therefor.
If the Company does not make interest or principal payments on the Subordinated
Debt Securities purchased by such Conseco Trust, such Conseco Trust will not pay
distributions on the Preferred Securities issued by such Conseco Trust and will
not have funds available therefore.
 
     The Company has also agreed to guarantee the obligations of each Conseco
Trust with respect to the Common Securities (the "Common Guarantee") issued by
such Conseco Trust to the same extent as the Trust Guarantee, except that, if an
Event of Default under the Subordinated Indenture has occurred and is
continuing, holders of Preferred Securities under the Trust Guarantee shall have
priority over holders of the Common Securities under the Trust Common Guarantee
with respect to distributions and payments on liquidation, redemption or
otherwise.
 
CERTAIN COVENANTS OF THE COMPANY
 
     In each Trust Guarantee, the Company will covenant that, so long as any
Preferred Securities issued by the applicable Conseco Trust remain outstanding,
if there shall have occurred any event of default under such Trust Guarantee or
under the Declaration of such Conseco Trust, then (a) the Company will not
declare or pay any dividend on, make any distributions with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
its capital stock; (b) the Company shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities (including guarantees) issued by the Company which rank pari passu
with or junior to the Subordinated Debt Securities issued to the applicable
Conseco Trust and (c) the Company shall not make any guarantee payments with
respect to the foregoing (other than pursuant to a Trust Guarantee); provided,
however, that the Company
 
                                       24
   64
 
may (i) declare and pay a stock dividend where the dividend stock is the same
stock as that on which the dividend is being paid and (ii) purchase or acquire
shares of Company Common Stock in connection with the satisfaction by the
Company of its obligations under any employee benefit plans.
 
MODIFICATION OF THE TRUST GUARANTEES; ASSIGNMENT
 
     Except with respect to any changes that do not adversely affect the rights
of holders of Preferred Securities (in which case no consent of such holders
will be required), each Trust Guarantee may be amended only with the prior
approval of the holders of not less than a majority in liquidation amount of the
outstanding Preferred Securities of such Conseco Trust. The manner of obtaining
any such approval of holders of such Preferred Securities will be set forth in
accompanying Prospectus Supplement. All guarantees and agreements contained in a
Trust Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Company and shall inure to the benefit of the holders of
the Preferred Securities of the applicable Conseco Trust then outstanding.
 
EVENTS OF DEFAULT
 
     An event of default under a Trust Guarantee will occur upon the failure of
the Company to perform any of its payment or other obligations thereunder. The
holders of a majority in liquidation amount of the Preferred Securities to which
such Trust Guarantee relates have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Preferred
Securities Guarantee Trustee in respect of such Trust Guarantee or to direct the
exercise of any trust or power conferred upon the Preferred Securities Guarantee
Trustee under such Trust Guarantee.
 
     If the Preferred Securities Guarantee Trustee fails to enforce such Trust
Guarantee, any record holder of Preferred Securities to which such Trust
Guarantee relates may institute a legal proceeding directly against the Company
to enforce the Preferred Securities Guarantee Trustee's rights under such Trust
Guarantee without first instituting a legal proceeding against the applicable
Conseco Trust, the Preferred Securities Guarantee Trustee or any other person or
entity. Notwithstanding the foregoing, if the Company has failed to make a
Guarantee Payment under a Trust Guarantee, a record holder of Preferred
Securities to which such Trust Guarantee relates may directly institute a
proceeding against the Company for enforcement of such Trust Guarantee for such
payment to the record holder of the Preferred Securities to which such Trust
Guarantee relates of the principal of or interest on the applicable Subordinated
Debt Securities on or after the respective due dates specified in the
Subordinated Debt Securities, and the amount of the payment will be based on the
holder's pro rata share of the amount due and owing on all of the Preferred
Securities to which such Trust Guarantee relates. The Company has waived any
right or remedy to require that any action be brought first against the
applicable Conseco Trust or any other person or entity before proceeding
directly against the Company. The record holder in the case of the issuance of
one or more global Preferred Securities certificates will be The Depository
Trust Company acting at the direction of the beneficial owners of the Preferred
Securities.
 
     The Company will be required to provide annually to the Preferred
Securities Guarantee Trustee a statement as to the performance by the Company of
certain of its obligations under each outstanding Trust Guarantee and as to any
default in such performance.
 
INFORMATION CONCERNING THE PREFERRED SECURITIES GUARANTEE TRUSTEE
 
     The Preferred Securities Guarantee Trustee, prior to the occurrence of a
default to a Trust Guarantee, undertakes to perform only such duties as are
specifically set forth in such Trust Guarantee and, after default with respect
to such Trust Guarantee, shall exercise the same degree of care as a prudent
individual would exercise in the conduct of his or her own affairs. Subject to
such provision, the Preferred Securities Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by a Trust Guarantee at
the request of any holder of Preferred Securities to which such Trust Guarantee
relates unless it is offered reasonable indemnity against the costs, expenses
and liabilities that might be incurred thereby.
 
                                       25
   65
 
TERMINATION
 
     Each Trust Guarantee will terminate as to the Preferred Securities issued
by the applicable Conseco Trust upon full payment of the Redemption Price of all
Preferred Securities of such Conseco Trust, upon distribution of the
Subordinated Debt Securities held by such Conseco Trust to the holders of all of
the Preferred Securities of such Conseco Trust or upon full payment of the
amounts payable in accordance with the Declaration of such Conseco Trust upon
liquidation of such Conseco Trust. Each Trust Guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any holder
of Preferred Securities issued by the applicable Conseco Trust must restore
payment of any sums paid under such Preferred Securities or such Trust
Guarantee.
 
STATUS OF THE TRUST GUARANTEES
 
     The Trust Guarantees will constitute an unsecured obligation of the Company
and will rank (i) subordinate and junior in right of payment to all other
liabilities of the Company, including the Subordinated Debt Securities, except
those liabilities of the Company made pari passu or subordinate by their terms,
(ii) pari passu with the most senior preferred or preference stock now or
hereafter issued by the Company and with any guarantee now or hereafter entered
into by the Company in respect of any preferred or preference stock of any
affiliate of the Company and (iii) senior to the Company's Common Stock. The
terms of the Preferred Securities provide that each holder of Preferred
Securities by acceptance thereof agrees to the subordination provisions and
other terms of the Trust Guarantee relating thereto.
 
     Each Trust Guarantee will constitute a guarantee of payment and not of
collection (that is, the guaranteed party may institute a legal proceeding
directly against the Company to enforce its rights under such Trust Guarantee
without instituting a legal proceeding against any other person or entity).
 
GOVERNING LAW
 
     The Trust Guarantees will be governed by and construed in accordance with
the law of the State of New York.
 
                              PLAN OF DISTRIBUTION
 
     The Company and/or any Conseco Trust may sell any of the Securities being
offered hereby in any one or more of the following ways from time to time: (i)
through agents; (ii) to or through underwriters; (iii) through dealers; or (iv)
directly to purchasers.
 
     The Prospectus Supplement with respect to the Securities will set forth the
terms of the offering of the Securities, including the name or names of any
underwriters, dealers or agents; the purchase price of the Securities and the
proceeds to the Company and/or a Conseco Trust from such sale; any underwriting
discounts and commissions or agency fees and other items constituting
underwriters' or agents' compensation; any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers and any
securities exchange on which such Securities may be listed. Any initial public
offering price, discounts or concessions allowed or reallowed or paid to dealers
may be changed from time to time.
 
     The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices.
 
     Offers to purchase Securities may be solicited by agents designated by the
Company from time to time. Any such agent involved in the offer or sale of the
Securities in respect of which this Prospectus is delivered will be named, and
any commissions payable by the Company and/or the applicable Conseco Trust to
such agent will be set forth, in the applicable Prospectus Supplement. Unless
otherwise indicated in such Prospectus Supplement, any such agent will be acting
on a reasonable best efforts basis for the period of its appointment. Any such
agent may be deemed to be an underwriter, as that term is defined in the
Securities Act, of the Securities so offered and sold.
 
                                       26
   66
 
     If Securities are sold by means of an underwritten offering, the Company
and/or the applicable Conseco Trust will execute an underwriting agreement with
an underwriter or underwriters at the time an agreement for such sale is
reached, and the names of the specific managing underwriter or underwriters, as
well as any other underwriters, and the terms of the transaction, including
commissions, discounts and any other compensation of the underwriters and
dealers, if any, will be set forth in the Prospectus Supplement which will be
used by the underwriters to make resales of the Securities in respect of which
this Prospectus is delivered to the public. If underwriters are utilized in the
sale of the Securities in respect of which this Prospectus is delivered, the
Securities will be acquired by the underwriters for their own account and may be
resold from time to time in one or more transactions, including negotiated
transactions, at fixed public offering prices or at varying prices determined by
the underwriter at the time of sale. Securities may be offered to the public
either through underwriting syndicates represented by managing underwriters or
directly by the managing underwriters. If any underwriter or underwriters are
utilized in the sale of the Securities, unless otherwise indicated in the
Prospectus Supplement, the underwriting agreement will provide that the
obligations of the underwriters are subject to certain conditions precedent and
that the underwriters with respect to a sale of Securities will be obligated to
purchase all such Securities of a series if any are purchased.
 
     If a dealer is utilized in the sales of the Securities in respect of which
this Prospectus is delivered, the Company and/or the applicable Conseco Trust
will sell such Securities to the dealer as principal. The dealer may then resell
such Securities to the public at varying prices to be determined by such dealer
at the time of resale. Any such dealer may be deemed to be an underwriter, as
such term is defined in the Securities Act, of the Securities so offered and
sold. The name of the dealer and the terms of the transaction will be set forth
in the Prospectus Supplement relating thereto.
 
     Offers to purchase Securities may be solicited directly by the Company
and/or the applicable Conseco Trust and the sale thereof may be made by the
Company and/or the applicable Conseco Trust directly to institutional investors
or others, who may be deemed to be underwriters within the meaning of the
Securities Act with respect to any resale thereof. The terms of any such sales
will be described in the Prospectus Supplement relating thereto.
 
     Agents, underwriters and dealers may be entitled under relevant agreements
to indemnification or contribution by the Company and/or the applicable Conseco
Trust against certain liabilities, including liabilities under the Securities
Act.
 
     Agents, underwriters and dealers may be customers of, engage in
transactions with, or perform services for, the Company and its subsidiaries in
the ordinary course of business.
 
     Securities may also be offered and sold, if so indicated in the applicable
Prospectus Supplement, in connection with a remarketing upon their purchase, in
accordance with a redemption or repayment pursuant to their terms, or otherwise,
by one or more firms ("remarketing firms"), acting as principals for their own
accounts or as agents for the Company and/or the applicable Conseco Trust. Any
remarketing firm will be identified and the terms of its agreement, if any, with
its compensation will be described in the applicable Prospectus Supplement.
Remarketing firms may be deemed to be underwriters, as such term is defined in
the Securities Act, in connection with the Securities remarketed thereby.
Remarketing firms may be entitled under agreements which may be entered into
with the Company and/or the applicable Conseco Trust to indemnification or
contribution by the Company and/or the applicable Conseco Trust against certain
civil liabilities, including liabilities under the Securities Act, and may be
customers of, engage in transactions with or perform services for Conseco and
its subsidiaries in the ordinary course of business.
 
     If so indicated in the applicable Prospectus Supplement, the Company and/or
the applicable Conseco Trust may authorize agents, underwriters or dealers to
solicit offers by certain types of institutions to purchase Securities from the
Company and/or the applicable Conseco Trust at the public offering prices set
forth in the applicable Prospectus Supplement pursuant to delayed delivery
contracts ("Contracts") providing for payment and delivery on a specified date
or dates in the future. A commission indicated in the applicable Prospectus
Supplement will be paid to underwriters, dealers and agents soliciting purchases
of Securities pursuant to Contracts accepted by the Company and/or the
applicable Conseco Trust.
 
                                       27
   67
 
                                 LEGAL MATTERS
 
     Unless otherwise indicated in the applicable Prospectus Supplement, the
legal validity of Securities (other than the Preferred Securities) will be
passed upon for the Company by Karl W. Kindig, Senior Vice President, Legal of
Conseco Services, LLC, a subsidiary of the Company. Mr. Kindig is a full-time
employee of the Company and owns shares and holds options to purchase shares of
Company common stock.
 
     Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon for the Conseco Trusts by Richards, Layton &
Finger, P.A., Wilmington, Delaware, special Delaware counsel to the Conseco
Trusts.
 
                                    EXPERTS
 
     The consolidated financial statements and schedules of the Company as of
December 31, 1996 and 1995, and for each of the three years in the period ended
December 31, 1996 incorporated by reference in this Prospectus, have been
audited by Coopers & Lybrand L.L.P., independent accountants, as set forth in
their reports thereon included therein and are incorporated herein by reference
in reliance upon such reports given upon the authority of such firm as experts
in accounting and auditing.
 
                                       28
   68
 
       ===============================================================
 
     NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN CONTAINED OR INCORPORATED
BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT, THE APPLICABLE PRICING SUPPLEMENT OR
THE PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT,
THE APPLICABLE PRICING SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE AGENTS. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT, THE APPLICABLE PRICING SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE
MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION
THAT THERE HAS NOT BEEN ANY CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF. THIS PROSPECTUS SUPPLEMENT, THE APPLICABLE PRICING SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT
IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
 
                               ------------------
 
                               TABLE OF CONTENTS
 


                                               PAGE
                                               ----
                                            
               PROSPECTUS SUPPLEMENT
Cautionary Statements Regarding
  Forward-Looking Statements.................   S-2
Risk Factors Relating to the Notes...........   S-2
Use of Proceeds..............................   S-5
Description of Notes.........................   S-5
Special Provisions Relating to Foreign
  Currency Notes.............................  S-21
Certain United States Federal Income Tax
  Considerations.............................  S-23
Supplemental Plan of Distribution............  S-38
Legal Matters................................  S-39
                    PROSPECTUS
Available Information........................     3
Incorporation of Certain Documents By
  Reference..................................     4
The Company..................................     5
The Conseco Trusts...........................     5
Use of Proceeds..............................     6
Ratios of Earnings to Fixed Charges, Earnings
  to Fixed Charges and Preferred Stock
  Dividends and Earnings to Fixed Charges,
  Preferred Stock Dividends and Distributions
  on Company-Obligated Mandatorily Redeemable
  Preferred Securities of Subsidiary
  Trusts.....................................     6
Description of Debt Securities...............     7
Description of Capital Stock.................    15
Description of Depositary Shares.............    18
Description of Warrants......................    22
Description of Preferred Securities of the
  Conseco Trusts.............................    22
Description of Trust Guarantees..............    23
Plan of Distribution.........................    26
Legal Matters................................    28
Experts......................................    28

 
       ===============================================================
       ===============================================================
                                 $1,000,000,000
                                 CONSECO, INC.
                       SENIOR MEDIUM-TERM NOTES, SERIES A
 
                        SUBORDINATED MEDIUM-TERM NOTES,
                                    SERIES A
                            DUE NINE MONTHS OR MORE
                               FROM DATE OF ISSUE
 
                           -------------------------
 
                             PROSPECTUS SUPPLEMENT
                           -------------------------
                              MERRILL LYNCH & CO.
                             CHASE SECURITIES INC.
                            DEUTSCHE MORGAN GRENFELL
                       FIRST UNION CAPITAL MARKETS CORP.
                              GOLDMAN, SACHS & CO.
                             NATIONSBANC MONTGOMERY
                              SALOMON BROTHERS INC
                               SMITH BARNEY, INC.
                               November 18, 1997
       ===============================================================