PROSPECTUS SUPPLEMENT                                         Rule No. 424(b)(2)
(To Prospectus dated May 1, 1996)                              File No. 333-1655
                               U.S.$4,286,270,654
                            Morgan Stanley Group Inc.
                       GLOBAL MEDIUM-TERM NOTES, SERIES D
                       GLOBAL MEDIUM-TERM NOTES, SERIES E

                           ---------------------------


                  Due More Than Nine Months from Date of Issue

                           ---------------------------


         Morgan  Stanley Group Inc. (the  "Company") may offer from time to time
its Global  Medium-Term  Notes, which are issuable in one or more series and may
be offered and sold in the United  States,  outside the United States or both in
and outside the United  States  simultaneously.  The Global  Medium-Term  Notes,
Series D (the "Series D Notes") and the Global Medium-Term Notes,  Series E (the
"Series E Notes" and,  together  with the Series D Notes,  the "Notes")  offered
hereby are offered  outside the United States at an aggregate  initial  offering
price  of  up  to  U.S.$4,286,270,654,   or  the  equivalent  thereof  in  other
currencies,  including  composite  currencies  such as the ECU  (the  "Specified
Currency").  See  "Description  of Notes -- Payment  Currency."  Such  aggregate
offering price is subject to reduction as a result of the sale by the Company of
certain  other Debt  Securities,  including the sale in the United States of the
Company's  Global  Medium-Term  Notes,  Series  C,  Warrants  to  purchase  Debt
Securities,  and Preferred Stock. See "Plan of  Distribution."  The Notes may be
issued  as  Senior  Indebtedness  or  Subordinated  Indebtedness.   Subordinated
Indebtedness will be subordinate to all Senior Indebtedness. See "Description of
Debt  Securities  --  Subordinated  Debt" in the  accompanying  Prospectus.  The
interest  rate on each  Note  will be  either a fixed  rate  established  by the
Company  at the  date of issue of such  Note,  which  may be zero in the case of
certain  Original  Issue  Discount Notes or a floating rate as set forth therein
and specified in the applicable Pricing  Supplement.  Such interest rates may be
determined by reference to the prices of certain  securities or  commodities.  A
Fixed Rate Note may pay a level amount in respect of both interest and principal
amortized over the life of the Note (an "Amortizing Note").

         The terms and  conditions set forth in  "Description  of Notes" in this
Prospectus  Supplement will apply to each Note unless otherwise specified in the
applicable  Pricing  Supplement  and in such  Note.  Interest  on each Note (and
principal  on each  Amortizing  Note) is payable  on the dates set forth  herein
and/or in the applicable Pricing Supplement. Each Fixed Rate Note will mature on
any day more  than  nine  months  from the date of  issue,  as set  forth in the
applicable  Pricing  Supplement.  Each  Floating  Rate  Note  will  mature on an
Interest Payment Date more than nine months from the date of issue, as set forth
in the applicable Pricing  Supplement.  The Notes may be redeemed by the Company
prior to the maturity (including upon the occurrence of certain events involving
United States taxation or information reporting requirements) and will be issued
in  fully  registered  form,  in  bearer  form,  or in any  combination  of such
registered  and bearer  forms.  See  "Description  of Notes."  The Notes will be
issued  only in  denominations  of  U.S.$1,000  (or,  in the case of  Notes  not
denominated in U.S. dollars,  the equivalent thereof in the Specified  Currency,
rounded to the nearest 1,000 units of the  Specified  Currency) or any amount in
excess thereof which is an integral  multiple of U.S.$1,000  (or, in the case of
Notes not denominated in U.S. dollars,  1,000 units of the Specified  Currency).
Any terms relating to Notes being denominated in a Specified Currency other than
U.S. dollars will be as set forth in the applicable Pricing Supplement.

         Payments on the Notes will be increased by the amount of any  deduction
for United States  withholding taxes to the extent described under  "Description
of Notes -- Payment of Additional Amounts."

         Application  has been made to the London  Stock  Exchange  Limited (the
"London Stock  Exchange")  for Series D Notes  offered  hereby during the twelve
months  after  the date of this  Prospectus  Supplement  to be  admitted  to the
Official  List of the  London  Stock  Exchange.  Application  will,  in  certain
circumstances as described herein, be made to list Series D Notes denominated in
French  Francs or  Series D Notes  denominated  in  another  currency  but which
provide for payments  that are linked  directly or  indirectly  to French Francs
("French Franc Notes") on the Bourse de Paris (the "Paris Bourse"). For the sole
purpose  of  listing  Series  D  Notes  on the  Paris  Bourse,  this  Prospectus
Supplement and the accompanying  Prospectus have been submitted to the clearance
procedures of the  Commission des Operations de Bourse (the "COB") and have been
registered  by the COB under no.  P96-095 on April 30, 1996.  The Series E Notes
will not be listed on any stock exchange.

                           ---------------------------


THESE  SECURITIES  HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES  AND
 EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES 
  AND  EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
   ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
              REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
                           ---------------------------




                                             Price to                    Agent's                          Proceeds to
                                            Public (1)               Commission (2)                      Company (2)(3)
                                     ----------------------  ------------------------------   -------------------------------------
                                                                                         

Per Note...........................          100.000%                  .125%-.750%                       99.875%-99.250%
Total(4)...........................     U.S.$4,286,270,654   U.S.$5,357,838-U.S.$32,147,030   U.S.$4,280,912,816-U.S.$4,254,123,624



         ----------
         (1)      Unless   otherwise   specified  in  the   applicable   Pricing
                  Supplement,  Notes  will be sold  at 100% of  their  principal
                  amount.  If the Company  issues any Note at a discount from or
                  at a premium over its principal amount, the Price to Public of
                  any Note issued at a discount or premium  will be set forth in
                  the applicable Pricing Supplement.
         (2)      Unless   otherwise   specified  in  the   applicable   Pricing
                  Supplement,  the commission  payable to an Agent for each Note
                  sold  through such Agent will range from .125% to .750% of the
                  principal  amount  of  such  Note;  provided,   however,  that
                  commissions  with  respect to Notes  having a  maturity  of 30
                  years or greater will be negotiated. The Company may also sell
                  Notes to an Agent, as principal, at negotiated discounts,  for
                  resale to investors and other purchasers.
         (3)      Before deducting  expenses payable by the Company estimated at
                  U.S.$2,453,890.
         (4)      Or the  equivalent  thereof  in  other  currencies,  including
                  composite currencies.



                           ---------------------------


         Offers to purchase the Notes are being  solicited  from time to time by
Morgan  Stanley & Co.  International  Limited,  Bank Morgan  Stanley AG,  Morgan
Stanley  S.A.  (the  French  Franc  arranger)  and Morgan  Stanley  Bank AG (the
Deutsche Mark  arranger),  each of which is an affiliate of the Company (each an
"Agent" and, together,  the "Agents").  The Agents have agreed to use reasonable
efforts to solicit  purchases of such Notes.  The Company may also sell Notes to
an Agent acting as principal  for its own account or otherwise as  determined by
such  Agent.  No  termination  date  for the  offering  of the  Notes  has  been
established. The Company or the Agents may reject any order in whole or in part.
There can be no  assurance  that the Notes  offered  hereby will be sold or that
there will be a secondary market for the Notes. See "Plan of Distribution."

         This Prospectus Supplement and the accompanying  Prospectus may be used
by the Agents in connection with offers and sales of the Notes in  market-making
transactions  at negotiated  prices  related to prevailing  market prices at the
time of sale or  otherwise.  The  Agents may act as  principal  or agent in such
transactions.

                           ---------------------------


                              MORGAN STANLEY & CO.
                                  International
May 2, 1996





         No dealer, salesman or any other person has been authorized to give any
information or to make any  representations  other than those  contained in this
Prospectus Supplement, any Pricing Supplement and the accompanying Prospectus in
connection with the offer contained in this Prospectus  Supplement,  any Pricing
Supplement  and  the  accompanying  Prospectus  and,  if  given  or  made,  such
information or representations must not be relied upon as having been authorized
by the  Company  or by the  Agents.  This  Prospectus  Supplement,  any  Pricing
Supplement and the accompanying Prospectus do not constitute an offer to sell or
a solicitation  of an offer to buy Securities by anyone in any  jurisdiction  in
which such offer or solicitation is not authorized or in which the person making
such offer or solicitation is not qualified to do so or to any person to whom it
is unlawful to make such offer or solicitation.

         References  herein  to  "U.S.  dollars"  or  "U.S.$"  or "$" are to the
currency of the United States of America.

         A copy of this Prospectus  Supplement and the  accompanying  Prospectus
dated May 1, 1996, which together  comprise  listing  particulars with regard to
the issuance by the Company of the Series D Notes in  compliance  with the rules
of the London Stock  Exchange and in  accordance  with Part IV of the  Financial
Services  Act 1986,  will be  delivered  for  registration  to the  Registrar of
Companies  in England  and Wales as  required  by Section  149 of such Act.  The
issuance  of French  Franc  Notes  will  comply  with the rules and  regulations
relating  to the  marche  de  l'eurofranc  from time to time of the  Comite  des
Emissions  ("French  EuroFranc  Regulations") and any French Franc Notes must be
admitted  to the Paris  Bourse if (i) such Notes  are,  or are  intended  to be,
listed on any other stock  exchange,  or (ii) such Notes are, or are intended to
be,  distributed  as a public offer (within the meaning of the French  EuroFranc
Regulations).  The  minimum  aggregate  principal  amount of French  Franc Notes
listed  on  the  Paris  Bourse  and  distributed  in a  public  offer  shall  be
300,000,000 French Francs. Under current applicable French regulations, "private
placements" shall be construed as issuances of Notes placed on a firm basis with
a small number of predetermined  nonresident investors. So long as any Notes are
listed  on the  Paris  Bourse,  copies  of this  Prospectus  Supplement  and the
accompanying  Prospectus (and all publicly available  documents  incorporated by
reference  herein) will be available from the principal office of Morgan Stanley
S.A.  as the listing  agent for Notes  listed on the Paris  Bourse.  The Company
accepts   responsibility  for  the  information  contained  in  this  Prospectus
Supplement  and the  accompanying  Prospectus.  To the best of the knowledge and
belief of the Company (which has taken all  reasonable  care to ensure that such
is the case),  the information  contained in this Prospectus  Supplement and the
accompanying  Prospectus  (including the existing publicly  available  documents
incorporated by reference  therein) is in accordance with the facts and does not
omit anything likely to affect the import of such information.

         IN  CONNECTION  WITH THIS  OFFERING,  THE AGENT WHO IS SPECIFIED IN THE
RELEVANT  PRICING  SUPPLEMENT  MAY  OVER-ALLOT  OR  EFFECT   TRANSACTIONS  WHICH
STABILISE  OR MAINTAIN  THE MARKET  PRICE OF THE NOTES,  OR ANY  SECURITIES  THE
PRICES OF WHICH MAY BE USED TO DETERMINE PAYMENTS ON SUCH NOTES, AT LEVELS WHICH
MIGHT NOT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILISING,  IF COMMENCED,
MAY BE  DISCONTINUED  AT ANY TIME.  SUCH  TRANSACTIONS  WILL BE  CARRIED  OUT IN
ACCORDANCE WITH ALL RELEVANT LAWS AND REGULATIONS.

                               -------------------

                              DESCRIPTION OF NOTES

         The following  description of the particular terms of the Notes offered
hereby  supplements  the  description of the general terms and provisions of the
Debt Securities set forth in the Prospectus,  to which reference is hereby made.
In  particular,  as used under this  caption,  the term  "Company"  means Morgan
Stanley  Group  Inc.  The  particular  terms of the Notes sold  pursuant  to any
pricing supplement (a "Pricing Supplement") will be described therein. The terms
and  conditions  set forth in  "Description  of Notes"  will  apply to each Note
unless  otherwise  specified in the  applicable  Pricing  Supplement and in such
Note.

         If any Note is not to be  denominated in U.S.  dollars,  the applicable
Pricing Supplement will specify the currency or currencies,  including composite
currencies such as the European Currency Unit (the "ECU"), in which

                                       S-2






the principal,  premium, if any, and interest, if any, with respect to such Note
are to be paid,  along with any other  terms  relating  to the  non-U.S.  dollar
denomination. See "Foreign Currency Risks."

General

         The Notes  may be  issued  under the  Senior  Debt  Indenture  ("Senior
Notes") or the Subordinated  Debt Indenture  ("Subordinated  Notes").  The Notes
issued under each  Indenture,  together  with the Company's  Global  Medium-Term
Notes, Series C, referred to below under "Plan of Distribution," will constitute
a single series under such Indenture, together with any medium-term notes of the
Company  issued in the future under such  Indenture  which are designated by the
Company as  constituting  a single series of  securities  with the Notes and the
Global  Medium-Term  Notes,  Series C, for purposes of such  Indenture.  Neither
Indenture  limits the amount of  additional  indebtedness  that the  Company may
incur.  At February 29, 1996,  the Company had  approximately  U.S.$9.7  billion
aggregate  principal amount of medium-term  notes  outstanding  under the Senior
Debt Indenture and approximately U.S.$94.4 million aggregate principal amount of
medium-term  notes  outstanding  under the  Subordinated  Debt  Indenture.  Such
aggregate principal amounts may be increased from time to time as authorized by,
or pursuant to  authority  delegated  by, the Board of Directors of the Company.
For the purpose of this  paragraph,  (i) the  principal  amount of any  Original
Issue  Discount Note (as defined below) means the Issue Price (as defined below)
of such  Note and (ii) the  principal  amount  of any Note  issued  in a foreign
currency or composite  currency means the U.S. dollar  equivalent on the date of
issue of the Issue Price of such Note.

         Notes issued under the Senior Debt  Indenture will rank pari passu with
all other Senior  Indebtedness  of the Company and with all other  unsecured and
unsubordinated  indebtedness of the Company. Notes issued under the Subordinated
Debt Indenture will rank pari passu with all other subordinated  indebtedness of
the Company and,  together with such other  subordinated  indebtedness,  will be
subordinated  in right of  payment  to the prior  payment  in full of the Senior
Indebtedness of the Company. See "Description of Debt Securities -- Subordinated
Debt"  in  the  Prospectus.   At  February  29,  1996,   there  was  outstanding
approximately  U.S.$21.5 billion of Senior Indebtedness,  approximately U.S.$1.3
billion of subordinated  indebtedness and  approximately  U.S.$865.3  million of
Capital Units. Each Capital Unit consists of a subordinated  debenture of Morgan
Stanley Finance plc, a subsidiary of the Company, guaranteed by the Company on a
subordinated  basis  and a  related  purchase  contract  issued  by the  Company
requiring the holder to purchase one depositary share representing  ownership of
a 1/8 interest in a share of the Company's preferred stock.

         Fixed Rate Notes,  Amortizing  Notes and Original  Issue Discount Notes
will  mature  on any day more than nine  months  from the date of issue,  as set
forth in the applicable Pricing  Supplement.  Floating Rate Notes will mature on
an Interest  Payment Date (as defined below) more than nine months from the date
of issue, as set forth in the applicable Pricing  Supplement.  Notes denominated
or payable in  Deutsche  Marks will  mature at least two years after the date of
issue and Notes  denominated or payable in pounds  sterling will mature at least
one year,  but not more than five years,  after the date of issue.  French Franc
Notes or Notes  denominated  in Japanese yen will mature at least one year after
the date of issue. The Notes will be offered on a continuing basis, and any Note
purchased on original  issuance by or on behalf of a United  States person must,
subject to certain exceptions,  be a Registered Note (as defined below).  Bearer
Notes (as defined below)  purchased on original  issuance by any other purchaser
initially will be represented by a temporary  global Bearer Note to be deposited
with a common depositary for Morgan Guaranty Trust Company of New York, Brussels
office,  as operator of the Euroclear System (the "Euroclear  Operator"),  Cedel
Bank,  societe  anonyme  ("Cedel")  and/or any other  relevant  clearing  system
(including  Societe   Interprofessionelle   pour  la  Compensation  des  Valeurs
Mobilieres and the Intermediaires  financiers  habilites  authorized to maintain
accounts  therein  ("SICOVAM")).  Interests in each temporary global Bearer Note
will be  exchangeable  for  interests  in permanent  global  Bearer Notes or for
definitive Registered or Bearer Notes in the manner and upon compliance with the
procedures  described  under  "Description  of  Notes --  Forms,  Denominations,
Exchange and Transfer."

         The applicable  Pricing  Supplement  will specify the price (the "Issue
Price") of each Note to be sold pursuant thereto (unless such Note is to be sold
at 100% of its principal amount), the interest rate or interest rate

                                       S-3






formula, ranking, maturity, currency or composite currency, principal amount and
any other terms on which each such Note will be issued.

         As used herein,  the following  terms shall have the meanings set forth
below:

         "Business Day" means any day, other than a Saturday or Sunday,  that is
neither a legal holiday nor a day on which banking  institutions  are authorized
or required by law or regulation to close in The City of New York or in The City
of London and (i) with respect to LIBOR Notes (as defined below), that is also a
London  Banking  Day,  (ii) with  respect to Notes  denominated  in a  Specified
Currency other than U.S. dollars,  Australian  dollars or ECUs, in the principal
financial center of the country of the Specified Currency, (iii) with respect to
Notes  denominated  in  Australian  dollars,  in Sydney and (iv) with respect to
Notes  denominated in ECUs, that is not a non-ECU clearing day, as determined by
the ECU Banking Association in Paris.

         An "Interest  Payment Date" with respect to any Note shall be a date on
which,  under the terms of such  Note,  regularly  scheduled  interest  shall be
payable.

         "London Banking Day" means any day on which dealings in deposits in the
relevant  Index  Currency  (as  defined  below)  are  transacted  in the  London
interbank market.

         "Original  Issue  Discount  Note" means any Note that  provides  for an
amount  less than the  principal  amount  thereof to be due and  payable  upon a
declaration of  acceleration  of the maturity  thereof  pursuant to the relevant
Indenture.

         The  "Record  Date" with  respect to any  Interest  Payment  Date for a
Registered  Note  shall  be the date 15  calendar  days  prior to such  Interest
Payment Date, whether or not such date shall be a Business Day.

Payment Currency

         If the applicable Pricing  Supplement  provides for all or a portion of
payments of interest and principal on a non-U.S.  dollar  denominated Note to be
made, at the option of the holder of such Note, in U.S.  dollars,  conversion of
the  Specified  Currency  into U.S.  dollars  will be based on the  highest  bid
quotation  in The City of New York  received  by the  Exchange  Rate  Agent  (as
defined  below) at  approximately  11:00 A.M., New York City time, on the second
Business Day preceding the applicable payment date from three recognized foreign
exchange  dealers  (one of which  may be the  Exchange  Rate  Agent  unless  the
Exchange  Rate Agent is an  affiliate  of the  Company)  for the purchase by the
quoting dealer of the Specified Currency for U.S. dollars for settlement on such
payment date in the aggregate  amount of the Specified  Currency  payable to the
holders  of Notes  and at which  the  applicable  dealer  commits  to  execute a
contract. If such bid quotations are not available, payments will be made in the
Specified Currency.  All currency exchange costs will be borne by the holders of
Notes by  deductions  from such  payments.  Unless  otherwise  indicated  in the
applicable Pricing Supplement,  the Exchange Rate Agent will be Morgan Stanley &
Co. International Limited.

         Except as set forth below,  if the  principal of,  premium,  if any, or
interest on, any Note is payable in a Specified Currency other than U.S. dollars
and such Specified  Currency is not available to the Company for making payments
thereof due to the imposition of exchange controls or other circumstances beyond
the control of the Company or is no longer used by the government of the country
issuing  such  currency  or  for  the  settlement  of   transactions  by  public
institutions within the international  banking community,  then the Company will
be entitled to satisfy  its  obligations  to holders of the Notes by making such
payments in U.S.  dollars on the basis of the Market  Exchange  Rate (as defined
below)  on the date of such  payment  or,  if the  Market  Exchange  Rate is not
available  on such  date,  as of the most  recent  practicable  date;  provided,
however,  that if such  Specified  Currency  is  replaced  by a single  European
currency  (expected to be named the Euro), the payment of principal of, premium,
if any, or interest on any Note  denominated  in such currency shall be effected
in the new single  European  currency  in  conformity  with  legally  applicable
measures  taken  pursuant  to, or by virtue  of,  the  treaty  establishing  the
European Community (the "EC"), as amended by the treaty on European Union (as so
amended, the "Treaty"). Any payment

                                       S-4






made under such  circumstances  in U.S.  dollars  (or, if  applicable,  such new
single European  currency) where the required payment is in a Specified Currency
other  than  U.S.  dollars  will not  constitute  an Event of  Default.  "Market
Exchange  Rate" means the noon U.S.  dollar  buying rate in The City of New York
for wire transfers of the relevant  currency or composite  currency as certified
for customs purposes by the Federal Reserve Bank of New York.

Special Provisions Relating to Notes Denominated in ECU

         Valuation of the ECU

         Subject to the  provisions  under  "Payment  in a  Component  Currency"
below,  the value of the ECU,  in which the Notes may be  denominated  or may be
payable,  is equal to the value of the ECU that is from time to time used as the
unit of account of the EC and which is at the date hereof valued on the basis of
specified  amounts of the  currencies  of 12 of the 15 member  states of the EC.
Under Article 109G of the Treaty, the currency composition of the ECU may not be
changed.  Other changes to the ECU may be made by the EC in  conformity  with EC
law, in which event the ECU will change accordingly and references to ECU in the
Notes shall thereafter be construed as references to the ECU as so changed. From
the start of the third stage of European monetary union, the value of the ECU as
against the currencies of member states participating in the third stage will be
irrevocably fixed and the ECU will become a currency in its own right, replacing
all or some of the  currencies of the 15 member states of the EC (as of the date
of this Prospectus  Supplement,  such currencies  include the Austrian shilling,
Belgian franc, Danish krone, Dutch guilder, Finnish markka, French franc, German
mark, Greek drachma,  Irish pound,  Italian lira,  Luxembourg franc,  Portuguese
escudo,  Spanish  peseta,  Swedish  krona and pound  sterling).  Such new single
European  currency  is  expected  to be named the Euro.  Once the ECU  becomes a
currency in its own right in accordance  with the Treaty,  all references to ECU
in the Notes shall be construed as references to such currency.

         Payment in a Component Currency

         With  respect  to each due date for the  payment  of  principal  of, or
interest  on, the Notes on or after the first  business day in Brussels on which
the ECU  ceases to be used as the unit of account of the EC and has not become a
currency in its own right  replacing all or some of the currencies of the member
states of the EC, the Company  shall choose a substitute  currency  (the "Chosen
Currency"),  which may be any  currency  which was, on the last day on which the
ECU was used as the unit of account of the EC, a  component  currency of the ECU
or U.S. dollars, in which all payments due on or after that date with respect to
the Notes and coupons shall be made.  Notice of the Chosen  Currency so selected
shall,  where  practicable,  be published  in the manner  described in "Notices"
below.  The amount of each payment in such Chosen  Currency shall be computed on
the basis of the equivalent of the ECU in that currency, determined as described
below, as of the fourth business day in Brussels prior to the date on which such
payment is due.

         On the first  business  day in  Brussels  on which the ECU ceases to be
used as the unit of account  of the EC and has not become a currency  in its own
right  replacing  all or some of the  currencies of the member states of the EC,
the Company shall select a Chosen Currency in which all payments with respect to
Notes and  coupons  having a due date prior  thereto but not yet  presented  for
payment are to be made.  Notice of the Chosen Currency so selected shall,  where
practicable, be published in the manner described in "Notices" below. The amount
of each  payment in such Chosen  Currency  shall be computed on the basis of the
equivalent of the ECU in that  currency,  determined as described  below,  as of
such first business day.

         The  equivalent  of the ECU in the relevant  Chosen  Currency as of any
date (the "Day of  Valuation")  shall be  determined  by, or on behalf  of,  the
Exchange Rate Agent on the following basis. The amounts and components composing
the ECU for this purpose (the "Components")  shall be the amounts and components
that  composed the ECU as of the last date on which the ECU was used as the unit
of account of the EC. The equivalent of the ECU in the Chosen  Currency shall be
calculated by, first, aggregating the U.S. dollar equivalents of the Components;
and then, in the case of a Chosen  Currency other than U.S.  dollars,  using the
rate used for determining the U.S.

                                       S-5






dollar  equivalent of the Components in the Chosen  Currency as set forth below,
calculating  the equivalent in the Chosen  Currency of such aggregate  amount in
U.S. dollars.

         The  U.S.  dollar  equivalent  of  each  of  the  Components  shall  be
determined  by, or on behalf  of,  the  Exchange  Rate Agent on the basis of the
middle spot delivery  quotations  prevailing at 2:30 P.M., Brussels time, on the
Day of Valuation,  as obtained by, or on behalf of, the Exchange Rate Agent from
one or more major banks, as selected by the Company,  in the country of issue of
the component currency in question.

         If for any reason no direct quotations are available for a Component as
of a Day of  Valuation  from any of the  banks  selected  for this  purpose,  in
computing the U.S. dollar equivalent of such Component,  the Exchange Rate Agent
shall (except as provided below) use the most recent direct  quotations for such
Component  obtained by it or on its behalf,  provided that such  quotations were
prevailing  in the country of issue not more than two Business  Days before such
Day of  Valuation.  If such most recent  quotations  were so  prevailing  in the
country of issue more than two Business Days before such Day of  Valuation,  the
Exchange Rate Agent shall determine the U.S. dollar equivalent of such Component
on the basis of cross rates derived from the middle spot delivery quotations for
such  component  currency  and for the  U.S.  dollar  prevailing  at 2:30  P.M.,
Brussels  time, on such Day of  Valuation,  as obtained by, or on behalf of, the
Exchange Rate Agent from one or more major banks, as selected by the Company, in
a  country  other  than  the  country  of  issue  of  such  component  currency.
Notwithstanding the foregoing,  the Exchange Rate Agent shall determine the U.S.
dollar  equivalent  of such  Component  on the basis of such cross  rates if the
Company  or  such  agent  judges  that  the  equivalent  so  calculated  is more
representative  than the U.S.  dollar  equivalent  calculated as provided in the
first sentence of this paragraph.  Unless otherwise specified by the Company, if
there is more than one market for dealing in any component currency by reason of
foreign exchange  regulations or for any other reason, the market to be referred
to in respect of such currency shall be that upon which a nonresident  issuer of
securities denominated in such currency would purchase such currency in order to
make payments in respect of such securities.

         Payments in the Chosen Currency will be made at the specified office of
a paying  agent in the country of the Chosen  Currency,  or, if none,  or at the
option of the holder,  at the  specified  office of any Paying Agent either by a
check drawn on, or by transfer to an account  maintained  by the holder  with, a
bank in the principal financial center of the country of the Chosen Currency.

         All  determinations  referred  to above  made by, or on behalf  of, the
Company  or by,  or on behalf  of,  the  Exchange  Rate  Agent  shall be at such
entity's  sole  discretion  and shall,  in the  absence of  manifest  error,  be
conclusive for all purposes and binding on holders of Notes and coupons.

         Notes Denominated in the Currencies of EC Member States

         If, pursuant to the Treaty, all or some of the currencies of the member
countries of the EC are replaced by a new single European currency  (expected to
be named the Euro),  the payment of principal of,  premium,  if any, or interest
on, the Notes denominated in such currencies shall be effected in the new single
European currency in conformity with legally applicable  measures taken pursuant
to, or by virtue of, the Treaty.

Forms, Denominations, Exchange and Transfer

         Unless otherwise  specified in the applicable Pricing  Supplement,  the
Notes may be issued (i) in fully  registered  definitive  form  without  coupons
("Registered  Notes") or (ii) in definitive bearer form with coupons attached or
in temporary or permanent  global bearer form without coupons  attached (in each
case,  "Bearer  Notes") or in any  combination  of the above such  registered or
bearer forms.

         Except as provided  below or as otherwise  specified in the  applicable
Pricing  Supplement,  Notes  denominated in U.S.  dollars will be issued only in
denominations  of U.S.$1,000 or any amount in excess thereof that is an integral
multiple of U.S.$1,000, Notes denominated in Japanese yen ("(Y)") will be issued
with a minimum denomination of (Y)1,000,000 and Notes denominated in a Specified
Currency other than U.S. dollars or Japanese

                                       S-6






yen will be issued in denominations of the equivalent of U.S.$1,000  (rounded to
an integral multiple of 1,000 units of such Specified  Currency),  or any amount
in excess thereof which is an integral multiple of 1,000 units of such Specified
Currency,  as  determined  by  reference  to the  Market  Exchange  Rate of such
Specified  Currency  on the  Business  Day  immediately  preceding  the  date of
issuance;  provided,  however, that, in the case of the ECU, the Market Exchange
Rate shall be the rate of exchange  determined by the Commission of the European
Communities (or any successor  thereto) as published in the Official  Journal of
the European  Communities,  or any  successor  publication,  on the Business Day
immediately preceding the date of issuance.

         Each  Bearer  Note and  interest  coupon,  if any,  will  bear a legend
substantially to the following effect:  "Any United States person who holds this
obligation  will be subject to  limitations  under the United  States income tax
laws,  including the limitations  provided in Sections 165(j) and 1287(a) of the
United States Internal Revenue Code of 1986, as amended to the date hereof."

         Registered  Notes will be  exchangeable  for Registered  Notes in other
authorized  denominations,  in an equal aggregate principal amount in accordance
with the provisions set forth in the applicable Indenture. Bearer Notes will not
be issuable in exchange for Registered Notes.  Registered Notes may be presented
for  registration  of transfer or exchange at the offices of the  Registrar  (as
defined below) or at the offices of any transfer agent designated by the Company
for such purpose.  See  "Registrar,  Paying Agents and Transfer  Agents." Bearer
Notes may be presented  for  exchange in the manner set forth below.  No service
charge  will be made for any  registration  of transfer or exchange of Notes but
the Company may require  payment of a sum  sufficient  to cover any tax or other
governmental  charge  payable  in  connection  therewith.  Bearer  Notes and any
coupons appertaining thereto will be transferable by delivery.

         Each Bearer Note will be  represented  initially by a temporary  global
Bearer Note, without interest coupons,  and which, unless otherwise specified in
the applicable Pricing Supplement, will be deposited with a common depositary (a
"Common  Depositary")  for the Euroclear  Operator and Cedel,  for credit to the
account  designated by or on behalf of the subscriber  thereof.  Upon deposit of
each such temporary global Bearer Note, the Euroclear  Operator or Cedel, as the
case may be, will credit each subscriber with a principal  amount of Notes equal
to the  principal  amount  thereof  for which it has  subscribed  and paid.  The
interests of the  beneficial  owner or owners in a temporary  global Bearer Note
will be exchangeable, after the date (the "Exchange Date") that is 40 days after
the date on which the  Company  receives  the  proceeds of the sale of such Note
(the "Closing  Date"),  for an interest in a permanent  global Bearer Note to be
held by a Common Depositary for the Euroclear  Operator and Cedel, for credit to
the account designated by or on behalf of the beneficial owner thereof; provided
that (i) the  Exchange  Date for any Note  held by an Agent as part of an unsold
allotment or subscription more than 40 days after the Closing Date for such Note
shall be the day after  the date  such Note is sold by such  Agent and (ii) such
exchange  will be made only upon receipt of Ownership  Certificates  (as defined
below).  No principal or interest may be paid on a temporary  global Bearer Note
until the person  entitled  to receive  such  interest  furnishes  an  Ownership
Certificate.  An "Ownership  Certificate" is a signed certificate in writing (or
an  electronic  certificate  described  in United  States  Treasury  Regulations
Section  1.163-5(c)(2)(i)(D)(3)(ii))  stating that on such date such Bearer Note
(i) is owned by a person that is not a United  States  person (as defined in the
Prospectus),  (ii) is owned  by a United  States  person  that (a) is a  foreign
branch of a United  States  financial  institution  (as defined in United States
Treasury  Regulations  Section  1.165-12(c)(1)(v))  (a "financial  institution")
purchasing  for its own account or for resale,  or (b) is acquiring  such Bearer
Note through a foreign branch of a United States  financial  institution and who
holds the Bearer Note through such financial  institution through such date (and
in either case (a) or (b), each such United States financial institution agrees,
on its own behalf or through its agent,  that the Company may be advised that it
will comply with the  requirements  of Section  165(j)(3)(A),  (B) or (C) of the
Internal Revenue Code of 1986, as amended, and the regulations  thereunder),  or
(iii) is owned by a United  States  or  foreign  financial  institution  for the
purposes of resale  during the  restricted  period (as defined in United  States
Treasury Regulations Section  1.163-5(c)(2)(i)(D)(7) (the "Restricted Period")),
and in addition  if the owner of such Bearer Note is a United  States or foreign
financial  institution  described  in clause  (iii)  above  (whether or not also
described in clause (i) or (ii)), such financial  institution  certifies that it
has not acquired the Bearer Note for purposes of resale  directly or  indirectly
to a United  States  person  or to a person  within  the  United  States  or its
possessions.


                                       S-7






         The beneficial owner of a Note represented by a permanent global Bearer
Note may, upon 30 days' written notice to the Principal Paying Agent (as defined
below),  given by the beneficial owner through either the Euroclear  Operator or
Cedel, exchange such owner's interest in such permanent global Bearer Note for a
definitive Bearer Note or Notes, which will be serially numbered,  with coupons,
if any,  attached or a definitive  Registered  Note or Notes,  of any authorized
denominations.  Upon receipt by the Principal Paying Agent of an initial request
to  exchange an interest  in a  permanent  global  Bearer Note for a  definitive
Bearer Note or Notes,  all other interests in such permanent  global Bearer Note
shall be exchanged for definitive  Bearer Notes.  The Common  Depositary for the
Euroclear  Operator and Cedel will instruct the Principal Paying Agent regarding
the aggregate principal amount and denominations of definitive Bearer Notes that
must be authenticated and delivered to each of the Euroclear Operator and Cedel.
Such  exchanges  shall occur at no expense to the  beneficial  owners as soon as
practicable  after the receipt of the  initial  request  for  definitive  Bearer
Notes. No Bearer Note will be delivered in the United States.  References herein
to "Bearer Notes" shall, except where otherwise indicated,  include interests in
a permanent or temporary  global Bearer Note as well as definitive  Bearer Notes
and any appurtenant coupons.

         At the option of the holder, and subject to the terms of the applicable
Indenture or procedures  established  pursuant thereto,  definitive Bearer Notes
(with all unmatured coupons,  and all matured coupons,  if any, in default) will
be exchangeable  into Registered  Notes of any authorized  denominations of like
tenor and in an equal aggregate  principal amount at the office of the Registrar
(as defined  below) or at the office of any  transfer  agent  designated  by the
Company for such purpose.  See "Registrar,  Paying Agents and Transfer  Agents."
Definitive  Bearer Notes  surrendered in exchange for Registered Notes after the
close of  business  at any such  office on any  Record  Date for the  payment of
interest on a Registered  Note and before the opening of business at such office
on the relevant  Interest  Payment Date shall be surrendered  without the coupon
relating  to  such  payment  of  interest.   Definitive  Bearer  Notes  will  be
exchangeable for definitive Bearer Notes in other authorized  denominations,  in
an equal aggregate  principal  amount,  in accordance with the provisions of the
applicable Indenture and at the offices of the Principal Paying Agent in London,
England or at the office of any  transfer  agent  designated  by the Company for
such purpose. See "Registrar, Paying Agents and Transfer Agents."

         The Company  will not be required  (i) to register  the  transfer of or
exchange  Notes to be redeemed for a period of fifteen  calendar days  preceding
the first  publication of the relevant  notice of  redemption,  or if Registered
Notes are outstanding  and there is no publication,  the mailing of the relevant
notice of  redemption  or, (ii) to  register  the  transfer  of or exchange  any
Registered Note selected for redemption or surrendered  for optional  repayment,
in whole  or in part,  except  the  unredeemed  or  unpaid  portion  of any such
Registered Note being redeemed or repaid,  as the case may be, in part, or (iii)
to exchange any Bearer Note selected for redemption or surrendered  for optional
repayment,  except that such Bearer Note may be exchanged for a Registered  Note
of like  tenor,  provided  that such  Registered  Note  shall be  simultaneously
surrendered for redemption or repayment, as the case may be.

Interest and Principal Payments

         Interest  payable on a Bearer Note  represented  by a temporary  global
Bearer Note or any portion  thereof  will,  unless  otherwise  specified  in the
applicable  Pricing  Supplement,  be paid to each of the Euroclear  Operator and
Cedel, as the case may be, with respect to that portion of such temporary global
Bearer Note held for its account upon delivery to the Principal  Paying Agent of
an Ownership  Certificate signed by the Euroclear Operator or Cedel, as the case
may be, dated no earlier than such Interest Payment Date, which certificate must
be based on Ownership  Certificates provided to the Euroclear Operator or Cedel,
as the case may be, by its member organizations.  Each of the Euroclear Operator
and Cedel will in such  circumstances  credit  the  interest  received  by it in
respect of such  temporary  global  Bearer  Note or any  portion  thereof to the
accounts of or for the  beneficial  owners  thereof to the extent that they have
furnished such Ownership Certificates.

         Each permanent global Bearer Note will,  unless otherwise  specified in
the applicable Pricing  Supplement,  provide that principal of, and premium,  if
any, and interest on such  permanent  global Bearer Note will be paid to each of
the  Euroclear  Operator  and Cedel,  as the case may be,  with  respect to that
portion of such permanent  global Bearer Note held for its account.  Each of the
Euroclear Operator and Cedel will in such  circumstances  credit such principal,
premium,  if any, and any interest  received by it in respect of such  permanent
global Bearer Note to the

                                       S-8






respective  accounts of or for the beneficial  owners of such  permanent  global
Bearer Note at maturity, redemption or repayment or on an Interest Payment Date,
as the case may be. If a  Registered  Note is issued in exchange for any portion
of a permanent  global  Bearer Note after the close of business at the office or
agency where such  exchange  occurs on any Record Date and before the opening of
business at such office or agency on the relevant  Interest  Payment  Date,  any
interest (or any principal and interest in the case of an Amortizing  Note) will
not be payable on such Interest Payment Date in respect of such Registered Note,
but will be payable on such Interest Payment Date only to the Euroclear Operator
and Cedel,  and the  Euroclear  Operator  and Cedel  will in such  circumstances
credit any such interest to the account of or for the  beneficial  owner of such
portion of such  permanent  global  Bearer Note on such Record Date.  Payment of
principal  of,  premium,  if any, and any  interest in respect of any  permanent
global Bearer Note will,  unless otherwise  specified in the applicable  Pricing
Supplement, be made to the Euroclear Operator and Cedel in immediately available
funds.

         Payment  of  principal  of,  premium,  if any,  and any  interest  on a
definitive  Bearer Note at maturity or upon redemption or repayment will be made
in immediately  available funds, subject to any applicable laws and regulations,
only  against  presentation  and  surrender  of such Note and any coupons at the
offices of a Paying Agent (as defined below)  outside the United States,  at the
option of the  holder,  by check or by wire  transfer of  immediately  available
funds to an account  maintained  by the payee with a bank  located  outside  the
United States if appropriate wire transfer  instructions have been received by a
Paying Agent not less than 15 calendar days prior to an applicable payment date.
Payment of interest on a definitive Bearer Note due on any Interest Payment Date
will be made only against  presentation  and surrender of the coupon relating to
such Interest Payment Date.

         No payment  with  respect to any Bearer Note will be made at any office
or agency of the Company in the United  States or by check mailed to any address
in the United  States or by wire transfer to an account  maintained  with a bank
located in the United  States  except as may be permitted  under  United  States
federal tax laws and regulations then in effect without adverse tax consequences
to the  Company.  Notwithstanding  the  foregoing,  payments  of  principal  of,
premium,  if any, and interest on Bearer Notes  payable in U.S.  dollars will be
made at the office of the  Company's  paying agent in the Borough of  Manhattan,
The City of New York,  if, and only if (i) payment of the full amount thereof in
U.S.  dollars at all offices or agencies outside the United States is illegal or
effectively  precluded by exchange  controls or other similar  restrictions  and
(ii) such paying agent in the Borough of Manhattan,  The City of New York, under
applicable law and regulations, would be able to make such payment.

         Interest  will be payable on a  Registered  Note to the person in whose
name  the  Registered  Note  is  registered  at the  close  of  business  on the
applicable  Record  Date;  provided  that the interest  payable  upon  maturity,
redemption  or  repayment  (whether or not the date of maturity,  redemption  or
repayment  is an  Interest  Payment  Date) will be payable to the person to whom
principal is payable.  The initial interest payment on a Registered Note will be
made on the first  Interest  Payment Date falling after the date the  Registered
Note is issued;  provided,  however,  that (i) payments of interest  (or, in the
case of an  Amortizing  Note,  principal  and  interest)  on a  Registered  Note
originally  issued less than 15 calendar  days before an Interest  Payment  Date
will be paid on the next  succeeding  Interest  Payment  Date to the  holder  of
record on the Record Date with respect to such succeeding  Interest Payment Date
and (ii) payments of interest (or, in the case of an Amortizing Note,  principal
and  interest)  on a  Registered  Note issued in  exchange  for an interest in a
permanent  global  Bearer  Note less than 15  calendar  days  before an Interest
Payment  Date  will be paid as  described  above.  See  "United  States  Federal
Taxation -- United States Holders -- Discount Notes" below.

         U.S.  dollar  payments  of interest on a  Registered  Note,  other than
interest  payable at maturity (or on the date of redemption  or repayment,  if a
Note is redeemed or repaid by the Company  prior to  maturity),  will be made by
check mailed to the address of the person entitled  thereto as shown on the Note
register. U.S. dollar payments of principal,  premium, if any, and interest upon
maturity,  redemption  or  repayment  of a  Registered  Note  will  be  made  in
immediately  available  funds  against  presentation  and surrender of the Note.
Notwithstanding  the foregoing,  a holder of U.S.$10,000,000 (or the equivalent)
or more in  aggregate  principal  amount of  Registered  Notes  having  the same
Interest  Payment Date shall be entitled to receive payments of interest by wire
transfer of immediately available funds upon written request to the Paying Agent
not later than 15 calendar days prior to the applicable  Interest  Payment Date.
See "United States Federal Taxation -- Foreign Holders -- Income Taxes."

                                       S-9







         With  respect  to any  moneys  paid  by the  Company  and  held  by the
applicable Trustee or any Paying Agent for payment of the principal of, premium,
if any, or interest on any Notes that remain  unclaimed  at the end of two years
after such  principal,  premium,  or interest  shall have become due and payable
(whether at maturity or upon call for redemption or otherwise), (i) such Trustee
or such  Paying  Agent  shall  notify the holders of such Notes that such moneys
shall be repaid  to the  Company  and any  person  claiming  such  moneys  shall
thereafter  look only to the Company  for  payment  thereof and (ii) such moneys
shall be so repaid to the Company.  Upon such  repayment  all  liability of such
Trustee or such Paying Agent with respect to such moneys shall thereupon  cease,
without,  however,  limiting in any way any obligation that the Company may have
to pay the principal of,  premium,  if any, or interest on the Notes as the same
shall become due.

         Certain  Notes,   including  Original  Issue  Discount  Notes,  may  be
considered to be issued with original issue discount,  which must be included in
income for United States  federal income tax purposes at a constant  yield.  See
"United  States  Federal  Taxation -- United States  Holders -- Discount  Notes"
below. Unless otherwise  specified in the applicable Pricing Supplement,  if the
principal of any Original  Issue Discount Note is declared to be due and payable
immediately  as described  under  "Description  of Debt  Securities -- Events of
Default" in the Prospectus, the amount of principal due and payable with respect
to such Note  shall be limited to the  aggregate  principal  amount of such Note
multiplied  by the sum of its Issue  Price  (expressed  as a  percentage  of the
aggregate  principal amount) plus the original issue discount amortized from the
date of issue to the date of declaration, which amortization shall be calculated
using the "interest  method"  (computed in accordance  with  generally  accepted
accounting   principles  in  effect  on  the  date  of   declaration).   Special
considerations  applicable to any such Notes will be set forth in the applicable
Pricing Supplement.

Registrar, Paying Agents and Transfer Agents

         The Company has initially  designated Chemical Bank, acting through its
principal  corporate  trust office in the Borough of Manhattan,  The City of New
York,  as its  registrar  and  transfer  agent  for the  Registered  Notes  (the
"Registrar,"  which term  includes  any  successor  Registrar  appointed  by the
Company) and as the Company's  paying agent for  Registered  Notes in the United
States,  and Chemical Bank,  London Branch, as transfer and paying agent for the
Notes and as its principal  paying agent for the Notes outside the United States
(the  "Principal  Paying  Agent," which term  includes any  successor  principal
paying agent appointed by the Company).  Any initial  designation by the Company
of the Registrar or a transfer agent may be rescinded at any time,  except that,
so long as any Notes  remain  outstanding,  the  Company  will  maintain  in the
Borough of  Manhattan,  The City of New York,  one or more  offices or  agencies
where  Registered  Notes may be  presented  for  registration  of  transfer  and
exchange.  The Company may at any time appoint  additional  transfer agents with
respect  to the Notes and may  appoint  additional  paying  agents for the Notes
outside  the United  States  (each a "Paying  Agent,"  which term  includes  the
Principal Paying Agent and any additional or successor paying agent appointed by
the  Company).  So long as the  Series D Notes are  listed on the  London  Stock
Exchange  and such  exchange so requires,  the Company will  maintain a transfer
agent and a Paying Agent in London.  So long as any Series D Notes are listed on
the Paris  Bourse and such  exchange so requires,  the Company  will  maintain a
Paying Agent in Paris.

Fixed Rate Notes

         Each Fixed Rate Note will bear  interest  from the date of  issuance at
the annual rate stated on the face thereof until the  principal  thereof is paid
or made  available for payment.  Unless  otherwise  specified in the  applicable
Pricing  Supplement,  such  interest  will be computed on the basis of a 360-day
year of twelve  30-day  months.  Unless  otherwise  specified in the  applicable
Pricing  Supplement,  payments  of  interest  on Fixed  Rate  Notes  other  than
Amortizing  Notes will be made  annually on each March 1 and at maturity or upon
any  earlier  redemption  or  repayment.   Unless  otherwise  specified  in  the
applicable Pricing Supplement,  payments of principal and interest on Amortizing
Notes, which are securities on which payments of principal and interest are made
in  equal  installments  over  the  life of the  security,  will be made  either
quarterly on each March 1, June 1, September 1 and December 1 or semiannually on
each March 1 and September 1, as set forth in the applicable Pricing Supplement,
and at maturity or upon any  earlier  redemption  or  repayment.  Payments  with
respect to  Amortizing  Notes will be applied  first to interest due and payable
thereon and then to the reduction of the unpaid principal amount thereof.

                                      S-10






A table setting forth  repayment  information in respect of each Amortizing Note
will be provided to the original  purchaser and will be available,  upon request
made to the Company, to subsequent holders.

         If any  Interest  Payment  Date for any Fixed Rate Note would fall on a
day that is not a Business  Day, the interest  payment shall be postponed to the
next day that is a Business  Day, and no interest on such  payment  shall accrue
for the period from and after the Interest  Payment  Date.  If the maturity date
(or date of  redemption or repayment) of any Fixed Rate Note would fall on a day
that is not a Business Day, the payment of interest and principal  (and premium,
if any) may be made on the next succeeding Business Day, and no interest on such
payment shall accrue for the period from and after the maturity date (or date of
redemption or repayment).

         Interest  payments for Fixed Rate Notes will include  accrued  interest
from and  including  the date of issue or from and  including  the last  date in
respect of which  interest has been paid, as the case may be, to, but excluding,
the  Interest  Payment  Date or the date of  maturity or earlier  redemption  or
repayment,  as the case may be. The interest rates the Company will agree to pay
on newly  issued  Fixed Rate Notes are subject to change  without  notice by the
Company  from time to time,  but no such change will affect any Fixed Rate Notes
theretofore issued or that the Company has agreed to issue.

Floating Rate Notes

         Each  Floating  Rate Note will bear  interest from the date of issuance
until the  principal  thereof is paid or made  available  for  payment at a rate
determined  by reference to an interest rate basis or formula (the "Base Rate"),
which may be  adjusted by a Spread  and/or  Spread  Multiplier  (each as defined
below).  The  applicable  Pricing  Supplement  will designate one or more of the
following  Base Rates as applicable to each Floating Rate Note:  (a) the CD Rate
(a "CD Rate Note"),  (b) the  Commercial  Paper Rate (a  "Commercial  Paper Rate
Note"),  (c) the Federal Funds Rate (a "Federal Funds Rate Note"),  (d) LIBOR (a
"LIBOR Note"),  (e) the Prime Rate (a "Prime Rate Note"),  (f) the Treasury Rate
(a "Treasury Rate Note"), (g) the  Constant-Maturity  Treasury Rate (a "CMT Rate
Note") or (h) such other Base Rate or interest  rate  formula as is set forth in
such Pricing Supplement and in such Floating Rate Note. The "Index Maturity" for
any Floating Rate Note is the period of maturity of the instrument or obligation
from which the Base Rate is calculated  and will be specified in the  applicable
Pricing Supplement.

         Unless otherwise  specified in the applicable Pricing  Supplement,  the
interest  rate on each Floating Rate Note will be calculated by reference to the
specified Base Rate (i) plus or minus the Spread, if any, and/or (ii) multiplied
by the Spread  Multiplier,  if any.  The  "Spread" is the number of basis points
(one  one-hundredth of a percentage  point) specified in the applicable  Pricing
Supplement  to be added to or  subtracted  from the Base Rate for such  Floating
Rate Note,  and the  "Spread  Multiplier"  is the  percentage  specified  in the
applicable  Pricing  Supplement to be applied to the Base Rate for such Floating
Rate Note.

         As specified in the applicable Pricing Supplement, a Floating Rate Note
may also have  either or both of the  following:  (i) a maximum  limitation,  or
ceiling,  on the rate of interest  which may accrue  during any interest  period
("Maximum Interest Rate"); and (ii) a minimum limitation,  or floor, on the rate
of  interest  that may accrue  during any  interest  period  ("Minimum  Interest
Rate").  In addition to any Maximum  Interest Rate that may be applicable to any
Floating  Rate Note  pursuant to the above  provisions,  the interest  rate on a
Floating Rate Note will in no event be higher than the maximum rate permitted by
New York law,  as the same may be  modified  by  United  States  law of  general
application.  Under current New York law, the maximum rate of interest,  subject
to certain  exceptions,  for any loan in an amount less than U.S.$250,000 is 16%
and  for  any  loan  in the  amount  of  U.S.$250,000  or  more  but  less  than
U.S.$2,500,000 is 25% per annum on a simple interest basis.  These limits do not
apply to loans of U.S.$2,500,000 or more.

         Unless otherwise  specified in the applicable Pricing  Supplement,  the
rate of  interest  on each  Floating  Rate  Note  will be reset  daily,  weekly,
monthly,  quarterly,  semiannually  or annually (such period being the "Interest
Reset  Period" for such Note,  and the first day of each  Interest  Reset Period
being  an  "Interest  Reset  Date"),  as  specified  in the  applicable  Pricing
Supplement.  The  determination of the rate of interest at which a Floating Rate
Note  will be reset on any  Interest  Reset  Date  will be made on the  Interest
Determination Date (as defined below) pertaining

                                      S-11






to  such  Interest  Reset  Date.  Unless  otherwise  specified  in  the  Pricing
Supplement,  the Interest Reset Date will be, in the case of Floating Rate Notes
which reset daily,  each Business Day; in the case of Floating Rate Notes (other
than Treasury Rate Notes) which reset weekly, the Wednesday of each week; in the
case of Treasury Rate Notes which reset weekly, the Tuesday of each week, except
as provided below;  in the case of Floating Rate Notes which reset monthly,  the
third  Wednesday of each month;  in the case of Floating  Rate Notes which reset
quarterly,  the third Wednesday of March, June,  September and December;  in the
case of Floating Rate Notes which reset semiannually, the third Wednesday of two
months of each year, as specified in the applicable Pricing  Supplement;  and in
the case of Floating Rate Notes which reset annually, the third Wednesday of one
month of each year, as specified in the applicable Pricing Supplement; provided,
however,  that (a) the  interest  rate in  effect  from the date of issue to the
first  Interest  Reset Date with  respect  to a  Floating  Rate Note will be the
initial  interest  rate set  forth in the  applicable  Pricing  Supplement  (the
"Initial  Interest Rate") and (b) unless  otherwise  specified in the applicable
Pricing  Supplement,  the  interest  rate in effect  for the ten  calendar  days
immediately prior to maturity, redemption or repayment will be that in effect on
the tenth calendar day preceding such maturity, redemption or repayment date. If
any Interest Reset Date for any Floating Rate Note would otherwise be a day that
is not a Business Day,  such Interest  Reset Date shall be postponed to the next
succeeding  Business  Day,  except  that in the  case of a LIBOR  Note,  if such
Business Day is in the next succeeding  calendar month, such Interest Reset Date
shall be the immediately preceding Business Day.

         Except as provided below,  unless otherwise specified in the applicable
Pricing Supplement,  interest on Floating Rate Notes will be payable: (i) in the
case of Floating Rate Notes with a daily, weekly or monthly Interest Reset Date,
on the third Wednesday of each month or on the third  Wednesday of March,  June,
September and December, as specified in the applicable Pricing Supplement;  (ii)
in the case of Floating Rate Notes with a quarterly  Interest Reset Date, on the
third  Wednesday of March,  June,  September and December;  (iii) in the case of
Floating  Rate  Notes  with a  semiannual  Interest  Reset  Date,  on the  third
Wednesday of the two months specified in the applicable Pricing Supplement;  and
(iv) in the case of Floating Rate Notes with an annual  Interest  Reset Date, on
the third Wednesday of the month specified in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, if any Interest
Payment  Date  (other  than  the  maturity  date or any  earlier  redemption  or
repayment  date) for any  Floating  Rate Note  would fall on a day that is not a
Business Day with respect to such Floating Rate Note, such Interest Payment Date
will be the  following  day that is a Business Day with respect to such Floating
Rate Note,  except that, in the case of a LIBOR Note, if such Business Day is in
the next  succeeding  calendar  month,  such Interest  Payment Date shall be the
immediately  preceding  day that is a  Business  Day with  respect to such LIBOR
Note.  If the maturity  date or any earlier  redemption  or repayment  date of a
Floating  Rate Note would fall on a day that is not a Business  Day, the payment
of principal,  premium, if any, and interest will be made on the next succeeding
Business  Day, and no interest on such payment  shall accrue for the period from
and after such maturity, redemption or repayment date, as the case may be.

         Unless  otherwise  specified  in  the  applicable  Pricing  Supplement,
interest  payments  for  Floating  Rate Notes  shall be the  amount of  interest
accrued from and including the date of issue or from and including the last date
to which interest has been paid to, but excluding,  the Interest Payment Date or
maturity date or date of redemption or repayment.

         With  respect  to a  Floating  Rate  Note,  accrued  interest  shall be
calculated by multiplying the principal  amount of such Floating Rate Note by an
accrued interest factor. Such accrued interest factor will be computed by adding
the interest factors calculated for each day in the period for which interest is
being paid. Unless otherwise specified in the applicable Pricing Supplement, the
interest  factor for each such day is  computed by dividing  the  interest  rate
applicable  to such day by 360, in the case of CD Rate Notes,  Commercial  Paper
Rate Notes, Federal Funds Rate Notes, LIBOR Notes and Prime Rate Notes or by the
actual  number of days in the year,  in the case of Treasury  Rate Notes and CMT
Rate Notes.  All  percentages  used in or resulting from any  calculation of the
rate of interest on a Floating Rate Note will be rounded,  if necessary,  to the
nearest one  hundred-thousandth  of a  percentage  point  (.0000001),  with five
one-millionths of a percentage point rounded upward, and all dollar amounts used
in or resulting from such  calculation on Floating Rate Notes will be rounded to
the nearest cent, with one-half cent rounded upward. The interest rate in effect
on any Interest Reset Date will be the applicable rate as

                                      S-12






reset on such  date.  The  interest  rate  applicable  to any  other  day is the
interest rate from the immediately  preceding  Interest Reset Date (or, if none,
the Initial Interest Rate).

         The applicable  Pricing  Supplement  shall specify a calculation  agent
(the "Calculation Agent") with respect to any issue of Floating Rate Notes. Upon
the request of the holder of any Floating Rate Note, the Calculation  Agent will
provide the interest rate then in effect and, if  determined,  the interest rate
that will become  effective on the next Interest Reset Date with respect to such
Floating Rate Note. The Calculation  Agent will notify the London Stock Exchange
(in the case of the  Series D Notes  listed  on such  exchange)  and the  Paying
Agents of each  determination  of the interest  rate  applicable to any Floating
Rate Note promptly after such determination is made.

         The "Interest  Determination Date" pertaining to an Interest Reset Date
for CD Rate Notes,  Commercial Paper Rate Notes, Federal Funds Rate Notes, Prime
Rate Notes and CMT Rate Notes will be the  second  Business  Day next  preceding
such  Interest  Reset Date.  The Interest  Determination  Date  pertaining to an
Interest  Reset  Date for a LIBOR  Note will be the second  London  Banking  Day
preceding such Interest Reset Date, except that the Interest  Determination Date
pertaining  to an  Interest  Reset  Date for a LIBOR  Note for  which  the Index
Currency is pounds  sterling  will be such  Interest  Reset Date.  The  Interest
Determination Date pertaining to an Interest Reset Date for a Treasury Rate Note
will be the day of the week in which  such  Interest  Reset  Date falls on which
Treasury bills would normally be auctioned.  Treasury bills are normally sold at
auction on Monday of each week,  unless  that day is a legal  holiday,  in which
case the auction is normally held on the following Tuesday, but such auction may
be held on the  preceding  Friday.  If,  as the  result of a legal  holiday,  an
auction is so held on the  preceding  Friday,  such Friday will be the  Interest
Determination  Date  pertaining to the Interest Reset Date occurring in the next
succeeding  week. If an auction  falls on a day that is an Interest  Reset Date,
such Interest Reset Date will be the next following Business Day.

         Unless otherwise  specified in the applicable Pricing  Supplement,  the
"Calculation  Date," where applicable,  pertaining to an Interest  Determination
Date will be the  earlier  of (i) the tenth  calendar  day after  such  Interest
Determination  Date, or, if such day is not a Business Day, the next  succeeding
Business Day, or (ii) the Business Day preceding the applicable Interest Payment
Date or Maturity Date, as the case may be.

         Interest rates will be determined by the Calculation Agent as follows:

         CD Rate Notes

         CD Rate Notes will bear interest at the interest rate  (calculated with
reference to the CD Rate and the Spread  and/or Spread  Multiplier,  if any, and
subject to the Minimum  Interest  Rate and the Maximum  Interest  Rate,  if any)
specified in the CD Rate Notes and in the applicable Pricing Supplement.

         Unless otherwise  specified in the applicable Pricing  Supplement,  "CD
Rate" means, with respect to any Interest  Determination  Date, the rate on such
date for negotiable certificates of deposit having the Index Maturity designated
in the applicable  Pricing  Supplement as published by the Board of Governors of
the Federal Reserve System in "Statistical Release H.15(519),  Selected Interest
Rates," or any  successor  publication  of the Board of Governors of the Federal
Reserve System  ("H.15(519)") under the heading "CDs (Secondary Market)," or, if
not so  published  by 9:00 A.M.,  New York City time,  on the  Calculation  Date
pertaining to such Interest  Determination Date, the CD Rate will be the rate on
such Interest  Determination Date for negotiable  certificates of deposit of the
Index Maturity  designated in the applicable  Pricing Supplement as published by
the Federal Reserve Bank of New York in its daily statistical release "Composite
3:30  P.M.   Quotations  for  U.S.   Government   Securities"   (the  "Composite
Quotations")  under the heading  "Certificates  of Deposit." If such rate is not
yet published in either H.15(519) or the Composite  Quotations by 3:00 P.M., New
York  City  time,  on  the   Calculation   Date   pertaining  to  such  Interest
Determination  Date,  the CD Rate on such  Interest  Determination  Date will be
calculated  by the  Calculation  Agent  and will be the  arithmetic  mean of the
secondary  market  offered  rates as of 10:00 A.M.,  New York City time, on such
Interest  Determination  Date for  certificates  of deposit in an amount that is
representative  for a single  transaction at that time with a remaining maturity
closest to the Index  Maturity  designated  in the Pricing  Supplement  of three
leading nonbank dealers in negotiable U.S. dollar certificates of deposit in The
City of New York selected by the Calculation  Agent for negotiable  certificates
of deposit of major United States money center

                                      S-13






banks;  provided,  however,  that if the dealers  selected as  aforesaid  by the
Calculation  Agent are not quoting as set forth  above,  the "CD Rate" in effect
for the  applicable  period will be the same as the CD Rate for the  immediately
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the rate of  interest  payable  on the CD Rate  Notes for which  such CD Rate is
being determined shall be the Initial Interest Rate).

         Commercial Paper Rate Notes

         Commercial  Paper Rate Notes will bear  interest at the  interest  rate
(calculated  with reference to the  Commercial  Paper Rate and the Spread and/or
Spread  Multiplier,  if any,  and subject to the Minimum  Interest  Rate and the
Maximum  Interest Rate, if any) specified in the Commercial Paper Rate Notes and
in the applicable Pricing Supplement.

         Unless  otherwise  specified  in  the  applicable  Pricing  Supplement,
"Commercial Paper Rate" means, with respect to any Interest  Determination Date,
the  Money  Market  Yield  (as  defined  below)  of the  rate on such  date  for
commercial paper having the Index Maturity  specified in the applicable  Pricing
Supplement,  as such rate shall be  published  in  H.15(519),  under the heading
"Commercial  Paper." In the event that such rate is not  published by 9:00 A.M.,
New  York  City  time,  on the  Calculation  Date  pertaining  to such  Interest
Determination  Date,  then the  Commercial  Paper Rate shall be the Money Market
Yield of the rate on such Interest  Determination  Date for commercial  paper of
the  specified  Index  Maturity as published in Composite  Quotations  under the
heading  "Commercial  Paper."  If by 3:00  P.M.,  New York  City  time,  on such
Calculation Date such rate is not yet available in either H.15(519) or Composite
Quotations,  then the  Commercial  Paper Rate shall be the Money Market Yield of
the  arithmetic  mean of the offered rates as of 11:00 A.M., New York City time,
on such Interest Determination Date of three leading dealers of commercial paper
in The City of New York selected by the Calculation  Agent for commercial  paper
of the specified  Index  Maturity,  placed for an  industrial  issuer whose bond
rating is "AA," or the equivalent,  from a nationally  recognized rating agency;
provided,  however, that if the dealers selected as aforesaid by the Calculation
Agent  are  not  quoting  offered  rates  as  mentioned  in this  sentence,  the
"Commercial  Paper Rate" in effect for the applicable period will be the same as
the Commercial  Paper Rate for the immediately  preceding  Interest Reset Period
(or, if there was no such Interest Reset Period, the rate of interest payable on
the Commercial  Paper Rate Notes for which such  Commercial  Paper Rate is being
determined shall be the Initial Interest Rate).

         "Money Market Yield" shall be a yield calculated in accordance with the
following formula:

                Money Market Yield =           D x 360         x 100
                                      ------------------------
                                            360 - (D x M)


where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount  basis and expressed as a decimal,  and "M" refers to the actual
number of days in the Index Maturity.

         Federal Funds Rate Notes

         Federal  Funds Rate  Notes  will bear  interest  at the  interest  rate
(calculated  with  reference  to the  Federal  Funds Rate and the Spread  and/or
Spread  Multiplier,  if any,  and subject to the Minimum  Interest  Rate and the
Maximum  Interest Rate, if any) specified in the Federal Funds Rate Notes and in
the applicable Pricing Supplement.

         Unless otherwise  specified in the applicable Pricing  Supplement,  the
"Federal Funds Rate" means, with respect to any Interest Determination Date, the
rate on such date for Federal funds as published in H.15(519)  under the heading
"Federal Funds (Effective)," or, if not so published by 9:00 A.M., New York City
time, on the Calculation  Date pertaining to such Interest  Determination  Date,
the Federal Funds Rate will be the rate on such Interest  Determination  Date as
published in the Composite Quotations under the heading "Federal Funds/Effective
Rate." If such rate is not yet  published in either  H.15(519) or the  Composite
Quotations by 3:00 P.M., New York City time, on the Calculation  Date pertaining
to such Interest  Determination  Date,  the Federal Funds Rate for such Interest
Determination  Date will be calculated by the Calculation  Agent and will be the
arithmetic mean of the rates

                                      S-14






for the last transaction in overnight  Federal funds, as of 11:00 A.M., New York
City time,  on such  Interest  Determination  Date,  arranged  by three  leading
brokers of Federal  funds  transactions  in The City of New York selected by the
Calculation Agent; provided,  however, that if the brokers selected as aforesaid
by the Calculation  Agent are not quoting as set forth above, the "Federal Funds
Rate" in effect for the applicable  period will be the same as the Federal Funds
Rate for the  immediately  preceding  Interest Reset Period (or, if there was no
such Interest  Reset Period,  the rate of interest  payable on the Federal Funds
Rate Notes for which such Federal  Funds Rate is being  determined  shall be the
Initial Interest Rate).

         LIBOR Notes

         LIBOR Notes will bear  interest at the interest rate  (calculated  with
reference to LIBOR and the Spread and/or Spread Multiplier,  if any, and subject
to the Minimum Interest Rate and the Maximum Interest Rate, if any) specified in
the LIBOR Notes and in the applicable Pricing Supplement.

         Unless  otherwise  specified  in  the  applicable  Pricing  Supplement,
"LIBOR"  for  each  Interest  Determination  Date  will  be  determined  by  the
Calculation Agent as follows:

                  (i) As of the Interest  Determination  Date,  the  Calculation
         Agent  will  determine  (a) if  "LIBOR  Reuters"  is  specified  in the
         applicable Pricing Supplement, the arithmetic mean of the offered rates
         (unless the specified  Designated  LIBOR Page (as defined below) by its
         terms  provides  only for a single rate, in which case such single rate
         shall be used) for deposits in the Index Currency for the period of the
         Index   Maturity,   each  as  designated  in  the  applicable   Pricing
         Supplement,  commencing  on the second London  Banking Day  immediately
         following  such  Interest  Determination  Date,  which  appear  on  the
         Designated LIBOR Page at approximately 11:00 A.M., London time, on such
         Interest  Determination Date, if at least two such offered rates appear
         (unless,  as  aforesaid,  only a  single  rate  is  required)  on  such
         Designated  LIBOR Page, or (b) if "LIBOR  Telerate" is specified in the
         applicable  Pricing  Supplement,  the rate for  deposits  in the  Index
         Currency for the period of the Index  Maturity,  each as  designated in
         the  applicable  Pricing  Supplement,  commencing  on the second London
         Banking Day following such Interest  Determination  Date (or, if pounds
         sterling  is  the  Index   Currency,   commencing   on  such   Interest
         Determination  Date),  that  appears  on the  Designated  LIBOR Page at
         approximately  11:00 A.M., London time, on such Interest  Determination
         Date.  If fewer than two offered  rates  appear (if "LIBOR  Reuters" is
         specified in the applicable Pricing Supplement and calculation of LIBOR
         is based on the  arithmetic  mean of the  offered  rates) or if no rate
         appears (if the  applicable  Pricing  Supplement  specifies  either (x)
         "LIBOR  Reuters" and the  Designated  LIBOR Page by its terms  provides
         only for a single  rate or (y) "LIBOR  Telerate"),  LIBOR in respect of
         that Interest  Determination  Date will be determined as if the parties
         had specified the rate described in (ii) below.

                  (ii) With respect to an Interest  Determination  Date on which
         fewer than two offered rates appear (if "LIBOR Reuters" is specified in
         the applicable  Pricing Supplement and calculation of LIBOR is based on
         the  arithmetic  mean of the offered  rates) or no rate appears (if the
         applicable Pricing Supplement  specifies either (x) "LIBOR Reuters" and
         the Designated  LIBOR Page by its terms provides only for a single rate
         or (y)  "LIBOR  Telerate"),  the  Calculation  Agent will  request  the
         principal  London offices of each of four major  reference banks in the
         London interbank  market,  as selected by the Calculation  Agent (after
         consultation  with the Company),  to provide the Calculation Agent with
         its  offered  quotations  for  deposits in the Index  Currency  for the
         period of the specified Index Maturity, commencing on the second London
         Banking Day immediately following such Interest  Determination Date (or
         if pounds sterling is the Index  Currency,  commencing on such Interest
         Determination  Date), to prime banks in the London  interbank market at
         approximately  11:00 A.M., London time, on such Interest  Determination
         Date and in a  principal  amount  equal to an  amount  of not less than
         U.S.$1 million (or the equivalent in the Index  Currency,  if the Index
         Currency is not the U.S.  dollar)  that is  representative  of a single
         transaction  in such Index  Currency in such market at such time. If at
         least  two such  quotations  are  provided,  LIBOR  determined  on such
         Interest  Determination  Date  will  be the  arithmetic  mean  of  such
         quotations. If fewer than two quotations are provided, LIBOR determined
         on such Interest Determination Date will be the

                                      S-15






         arithmetic  mean of rates quoted at  approximately  11:00 A.M. (or such
         other time  specified in the  applicable  Pricing  Supplement),  in the
         applicable  principal  financial  center  for the  country of the Index
         Currency on such Interest  Determination  Date, by three major banks in
         such  principal  financial  center  selected by the  Calculation  Agent
         (after  consultation  with the Company) on such Interest  Determination
         Date for loans in the Index Currency to leading European banks, for the
         period of the specified Index Maturity  commencing on the second London
         Banking Day immediately following such Interest Determination Date (or,
         if pounds sterling is the Index  Currency,  commencing on such Interest
         Determination  Date) and in a principal  amount of not less than U.S.$1
         million (or the equivalent in the Index Currency, if the Index Currency
         is not the U.S. dollar) that is representative of a single  transaction
         in such Index Currency in such market at such time; provided,  however,
         that if the banks  selected as aforesaid by the  Calculation  Agent are
         not  quoting  rates as  mentioned  in this  sentence,  "LIBOR" for such
         Interest  Reset  Period  will be the same as LIBOR for the  immediately
         preceding  Interest  Reset  Period (or,  if there was no such  Interest
         Reset Period, the rate of interest payable on the LIBOR Notes for which
         LIBOR is being determined shall be the Initial Interest Rate).

         "Index Currency" means the currency  (including  composite  currencies)
specified in the applicable  Pricing  Supplement as the currency for which LIBOR
shall be calculated.  If no such currency is specified in the applicable Pricing
Supplement, the Index Currency shall be U.S. dollars.

         "Designated  LIBOR  Page"  means  either  (a)  if  "LIBOR  Reuters"  is
designated  in the  applicable  Pricing  Supplement,  the display on the Reuters
Monitor Money Rates Service for the purpose of displaying  the London  interbank
rates of  major  banks  for the  applicable  Index  Currency,  or (b) if  "LIBOR
Telerate" is designated in the applicable Pricing Supplement, the display on the
Dow Jones Telerate  Service for the purpose of displaying  the London  interbank
rates of major banks for the applicable Index Currency. If neither LIBOR Reuters
nor LIBOR Telerate is specified in the applicable Pricing Supplement,  LIBOR for
the  applicable  Index Currency will be determined as if LIBOR Telerate (and, if
the U.S. dollar is the Index Currency, Page 3750) had been specified.

         Prime Rate Notes

         Prime Rate Notes will bear  interest at the interest  rate  (calculated
with  reference to the Prime Rate and the Spread  and/or Spread  Multiplier,  if
any, and subject to the Minimum  Interest Rate and the Maximum Interest Rate, if
any) specified in the Prime Rate Notes and in the applicable Pricing Supplement.

         Unless otherwise specified in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Interest Determination Date, the rate set forth
in H.15(519)  for such date opposite the caption "Bank Prime Loan." If such rate
is not yet published by 9:00 A.M., New York City time, on the  Calculation  Date
pertaining to such Interest Determination Date, the Prime Rate for such Interest
Determination Date will be the arithmetic mean of the rates of interest publicly
announced  by each bank named on the Reuters  Screen  USPRIME1  Page (as defined
below) as such  bank's  prime  rate or base  lending  rate as in effect for such
Interest  Determination  Date as quoted on the Reuters  Screen  USPRIME1 Page on
such Interest  Determination  Date,  or, if fewer than four such rates appear on
the Reuters Screen USPRIME1 Page for such Interest  Determination Date, the rate
shall be the  arithmetic  mean of the  prime  rates  quoted  on the basis of the
actual  number of days in the year divided by 360 as of the close of business on
such Interest Determination Date by at least two of the three major money center
banks in The City of New York  selected  by the  Calculation  Agent  from  which
quotations are requested.  If fewer than two quotations are provided,  the Prime
Rate shall be calculated by the Calculation Agent and shall be determined as the
arithmetic  mean on the basis of the prime  rates in The City of New York by the
appropriate  number of substitute  banks or trust companies  organized and doing
business under the laws of the United States, or any State thereof, in each case
having total equity  capital of at least  U.S.$500  million and being subject to
supervision  or  examination  by federal  or state  authority,  selected  by the
Calculation Agent to quote such rate or rates;  provided,  however,  that if the
banks or trust companies  selected as aforesaid by the Calculation Agent are not
quoting  rates as set forth above,  the "Prime Rate" in effect for such Interest
Reset  Period will be the same as the Prime Rate for the  immediately  preceding
Interest Reset Period (or, if there was no such Interest Reset Period,  the rate
of  interest  payable on the Prime Rate Notes for which such Prime Rate is being
determined shall be the Initial Interest Rate). "Reuters Screen

                                      S-16






USPRIME1  Page" means the display  designated as Page  "USPRIME1" on the Reuters
Monitor Money Rates Service (or such other page as may replace the USPRIME1 Page
on that service for the purpose of displaying  prime rates or base lending rates
of major United States banks).

         Treasury Rate Notes

         Treasury Rate Notes will bear interest at the interest rate (calculated
with reference to the Treasury Rate and the Spread and/or Spread Multiplier,  if
any, and subject to the Minimum  Interest Rate and the Maximum Interest Rate, if
any)  specified  in the  Treasury  Rate  Notes  and in  the  applicable  Pricing
Supplement.

         Unless otherwise  specified in the applicable Pricing  Supplement,  the
"Treasury Rate" means, with respect to any Interest Determination Date, the rate
for the auction  held on such date of direct  obligations  of the United  States
("Treasury  Bills")  having  the Index  Maturity  designated  in the  applicable
Pricing Supplement,  as published in H.15(519) under the heading "Treasury Bills
- -- auction average  (investment)" or, if not so published by 9:00 A.M., New York
City time, on the  Calculation  Date  pertaining to such Interest  Determination
Date, the auction average rate on such Interest Determination Date (expressed as
a bond equivalent, on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) as otherwise announced by the United States Department
of the Treasury.  In the event that the results of the auction of Treasury Bills
having the Index Maturity  designated in the applicable  Pricing  Supplement are
not published or reported as provided above by 3:00 P.M., New York City time, on
such  Calculation  Date  or  if  no  such  auction  is  held  on  such  Interest
Determination   Date,  then  the  Treasury  Rate  shall  be  calculated  by  the
Calculation  Agent  and  shall  be a  yield  to  maturity  (expressed  as a bond
equivalent,  on the  basis  of a year of 365 or 366  days,  as  applicable,  and
applied on a daily basis)  calculated using the arithmetic mean of the secondary
market bid rates,  as of  approximately  3:30 P.M.,  New York City time, on such
Interest  Determination  Date, of three leading primary United States government
securities  dealers selected by the Calculation  Agent for the issue of Treasury
Bills with a remaining maturity closest to the Index Maturity  designated in the
applicable Pricing Supplement;  provided,  however, that if the dealers selected
as aforesaid by the Calculation  Agent are not quoting bid rates as mentioned in
this sentence, the "Treasury Rate" for such Interest Reset Date will be the same
as the Treasury Rate for the immediately preceding Interest Reset Period (or, if
there was no such  Interest  Reset Period,  the rate of interest  payable on the
Treasury Rate Notes for which the Treasury Rate is being determined shall be the
Initial Interest Rate).

         CMT Rate Notes

         CMT Rate Notes will bear interest at the interest rate (calculated with
reference to the CMT Rate and the Spread and/or Spread  Multiplier,  if any, and
subject to the Minimum  Interest  Rate and the Maximum  Interest  Rate,  if any)
specified in the CMT Rate Notes and in the applicable Pricing Supplement.

         Unless otherwise  indicated in an applicable Pricing  Supplement,  "CMT
Rate" means, with respect to any Interest Determination Date, the rate displayed
for the Index  Maturity  designated in such CMT Rate Note on the  Designated CMT
Telerate  Page (as defined  below)  under the  caption  "...  Treasury  Constant
Maturities  ...  Federal  Reserve  Board  Release H.15" under the column for the
Designated  CMT Maturity  Index (as defined below) for (i) if the Designated CMT
Telerate Page is 7055, the rate on such Interest  Determination Date and (ii) if
the Designated CMT Telerate Page is 7052, the week or the month,  as applicable,
ended immediately preceding the week in which the related Interest Determination
Date occurs. If such rate is no longer displayed on the relevant page, or if not
displayed by 3:00 P.M.,  New York City time,  on the related  Calculation  Date,
then the CMT Rate for such  Interest  Determination  Date will be such  Treasury
Constant Maturity rate for the Designated CMT Maturity Index as published in the
relevant H.15(519).  If such rate is no longer published, or if not published by
3:00 P.M.,  New York City time, on the related  Calculation  Date,  then the CMT
Rate  for  such  Interest  Determination  Date  will be such  Treasury  Constant
Maturity  rate for the  Designated  CMT Maturity  Index (or other United  States
Treasury  rate  for  the  Designated  CMT  Maturity   Index)  for  the  Interest
Determination  Date with respect to the related  Interest Reset Date as may then
be published by either the Board of Governors of the Federal  Reserve  System or
the  United  States  Department  of the  Treasury  that  the  Calculation  Agent
determines to be comparable to the rate formerly displayed on the Designated CMT
Telerate Page and published in the relevant H.15(519). If such information is

                                      S-17






not provided by 3:00 P.M., New York City time, on the related  Calculation Date,
then the CMT Rate for the Interest  Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity,  based on the arithmetic mean
of the secondary market closing offer side prices as of approximately 3:30 P.M.,
New York City time, on the Interest  Determination  Date reported,  according to
their  written  records,  by three  leading  primary  United  States  government
securities  dealers (each, a "Reference  Dealer") in The City of New York (which
may include the Agents or their  affiliates)  selected by the Calculation  Agent
(from five such  Reference  Dealers  selected by the  Calculation  Agent,  after
consultation with the Company, and eliminating the highest quotation (or, in the
event of  equality,  one of the highest)  and the lowest  quotation  (or, in the
event of equality,  one of the  lowest)),  for the most  recently  issued direct
noncallable fixed rate obligations of the United States ("Treasury  notes") with
an original  maturity of  approximately  the  Designated  CMT Maturity Index and
remaining  term to maturity of not less than such  Designated CMT Maturity Index
minus one year. If the Calculation Agent cannot obtain three such Treasury notes
quotations, the CMT Rate for such Interest Determination Date will be calculated
by the Calculation Agent and will be a yield to maturity based on the arithmetic
mean of the secondary  market offer side prices as of  approximately  3:30 P.M.,
New York  City  time,  on the  Interest  Determination  Date of three  Reference
Dealers in The City of New York (from five such  Reference  Dealers  selected by
the Calculation Agent, after consultation with the Company,  and eliminating the
highest  quotation  (or, in the event of  equality,  one of the highest) and the
lowest  quotation  (or,  in the  event of  equality,  one of the  lowest)),  for
Treasury notes with an original maturity of the number of years that is the next
highest to the  Designated  CMT Maturity  Index and a remaining term to maturity
closest  to the  Designated  CMT  Maturity  Index  and in an  amount of at least
U.S.$100,000,000.  If three or four (and not five) of such Reference Dealers are
quoting as described  above,  then the CMT Rate will be based on the  arithmetic
mean of the offer prices obtained and neither the highest nor the lowest of such
quotes will be eliminated; provided, however, that if fewer than three Reference
Dealers selected by the Calculation Agent are quoting as described  herein,  the
CMT Rate for such  Interest  Reset Date will be the same as the CMT Rate for the
immediately  preceding  Interest Reset Period (or, if there was no such Interest
Reset Period,  the rate of interest  payable on the CMT Rate Notes for which the
CMT Rate is  being  determined  shall  be the  Initial  Interest  Rate).  If two
Treasury  notes with an original  maturity as described in the second  preceding
sentence have  remaining  terms to maturity  equally close to the Designated CMT
Maturity Index, the quotes for the Treasury note with the shorter remaining term
to maturity will be used.

         "Designated  CMT  Telerate  Page"  means the  display  on the Dow Jones
Telerate Service on the page designated in an applicable  Pricing Supplement (or
any other  page as may  replace  such page on that  service  for the  purpose of
displaying  Treasury  Constant  Maturities  as reported in  H.15(519)),  for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519).  If
no such page is specified in the applicable Pricing  Supplement,  the Designated
CMT Telerate Page shall be 7052, for the most recent week.

         "Designated  CMT  Maturity  Index"  shall  be the  original  period  to
maturity  of the U.S.  Treasury  securities  (either 1, 2, 3, 5, 7, 10, 20 or 30
years) specified in an applicable  Pricing  Supplement with respect to which the
CMT Rate will be calculated.  If no such maturity is specified in the applicable
Pricing Supplement, the Designated CMT Maturity Index shall be two years.

Exchangeable Notes

         Notes  may be  issued,  from  time to  time,  that  are  optionally  or
mandatorily  exchangeable into the securities of an entity unaffiliated with the
Company,  into a basket of such  securities,  into an index or  indices  of such
securities  or into any  combination  of the  above,  as may be set forth in the
applicable Pricing Supplement (the "Exchangeable Notes"). The Exchangeable Notes
may or may not bear interest or be issued with original  issue  discount or at a
premium.

         Unless  otherwise  specified  in  the  applicable  Pricing  Supplement,
optionally Exchangeable Notes (the "Optionally Exchangeable Notes") will entitle
the holder of such a Note,  during a period,  or at specific  times, to exchange
such Note for the underlying security,  basket of securities or index or indices
of securities (or  combination  thereof) at a specified rate of exchange.  If so
specified in the applicable Pricing  Supplement,  Optionally  Exchangeable Notes
will be redeemable at the option of the Company prior to maturity. If the holder
of an

                                      S-18






Optionally  Exchangeable  Note does not  elect to  exchange  such Note  prior to
maturity  or any  applicable  redemption  date,  such  holder  will  receive the
principal amount of such Note.

         Unless  otherwise  specified  in  the  applicable  Pricing  Supplement,
mandatorily  Exchangeable  Notes (the "Mandatorily  Exchangeable  Notes") do not
entitle the holder of such a Note to exchange  such Note prior to  maturity;  at
maturity,  the  holder is  required  to  exchange  such Note for the  underlying
security, basket of securities or index or indices of securities (or combination
thereof)  at a  specified  rate of  exchange,  and,  therefore,  the holder of a
Mandatorily Exchangeable Note may receive less than the principal amount of such
Note at maturity.  If so indicated in the  applicable  Pricing  Supplement,  the
specified  rate at which a  Mandatorily  Exchangeable  Note may be exchanged may
vary depending on the value of the underlying security,  basket of securities or
index or indices (or  combination  thereof) so that,  upon exchange,  the holder
participates in a percentage,  which may be less than, equal to, or greater than
100% of the change in value of the underlying security,  basket of securities or
index or indices (or combination thereof).

         Upon exchange, at maturity or otherwise,  the holder of an Exchangeable
Note may receive, at the specified exchange rate, either the underlying security
or the securities  constituting  the relevant  basket or index or indices at the
specified  exchange  rate or the  cash  value  of such  underlying  security  or
securities,  as may be  specified  in the  applicable  Pricing  Supplement.  The
underlying security or securities  constituting any basket, index or indices may
be the  securities  of  either  U.S.  or  foreign  entities  or  both,  and  the
Exchangeable Notes may or may not provide for protection against fluctuations in
the rate of  currency  exchange  between  the  currency  in which  such  Note is
denominated  and the currency or  currencies  in which the market prices of such
underlying  security  or  securities  are  quoted,  as may be  specified  in the
applicable  Pricing  Supplement.  Exchangeable Notes may have other terms, which
will be specified in the applicable Pricing  Supplement.  Exchangeable Notes for
which a holder may receive the underlying security or securities  constituting a
basket of  securities  or an index or  indices  will not be listed on the London
Stock Exchange unless listing  particulars  with respect thereto are approved by
the London Stock Exchange.

         If an Optionally  Exchangeable  Note is  represented by a global Bearer
Note or by definitive Notes that remain on deposit with a Common  Depositary for
the Euroclear  Operator or Cedel,  the exercise of the right to exchange must be
made  through  the  Euroclear  Operator  or Cedel.  In order to ensure  that the
Euroclear  Operator  or Cedel  will  timely  exercise a right to  exchange  with
respect to a particular Note on behalf of a beneficial  owner of such Note or an
interest  in such Note,  the  beneficial  owner of such Note must  instruct  the
broker  or  other  direct  or  indirect  participant  through  which it holds an
interest in such Note to notify the Euroclear Operator or Cedel of its desire to
exercise a right to exchange in accordance  with the then  applicable  operating
procedures of the Euroclear  Operator or Cedel.  Different  firms have different
deadlines for accepting instructions from their customers and, accordingly, each
beneficial  owner  should  consult  the  broker  or  other  direct  or  indirect
participant  through  which it holds an interest in a Note in order to ascertain
the deadline for such an  instruction in order for timely notice to be delivered
to the Euroclear Operator or Cedel.

         Payments upon Acceleration of Maturity or upon Tax Redemption

         If the principal amount payable at maturity of any Exchangeable Note is
declared  due and  payable  prior to  maturity or is redeemed as set forth below
under "Tax Redemption," and unless otherwise specified in the applicable Pricing
Supplement,  the amount  payable with respect to (i) an Optionally  Exchangeable
Note will equal the face amount of such Note plus accrued  interest,  if any, to
but excluding the date of payment and (ii) a Mandatorily  Exchangeable Note will
equal an amount  determined as if the date of such declaration or tax redemption
were the maturity date plus accrued interest,  if any, to but excluding the date
of payment.

Currency Linked Notes

         Notes may be  issued,  from  time to time,  with the  principal  amount
payable on any principal  payment date, or the amount of interest payable on any
interest payment date, to be determined by reference to the value of one or more
currencies  (or  composite  currencies)  as compared to the value of one or more
other   currencies  (or  composite   currencies)   ("Currency   Linked  Notes").
Information as to the one or more currencies (or composite

                                      S-19






currencies) to which the principal amount payable on any principal  payment date
or the amount of interest payable on any interest  payment date is indexed,  the
currency in which the face  amount of the  Currency  Linked Note is  denominated
(the  "Denominated  Currency"),  the currency in which principal on the Currency
Linked Note will be paid (the "Payment  Currency"),  specific  historic exchange
rate  information,  any  currency  risks  relating  to the  specific  currencies
selected,  and certain additional tax considerations,  if any, will be set forth
in the applicable Pricing Supplement.  The Denominated  Currency and the Payment
Currency may be the same  currency or  different  currencies.  Unless  otherwise
specified in the  applicable  Pricing  Supplement,  interest on Currency  Linked
Notes will be paid in the  Denominated  Currency based on the face amount of the
Currency  Linked  Note at the rate per  annum  and on the dates set forth in the
applicable Pricing  Supplement.  Currency Linked Notes may include,  but are not
limited to, Notes of the types described  below. The issuance of Currency Linked
Notes  denominated or payable in Deutsche Marks will be made in compliance  with
the policy of the German  Central Bank, as amended from time to time,  regarding
indexation of Deutsche Mark-denominated debt obligations.

         Principal Exchange Rate Linked Securities (PERLS)

         PERLS are Currency Linked Notes pursuant to which the principal  amount
payable on any principal payment date equals the Payment Currency  equivalent at
such date of a fixed amount of a designated  currency  (or  composite  currency)
(the "Indexed  Currency").  Generally,  the fixed amount of Indexed  Currency to
which the  principal  of a PERLS will be linked will be  approximately  equal in
value to the face amount of the PERLS in the  Denominated  Currency based on the
exchange  rate  between the Indexed  Currency  and the  Denominated  Currency in
effect at the time of pricing.  The Denominated  Currency,  the Indexed Currency
and  the  Payment  Currency  will  be  identified  in  the  applicable   Pricing
Supplement.  In addition,  the fixed amount of the Indexed Currency to which the
principal  of the PERLS is linked  will be set forth in the  applicable  Pricing
Supplement for a specific representative face amount of the PERLS as well as for
the  aggregate  face  amount of all PERLS  forming  part of the same  issue (the
"Conversion Reference Amount").

         Holders of PERLS may receive an amount of principal  greater than, less
than or equal in value to the face amount of the PERLS, depending on the change,
if any, in the relative exchange rates of the Denominated Currency,  the Payment
Currency  and the Indexed  Currency  from the issue date to the date that is two
Exchange Rate Days (as defined below) preceding the maturity date.

         The Payment  Currency  equivalent of any Indexed Currency amount on any
date will be determined by an exchange rate agent  (identified in the applicable
Pricing  Supplement) based on the arithmetic mean of the quotations  obtained by
such  agent  from  reference  dealers  (identified  in  the  applicable  Pricing
Supplement) at 11:00 A.M.,  New York City time, on the second  Exchange Rate Day
preceding such date for the purchase by the reference  dealers of the Conversion
Reference  Amount  of  the  Indexed  Currency  with  the  Payment  Currency  for
settlement  on such  date;  provided  that if  there is no  cross-exchange  rate
available  in New  York  City  between  the  Indexed  Currency  and the  Payment
Currency,  the  quotations  will be calculated by the exchange rate agent at the
time referred to above using the U.S. dollar  equivalent of the Indexed Currency
and  the  Payment  Currency  as the  basis  for  comparing  the  values  of such
currencies;  and provided  further that if the Payment  Currency and the Indexed
Currency are  identical,  then the Payment  Currency  equivalent  of any Indexed
Currency amount will be such amount.

         "Exchange Rate Day" means, with respect to any currency conversion, any
day other than a Saturday or Sunday or a day on which  banking  institutions  in
New York City are authorized or required by law or executive  order to close and
that  is a  business  day  in  each  of the  cities  designated  in the  Pricing
Supplement  for the currencies  being  converted and, in the case of conversions
involving  ECUs,  that is not a non-ECU  clearing  day, as determined by the ECU
Banking Association in Paris.

         Reverse Principal Exchange Rate Linked Securities (Reverse PERLS)

         Reverse PERLS are Currency Linked Notes pursuant to which the principal
amount  payable  on any  principal  payment  date  equals the  Payment  Currency
equivalent at such date of a fixed amount of a designated currency (or composite
currency) (the "First Indexed  Currency") minus the Payment Currency  equivalent
at maturity

                                      S-20






of a fixed amount of another  designated  currency (or composite  currency) (the
"Second Indexed  Currency");  provided that the minimum principal amount payable
at  maturity  will be zero.  Generally,  the fixed  amount of the First  Indexed
Currency  to which the  principal  of a  Reverse  PERLS  will be linked  will be
approximately  equal in value to twice the face amount of the  Reverse  PERLS in
the Denominated Currency, and the fixed amount of the Second Indexed Currency to
which the  principal  of a Reverse  PERLS will be linked  will be  approximately
equal in  value  to the face  amount  of the  Reverse  PERLS in the  Denominated
Currency,  in each case based on the exchange rate between each Indexed Currency
and the Denominated Currency in effect at the time of pricing.

         Holders of Reverse  PERLS may  receive an amount of  principal  greater
than, less than (with a minimum of zero) or equal in value to the face amount of
the Reverse  PERLS,  depending on the change,  if any, in the relative  exchange
rates of the Denominated Currency, the Payment Currency and the First and Second
Indexed  Currencies  from the issue date to the date that is two  Exchange  Rate
Days preceding the maturity date.

         The Denominated  Currency,  the First and Second Indexed Currencies and
the Payment Currency will be identified in the applicable Pricing Supplement. In
addition,  the fixed amounts of the First and Second Indexed Currencies to which
the principal of the Reverse PERLS is linked will be set forth in the applicable
Pricing  Supplement  for a specific  representative  face  amount of the Reverse
PERLS as well as for the aggregate face amount of all Reverse PERLS forming part
of the same issue (respectively, the "First Conversion Reference Amount" and the
"Second Conversion Reference Amount").

         The Payment Currency equivalent of any First Indexed Currency amount on
any date  will be  determined  by an  exchange  rate  agent  (identified  in the
applicable  Pricing  Supplement)  based on the arithmetic mean of the quotations
obtained by such agent from  reference  dealers  (identified  in the  applicable
Pricing  Supplement) at 11:00 A.M.,  New York City time, on the second  Exchange
Rate Day preceding  such date for the purchase by the  reference  dealers of the
First Conversion Reference Amount of the First Indexed Currency with the Payment
Currency  for   settlement   on  such  date;   provided  that  if  there  is  no
cross-exchange  rate  available  in New York  City  between  the  First  Indexed
Currency and the Payment  Currency,  the  quotations  will be  calculated by the
exchange  rate  agent  at the  time  referred  to above  using  the U.S.  dollar
equivalent of the First Indexed  Currency and the Payment  Currency as the basis
for comparing the values of such currencies;  provided further that if the First
Indexed  Currency  and the  Payment  Currency  are  identical,  then the Payment
Currency equivalent of any First Indexed Currency amount will be such amount.

         The Payment  Currency  equivalent of any Second Indexed Currency amount
on any date will be  determined  by an exchange  rate agent  (identified  in the
applicable  Pricing  Supplement)  based on the arithmetic mean of the quotations
obtained by such agent from the reference dealers  (identified in the applicable
Pricing  Supplement) at 11:00 A.M.,  New York City time, on the second  Exchange
Rate Day preceding such date for the sale by the reference dealers of the Second
Conversion  Reference  Amount of the Second  Indexed  Currency  for the  Payment
Currency  for   settlement   on  such  date;   provided  that  if  there  is  no
cross-exchange  rate  available  in New York City  between  the  Second  Indexed
Currency and the Payment  Currency,  the  quotations  will be  calculated by the
exchange  rate  agent  at the  time  referred  to above  using  the U.S.  dollar
equivalent of the Second Indexed  Currency and the Payment Currency as the basis
for comparing the values of such currencies; provided further that if the Second
Indexed  Currency  and the  Payment  Currency  are  identical,  then the Payment
Currency equivalent of any Second Indexed Currency amount will be such amount.

         Multicurrency Principal Exchange Rate Linked Securities 
         (Multicurrency PERLS)

         Multicurrency  PERLS are Currency  Linked  Notes  pursuant to which the
principal  amount  payable on any  principal  payment  date  equals the  Payment
Currency  equivalent at such date of a fixed amount of a designated currency (or
composite  currency)  (the "First Indexed  Currency")  plus or minus the Payment
Currency  equivalent  at  maturity  of a fixed  amount  of a  second  designated
currency (or composite  currency) (the "Second Indexed  Currency") plus or minus
the  Payment  Currency  equivalent  at  maturity  of a fixed  amount  of a third
designated  currency (or composite  currency)  (the "Third  Indexed  Currency");
provided  that the minimum  principal  amount  payable at maturity will be zero.
Generally, the added and subtracted fixed amounts of the First, Second and Third

                                      S-21






Indexed  Currencies  (each,  an "Indexed  Currency") to which the principal of a
Multicurrency  PERLS will be linked will have an aggregate  value  approximately
equal to the face amount of the Multicurrency PERLS in the Denominated  Currency
based on exchange  rates  between  each  Indexed  Currency  and the  Denominated
Currency in effect at the time of pricing.

         Holders  of  Multicurrency  PERLS may  receive  an amount of  principal
greater  than,  less than (with a minimum of zero) or equal in value to the face
amount of the  Multicurrency  PERLS,  depending  on the  change,  if any, in the
relative exchange rates for the Denominated  Currency,  the Payment Currency and
the First,  Second and Third Indexed  Currencies from the issue date to the date
that is two Exchange Rate Days preceding the maturity date.

         The Denominated Currency,  each Indexed Currency,  the Payment Currency
and whether the fixed amounts of the Second and Third Indexed  Currencies are to
be added or subtracted to determine the principal  amount payable at maturity of
the Multicurrency  PERLS will be set forth in the applicable Pricing Supplement.
In addition, the fixed amounts of the First, Second and Third Indexed Currencies
to which the principal of the Multicurrency PERLS is linked will be set forth in
the applicable Pricing Supplement for a specific  representative  face amount of
the  Multicurrency  PERLS  as well  as for  the  aggregate  face  amount  of all
Multicurrency  PERLS  forming part of the same issue  (respectively,  the "First
Conversion  Reference Amount," the "Second Conversion  Reference Amount" and the
"Third Conversion Reference Amount," each, a "Conversion  Reference Amount"). As
used herein,  "Added Indexed  Currency" means the First Indexed Currency and any
other Indexed  Currency that is added to determine the principal  amount payable
at maturity of the Multicurrency PERLS and a "Subtracted Indexed Currency" means
an Indexed Currency that is subtracted to determine the principal amount payable
at maturity of the Multicurrency PERLS.

         The Payment Currency equivalent of any Added Indexed Currency amount on
any date  will be  determined  by an  exchange  rate  agent  (identified  in the
applicable  Pricing  Supplement)  based on the arithmetic mean of the quotations
obtained by such agent from  reference  dealers  (identified  in the  applicable
Pricing  Supplement) at 11:00 A.M.,  New York City time, on the second  Exchange
Rate Day preceding  such date for the purchase by the  reference  dealers of the
applicable  Conversion  Reference  Amount of the Added Indexed Currency with the
Payment  Currency  for  settlement  on such date;  provided  that if there is no
cross-exchange  rate  available  in New York  City  between  the  Added  Indexed
Currency and the Payment  Currency,  the  quotations  will be  calculated by the
exchange  rate  agent  at the  time  referred  to above  using  the U.S.  dollar
equivalent of the Added Indexed  Currency and the Payment  Currency as the basis
for comparing the values of such currencies;  provided further that if the Added
Indexed  Currency  and the  Payment  Currency  are  identical,  then the Payment
Currency equivalent of any Added Indexed Currency amount will be such amount.

         The Payment  Currency  equivalent of any  Subtracted  Indexed  Currency
amount on any date will be determined by an exchange rate agent  (identified  in
the  applicable  Pricing  Supplement)  based  on  the  arithmetic  mean  of  the
quotations  obtained by such agent from  reference  dealers  (identified  in the
applicable Pricing  Supplement) at 11:00 A.M., New York City time, on the second
Exchange Rate Day preceding  such date for the sale by the reference  dealers of
the applicable  Conversion  Reference Amount of the Subtracted  Indexed Currency
for the Payment Currency for settlement on such date;  provided that if there is
no cross-exchange rate available in New York City between the Subtracted Indexed
Currency and the Payment  Currency,  the  quotations  will be  calculated by the
exchange  rate  agent  at the  time  referred  to above  using  the U.S.  dollar
equivalent of the Subtracted  Indexed  Currency and the Payment  Currency as the
basis for comparing the values of such currencies;  provided further that if the
Subtracted  Indexed  Currency and the Payment  Currency are identical,  then the
Payment  Currency  equivalent of any Subtracted  Indexed Currency amount will be
such amount.

         Payments upon Acceleration of Maturity or upon Tax Redemption

         If the principal amount payable at maturity of any PERLS, Reverse PERLS
or Multicurrency PERLS is declared due and payable prior to maturity,  or if any
PERLS,  Reverse  PERLS or  Multicurrency  PERLS are  redeemed as set forth below
under "Tax Redemption," and unless otherwise specified in the applicable Pricing

                                      S-22






Supplement,  the amount  payable  with  respect to such Note will be paid in the
Denominated  Currency  and will equal the face amount of such Note plus  accrued
interest to but excluding the date of payment.

Notes Linked to Commodity Prices, Single Securities, Baskets of Securities or 
Indices

         Notes may be  issued,  from  time to time,  with the  principal  amount
payable on any principal  payment date, or the amount of interest payable on any
interest  payment date,  to be determined by reference to one or more  commodity
prices,  securities of entities  unaffiliated with the Company,  baskets of such
securities  or  indices  and on such  other  terms  as may be set  forth  in the
relevant Pricing Supplement. The issuance of such Notes (excluding Notes indexed
to interest  indices)  denominated  or payable in Deutsche Marks will be made in
compliance  with German law and with the policies and  guidelines  of the German
Central  Bank,  as amended from time to time,  regarding  indexation of Deutsche
Mark-denominated  debt  obligations,  which currently  prohibits the issuance of
Deutsche  Mark-denominated  Notes  whose  payments  are  linked to oil,  gold or
similar  commodities,  any index  related  thereto or consumer  price or similar
indices. Each issue of index-linked French Franc Notes which are to be listed on
the Paris  Bourse must be made in  compliance  with the general  principles  set
forth in COB bulletin no. 281 of June 1994.

         An  investment   in  such  Notes  or  Currency   Linked  Notes  entails
significant risks not associated with similar investments in a conventional debt
security.  If the  interest  rate of such a Note or  Currency  Linked Note is so
indexed,  it may result in an interest  rate that is less than that payable on a
conventional  fixed-rate  debt security  issued at the same time,  including the
possibility  that no interest will be paid, and, if the principal amount of such
a Note or Currency  Linked Note is so indexed,  the principal  amount payable at
maturity may be less than the original purchase price of such Note (if permitted
pursuant to the terms of such Note) including the possibility  that no principal
will be paid.  The market  values for such Notes will be affected by a number of
factors independent of the  creditworthiness of the Company and the value of the
applicable  currency,  security  or basket of  securities,  commodity  or index,
including  the  volatility  of the  applicable  currency,  security or basket of
securities, commodity or index, the time remaining to the maturity of the Notes,
the outstanding  principal  amount of the Notes and market  interest rates.  The
value of the applicable currency, security or basket of securities, commodity or
index depends 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 principal amount, premium, if any, or interest
payable with respect to such Notes contains a multiple or leverage  factor,  the
effect  of  any  change  in the  applicable  currency,  security  or  basket  of
securities,  commodity or index may be increased.  The historical  experience of
the relevant  currencies,  securities or baskets of  securities,  commodities or
indices  should  not be taken as an  indication  of future  performance  of such
currencies,  securities or baskets of securities,  commodities or indices during
the term of any Note.

Optional Redemption

         The Pricing  Supplement  will indicate  either that the Notes cannot be
redeemed prior to maturity (other than as provided under "Tax Redemption" below)
or will  indicate the terms on which the Notes will be  redeemable at the option
of the Company. Notes denominated or payable in French Francs or pounds sterling
may not be  redeemed  at the option of the  Company  during the first year after
issuance and Notes  denominated or payable in Deutsche Marks may not be redeemed
during the first two years after issuance, except in each case pursuant to a Tax
Redemption.  Unless otherwise  specified in the applicable  Pricing  Supplement,
notice of  redemption  to  holders  of Notes  will be  published  in the  manner
described  under  "Notices"  below,  once in each of three  successive  calendar
weeks, the first  publication to be not less than 30 nor more than 60 days prior
to the date set for  redemption.  Unless  otherwise  specified in the applicable
Pricing  Supplement,  notice of redemption  shall also be provided to holders of
Registered Notes in the manner described under "Notices" below, not less than 30
days and not more  than 60 days  prior to the date  fixed  for  redemption.  The
Notes, except for Amortizing Notes, will not be subject to any sinking fund.


                                      S-23






Repayment at the Noteholders' Option; Repurchase

         If  applicable,  the  Pricing  Supplement  relating  to each  Note will
indicate  that the Note will be  repayable at the option of the holder on a date
or dates  specified  prior to its  maturity  date  (which,  in the case of Notes
denominated or payable in French Francs or pounds  sterling may not occur during
the first year after issuance and, in the case of Deutsche Marks,  may not occur
during the first two years after  issuance) and, unless  otherwise  specified in
such  Pricing  Supplement,  at a price  equal  to 100% of the  principal  amount
thereof,  together with accrued  interest to the date of repayment,  unless such
Note  was  issued  with  original  issue  discount,  in which  case the  Pricing
Supplement will specify the amount payable upon such repayment.

         In order for such a Note to be repaid,  the Principal Paying Agent must
receive at least 15 days but not more than 30 days prior to the  repayment  date
(i) the Note with the form entitled  "Option to Elect  Repayment" on the reverse
of the Note duly completed,  together with any coupons appertaining  thereto, or
(ii) a  telegram,  telex,  facsimile  transmission  or letter from a member of a
national securities exchange or the National  Association of Securities Dealers,
Inc. (the "NASD") or a commercial  bank or trust  company in the United  States,
Western Europe or Japan setting forth the name of the holder of the Note (in the
case only of a Registered Note), the principal amount of the Note, the principal
amount of the Note to be repaid,  the certificate number or a description of the
tenor and terms of the Note, a statement  that the option to elect  repayment is
being  exercised  thereby and a guarantee  that the Note to be repaid,  together
with the duly completed form entitled "Option to Elect Repayment" on the reverse
of the Note, together with any coupons appertaining thereto, will be received by
the Principal  Paying Agent not later than the fifth Business Day after the date
of such telegram,  telex, facsimile transmission or letter;  provided,  however,
that such  telegram,  telex,  facsimile  transmission  or letter  shall  only be
effective  if such  Note and form  duly  completed,  together  with any  coupons
appertaining  thereto,  are received by the Principal Paying Agent by such fifth
Business Day. Unless otherwise  specified in the applicable Pricing  Supplement,
exercise of the  repayment  option by the holder of a Note will be  irrevocable.
The repayment  option may be exercised by the holder of a Note for less than the
entire  principal amount of the Note but, in that event, the principal amount of
the  Note  remaining   outstanding   after   repayment  must  be  an  authorized
denomination.

         The  Company  may  purchase  Notes at any  price in the open  market or
otherwise.  Notes so  purchased  by the Company  may, at the  discretion  of the
Company,  be  held  or  resold  or  surrendered  to  the  relevant  Trustee  for
cancellation.

Tax Redemption

         All Notes

         Notes may be redeemed  as a whole,  at the option of the Company at any
time prior to maturity,  upon the giving of a notice of  redemption as described
below,  at a  redemption  price equal to 100% of the  principal  amount  thereof
(except as otherwise  specified in the applicable  Pricing  Supplement or unless
such Note is a Mandatorily Exchangeable Note), together with accrued interest to
the date fixed for redemption,  if the Company  determines  that, as a result of
any  change  in or  amendment  to  the  laws  (or  any  regulations  or  rulings
promulgated  thereunder) of the United States or of any political subdivision or
taxing  authority  thereof  or  therein  affecting  taxation,  or any  change in
official  position  regarding the  application or  interpretation  of such laws,
regulations or rulings,  which change or amendment becomes effective on or after
the date of issuance of such Notes,  the Company has or will become obligated to
pay  Additional  Amounts  with  respect to such Notes as  described  below under
"Payment of Additional Amounts." Prior to the giving of any notice of redemption
pursuant to this paragraph,  the Company shall deliver to the applicable Trustee
(i) a certificate stating that the Company is entitled to effect such redemption
and setting forth a statement of facts showing that the conditions  precedent to
the right of the  Company  to so redeem  have  occurred  (the date on which such
certificate is delivered to the Trustee is the "Redemption Determination Date"),
and (ii) an opinion of independent counsel  satisfactory to such Trustee to such
effect  based on such  statement  of  facts;  provided  that no such  notice  of
redemption  shall be given  earlier than 60 days prior to the  earliest  date on
which the Company would be obligated to pay such Additional Amounts if a payment
in respect of such Note were then due.

                                      S-24







         Notice  of  redemption  will be given not less than 30 nor more than 60
days  prior to the date  fixed for  redemption,  which  date and the  applicable
redemption  price will be specified in the notice.  Such notice will be given in
accordance with "Notices" below.

         If any date fixed for  redemption is a date prior to the Exchange Date,
definitive Bearer Notes will be issuable on and after such redemption date as if
such redemption date had been the Exchange Date, subject to receipt of Ownership
Certificates   described  above  under  "Forms,   Denominations,   Exchange  and
Transfer,"  delivery of which is a condition  to delivery of  definitive  Bearer
Notes.

         Special Tax Redemption of Bearer Notes

         If the Company shall determine that any payment made outside the United
States by the  Company or any Paying  Agent of  principal,  premium,  if any, or
interest due in respect of any Bearer Note or coupon would, under any present or
future  laws  or  regulations   of  the  United   States,   be  subject  to  any
certification,  identification or other information reporting requirement of any
kind, the effect of which is the disclosure to the Company,  any Paying Agent or
any  governmental  authority  of the  nationality,  residence  or  identity of a
beneficial  owner of such Bearer Note or coupon who is a United States Alien (as
defined below in "Payment of Additional Amounts") (other than such a requirement
(a) that would not be  applicable to a payment made by the Company or any Paying
Agent (i) directly to the  beneficial  owner or (ii) to a custodian,  nominee or
other  agent of the  beneficial  owner,  or (b) that  can be  satisfied  by such
custodian,  nominee or other agent certifying to the effect that such beneficial
owner is a United  States  Alien;  provided  that in each  case  referred  to in
clauses  (a)(ii)  and (b)  payment by such  custodian,  nominee or agent to such
beneficial owner is not otherwise subject to any such requirement),  the Company
shall redeem the Bearer Notes, as a whole,  at a redemption  price equal to 100%
of the principal  amount  thereof,  together  with accrued  interest to the date
fixed for  redemption,  or, at the election of the Company if the  conditions of
the next paragraph are satisfied,  pay the additional  amounts specified in such
paragraph.  The Company  shall make such  determination  and election as soon as
practicable  and publish  prompt  notice  thereof (the  "Determination  Notice")
stating  the  effective  date of such  certification,  identification  or  other
information reporting  requirements,  whether the Company will redeem the Bearer
Notes  or has  elected  to pay the  additional  amounts  specified  in the  next
paragraph,  and (if  applicable)  the last date by which the  redemption  of the
Bearer Notes must take place,  as provided in the next sentence.  If the Company
redeems the Bearer Notes,  such  redemption  shall take place on such date,  not
later than one year after the publication of the  Determination  Notice,  as the
Company shall elect by notice to the  applicable  Trustee at least 60 days prior
to the date fixed for redemption.  Notice of such redemption of the Bearer Notes
will be given to the holders of the Bearer  Notes not more than 60 nor less than
30 days prior to the date fixed for  redemption.  Such  redemption  notice shall
include a statement as to the last date by which the Bearer Notes to be redeemed
may be exchanged  for  Registered  Notes.  Notwithstanding  the  foregoing,  the
Company shall not so redeem the Bearer Notes if the Company  shall  subsequently
determine,  not less than 30 days prior to the date fixed for  redemption,  that
subsequent payments would not be subject to any such requirement,  in which case
the Company shall publish  prompt notice of such  determination  and any earlier
redemption  notice shall be revoked and of no further  effect.  The right of the
holders of Bearer  Notes  called for  redemption  pursuant to this  paragraph to
exchange  Bearer  Notes for  Registered  Notes  will  terminate  at the close of
business of the  Principal  Paying Agent on the  fifteenth day prior to the date
fixed for  redemption,  and no further  exchanges of Bearer Notes for Registered
Notes shall be permitted.

         If  and  so  long  as  the   certification,   identification  or  other
information reporting  requirements referred to in the preceding paragraph would
be fully satisfied by payment of a backup withholding tax or similar charge, the
Company may elect to pay as additional  amounts such amounts as may be necessary
so that every net payment made outside the United States following the effective
date of such  requirements  by the  Company  or any Paying  Agent of  principal,
premium or interest due in respect of any Bearer Note or any coupon of which the
beneficial  owner is a United States Alien (but without any requirement that the
nationality,  residence or identity of such beneficial owner be disclosed to the
Company,  any Paying Agent or any  governmental  authority,  with respect to the
payment of such  additional  amounts),  after deduction or withholding for or on
account of such backup  withholding  tax or similar  charge (other than a backup
withholding  tax or  similar  charge  that (i)  would not be  applicable  in the
circumstances  referred  to in the  second  parenthetical  clause  of the  first
sentence of the preceding paragraph, or (ii)

                                      S-25






is imposed as a result of presentation of such Bearer Note or coupon for payment
more than 15 days after the date on which such  payment  becomes due and payable
or on which payment thereof is duly provided for, whichever occurs later),  will
not be less than the amount  provided  for in such  Bearer  Note or coupon to be
then due and  payable.  In the event the  Company  elects to pay any  additional
amounts  pursuant to this paragraph,  the Company shall have the right to redeem
the Bearer Notes as a whole at any time pursuant to the applicable provisions of
the preceding  paragraph and the redemption  price of such Bearer Notes will not
be reduced  for  applicable  withholding  taxes.  If the  Company  elects to pay
additional amounts pursuant to this paragraph and the condition specified in the
first sentence of this paragraph should no longer be satisfied, then the Company
will redeem the Bearer Notes as a whole,  pursuant to the applicable  provisions
of the preceding paragraph.

Payment of Additional Amounts

         The Company will,  subject to certain  exceptions and  limitations  set
forth  below,  pay such  additional  amounts (the  "Additional  Amounts") to the
holder of any Note or of any coupon appertaining  thereto who is a United States
Alien as may be  necessary  in order that every net payment of the  principal of
and  interest  on such Note and any other  amounts  payable on such Note,  after
withholding  for or on  account  of any  present or future  tax,  assessment  or
governmental  charge  imposed  upon or as a result of such payment by the United
States (or any political  subdivision or taxing  authority  thereof or therein),
will not be less than the amount  provided for in such Note or coupon to be then
due and payable.  The Company will not, however, be required to make any payment
of Additional Amounts to any such holder for or on account of:

                  (a) any such tax, assessment or other governmental charge that
         would not have been so imposed but for (i) the existence of any present
         or former  connection  between  such  holder (or  between a  fiduciary,
         settlor,  beneficiary,  member or shareholder  of such holder,  if such
         holder is an estate,  a trust, a partnership or a corporation)  and the
         United  States,  including,  without  limitation,  such holder (or such
         fiduciary, settlor, beneficiary, member or shareholder) being or having
         been a citizen or resident thereof or being or having been engaged in a
         trade or  business  or  present  therein or  having,  or having  had, a
         permanent  establishment therein or (ii) the presentation by the holder
         of any such  Note or  coupon  for  payment  on a date more than 15 days
         after the date on which such payment became due and payable or the date
         on which payment thereof is duly provided for, whichever occurs later;

                  (b) any estate, inheritance, gift, sales, transfer or personal
         property tax or any similar tax, assessment or governmental charge;

                  (c) any tax,  assessment or other governmental  charge imposed
         by reason of such holder's past or present status as a personal holding
         company or foreign  personal  holding  company  or  controlled  foreign
         corporation or passive foreign  investment  company with respect to the
         United States or as a corporation  that  accumulates  earnings to avoid
         United States  federal  income tax or as a private  foundation or other
         tax-exempt organization;

                  (d) any tax,  assessment or other governmental  charge that is
         payable otherwise than by withholding from payments on or in respect of
         any Note;

                  (e) any tax,  assessment or other governmental charge required
         to be withheld by any Paying Agent from any payment of principal of, or
         interest  on,  any  Note,  if such  payment  can be made  without  such
         withholding by any other Paying Agent in a city in Western Europe;

                  (f) any tax,  assessment  or other  governmental  charge  that
         would  not  have  been  imposed  but for the  failure  to  comply  with
         certification,  information or other reporting requirements  concerning
         the  nationality,  residence  or identity  of the holder or  beneficial
         owner of such Note,  if such  compliance  is  required by statute or by
         regulation  of the United  States or of any  political  subdivision  or
         taxing  authority  thereof or therein  as a  precondition  to relief or
         exemption from such tax, assessment or other governmental charge;


                                      S-26






                  (g) any tax,  assessment or other governmental  charge imposed
         by reason of such  holder's  past or  present  status as the  actual or
         constructive owner of 10% or more of the total combined voting power of
         all classes of stock  entitled to vote of the Company or as a direct or
         indirect subsidiary of the Company; or

                  (h) any  combination  of item (a),  (b), (c), (d), (e), (f) or
         (g);

nor shall Additional  Amounts be paid with respect to any payment on a Note to a
United  States  Alien who is a fiduciary or  partnership  or other than the sole
beneficial owner of such payment to the extent such payment would be required by
the laws of the  United  States (or any  political  subdivision  thereof)  to be
included in the income,  for tax  purposes,  of a  beneficiary  or settlor  with
respect to such fiduciary or a member of such  partnership or a beneficial owner
who would not have been entitled to the Additional Amounts had such beneficiary,
settlor, member or beneficial owner been the holder of the Note.

         The term "United  States Alien" means any person who, for United States
federal  income tax purposes,  is a foreign  corporation,  a  nonresident  alien
individual,  a nonresident  alien  fiduciary of a foreign estate or trust,  or a
foreign  partnership  one  or  more  of  the  members  of  which  is  a  foreign
corporation,  a nonresident alien individual or a nonresident alien fiduciary of
a foreign estate or trust.

Replacement of Notes and Coupons

         Any Notes or coupons that become mutilated,  destroyed,  lost or stolen
or are apparently  destroyed,  lost or stolen will be replaced by the Company at
the expense of the holder upon delivery of such Notes or coupons or satisfactory
evidence of the destruction, loss or theft thereof to the Company, the Principal
Paying Agent, the Registrar (in the case of Registered Notes) and the applicable
Trustee. In each case, an indemnity  satisfactory to the Company,  the Principal
Paying Agent, the Registrar (in the case of Registered Notes) and the applicable
Trustee  may be  required  at the  expense  of the holder of such Note or coupon
before a replacement Note or coupon will be issued.

Notices

         Notices  to  holders  of the Notes  will be given by  publication  in a
newspaper  in the  English  language  of general  circulation  in the Borough of
Manhattan, The City of New York, and in The City of London or, if publication in
London  is  not  practical,  in  an  English  language  newspaper  with  general
circulation in Western  Europe.  Such  publication is expected to be made in The
Wall Street Journal and the Financial Times. Such notices will be deemed to have
been given on the date of such  publication  or, if published in such newspapers
on different dates, on the date of the first such publication.

         Notices to holders  of  Registered  Notes will also be given by mailing
such  notices  to each  holder by first  class  mail,  postage  prepaid,  at the
respective  address of each holder as that address appears upon the books of the
Company.

                             FOREIGN CURRENCY RISKS

Exchange Rates and Exchange Controls

         An investment in Notes that are denominated in, or the payment of which
is related to the value of, a Specified  Currency other than the currency of the
country in which the purchaser is a resident or the currency  (including the ECU
and any other such  composite  currency)  in which the  purchaser  conducts  its
business or activities (the "home currency") entails  significant risks that are
not associated with a similar  investment in a security  denominated in the home
currency. Such risks include, without limitation, the possibility of significant
changes in rates of exchange  between the home currency and the various  foreign
currencies (or composite  currencies)  and the  possibility of the imposition or
modification  of exchange  controls  by either the U.S. or foreign  governments.
Such

                                      S-27






risks generally  depend on economic and political  events over which the Company
has no control.  In recent years,  rates of exchange for certain currencies have
been  highly  volatile  and such  volatility  may be expected to continue in the
future.  Fluctuations in any particular  exchange rate that have occurred in the
past are not necessarily indicative,  however, of fluctuations in such rate that
may occur during the term of any Note.  Depreciation  of the Specified  Currency
for a Note against the relevant home currency  would result in a decrease in the
effective   yield  of  such  Note  below  its  coupon   rate  and,   in  certain
circumstances,  could result in a loss to the investor on a home currency basis.
In addition,  depending on the specific terms of a Currency Linked Note, changes
in exchange  rates  relating to any of the  currencies  involved may result in a
decrease in its effective yield and, in certain circumstances, could result in a
loss of all or a substantial portion of the principal of a Note to the investor.

         EACH  PROSPECTIVE  INVESTOR  SHOULD CONSULT ITS OWN FINANCIAL AND LEGAL
ADVISORS AS TO ANY SPECIFIC  RISKS ENTAILED BY AN INVESTMENT BY SUCH INVESTOR IN
NOTES  DENOMINATED  IN,  OR THE  PAYMENT  OF WHICH IS  RELATED  TO THE VALUE OF,
FOREIGN CURRENCY. SUCH NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR INVESTORS WHO
ARE UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS.

         Foreign  exchange  rates  can  either  float or be  fixed by  sovereign
governments. Exchange rates of most economically developed nations are permitted
to  fluctuate  in value  relative  to the  U.S.  dollar.  National  governments,
however,  rarely  voluntarily allow their currencies to float freely in response
to economic  forces.  From time to time governments use a variety of techniques,
such as  intervention  by a country's  central bank or  imposition of regulatory
controls or taxes, to affect the exchange rate of their currencies.  Governments
may also  issue a new  currency  to replace an  existing  currency  or alter the
exchange rate or relative exchange characteristics by devaluation or revaluation
of a currency. Thus, a special risk in purchasing non-home  currency-denominated
Notes or Currency  Linked  Notes is that their home  currency-equivalent  yields
could be affected by governmental actions,  which could change or interfere with
theretofore freely determined  currency  valuation,  fluctuations in response to
other market forces,  and the movement of currencies across borders.  There will
be no adjustment or change in the terms of such Notes in the event that exchange
rates should become fixed,  or in the event of any devaluation or revaluation or
imposition of exchange or other regulatory controls or taxes, or in the event of
other  developments  affecting  the  U.S.  dollar  or any  applicable  Specified
Currency.

         Governments  have  imposed  from  time to time,  and may in the  future
impose,  exchange  controls  that  could  affect  exchange  rates as well as the
availability of a specified foreign currency at the time of payment of principal
of, premium, if any, or interest on a Note. Even if there are no actual exchange
controls, it is possible that the Specified Currency for any particular Note not
denominated  in U.S.  dollars would not be available  when payments on such Note
are due,  including as a result of the replacement of such Specified Currency by
a single European  currency  (expected to be named the Euro). In that event, the
Company would make required  payments in U.S. dollars on the basis of the Market
Exchange  Rate on the date of such  payment  or, if such rate of exchange is not
then  available,  on the basis of the Market Exchange Rate as of the most recent
practicable  date;  provided,  however,  that, if the Specified  Currency is not
available  because  it has been  replaced  by a single  European  currency,  the
Company  would  make  such  payments  in the new  single  European  currency  in
conformity with legally applicable  measures taken pursuant to, or by virtue of,
the Treaty. See "Description of Notes -- Payment Currency."

Governing Law and Judgments

         The Notes will be governed by and construed in accordance with the laws
of the State of New York. The courts of the States of New York and Delaware will
have  jurisdiction over claims relating to the Series D Notes. If a court in the
United  States were to grant a judgment in an action based on Notes  denominated
in a Specified  Currency other than U.S.  dollars,  it is likely that such court
would grant judgment only in U.S.  dollars.  If the court were a New York court,
however,  such court  would  grant a judgment in the  Specified  Currency.  Such
judgment  would then be  converted  into U.S.  dollars  at the rate of  exchange
prevailing on the date of entry of the judgment.


                                      S-28






                UNITED STATES FEDERAL TAXATION -- FOREIGN HOLDERS

         In the  opinion of  Shearman & Sterling,  counsel to the  Company,  the
following  summary  accurately  describes  the principal  United States  federal
income and estate tax  consequences of ownership and disposition of the Notes by
a Foreign  Holder (as  defined  below).  This  summary is based on the  Internal
Revenue Code of 1986, as amended to the date hereof (the  "Code"),  and existing
and proposed Treasury regulations,  revenue rulings and judicial decisions. This
summary  does not  discuss all of the tax  consequences  that may be relevant to
holders in light of their  particular  circumstances  or to  holders  subject to
special rules,  such as persons other than Foreign  Holders,  nonresident  alien
individuals  that have lost United States  citizenship or that have ceased to be
treated as resident aliens, corporations that are treated as foreign or domestic
personal holding companies,  controlled foreign corporations, or passive foreign
investment companies and Foreign Holders that are owned or controlled by persons
subject to United States  income tax.  Persons  considering  the purchase of the
Notes should consult with their own tax advisors with regard to the  application
of the United  States  federal  income  and estate tax laws to their  particular
situations as well as any tax consequences  arising under the laws of any state,
local or foreign tax jurisdiction.

         As used herein, the term "Foreign Holder" means a beneficial owner of a
Note that is for United  States  federal  income tax purposes (i) a  nonresident
alien individual,  (ii) a corporation,  partnership or other entity that was not
created or organized in or under the laws of the United  States or any political
subdivision thereof or (iii) a nonresident alien or foreign fiduciary or grantor
of a trust or estate.

         Income Taxes

         A Foreign Holder will generally not be subject to United States federal
income taxes, including withholding taxes, on payments of principal of, premium,
if any, or interest  (including  original issue  discount,  if any) on a Note or
coupon,  or any gain arising from the sale or  disposition  of a Note or coupon,
provided that (i) any such income is not effectively  connected with the conduct
of a trade or business within the United States, (ii) such Foreign Holder is not
a person who owns (directly or by attribution)  ten percent or more of the total
combined voting power of all classes of stock of the Company,  (iii) the Foreign
Holder (if an  individual)  is not present in the United States 183 days or more
during the taxable  year of the  disposition,  (iv) the Foreign  Holder does not
have a "tax home" (as defined in section  911(d)(3) of the Code) or an office or
other fixed place of business in the United States and (v) in the case of a Note
issued in registered  form,  required  certification  of the  non-United  States
status of the beneficial owner is provided to the Company or the Agent.

         The 31% "backup"  withholding  and information  reporting  requirements
will  generally  not apply to payments by the Company or its agents of principal
of, premium, if any, and interest on any obligation, and to proceeds of the sale
or redemption of an obligation before maturity, with respect to a Foreign Holder
of a Bearer Note or coupon.  Such requirements will likewise generally not apply
to such  payments  made on a Registered  Note if required  certification  of the
holder's non-United States status is provided to the Company or the Agent.

         Foreign  Holders of Notes should  consult their tax advisors  regarding
the  application  of  information  reporting  and  backup  withholding  in their
particular  situations,  the  availability  of an exemption  therefrom,  and the
procedure for obtaining such an exemption,  if available.  Any amounts  withheld
from a payment to a Foreign  Holder under the backup  withholding  rules will be
allowed as a credit  against such  Holder's  United  States  federal  income tax
liability  and may entitle such Holder to a refund,  provided  that the required
information  is furnished to the United  States  Internal  Revenue  Service (the
"Service").

         Estate Taxes

         A Note or coupon held by an individual  who at the time of his death is
not a citizen or  domiciliary of the United States will not be subject to United
States federal estate tax as a result of such individual's death,  provided that
(i)  interest  paid to such  individual  on such  Note or  coupon  would  not be
effectively connected with the conduct by such individual of a trade or business
within the United States and (ii) such individual is not a person who owns

                                      S-29






(directly or by  attribution)  ten percent or more of the total combined  voting
power of all classes of stock of the Company.

         Exchangeable Notes

         A Foreign Holder will generally not be subject to United States federal
income  tax,  including  withholding  tax,  or  estate  tax  with  regard  to an
Exchangeable  Note if (i) the Note is treated as indebtedness of the Company for
United States federal income tax purposes,  (ii) the Notes are exchangeable only
into securities that are actively  traded,  into a basket of securities that are
actively traded or an index or indices of securities  that are actively  traded,
and (iii) the other  requirements  for  exemption  from tax listed  above  under
"Income   Taxes"  and  "Estate   Taxes"  are  met.  With  regard  to  the  above
requirements,  Optionally  Exchangeable  Notes for which  the  principal  amount
payable  in  cash  equals  or  exceeds  the  issue  price  will  be  treated  as
indebtedness  of the Company for United States  federal income tax purposes and,
unless otherwise noted in the applicable Pricing Supplement, the Company intends
to treat other  Exchangeable  Notes as  indebtedness  for United States  federal
income tax  purposes.  No opinion  is  expressed  herein as to the impact of the
"United  States real property  holding  company"  rules,  which could affect the
taxation  of Foreign  Holders in certain  circumstances.  Holders  intending  to
purchase  Exchangeable Notes should refer to the discussion relating to taxation
in the applicable Pricing Supplement for disclosure, if any is deemed necessary,
concerning the applicability of such rules. For information regarding the United
States  federal  income tax  consequence  of ownership  and  disposition  of the
property  received  in  exchange  for the  Note,  please  refer to the  publicly
available documents described in the applicable Pricing Supplement.

         Notes Linked to Commodity Prices, Single Securities, Baskets of 
         Securities or Indices

         The United States federal income tax  consequences  to a Foreign Holder
of the  ownership  and  disposition  of Notes that have  principal  or  interest
determined by reference to commodity prices, securities of entities unaffiliated
with the Company,  baskets of such securities or indices may vary depending upon
the exact terms of the Notes and related  factors.  Notes containing any of such
features  may be subject to rules that differ from the general  rules  discussed
above.  Holders  intending to purchase such Notes should refer to the discussion
relating to taxation in the applicable Pricing Supplement.

             UNITED STATES FEDERAL TAXATION -- UNITED STATES HOLDERS

         In the  opinion of  Shearman & Sterling,  counsel to the  Company,  the
following  summary  accurately  describes  the principal  United States  federal
income tax  consequences  of ownership and  disposition of the Notes by a United
States Holder (as defined below). This summary is based on the Code and existing
and proposed Treasury regulations,  revenue rulings and judicial decisions. This
summary  deals only with the Notes held as capital  assets within the meaning of
Section 1221 of the Code. It does not discuss all of the tax  consequences  that
may be  relevant  to holders in light of their  particular  circumstances  or to
holders  subject to special  rules,  such as persons  other than  United  States
Holders, life insurance companies,  dealers in securities or foreign currencies,
persons  holding  the  Notes  as  part  of a  hedging  transaction,  "straddle,"
conversion  transaction,  or other  integrated  transaction,  or  United  States
Holders whose functional currency (as defined in Section 985 of the Code) is not
the United States dollar.  Persons  considering the purchase of the Notes should
consult with their own tax advisors with regard to the application of the United
States federal income tax laws to their particular situations as well as any tax
consequences  arising  under  the  laws  of any  state,  local  or  foreign  tax
jurisdiction.

         As used herein,  the term  "United  States  Holder"  means a beneficial
owner of a Note that is for United  States  federal  income tax  purposes  (i) a
citizen or resident of the United  States,  (ii) a  corporation,  partnership or
other entity  created or organized in or under the laws of the United  States or
of any political  subdivision thereof, or (iii) an estate or trust the income of
which is subject to United  States  federal  income  taxation  regardless of its
source.


                                      S-30






         Payments of Interest on the Notes

         Interest paid on a Note  (whether in United States  dollars or in other
than United States dollars) that is not a Discount Note, as defined below,  will
generally be taxable to a United  States Holder as ordinary  interest  income at
the time it  accrues  or is  received,  in  accordance  with the  United  States
Holder's method of accounting for federal income tax purposes.

         Special rules  governing the treatment of interest paid with respect to
Discount  Notes,  including  certain  Notes that pay interest  annually that are
issued less than 15 calendar days before an Interest  Payment  Date,  Notes that
mature  one year or less from  their date of  issuance  and Notes  issued for an
amount less than their stated redemption price at maturity,  are described under
"Discount Notes" below.

         Discount Notes

         The following  discussion  is a summary of the principal  United States
federal  income tax  consequences  of the ownership and  disposition of Discount
Notes (as defined below) by United States Holders.  Additional  rules applicable
to Discount Notes that are  denominated  in a Specified  Currency other than the
U.S. dollar,  or have payments of interest or principal  determined by reference
to the value of one or more  currencies  or  currency  units other than the U.S.
dollar, are described under "Foreign Currency Notes" below.

         A Note  that  has an  "issue  price"  that is  less  than  its  "stated
redemption  price at maturity"  will generally be considered to have been issued
bearing  original  issue  discount  ("OID") for United States federal income tax
purposes (a "Discount Note"), unless such difference is less than a specified de
minimis amount.  The issue price of a Note issued for cash generally will be the
initial  offering  price to the public at which  price a  substantial  amount of
Notes is sold.  Such issue  price  does not change  even if part of the issue is
subsequently  sold at a different price. The stated redemption price at maturity
of a Discount  Note is the total of all  payments  required to be made under the
Discount  Note  other  than  "qualified  stated  interest"  payments.  The  term
"qualified   stated   interest"   is   defined  as  stated   interest   that  is
unconditionally payable at least annually at a single fixed rate of interest. In
addition,  qualified  stated  interest  generally  includes stated interest with
respect to a variable rate debt  instrument that is  unconditionally  payable at
least annually at a single qualified  floating rate or a rate that is determined
using a single  fixed  formula that is based on one or more  qualified  floating
rates.  A rate is a  qualified  floating  rate if  variations  in the  rate  can
reasonably be expected to measure  contemporaneous  fluctuations  in the cost of
newly borrowed funds.

         No payment of interest on a Note that matures one year or less from its
date of issuance will be considered  qualified  stated  interest and accordingly
such a Note will be treated as a Discount Note.

         A United  States  Holder  of  Discount  Notes is  required  to  include
qualified  stated  interest in income at the time it is received or accrued,  in
accordance with such holder's method of accounting.

         In addition,  United States  Holders of Discount Notes that mature more
than one year from the date of  issuance  will be  required  to  include  OID in
income  for  United  States  federal  income  tax  purposes  as it  accrues,  in
accordance  with a constant  yield  method based on a  compounding  of interest,
before the  receipt  of cash  payments  attributable  to such  income,  but such
holders  will not be required  to include  separately  in income  cash  payments
received on such Notes,  even if denominated as interest,  to the extent they do
not constitute qualified stated interest. The amount of OID includible in income
for a taxable year by the initial  United  States Holder of a Discount Note will
generally equal the sum of the "daily portions" of the total OID on the Discount
Note for each day during the taxable year in which such holder held the Discount
Note ("accrued OID").  Generally,  the daily portion of the OID is determined by
allocation  to each day in any  "accrual  period" a ratable  portion  of the OID
allocable to such accrual period. The term "accrual period" means an interval of
time of one year or less;  provided that each scheduled  payment of principal or
interest either occurs on the final day of an accrual period or the first day of
an accrual period.  The amount of OID allocable to an accrual period will be the
excess of (a) the product of the "adjusted  issue price" of the Discount Note at
the beginning of such accrual period and its "yield to maturity" over

                                      S-31






(b) the amount of any qualified stated interest allocable to the accrual period.
The  "adjusted  issue price" of a Discount  Note at the  beginning of an accrual
period will equal the issue price plus the amount of OID  previously  includible
in the gross  income of any United  States  Holder  (without  reduction  for any
premium or amortized acquisition premium, as described below), less any payments
made on such Discount Note (other than qualified  stated  interest) on or before
the first day of the accrual  period.  The "yield to  maturity"  of the Discount
Note  will be  computed  on the basis of a  constant  annual  interest  rate and
compounded at the end of each accrual period.  Under the foregoing rules, United
States Holders of Discount Notes will generally be required to include in income
increasingly greater amounts of OID in successive accrual periods. Special rules
will apply for calculating OID for initial short or final accrual periods.

         Notes that pay interest  annually that are issued less than 15 calendar
days before an Interest  Payment Date may be treated as Discount  Notes.  United
States  Holders  intending to purchase such Notes should refer to the applicable
Pricing Supplement.

         Certain of the Discount  Notes may be  redeemable  prior to maturity at
the option of the Company (a "call option")  and/or  repayable prior to maturity
at the option of the holder (a "put option").  Discount Notes containing  either
or both of such  features  may be subject to rules that  differ from the general
rules discussed above.  Holders intending to purchase Discount Notes with either
or both  of such  features  should  carefully  examine  the  applicable  Pricing
Supplement and should consult with their own tax advisors with respect to either
or both of such  features  since the tax  consequences  with respect to OID will
depend,  in part, on the  particular  terms and the  particular  features of the
purchased Note.

         In  general,  a United  States  Holder who uses the cash  method of tax
accounting  and who holds a Discount Note that matures one year or less from the
date of its issuance (a  "short-term  Discount  Note") is not required to accrue
OID for United States federal  income tax purposes  unless such holder elects to
do so. United States  Holders who report income for United States federal income
tax purposes on the accrual  method and certain other holders,  including  banks
and  dealers  in  securities,  are  required  to include  OID (or  alternatively
acquisition  discount)  on such  short-term  Discount  Notes on a  straight-line
basis,  unless an  election  is made to accrue the OID  according  to a constant
yield method based on daily  compounding.  In the case of a United States Holder
who is not required, and does not elect, to include OID in income currently, any
gain realized on the sale,  exchange or retirement of a short-term Discount Note
will  be  ordinary  interest  income  to the  extent  of the  OID  accrued  on a
straight-line  basis (or alternatively  under the constant yield method) through
the date of sale, exchange or retirement.  In addition, such non-electing United
States  Holders  who  are  not  subject  to the  current  inclusion  requirement
described in the second sentence of this paragraph will be required to defer the
deduction of all or a portion of any interest paid on  indebtedness  incurred to
purchase  short-term  Discount Notes until such OID is included in such holder's
income.

         If the amount of OID with respect to a Note is less than the  specified
de minimis  amount  (generally,  0.0025  multiplied by the product of the stated
redemption price at maturity and the number of complete years to maturity),  the
amount of OID is treated as zero and all stated interest is treated as qualified
stated  interest.  A United  States  Holder will be required to treat any stated
principal  payment on a Note as capital gain to the extent of the product of the
total  amount of de minimis  OID and a fraction  the  numerator  of which is the
amount of the principal  payment made and the denominator of which is the stated
principal amount of the Note.

         United States Holders are permitted to elect to include all interest on
a Note using the constant  yield  method.  For this purpose,  interest  includes
stated interest,  acquisition discount, OID, de minimis OID, market discount, de
minimis market discount,  and unstated interest,  as adjusted by any amortizable
bond premium or acquisition premium.  Special rules apply to elections made with
respect to Notes with  amortizable  bond  premium or market  discount and United
States  Holders  considering  such an  election  should  consult  their  own tax
advisors. The election cannot be revoked without the approval of the Service.


                                      S-32






         Market Discount and Premium

         If a United States Holder purchases a Note (other than a Discount Note)
for an amount that is less than its stated  redemption  price at maturity or, in
the case of a  Discount  Note,  its  adjusted  issue  price,  the  amount of the
difference will be treated as "market discount" for United States federal income
tax purposes, unless such difference is less than a specified de minimis amount.

         Under the market  discount  rules of the Code, a United  States  Holder
will be required to treat any partial  principal  payment  (or, in the case of a
Discount Note, any payment that does not constitute  qualified  stated interest)
on, or any gain realized on the sale, exchange,  retirement or other disposition
of, a Note as  ordinary  income to the extent of the lesser of (i) the amount of
such  payment  or  realized  gain or  (ii)  the  market  discount  that  has not
previously been included in income and is treated as having accrued on such Note
at the time of such  payment or  disposition.  If such Note is  disposed of in a
nontaxable  transaction  (other than a nonrecognition  transaction  described in
Code  Section  1276(c)),  the amount of gain  realized on such  disposition  for
purposes of the market  discount rules shall be determined as if such holder had
sold the Note at its then fair market value.  Market discount will be considered
to accrue ratably during the period from the date of acquisition to the maturity
date of the Note,  unless the United States Holder elects to accrue on the basis
of a constant  interest  rate. A different  rule may apply to Discount  Notes or
Amortizing Notes under forthcoming regulations.

         A United States Holder may be required to defer the deduction of all or
a portion  of the  interest  paid or  accrued on any  indebtedness  incurred  or
maintained  to purchase or carry such Note until the maturity of the Note or its
earlier disposition (except for certain nonrecognition  transactions).  A United
States  Holder may elect to include  market  discount in income  currently as it
accrues (on either a ratable or a constant  interest rate basis),  in which case
the rules  described  above  regarding the treatment as ordinary  income of gain
upon the  disposition  of the Note and upon the receipt of certain cash payments
and regarding the deferral of interest deductions will not apply.

         A United States Holder who purchases a Discount Note for an amount that
is greater than its adjusted  issue price,  but less than or equal to the sum of
all amounts  payable on the Note,  after the purchase date (other than qualified
stated  interest),  will  be  considered  to  have  purchased  such  Note  at an
"acquisition  premium"  within the  meaning of the Code.  Under the  acquisition
premium  rules of the Code,  the amount of OID which such holder must include in
its gross  income with respect to such Note for any taxable year will be reduced
by a fraction the  numerator of which is the excess of the cost of the Note over
its adjusted  issue price and the  denominator of which is the excess of the sum
of all amounts payable on the Note after the purchase date (other than qualified
stated interest) over the adjusted issue price.

         A United States Holder who purchases a Discount Note for an amount that
is greater  than the sum of all amounts  payable on the Note after the  purchase
date (other than qualified stated interest) will be considered to have purchased
such Note at a  "premium"  within the  meaning of the OID  Regulations.  In such
case, the holder is not required to include any OID in gross income.

         If a  United  States  Holder  purchases  a Note for an  amount  that is
greater than the amount payable at maturity (or on the earlier call date, in the
case of a Note that is  redeemable  at the option of the  Company),  such holder
will be considered to have purchased such Note with  "amortizable  bond premium"
equal in amount to such excess,  and may elect (in  accordance  with  applicable
Code  provisions)  to amortize such premium,  using a constant yield method over
the remaining term of the Note and to offset interest  otherwise  required to be
included  in income in  respect  of such Note  during  any  taxable  year by the
amortized amount of such excess for such taxable year. However, if such Note may
be optionally  redeemed after the United States Holder acquires it at a price in
excess of its stated  redemption  price at maturity,  special  rules would apply
which could result in a deferral of the  amortization of some bond premium until
later in the term of such Note.


                                      S-33






         Sale, Exchange or Retirement of the Notes

         Upon the sale, exchange or retirement of a Note, a United States Holder
will recognize  taxable gain or loss equal to the difference  between the amount
realized on the sale,  exchange or  retirement  and such  holder's  adjusted tax
basis in the  Note.  A  taxpayer's  amount  realized  on the sale,  exchange  or
retirement  of a Note will be  reduced  by any  amount  attributable  to accrued
interest  (or,  in  the  case  of a  Discount  Note,  accrued  qualified  stated
interest), which will be taxable as such unless previously taken into account. A
United States  Holder's  adjusted tax basis in a Note  generally  will equal the
cost  of the  Note  to such  holder,  increased  by the  amounts  of any  market
discount,  OID and de minimis  OID  previously  included in income by the holder
with  respect to such Note and  reduced by any  amortized  bond  premium and any
principal  payments  received by the United  States Holder and, in the case of a
Discount  Note,  by the  amounts of any other  payments  that do not  constitute
qualified stated interest.

         Subject to the discussion under "Foreign Currency Notes" below, gain or
loss  recognized  on the sale,  exchange or retirement of a Note will be capital
gain or loss  (except to the extent of any accrued  market  discount  or, in the
case of a  short-term  Discount  Note,  any accrued OID which the United  States
Holder has not previously  included in income),  and will generally be long-term
capital gain or loss if at the time of sale, exchange or retirement the Note has
been held for more than one year.

         Unless a United  States  Holder holds a Bearer Note through a financial
institution   that  satisfies  the   requirements   of  United  States  Treasury
Regulations Section 1.165-12(c)(3), such United States Holder generally will not
be  entitled  to deduct any loss on such Bearer Note or coupon and must treat as
ordinary  income any gain realized on the sale or other  disposition  (including
the receipt of principal) of such Bearer Note or coupon.

         Foreign Currency Notes

         The following discussion summarizes the principal United States federal
income  tax  consequences  to a  United  States  Holder  of  the  ownership  and
disposition of Notes (other than the Currency Linked Notes described above) that
are  denominated  in a  Specified  Currency  other  than the U.S.  dollar or the
payments of interest or principal on which are payable in one or more currencies
or currency units other than the U.S. dollar (a "Foreign Currency Note").

         The rules  discussed  below will generally not apply to a United States
Holder that enters into a "qualified  hedging  transaction." A qualified hedging
transaction  is an integrated  economic  transaction  consisting of a qualifying
debt  instrument,  such as a Foreign  Currency Note,  and a "section  1.988-5(a)
hedge,"  as  defined  in  section  1.988-5(a)(4)  of the  Treasury  regulations.
Generally,  such an integrated  economic  transaction,  if identified as such by
either  the  United  States  Holder  or the  Service,  is  treated  as a  single
transaction  for United States federal income tax purposes,  the effect of which
is to treat such a holder as owning a synthetic debt  instrument that is subject
to rules  applicable  to Discount  Notes.  The rules with respect to a qualified
hedging transaction are extremely complex and special rules may apply in certain
circumstances,  and persons that are  considering  hedging the currency risk are
urged to consult with their own tax advisors with respect to the  application of
these rules.

         A United States  Holder who uses the cash method of accounting  and who
receives a payment of interest  with respect to a Foreign  Currency  Note (other
than a Discount  Note  (except to the extent any  qualified  stated  interest is
received)  in which OID is  accrued  on a current  basis)  will be  required  to
include  in  income  the U.S.  dollar  value  of the  foreign  currency  payment
(determined  on the date such  payment is  received)  regardless  of whether the
payment is in fact converted to U.S.  dollars at that time, and such U.S. dollar
value will be the United States Holder's tax basis in the foreign currency.

         A United  States  Holder  (to the  extent  the above  paragraph  is not
applicable)  will be required to include in income the U.S.  dollar value of the
amount of  interest  income  (including  OID or market  discount  and reduced by
premium,  acquisition  premium  and  amortizable  bond  premium  to  the  extent
applicable) that has accrued and is otherwise  required to be taken into account
with  respect to a Foreign  Currency  Note  during an accrual  period.  The U.S.
dollar value of such  accrued  income will be  determined  by  translating  such
income at the average rate of

                                      S-34






exchange for the accrual period or, with respect to an accrual period that spans
two taxable years, at the average rate for the partial period within the taxable
year. The average rate of exchange for the accrual period (or partial period) is
the simple  average of the exchange  rates for each  business day of such period
(or other method if such method is reasonably derived and consistently applied).
A United  States  Holder may elect to  determine  the U.S.  dollar value of such
accrued  income by  translating  such income at the spot rate on the last day of
the interest  accrual period (or, in the case of a partial accrual  period,  the
spot rate on the last day of the  taxable  year) or, if the date of  receipt  is
within five business days of the last day of the interest  accrual  period,  the
spot rate on the date of receipt.  Such  United  States  Holder  will  recognize
ordinary gain or loss with respect to accrued  interest  income on the date such
income is received.  The amount of ordinary gain or loss  recognized  will equal
the difference  between the U.S. dollar value of the foreign  currency  payments
received  (determined  on the date such  payment is received) in respect of such
accrual  period and the U.S.  dollar  value of interest  income that has accrued
during such accrual period (as determined above).

         A United  States  Holder will have a tax basis in any foreign  currency
received on the sale, exchange or retirement of a Foreign Currency Note equal to
the U.S. dollar value of such foreign  currency,  determined at the time of such
sale,  exchange or  retirement.  Any gain or loss  realized  by a United  States
Holder  on a sale or  other  disposition  of  foreign  currency  (including  its
exchange for U.S. dollars or its use to purchase Foreign Currency Notes) will be
ordinary income or loss.

         A United States Holder's tax basis in a Foreign  Currency Note, and the
amount of any subsequent adjustment to such holder's tax basis, will be the U.S.
dollar value of the foreign currency amount paid for such Foreign Currency Note,
or of the foreign  currency amount of the adjustment,  determined on the date of
such purchase or adjustment. A United States Holder who converts U.S. dollars to
a foreign  currency  and  immediately  uses that  currency to purchase a Foreign
Currency Note  denominated  in the same currency  ordinarily  will not recognize
gain or loss in connection with such conversion and purchase.  However, a United
States  Holder who  purchases  a Foreign  Currency  Note with  previously  owned
foreign  currency will 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 U.S.  dollar fair market value of the Foreign  Currency Note on the date
of  purchase.  For  purposes  of  determining  the  amount  of any  gain or loss
recognized by a United  States  Holder on the sale,  exchange or retirement of a
Foreign  Currency  Note,  the  amount  realized  upon  such  sale,  exchange  or
retirement  will be the U.S.  dollar  value of the  foreign  currency  received,
determined on the date of sale, exchange or retirement.

         Gain or loss  realized  upon the  sale,  exchange  or  retirement  of a
Foreign  Currency  Note  will be  ordinary  income  or loss to the  extent it is
attributable  to  fluctuations  in  currency   exchange  rates.   Gain  or  loss
attributable to fluctuations in exchange rates will equal the difference between
the U.S.  dollar value of the foreign  currency  principal  amount of such Note,
determined  on the date such  payment is received  or such Note is disposed  of,
including  any payment with  respect to accrued  interest,  and the U.S.  dollar
value of the foreign currency  principal amount of such Note,  determined on the
date such United States Holder  acquired such Note, and the U.S. dollar value of
accrued  interest  received  (determined  by  translating  such  interest at the
average  exchange rate for the accrual period).  The foreign currency  principal
amount of a Foreign  Currency Note generally  equals the United States  Holder's
purchase price in units of foreign currency.  Such foreign currency gain or loss
will be recognized  only to the extent of the total gain or loss recognized by a
United States Holder on the sale, exchange or retirement of the Foreign Currency
Note.

         The source of exchange  gain or loss will be determined by reference to
the residence of the holder or the  "qualified  business  unit" of the holder on
whose books the Note is properly reflected.  Any gain or loss recognized by such
a United States  Holder in excess of such foreign  currency gain or loss will be
capital gain or loss (except to the extent of any accrued market discount or, in
the case of a short-term  Discount Note, any accrued OID), and generally will be
long-term  capital  gain or loss if the holding  period of the Foreign  Currency
Note exceeds one year.

         Any gain or loss  that is  treated  as  ordinary  income  or  loss,  as
described  above,  generally  will not be treated as interest  income or expense
except to the extent provided by administrative pronouncements of the Service.


                                      S-35






         OID, market discount, premium, acquisition premium and amortizable bond
premium of a Foreign  Currency Note are to be determined in the relevant foreign
currency.  The amount of such  discount  or premium  that is taken into  account
currently  under general rules  applicable to Notes other than Foreign  Currency
Notes  is to be  determined  for any  accrual  period  in the  relevant  foreign
currency and then translated into the United States Holder's functional currency
on the basis of the average  exchange rate in effect during such accrual period.
The amount of accrued  market  discount  (other  than  market  discount  that is
included in income on a current  basis)  taken into  account upon the receipt of
any partial  principal payment or upon the sale,  exchange,  retirement or other
disposition  of a Foreign  Currency  Note will be the U.S.  dollar value of such
accrued  market  discount  (determined  on the date of receipt  of such  partial
principal payment or upon the sale, exchange, retirement or other disposition).

         Any loss  realized  on the sale,  exchange or  retirement  of a Foreign
Currency  Note with  amortizable  bond premium by a United States Holder who has
not elected to amortize  such  premium  will be a capital  loss to the extent of
such bond premium.  If such an election is made,  amortizable bond premium taken
into  account on a current  basis shall reduce  interest  income in units of the
relevant foreign  currency.  Exchange gain or loss is realized on such amortized
bond premium  with respect to any period by treating the bond premium  amortized
in such period as a return of principal.

         The  Code  and  the  applicable  regulations  do not  discuss  the  tax
consequences  of an issuance of a Foreign  Currency Note that is denominated in,
or has payments of interest or principal determined by reference to, a so-called
hyperinflationary  currency  or more  than  one  currency.  On March  17,  1992,
Treasury  regulations were proposed with regard to debt instruments  denominated
in a hyperinflationary currency and certain debt instruments denominated in more
than one currency.  These proposed  regulations are proposed to be effective for
transactions entered into on or after the date such regulations are finalized.

         A Foreign  Currency  Note will be  considered  to be a debt  instrument
denominated in a hyperinflationary  currency if it is denominated in a Specified
Currency of a country in which there is  cumulative  inflation  of at least 100%
during the 36  calendar  month  period  ending on the last day of the  preceding
calendar  year.  Under the proposed  regulations,  a United  States  Holder that
acquires a Foreign  Currency  Note that is  denominated  in a  hyperinflationary
currency  will  recognize  gain  or loss  for its  taxable  year  determined  by
reference to the change in exchange  rates  between the first day of the taxable
year  (or the date the Note  was  acquired,  if  later)  and the last day of the
taxable year (or the date the Note was  disposed  of, if earlier).  Such gain or
loss will reduce or increase the amount of interest income otherwise required to
be taken into  account.  Special rules apply to the extent such loss exceeds the
amount of interest income otherwise taken into account.

         Under  the  proposed  regulations,  a  Foreign  Currency  Note  will be
considered to be a "dual currency debt  instrument" if (i) the qualified  stated
interest is denominated in or determined by reference to a single currency, (ii)
the stated  redemption  price at maturity is  denominated  in or  determined  by
reference to a different currency,  and (iii) the amount of all payments in each
currency is fixed on the issue date. A Foreign  Currency Note (other than a dual
currency  debt  instrument)  will  be  considered  to be a  "multicurrency  debt
instrument"  if payments are to be made in more than one currency and the amount
of all  payments in each  currency is fixed on the issue date.  A dual  currency
debt instrument will be treated as two  hypothetical  debt  instruments,  a zero
coupon  bond  denominated  in the  currency  of the stated  redemption  price at
maturity  and an  installment  obligation  denominated  in the  currency  of the
qualified  stated  interest.  A  multicurrency  debt  instrument will be treated
similarly and separated into  component  hypothetical  debt  instruments in each
currency.  The OID and foreign currency rules discussed above will apply to each
hypothetical  debt  instrument.  The  proposed  regulations  do not apply to any
Foreign  Currency  Note that is  denominated  in, or has payments of interest or
principal  determined  by  reference  to, more than one  currency  except to the
extent the Note meets the  definition  of a dual  currency  debt  instrument  or
multicurrency debt instrument.

         Exchangeable Notes

         The following discussion summarizes the principal United States federal
income  tax  consequences  to a  United  States  Holder  of  the  ownership  and
disposition of Exchangeable Notes.


                                      S-36






         There are substantial uncertainties regarding the United States federal
income tax  consequences of an investment in  Exchangeable  Notes because of the
absence of authority that addresses instruments having  characteristics  similar
to such  instruments.  Optionally  Exchangeable  Notes for  which the  principal
amount  payable  in cash  equals or exceeds  the issue  price will be treated as
indebtedness  of the  Company for United  States  federal  income tax  purposes.
Unless otherwise noted in the applicable Pricing Supplement, the Company intends
to treat  other  Exchangeable  Notes as  indebtedness  of the  Company  and such
characterization  is binding on all United States Holders except for holders who
disclose a different  position on their United States federal income tax return.
In any case,  the  Company's  treatment  is not binding  upon the Service or the
courts, and there can be no assurance that it will be accepted.

         Under  current  law,  interest  paid on an  Exchangeable  Note  will be
taxable to a United  States  Holder as ordinary  interest  income at the time it
accrues or is received,  in accordance with the United States Holder's method of
accounting for United States federal income tax purposes. Any difference between
the issue price of such a Note and its  principal  amount will be treated as OID
under  "Discount  Notes," above.  Under current law, a United States Holder will
not  be  required  to  include  as  income  any  increase  in  the  value  of an
Exchangeable Note attributable to the exchange feature before the sale, exchange
or retirement of the Note unless such holder becomes  entitled to a fixed amount
of cash (or the  equivalent)  under  such  exchange  feature  before  such sale,
exchange or  retirement.  In such a case, a United States Holder may be required
to  recognize  amounts  in  respect of an  exchange  feature  prior to the sale,
exchange or retirement of the Note.

         Upon the sale, exchange or retirement of an Exchangeable Note, a United
States  Holder  will  recognize  taxable  gain or loss  equal to the  difference
between  the  amount  realized  on  the  sale,  exchange  or  retirement  of  an
Exchangeable  Note and such  holder's  tax  basis in the  Note.  If the  Company
delivers property (other than cash) to a holder in retirement of an Exchangeable
Note,  the amount  realized  would equal the fair market value of the  property,
determined  at the time of such  retirement,  increased by any cash  received in
lieu of fractional stock or securities,  and reduced by any amount  attributable
to accrued interest,  which will be taxable as such unless previously taken into
account.  Gain or loss recognized on the sale or exchange (before retirement) of
an  Exchangeable  Note will be capital gain or loss (except to the extent of any
accrued market discount) and will generally be long-term capital gain or loss if
at the time of the sale or exchange the Exchangeable Note has been held for more
than one year.

         Under current law, there is  uncertainty as to whether gain  recognized
upon a retirement  (including a retirement  pursuant to an optional or mandatory
exchange for property) of an Exchangeable  Note would be capital gain or, to the
extent  attributable  to the optional or mandatory  exchange  feature,  ordinary
interest  income.  Any loss recognized upon a retirement will be a capital loss.
The  applicable  Pricing  Supplement  will  disclose  whether or not the Company
intends  to treat  gain upon a  retirement  to the  extent  attributable  to the
optional or  mandatory  exchange  feature as interest  income and to report such
amounts  accordingly.  Prospective  investors  should  consult  with  their  tax
advisors regarding the character of gain recognized upon retirement.

         A United  States  Holder will have a tax basis in any  property  (other
than cash)  received upon the  retirement of an  Exchangeable  Note equal to the
fair market value of such property,  determined at the time of such  retirement.
Any gain or loss  realized  by a United  States  Holder on a sale or exchange of
such  property  will  generally  be capital  gain or loss and will  generally be
long-term capital gain or loss if the sale or exchange occurs more than one year
after the retirement of the Exchangeable Note.

         United  States  Holders that have acquired  debt  instruments  that are
similar to Exchangeable  Notes and have accounted for such debt instruments in a
consistent  manner  (including  under  proposed,  but  subsequently   withdrawn,
Treasury  regulations)  may be  deemed  to  have  established  a  method  of tax
accounting.  In such  instance,  the United  States  Holder would be required to
apply such method of tax accounting to the Exchangeable Notes, unless consent of
the  Commissioner of the Service is obtained to change such method.  The Service
or a court would not be required to accept such method as correct and the United
States  Holder  could be  liable  for  penalties  if such  method is found to be
incorrect.


                                      S-37






         The  Code  and  the  applicable  regulations  do not  discuss  the  tax
consequences  of an  issuance of Notes that  provide for one or more  contingent
payments.  On December 15, 1994,  Treasury  regulations were proposed addressing
the treatment of contingent  debt  instruments.  These proposed  regulations are
proposed to be effective for debt  instruments  issued on or after the date that
is 60 days after the date final regulations are promulgated.  Under the proposed
regulations,   the  so-called   "noncontingent   bond  method"  would  apply  in
determining the amount of interest income with respect to an Exchangeable  Note.
Under the noncontingent  bond method, a projected payment schedule is determined
for a debt instrument, and interest accrues on the debt instrument based on this
schedule.  The projected  payment  schedule  would consist of all  noncontingent
payments (including payments that otherwise would be considered qualified stated
interest)  and a  projected  amount  for each  contingent  payment.  Appropriate
adjustments are made to take into account  differences between the actual amount
of  a  contingent   payment  and  the  projected  amount.   Under  the  proposed
regulations, any gain recognized by a United States Holder on the sale, exchange
or retirement of an Exchangeable  Note would be treated as interest income.  Any
loss  recognized  on the sale,  exchange  or  retirement  would be treated as an
ordinary loss to the extent of prior interest inclusions.

         There  can be no  assurance  that the  ultimate  tax  treatment  of the
Exchangeable Notes would not differ  significantly from the description  herein.
Prospective investors are urged to consult their tax advisors as to the possible
consequences of holding the Exchangeable Notes.

         PERLS, Reverse PERLS and Multicurrency PERLS

         The  following   discussion   relates  to  PERLS,   Reverse  PERLS  and
Multicurrency  PERLS that bear current  coupons  consistent with or greater than
comparable  dollar-denominated debt obligations.  In other cases, holders should
refer  to  the  discussion  relating  to  taxation  in  the  applicable  Pricing
Supplement.

         Although  no  authority  exists  that  addresses   instruments   having
characteristics  similar  to such  instruments  and the  conclusions  herein are
therefore  not entirely free from doubt,  Shearman & Sterling  advises that such
PERLS,  Reverse PERLS and Multicurrency PERLS should constitute debt obligations
for United States  federal  income tax purposes and that no portion of the issue
price should be allocated to the foreign currency  feature.  The Company intends
to treat PERLS,  Reverse PERLS and  Multicurrency  PERLS as  indebtedness of the
Company  and such  characterization  is binding on all  United  States  Holders,
except for holders  who  disclose a different  position on their  United  States
federal income tax return.  In any case, the Company's  treatment is not binding
upon the Service or the courts,  and there can be no  assurance  that it will be
accepted.

         The  regulations  under the OID rules state that a debt instrument will
not be treated as a contingent debt instrument merely because some or all of the
payments are  denominated  in or  determined by reference to the value of one or
more foreign currencies.  It should be noted, however, that the foreign currency
regulations do not yet address the treatment of instruments like PERLS,  Reverse
PERLS or  Multicurrency  PERLS and the proposed  regulations  do not address the
treatment of such  instruments  except  insofar as they meet the  definitions of
dual  currency  debt  instruments  and  multicurrency  debt  instruments.  It is
possible that such regulations (or other authority),  when issued,  could result
in tax  consequences  that differ  from those  described  herein,  and that such
authority could apply with  retroactive  effect.  See discussion  under "Foreign
Currency  Notes" for a summary of other federal income tax  principles  that may
apply to United States Holders of PERLS, Reverse PERLS and Multicurrency PERLS.

         Notes Linked to Commodity Prices, Single Securities, Baskets of 
         Securities or Indices

         The United States  federal income tax  consequences  to a United States
Holder of the ownership and disposition of Notes that have principal or interest
determined by reference to commodity prices, securities of entities unaffiliated
with the Company, baskets of such securities or indices will vary depending upon
the exact terms of the Notes and related  factors.  Notes containing any of such
features  may be subject to rules that differ from the general  rules  discussed
above.  Holders  intending to purchase such Notes should refer to the discussion
relating to taxation in the applicable Pricing Supplement.

                                      S-38







Backup Withholding

         The 31% "backup"  withholding  and information  reporting  requirements
apply to certain  payments of  principal,  premium,  if any,  and interest on an
obligation,  and to proceeds of the sale or redemption  of an obligation  before
maturity, to certain noncorporate United States Holders. The Company, its agent,
a broker,  the relevant Trustee or any paying agent, as the case may be, will be
required to withhold  from any payment that is subject to backup  withholding  a
tax equal to 31% of such  payment if the United  States  Holder fails to furnish
his  taxpayer   identification   number  (social  security  number  or  employer
identification  number),  to certify  that such  holder is not subject to backup
withholding,  or to otherwise  comply with the  applicable  requirements  of the
backup withholding rules. Certain holders (including, among others, corporations
and persons  who are not United  States  persons)  are not subject to the backup
withholding and reporting requirements.

         Any amounts withheld under the backup  withholding rules from a payment
to a United States Holder would be allowed as a refund or a credit  against such
holder's United States federal income tax provided that the required information
is furnished to the Service.

         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 OWN TAX ADVISORS WITH RESPECT
TO THE TAX  CONSEQUENCES  TO THEM OF THE 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.

                              PLAN OF DISTRIBUTION

         The  Notes are  being  offered  on a  continuing  basis by the  Company
exclusively  through the Agents,  who have agreed to use  reasonable  efforts to
solicit offers to purchase Notes. The Company will have the sole right to accept
offers to purchase  Notes and may reject any offer to purchase Notes in whole or
in part.  The Agents will have the right to reject any offer to  purchase  Notes
solicited  by them in whole or in part.  Payment  of the  purchase  price of the
Notes  will be  required  to be  made in  immediately  available  funds.  Unless
otherwise specified in the applicable Pricing  Supplement,  the Company will pay
an Agent, in connection  with sales of Notes resulting from a solicitation  made
or an offer to purchase received by such Agent, a commission  ranging from .125%
to .750% of the  principal  amount  of  Notes  to be  sold,  depending  upon the
maturity of the Notes; provided, however, that commissions with respect to Notes
having a maturity of 30 years or greater will be negotiated.

         The  Company may also sell Notes to an Agent as  principal  for its own
account at  discounts  to be agreed upon at the time of sale.  Such Notes may be
resold  to  investors  and  other  purchasers  at a fixed  offering  price or at
prevailing  market prices,  or prices related thereto at the time of such resale
or  otherwise,  as  determined  by such Agent and  specified  in the  applicable
Pricing  Supplement.  An Agent may offer the Notes it has purchased as principal
to other dealers. Such Agent may sell the Notes to any dealer at a discount and,
unless otherwise specified in the applicable Pricing  Supplement,  such discount
allowed to any dealer  will not be in excess of the  discount  to be received by
such Agent from the Company. After the initial public offering of Notes that are
to be resold by an Agent to  investors  and other  purchasers  on a fixed public
offering price basis, the public offering price,  concession and discount may be
changed.

         In  compliance   with  United  States   federal  income  tax  laws  and
regulations,  the  Company  and each  Agent  has  agreed  that it will  not,  in
connection  with  the  original  issuance  of any  Bearer  Notes or  during  the
Restricted  Period  (as  defined  above  in  "Description  of  Notes  --  Forms,
Denominations, Exchange and Transfer"), offer, sell, resell or deliver, directly
or  indirectly,  any Bearer Notes in the United States or its  possessions or to
United  States  persons  (other than as  permitted  by the  applicable  Treasury
Regulations).  In addition,  each Agent has  represented and agreed that it will
have in effect  procedures  reasonably  designed to ensure that its employees or
agents who are

                                      S-39






directly engaged in selling Bearer Notes are aware of the above  restrictions on
the offering, sale, resale or delivery of Bearer Notes.

         With respect to Notes to be offered or sold in the United Kingdom, each
Agent,  underwriter,  dealer,  other agent and remarketing firm participating in
the distribution of such Notes has represented and agreed, or will represent and
agree,  that: (i) in relation to Notes which have a maturity of one year or more
and which are to be listed on the London Stock  Exchange,  it has not offered or
sold and will not offer or sell any such Notes to persons in the United  Kingdom
prior to  admission of such Notes to listing in  accordance  with Part IV of the
Financial  Services  Act 1986 (the  "Act")  except  to  persons  whose  ordinary
activities  involve  them  in  acquiring,  holding,  managing  or  disposing  of
investments  (as  principal  or agent) for the purposes of their  businesses  or
otherwise  in  circumstances  which have not  resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Act; (ii) in
relation to Notes which have a maturity of one year or more and which are not to
be listed on the London Stock Exchange, it has not offered or sold and, prior to
the  expiry of the period of six  months  from the date of issue of such  Notes,
will not offer or sell any such Notes to persons in the United Kingdom except to
persons whose ordinary activities involve them in acquiring,  holding,  managing
or disposing of  investments  (as  principal or agent) for the purposes of their
businesses  or otherwise in  circumstances  which have not resulted and will not
result in an offer to the public in the United Kingdom within the meaning of the
Public Offers of  Securities  Regulations  1995;  (iii) it has complied and will
comply with all  applicable  provisions of the Act with respect to anything done
by it in  relation  to such Notes in,  from or  otherwise  involving  the United
Kingdom; and (iv) it has only issued or passed on and will only issue or pass on
in the United Kingdom any document  received by it in connection  with the issue
of such Notes,  other than any document which consists of or any part of listing
particulars, supplementary listing particulars or any other document required or
permitted to be  published  by the listing  rules under part IV of the Act, to a
person who is of a kind described in article 11(3) of the Financial Services Act
1986 (Investment Advertisements)  (Exemptions) Order 1995 or is a person to whom
such document may otherwise lawfully be issued or passed on.

         The  Notes  have  not  been,  and  will not be,  registered  under  the
Securities and Exchange Law of Japan. Accordingly,  the Notes may not be offered
or sold,  directly  or  indirectly,  in Japan or to, or for the  benefit of, any
resident of Japan (which term as used herein means any person  resident in Japan
including any corporation or other entity  organized under the laws of Japan) or
to others for the reoffering or resale, directly or indirectly, in Japan or to a
resident  of  Japan  except  pursuant  to an  exemption  from  the  registration
requirements  of, and otherwise in compliance  with, the Securities and Exchange
Law of Japan and other relevant laws and regulations of Japan.

         Notes  denominated or payable in Deutsche Marks may only be offered and
sold from time to time by the Company  through Morgan Stanley Bank AG, acting as
agent for the  Company  or as lead  manager  in a  syndicated  transaction.  The
issuance of Notes  denominated  or payable in Deutsche  Marks will take place in
compliance  with the guidelines of the German Central Bank, as amended from time
to time,  regarding the issue of debt securities  denominated in Deutsche Marks.
The Notes may not be offered or sold in the Federal  Republic  of Germany  other
than in  compliance  with the  provisions  of the German  Sales  Prospectus  Act
(Wertpapier-Verkaufsprospektgesetz) of December 13, 1990, as amended, and of any
other laws  applicable in the Federal  Republic of Germany  governing the issue,
offering and sale of securities.

         Notes  denominated or payable in or indexed to Swiss francs may only be
offered and sold from time to time by the Company  through  Bank Morgan  Stanley
AG,  acting  as  agent  for the  Company  or as  lead  manager  in a  syndicated
transaction. The issuance of Notes denominated or payable in or indexed to Swiss
francs will take place in compliance with Swiss law and the relevant regulations
of the Swiss National Bank in effect from time to time.

         Morgan  Stanley S.A. has  represented  and agreed,  and any dealers for
French  Franc Notes will  represent  and agree,  that French Franc Notes will be
issued outside the Republic of France and that, in connection with their initial
distribution,  Morgan  Stanley  S.A.  and such  dealers  will not offer or sell,
directly or indirectly,  any French Franc Notes to the public in the Republic of
France,  and will not distribute or cause to be distributed to the public in the
Republic of France this Prospectus  Supplement,  the accompanying  Prospectus or
any other offering material

                                      S-40






relating to French Franc Notes.  As of the date of this  Prospectus  Supplement,
only French credit  institutions  (which includes French subsidiaries of foreign
banks) may act as  underwriters,  dealers or agents with respect to issuances of
French Franc Notes (except for syndicated issuances of French Franc Notes, where
the lead manager must be a credit institution  authorized to act as lead manager
of French Franc debt instrument issuances).

         Each of the  Agents  may be deemed to be an  "underwriter"  within  the
meaning of the Securities Act of 1933 (the  "Securities  Act").  The Company and
the Agents have agreed to  indemnify  each other  against  certain  liabilities,
including  liabilities  under the  Securities  Act, or to contribute to payments
made in respect thereof. The Company has also agreed to reimburse the Agents for
certain expenses.

         Morgan  Stanley & Co.  International  Limited,  Bank Morgan Stanley AG,
Morgan  Stanley  S.A.  and Morgan  Stanley  Bank AG are each an affiliate of the
Company.  The Company has been  advised by the Agents that they intend to make a
market in the Notes, as permitted by applicable laws and regulations. The Agents
are not obligated to do so,  however,  and the Agents may  discontinue  making a
market at any time without notice. No assurance can be given as to the liquidity
of any trading market for the Notes.

         Concurrently with the offering of Notes through the Agents as described
herein,  the Company may issue other Debt Securities  pursuant to the Indentures
referred to herein.  Such Debt Securities may include medium-term notes ("Global
Medium-Term Notes, Series C") that may have terms  substantially  similar to the
terms of the Notes offered hereby and that may be offered, concurrently with the
offering of the Notes, on a continuing basis in the United States by the Company
pursuant to a distribution  agreement (the "U.S.  Distribution  Agreement") with
Morgan Stanley & Co.  Incorporated,  an affiliate of the Company ("MS&Co."),  as
agent for the Company, the terms of which are substantially similar to the terms
of the  distribution  agreement  (the "Euro  Distribution  Agreement")  with the
Agents,   except  for  certain  selling  restrictions   specified  in  the  Euro
Distribution Agreement.  Any Global Medium-Term Notes, Series C sold pursuant to
such U.S.  Distribution  Agreement,  and any Debt  Securities  or Debt  Warrants
issued by the Company  pursuant  to the  Indentures,  will reduce the  aggregate
offering price of Notes that may be offered by this Prospectus  Supplement,  any
Pricing Supplement hereto and the Prospectus.

                                  LEGAL MATTERS

         The  validity  of the Notes  will be  passed  upon for the  Company  by
Jonathan M. Clark,  Esq.,  General  Counsel and  Secretary  of the Company and a
Managing  Director of MS&Co., or other counsel who is satisfactory to the Agents
and an officer of the  Company.  Mr. Clark and such other  counsel  beneficially
own, or have rights to acquire under an employee benefit plan of the Company, an
aggregate  of less than 1% of the common  stock of the  Company.  Certain  legal
matters relating to the Notes will be passed upon for the Agents by Davis Polk &
Wardwell.  Davis Polk & Wardwell has in the past  represented  and  continues to
represent the Company on a regular basis and in a variety of matters,  including
in  connection  with its  merchant  banking and  leveraged  capital  activities.
Shearman & Sterling,  which is opining on the accuracy of the summary of certain
tax matters  described  under the captions  "United States  Federal  Taxation --
Foreign  Holders" and "United States Federal Taxation -- United States Holders,"
represents the Company on a regular basis and in a variety of matters, including
in connection with its merchant banking and leveraged capital activities.



                                      S-41






                                 CAPITALIZATION

         The   following   table   sets   forth   the   unaudited   consolidated
capitalization  of the Company at February 29,  1996.  As of the date hereof and
except as described in the footnotes to the following  table,  there has been no
material  change  in the  capitalization  of the  Company  and its  consolidated
subsidiaries, taken as a whole, since February 29, 1996. The following should be
read in conjunction with the Company's  consolidated  financial statements,  the
notes thereto and "Management's  Discussion and Analysis of Financial  Condition
and Results of Operations"  in the Company's  Annual Report on Form 10-K for the
fiscal period ended November 30, 1995 and Quarterly  Report on Form 10-Q for the
quarter ended February 29, 1996, each incorporated herein by reference.

                                                            At February 29, 1996
                                                           ---------------------
                                                           (In thousands, except
                                                            share and unit data)

Short-term borrowings.......................................  U.S.$ 12,930,519
Current portion of long-term borrowings.....................         2,397,724
                                                                  ------------
     Total..................................................  U.S.$ 15,328,243
                                                                  ============

Long-term borrowings (1)....................................  U.S.$  9,894,864
                                                                  ------------
Capital Units...............................................           865,283
                                                                  ------------

Stockholders' equity:
 Preferred stock, no par value; authorized 30,000,000 shares:
   ESOP Convertible Preferred Stock, liquidation preference
     U.S.$35.88; outstanding 3,745,901 shares...............          134,384
   9.36% Cumulative Preferred Stock, stated value U.S.$25;
     outstanding 5,500,000 shares...........................          137,500
   8.88% Cumulative Preferred Stock, stated value U.S.$200;
     outstanding 975,000 shares.............................          195,000
   8 3/4% Cumulative Preferred Stock, stated value U.S.$200;
     outstanding 750,000 shares.............................          150,000
   7 3/8% Cumulative Preferred Stock, stated value U.S.$200;
     outstanding 1,000,000 shares...........................          200,000
 Common stock, U.S.$1.00 par value; authorized 300,000,000
    shares; issued 164,389,850 shares.......................          164,390
 Paid-in capital............................................          644,902
 Retained earnings..........................................        4,038,783
 Cumulative translation adjustments.........................          (10,053)
                                                                -------------
           Subtotal.........................................        5,654,906

 Less:
   Note receivable related to sale of preferred stock 
     to ESOP ...............................................           86,773
   Common stock held in treasury, at cost 10,558,016 shares.          411,493
                                                                  ------------
           Total stockholders' equity.......................        5,156,640
                                                                  ------------

Total capitalization........................................  U.S.$ 15,916,787
                                                                  ============

- ---------------
(1)  A shelf  registration  statement  became  effective in March 1995 for up to
     U.S.$4,829,470  of debt  securities,  warrants to purchase debt securities,
     preferred stock and depositary shares.  Additional senior notes aggregating
     U.S.$760,676  were issued  after  February  29, 1996 and through  March 31,
     1996, pursuant to such shelf registration statement.


                                      S-42






                               BOARD OF DIRECTORS

         The current  Directors of the Company and their  principal  occupations
are listed below.  The business  address of each director is 1585 Broadway,  New
York, New York 10036.

Richard B. Fisher .................    Chairman, Managing Director and Director
John J. Mack ......................    President, Managing Director and Director
Barton M. Biggs....................    Managing Director and Director
Peter F. Karches...................    Managing Director and Director
Sir David A. Walker................    Managing Director and Director
Robert P. Bauman...................    Director
Daniel B. Burke....................    Director
S. Parker Gilbert..................    Director
Allen E. Murray....................    Director
Paul J. Rizzo......................    Director

                               GENERAL INFORMATION

         The listing of the Series D Notes on the London Stock  Exchange will be
expressed as a percentage of their principal amount excluding  accrued interest.
Listing of the Series D Notes  offered  hereby is  expected to be granted by the
London Stock  Exchange on May 3, 1996 subject only to issuance of Series D Notes
(including  temporary  global  notes).  The  listing  agent with  respect to the
application  for the listing of the Series D Notes on the London Stock  Exchange
is Morgan Stanley Securities Limited. The French Franc arranger, any dealers for
French  Franc  Notes and the  Company  will  comply  with the  French  EuroFranc
Regulations.

         Ernst & Young LLP, independent auditors,  have audited the consolidated
statement of financial condition of the Company as of November 30, 1995, January
31,  1995,  January 31,  1994,  January 31, 1993 and  December  31, 1991 and the
related   consolidated   statements  of  income,   cash  flows  and  changes  in
stockholders'  equity for the fiscal  period ended  November  30, 1995,  for the
fiscal  years ended  January 31, 1995,  January 31,  1994,  January 31, 1993 and
December 31, 1991 and for the one-month period ended January 31, 1992.

         Shearman & Sterling has given and not withdrawn its written  consent to
the inclusion in this Prospectus  Supplement of its opinion under "United States
Federal  Taxation -- Foreign  Holders" and "United  States  Federal  Taxation --
United  States  Holders"  and has  authorized  the  contents of that part of the
listing  particulars  for the  purposes of Section  152(1)(e)  of the  Financial
Services Act 1986.

         Listing  on  the  London  Stock  Exchange  of the  Series  D  Notes  is
conditional  upon  issuance  of such  Notes.  The  obligation  of a  prospective
purchaser  (including the Agents) to pay for any Notes it has agreed to purchase
is subject to the satisfaction of certain  conditions which, if not satisfied or
waived,  would result in such purchaser having no obligation to pay for any such
Notes.

         The  issuance  of the  Notes was  authorized  pursuant  to  resolutions
adopted by  unanimous  written  consent of the Board of Directors of the Company
dated March 12, 1996 and unanimous written consent of the Executive Committee of
the Board of Directors of the Company dated April 24, 1996.

         The Company is  incorporated  in Delaware,  U.S.A.,  and its registered
office is located at 32 Loockerman Square, Suite L-100, Dover, Delaware 19901.

         Since  February 29, 1996,  the date of the latest  published  unaudited
financial statements, there has been no material adverse change in the financial
or business position of the Company and its consolidated subsidiaries,  taken as
a whole.


                                      S-43






         As  of  the  date   hereof,   there  are  no  legal,   arbitration   or
administrative proceedings including any pending or, to the Company's knowledge,
threatened  involving the Company or any of its consolidated  subsidiaries which
may have or have had during  the  previous  12 months a  material  effect on the
Company's consolidated financial condition.

         The Notes  have been  accepted  for  clearance  through  the  Euroclear
Operator, Cedel and (in the case of French Franc Notes) SICOVAM. The appropriate
code for each  issue  allocated  by the  Euroclear  Operator  and Cedel  will be
contained in the applicable  Pricing  Supplement.  Transactions will normally be
effected for settlement not earlier than two business days after the date of the
transaction.

         Copies of the Euro  Distribution  Agreement dated May 2, 1996 among the
Company  and the  Agents,  the U.S.  Distribution  Agreement  dated  May 1, 1996
between the Company and MS&Co.,  each of the  Indentures,  the Company's  Annual
Reports on Form 10-K for the fiscal  period ended  November 30, 1995 and for the
fiscal years ended January 31, 1995 and January 31, 1994 and  Quarterly  Reports
on Form  10-Q for 1993,  1994,  1995 and 1996  (each  excluding  exhibits),  the
Company's listing particulars, all of the Company's future Annual, Quarterly and
Current Reports,  supplementary  listing particulars and Pricing Supplements and
the Company's Restated Certificate of Incorporation, as amended, and By-laws, as
amended,  will,  from the date hereof and so long as any Note is outstanding and
throughout  the  term  of the  medium-term  note  program  (the  "Program"),  be
available for inspection  during business hours at the corporate trust office of
each of the  Trustees in The City of New York,  the office of each Paying  Agent
and the principal executive offices of the Company specified in the accompanying
Prospectus.  The  Company's  Quarterly  Reports on Form 10-Q  contain  unaudited
quarterly financial statements.

         Documents  incorporated  by  reference  herein  and  any  part  of  the
Registration  Statement  not  included  herein do not form  part of the  listing
particulars.

         Any statement contained herein or in a document  incorporated or deemed
to be  incorporated  by  reference  herein  shall be  deemed to be  modified  or
superseded  for  purposes  of this  Prospectus  Supplement  (but not the listing
particulars)  to  the  extent  that  a  statement  contained  herein  or in  any
subsequently  filed  document  that also is or is deemed to be  incorporated  by
reference  herein modifies or supersedes  such statement.  Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus Supplement.

                            PARIS LISTING INFORMATION

         Under  regulations  made by the French  Tresor,  French Franc Notes are
required to be listed on the Paris Bourse if (a) such French Franc Notes are, or
are intended to be, listed on any other stock  exchange or (b) such French Franc
Notes are, or are  intended to be,  distributed  as a public  offer  (within the
meaning of the French  EuroFranc  Regulations).  The following  procedures  will
apply to French Franc Notes which are to be so listed.

         Only French credit  institutions (which includes French subsidiaries of
foreign banks) may act as underwriters, dealers or agents for French Franc Notes
(except for syndicated  issuances of French Franc Notes,  where the lead manager
must be a credit  institution  authorized to act as lead manager of French Franc
debt instrument issuances). The French Franc arranger, any dealers in respect of
French  Franc  Notes and the  Company  must  comply  with the  French  EuroFranc
Regulations,  including  with  respect to French Franc Notes issued in a private
placement  under French law. The minimum  aggregate  principal  amount of French
Franc Notes listed on the Paris Bourse and  distributed  in a public offer shall
be 300,000,000  French Francs. In addition,  French Franc Notes which are listed
on the Paris  Bourse  will be issued  subject to the  requirements  of the Paris
Bourse. Under the current  regulations,  "private placements" shall be construed
as  issuances  of  Notes  placed  on  a  firm  basis  with  a  small  number  of
predetermined  nonresident investors.  Index-linked French Franc Notes which are
to be  listed  on the  Paris  Bourse  will be  issued  in  compliance  with  the
regulations of the COB and the Conseil des Bourses de Valeurs.


                                      S-44






Commission des Operations de Bourse ("COB")

         Prior to listing of any French Franc Notes on the Paris Bourse, the COB
is  required  to  approve  this  Prospectus   Supplement  and  the  accompanying
Prospectus.  In addition,  the Pricing  Supplement  applicable  to each issue of
French Franc Notes to be listed on the Paris Bourse is currently  required to be
approved at the time of the relevant issue. The relevant approval in relation to
the Program and each such issue will each be evidenced by the issue of a visa by
the COB. The visa numbers will be disclosed in the Pricing Supplement applicable
to the relevant French Franc Notes.

Conseil des Bourses de Valeurs ("CBV")

         The  listing of French  Franc  Notes on the Paris  Bourse is subject to
approval by the CBV.  Such  approval  will be  evidenced by  publication  in the
Bulletin  Officiel de la Cote. At the option of the Company,  publication may be
made in one notice  published in  connection  with a particular  issue of French
Franc Notes or in two  notices,  the first  published in relation to the Program
generally  and the second  published in  connection  with a particular  issue of
French Franc Notes incorporated by reference to the contents of the first notice
(to the extent not modified in the second notice).

Bulletin des Annonces Legales Obligatoires ("BALO")

         French  Franc Notes to be listed on the Paris Bourse may not be offered
in France and the publication of the Pricing Supplement  applicable thereto must
not be made before such listing  becomes  effective  and details of the relevant
French Franc Notes (in the form of a notice  legale) have been  published in the
BALO.

Documents available for inspection

         In the case of French  Franc  Notes  listed on the  Paris  Bourse,  the
applicable  Pricing  Supplement  will specify the additional  places in Paris at
which documents  incorporated by reference  herein (or otherwise  required to be
made available for  inspection)  may be inspected  during normal business hours.
The Company has undertaken to make such documents available as so required.



                                      S-45






                      PARIS BOURSE RESPONSIBILITY STATEMENT

                             PERSONNES QUI ASSUMENT
         LA RESPONSABILITE DU "PROSPECTUS" ET DU "PROSPECTUS SUPPLEMENT"
         EN CE QUI CONCERNE LES INSTRUMENTS QUI SONT ADMIS A LA COTATION
             SUR LE COMPARTIMENT INTERNATIONAL DE LA BOURSE DE PARIS

AU NOM DE L'EMETTEUR ET DE LA BANQUE PRESENTATRICE

A la connaissance de l'emetteur et de la banque  presentatrice,  les donnees des
presents  documents  denommes  "Prospectus"  et  "Prospectus   Supplement"  sont
conformes a la realite et ne comportent pas d'omission de nature a en alterer la
portee.



Valerie Blin                              Philip N. Duff
Associate                                 Chief Financial Officer and Treasurer
Attorney-in-fact                          Morgan Stanley Group Inc.
Morgan Stanley S.A.


                 VISA DE LA COMMISSION DES OPERATIONS DE BOURSE

         En vue de la  cotation a Paris des titres  eventuellement  emis dans le
cadre  de ce  present  Programme,  et par  application  des  articles  6 et 7 de
l'ordonnance  No. 67-833 du 28 septembre  1967, la Commission  des Operations de
Bourse a enregistre les presents documents denommes  "Prospectus" et "Prospectus
Supplement" sous le No.
P96-095 du 30 avril 1996.

                                      S-46





PRINCIPAL EXECUTIVE OFFICES                        REGISTERED OFFICE OF THE
      OF THE COMPANY                                  COMPANY IN DELAWARE

       1585 Broadway                           32 Loockerman Square, Suite L-100
 New York, New York 10036                            Dover, Delaware 19901
          U.S.A.                                            U.S.A.

                                    TRUSTEES

      (Senior Notes)                                 (Subordinated Notes)

       Chemical Bank                          The First National Bank of Chicago
   450 West 33rd Street                            One First National Plaza
 New York, New York 10001                           Chicago, Illinois 60670
          U.S.A.                                            U.S.A.


                   PRINCIPAL PAYING AGENT, EXCHANGE AGENT AND
              TRANSFER AGENT FOR BEARER NOTES AND REGISTERED NOTES

                                  Chemical Bank
                               Chemical Bank House
                                   180 Strand
                                 London WC2R 1EX
                                     England

                         OTHER PAYING AGENT AND TRANSFER
                           AGENT FOR REGISTERED NOTES
                                  Chemical Bank
                              450 West 33rd Street
                            New York, New York 10001
                                     U.S.A.

LEGAL ADVISORS TO THE COMPANY                      LEGAL ADVISORS TO THE AGENTS

    Shearman & Sterling                               Davis Polk & Wardwell
   599 Lexington Avenue                               450 Lexington Avenue
 New York, New York 10022                           New York, New York 10017
          U.S.A.                                             U.S.A.

                                  LISTING AGENT

                        Morgan Stanley Securities Limited
                                 25 Cabot Square
                                  Canary Wharf
                                 London E14 4QA
                                     England

                               PARIS LISTING AGENT

                               Morgan Stanley S.A.
                                25, rue de Balzac
                                   75008 Paris
                                     France

                             AUDITORS OF THE COMPANY

                                Ernst & Young LLP
                                 277 Park Avenue
                            New York, New York 10172
                                     U.S.A.