-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, nXv4oX9rQqHmSGiPSHKVFsvpAJASc+M6KpwRr7Slvmgr8z8lJ0GHYv+2gHr3BH7o ++2x+2fiLs25M/rSUj34Gg== 0000810316-95-000029.txt : 19950814 0000810316-95-000029.hdr.sgml : 19950814 ACCESSION NUMBER: 0000810316-95-000029 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIAMOND SHAMROCK INC CENTRAL INDEX KEY: 0000810316 STANDARD INDUSTRIAL CLASSIFICATION: PETROLEUM REFINING [2911] IRS NUMBER: 742456753 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09409 FILM NUMBER: 95561593 BUSINESS ADDRESS: STREET 1: P O BOX 696000 CITY: SAN ANTONIO STATE: TX ZIP: 78230 BUSINESS PHONE: 2106416800 MAIL ADDRESS: STREET 1: P O BOX 696000 CITY: SAN ANTONIO STATE: TX ZIP: 78230 FORMER COMPANY: FORMER CONFORMED NAME: DIAMOND SHAMROCK R&M INC DATE OF NAME CHANGE: 19900207 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT of 1934 For the quarterly period ended June 30, 1995 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT of 1934 For the transition period from___________________to__________________ Commission file number: 1-9409 DIAMOND SHAMROCK, INC. (Exact name of registrant as specified in its charter) DELAWARE 74-2456753 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 9830 Colonnade Boulevard, San Antonio, Texas 78230 (Address of principal executive offices) (Zip Code) 210-641-6800 (Registrant's telephone number, including area code) ______________________________________________________________________________ (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. (X)YES ( )NO APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ( )YES ( )NO APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Shares of Common Stock outstanding at July 31, 1995: 29,021,996 PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements DIAMOND SHAMROCK, INC. CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) (dollars in millions, except per share data) Three Months Six Months Ended Ended June 30, June 30, 1995 1994 1995 1994 REVENUES Sales and operating revenues $ 789.7 $ 646.5 $ 1,466.4 $ 1,230.3 Other revenues, net 4.3 2.6 8.4 7.1 794.0 649.1 1,474.8 1,237.4 COSTS AND EXPENSES Cost of products sold and operating expenses 687.1 546.6 1,300.2 1,061.3 Depreciation 19.5 17.6 38.1 34.6 Selling and administrative 21.4 18.1 39.7 34.0 Taxes other than income taxes 10.4 10.4 20.7 19.9 Interest 11.4 10.8 22.8 21.3 749.8 603.5 1,421.5 1,171.1 Income Before Tax Provision 44.2 45.6 53.3 66.3 Provision for Income Taxes 16.2 18.1 19.9 26.6 Net Income 28.0 27.5 33.4 39.7 Dividend Requirement on Preferred Stock 1.1 1.1 2.2 2.2 Earnings Applicable to Common Shares $ 26.9 $ 26.4 $ 31.2 $ 37.5 Primary Earnings Per Share $ 0.93 $ 0.91 $ 1.08 $ 1.29 Fully Diluted Earnings Per Share $ 0.87 $ 0.85 $ 1.03 $ 1.23 Cash Dividends Per Share Common $ 0.14 $ 0.13 $ 0.28 $ 0.26 Preferred $ 0.625 $ 0.625 $ 1.25 $ 1.25 Weighted Average Common Shares Outstanding (thousands of shares) Primary 29,153 29,122 29,089 29,132 Fully Diluted 32,409 32,376 32,372 32,389 See accompanying Notes to Consolidated Financial Statements. DIAMOND SHAMROCK, INC. CONSOLIDATED BALANCE SHEET (dollars in millions, except per share data) June 30, December 31, 1995 1994 (Unaudited) ASSETS Current Assets Cash and cash equivalents $ 16.7 $ 27.4 Receivables, less doubtful receivables of $6.6; $5.8 in 1994 236.0 211.6 Inventories Finished products 127.4 109.6 Raw materials 77.9 148.3 Supplies 35.7 33.1 241.0 291.0 Prepaid expenses 19.3 10.4 Total Current Assets 513.0 540.4 Properties and Equipment, less accumulated depreciation of $648.1; $609.3 in 1994 1,106.9 1,026.1 Deferred Charges and Other Assets 52.3 54.3 $ 1,672.2 $ 1,620.8 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Long-term debt payable within one year $ 4.0 $ 3.9 Accounts payable 144.6 199.3 Accrued taxes 71.4 65.3 Accrued royalties 7.5 6.7 Current portion of Long-term Liability 8.0 8.0 Other accrued liabilities 73.0 90.9 Total Current Liabilities 308.5 374.1 Long-term Debt 581.3 509.2 Deferred Income Taxes 89.5 81.5 Other Liabilities and Deferred Credits 76.2 67.0 Stockholders' Equity Preferred Stock, $.01 par value Authorized shares - 25,000,000 Issued and Outstanding shares - 1,725,000; 1,725,000 in 1994 0.0 0.0 Common Stock, $.01 par value Authorized shares - 75,000,000 Issued shares - 29,028,534; 29,014,711 in 1994 Outstanding shares - 29,020,442; 28,896,917 in 1994 0.3 0.3 Paid-in Capital 447.7 447.3 ESOP Stock and Stock Held in Treasury (39.6) (45.4) Retained Earnings 208.3 186.8 Total Stockholders' Equity 616.7 589.0 $1,672.2 $1,620.8 See accompanying Notes to Consolidated Financial Statements. DIAMOND SHAMROCK, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (dollars in millions) Six Months Ended June 30, 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 33.4 $ 39.7 Adjustments to arrive at net cash provided by operating activities: Depreciation 38.1 34.6 Deferred income taxes 8.0 12.4 Loss on sale of properties and equipment 0.5 1.8 Changes in operating assets and liabilities: Decrease (increase) in accounts receivable (24.4) (34.0) Decrease (increase) in inventories 50.0 (17.5) Decrease (increase) in prepaid expenses (8.9) (3.3) Increase (decrease) in accounts payable (54.7) 31.4 Increase (decrease) in taxes payable 6.1 12.6 Increase (decrease) in accrued liabilities (17.1) 17.8 Other, net 10.5 3.4 NET CASH PROVIDED BY OPERATING ACTIVITIES 41.5 98.9 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sales of properties and equipment 0.1 1.1 Purchase of properties and equipment (111.0) (58.9) Expenditures for investments (1.1) (2.6) NET CASH (USED IN) INVESTING ACTIVITIES (112.0) (60.4) CASH FLOWS FROM FINANCING ACTIVITIES: Increases in long-term debt 233.7 92.5 Repayments of long-term debt (161.5) (114.7) Payments of long-term liability (5.3) (4.8) Funds received from ESOP 2.8 2.5 Issuance of Common Stock 0.2 0.9 Sale of Common Stock held in treasury 0.2 0.3 Dividends paid (10.3) (9.7) NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 59.8 (33.0) Net increase (decrease) in cash and cash equivalents (10.7) 5.5 Cash and cash equivalents at beginning of period 27.4 12.8 Cash and cash equivalents at end of period $ 16.7 $ 18.3 In January 1995, the Company acquired a portion of a crude oil import and storage terminal in a non-cash transaction under an installment purchase arrangement. The purchase price was $12.0 million. See accompanying Notes to Consolidated Financial Statements. DIAMOND SHAMROCK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Financial Statements The consolidated financial statements as of June 30, 1995 and for the three months ended June 30, 1995 and 1994 are unaudited, but in the opinion of Diamond Shamrock, Inc. (the "Company"), all adjustments (consisting only of normal accruals) necessary for a fair presentation of consolidated results of operations, consolidated financial position, and consolidated cash flows at the date and for the periods indicated have been included. The consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the 1994 Annual Report to Stockholders and incorporated by reference into the Company's Annual Report on Form 10-K for the year ended December 31, 1994 (the "1994 Form 10-K"). With respect to the unaudited consolidated financial information of the Company as of June 30, 1995, and for the three months ended June 30, 1995 and 1994, Price Waterhouse LLP has made a review (based on procedures adopted by the American Institute of Certified Public Accountants) and not an audit, as set forth in their separate report appearing herein. Such a report is not a "report" or "part of a Registration Statement" within the meaning of Sections 7 and 11 of the Securities Act of 1933 and the liability provisions of Section 11 of such Act do not apply. 2. Inventories Inventories are valued at the lower of cost or market with cost determined primarily under the Last-in, First-out (LIFO) method. At June 30, 1995, inventories of crude oil and refined products of the Refining and Wholesale segment were valued at market values (lower than LIFO cost). Motor fuel products of the Retail segment, and propylene products in the Allied Businesses segment were recorded at their LIFO costs. Costs of all other inventories are determined on an average cost method. 3. Long-term Debt The Company currently has outstanding $120.0 million of debt designated as the 10.75% Senior Notes. As of May 1, 1995, $30.0 million of the long-term debt became payable within one year. Since the Company intends to refinance the $30.0 million repayment by the use of commercial paper or other credit facilities which would be classified as long-term, and the Company has the ability to do so, the current portion of the long-term debt payable on April 30, 1996 has been classified as long-term debt. 4. Commitments and Contingencies In connection with the 1987 Spin-off from Maxus Energy Corporation ("Maxus"), the Company agreed to assume a share of certain liabilities of Maxus' businesses discontinued or disposed of prior to the Spin-off date (see Note 16 of the 1994 Form 10-K). The Company's total liability for such shared costs is limited to $85.0 million. The Company has reimbursed Maxus for a total of $68.9 million as of June 30, 1995, including $5.3 million paid during the six months ended June 30, 1995. See Note 3 of the 1994 Form 10-K for a discussion of the change in the method of accounting for the liability during the year ended December 31, 1993. REVIEW BY INDEPENDENT ACCOUNTANTS With respect to the unaudited consolidated financial information of the Company as of June 30, 1995 and the three months and six months ended June 30, 1995 and 1994, Price Waterhouse LLP reported that they have applied limited procedures in accordance with professional standards for a review of such information. However, their separate report dated August 10, 1995, appearing below, states that they did not audit and they do not express an opinion on that unaudited consolidated financial information. Price Waterhouse LLP has not carried out any significant or additional audit tests beyond those which would have been necessary if their report had not been included. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied. Price Waterhouse LLP is not subject to the liability provisions of Section 11 of the Securities Act of 1933 for their report on the unaudited consolidated financial information because that report is not a "report" or "part of a Registration Statement" prepared or certified by Price Waterhouse LLP within the meaning of Sections 7 and 11 of the Securities Act of 1933. REPORT ON REVIEW BY INDEPENDENT ACCOUNTANTS To the Stockholders and Board of Directors of Diamond Shamrock, Inc. We have reviewed the consolidated interim financial information included in the Report on Form 10-Q of Diamond Shamrock, Inc. and its subsidiaries (the "Company") as of June 30, 1995 and for the quarters and six months ended June 30, 1995 and 1994. This financial information is the responsibility of the management of Diamond Shamrock, Inc. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial information for it to be in conformity with generally accepted accounting principles. We previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of the Company as of December 31, 1994, and the related consolidated statements of operations and of cash flows for the year then ended (not presented herein), and in our report dated February 24, 1995, which included an explanatory paragraph regarding the Company's change in accounting for its long-term shared cost liability in 1993, and its changes in accounting for income taxes and post-retirement benefits other than pensions in 1992, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet information as of December 31, 1994, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived. /S/ PRICE WATERHOUSE LLP PRICE WATERHOUSE LLP San Antonio, Texas August 10, 1995 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations The following are the Company's sales and operating revenues and operating profit for the three months and six months ended June 30, 1995 and 1994. Business segment operating profit is sales and operating revenues less applicable segment operating expense. In determining the operating profit of the three business segments, neither interest expense nor administrative expenses are included. Three Months Six Months Ended Ended June 30, June 30, 1995 1994 1995 1994 Sales and Operating Revenues: Refining and Wholesale $ 391.8 $ 335.2 $ 716.7 $ 639.2 Retail 291.3 242.1 538.6 454.5 Allied Businesses 106.6 69.2 211.1 136.6 Total Sales and Operating Revenues $ 789.7 $ 646.5 $ 1,466.4 $ 1,230.3 Operating Profit: Refining and Wholesale $ 46.1 $ 60.2 $ 54.6 $ 92.4 Retail 12.0 9.9 27.0 18.2 Allied Businesses 15.3 2.6 28.4 7.1 Total Operating Profit $ 73.4 $ 72.7 $ 110.0 $ 117.7 Consolidated Results Second Quarter 1995 vs Second Quarter 1994 Sales and operating revenues of $789.7 million for the second quarter of 1995 were 22.2% higher than in the same period of 1994, primarily due to a 12.3% increase in wholesale refined products sales prices and a 14.3% and a 11.0% increase in retail gasoline sales prices and volumes, respectively. Also contributing to the increase in sales and operating revenues was a 54.0% increase in sales in the Company's Allied Businesses segment, primarily due to continued strong demand for polymer grade propylene. During the second quarter of 1995, the Company had net income of $28.0 million compared to net income of $27.5 million in the 1994 second quarter. An improvement in the demand for polymer grade propylene in the Company's Allied Businesses segment was partially offset by lower refinery margins compared to the second quarter of 1994. Inventories are valued at the lower of cost or market with cost determined primarily under the Last-in, First-out (LIFO) method. At June 30, 1995, inventories of crude oil and refined products of the Refining and Wholesale segment were valued at market values (lower than LIFO cost). Motor fuel products of the Retail segment, and propylene products in the Allied Businesses segment were recorded at their LIFO costs. All other inventories are determined on an average cost method. Estimating the financial impact of changes in the valuation of refinery inventories due to such inventories being valued at market is difficult because of the number of variables that must be considered. For operating purposes, management attempts to estimate the impact of changes in valuation of refinery inventories on net income. The estimated after tax change in inventory values was a positive $7.8 million and a positive $11.2 million in the second quarters of 1995 and 1994, respectively. Consolidated Results First Six Months 1995 vs First Six Months 1994 Sales and operating revenues of $1.5 billion for the first six months of 1995 were $236.1 million higher than for the same period of 1994. This increase was primarily due to a 13.8% increase in retail gasoline prices and an 11.0% increase in wholesale refined product sales prices. Also contributing to the increase in sales and operating revenues was a 54.6% increase in sales in the Allied Businesses segment, primarily due to an increase in polymer grade propylene sales. During the first six months of 1995, the Company had net income of $33.4 million compared to net income of $39.7 million in the first six months of 1994. This 15.9% decrease is primarily due to lower refining margins, which was partially offset by strong demand for polymer grade propylene in the Company's Allied Businesses segment and an increase in the value of refinery inventories due primarily to crude oil price increases during the first six months of 1995. The estimated after-tax effect on net income from changes in inventory values was a positive $9.7 million and a positive $5.9 million in the first six months of 1995 and 1994, respectively. Segment Results Second Quarter 1995 vs Second Quarter 1994 During the second quarter of 1995 the Refining and Wholesale segment had sales and operating revenues of $391.9 million compared to $335.2 million during the second quarter of 1994. The increase in sales and operating revenues was primarily due to a 12.3% increase in wholesale refined product sales prices. Operating profit in the second quarter of 1995 decreased $14.0 million from the second quarter of 1994, primarily due to a 9.5% decrease in refinery margins from the same period a year ago. The Retail segment in the second quarter of 1995 reflected a 20.3% increase in sales and operating revenues. Such increase was primarily due to a 14.3% and a 11.0% increase in retail gasoline prices and volumes, respectively, reflecting an 8.5% increase in retail stores compared to the second quarter of 1994. Operating profit in the second quarter of 1995 was $12.0 million compared to $9.9 million in the second quarter of 1994. The increased operating profit was primarily due to increased retail gasoline volumes, partially offset by a 0.7% and a 1.2% decrease in retail gasoline and merchandise margins, respectively. During the second quarter of 1995, the Allied Businesses segment reflected an increase in sales and operating revenues of 54.0%, primarily due to a $32.7 million increase in sales in the Company's propane/propylene business. This increase was primarily due to increased sales volumes and prices, reflecting continued strong demand for polymer grade propylene. Also contributing to the increase in sales and operating revenues was a 25.7% increase from the Company's natural gas liquids marketing business, reflecting a 22.1% increase in natural gas liquids sales volumes. Operating profits were $15.3 million for the second quarter of 1995 compared to $2.6 million in the second quarter of 1994. Operating profits increased primarily due to an $11.0 million increase in operating profit from the Company's propylene business. Segment Results First Six Months 1995 vs First Six Months 1994 Sales and operating revenues from the Refining and Wholesale segment were $716.7 million in the first six months of 1995 compared to $639.2 million during the first six months of 1994. The increase in sales and operating revenues was primarily due to an 11.0% increase in wholesale refined product sales prices. Operating profit in the first six months of 1995 was $54.6 million compared to $92.4 million in the first six months of 1994. The decrease in operating profit was primarily due to a 26.6% decrease in refinery margins. Industry refining margins during the first quarter of 1995 were the weakest in recent years, reflecting a surplus of heating oil because of the extremely mild winter and confusion in the new reformulated gasoline ("RFG") market as several areas opted out, or attempted to opt out, of the RFG requirements. Refinery margins improved in the second quarter of 1995, reflecting strong gasoline demand and tight gasoline inventories. The Retail segment results in the first six months of 1995 reflected an 18.5% increase in sales and operating revenues, primarily due to a 13.8% increase in retail gasoline sales prices, reflecting a 7.5% increase in retail outlets compared to the first six months of 1994. Operating profit in the first six months of 1995 was $27.0 million compared to $18.2 million in the first six months of 1994. The increase was primarily due to an 8.6% and a 2.3% increase in retail gasoline and merchandise margins, respectively. The Allied Businesses segment results reflected an increase in sales and operating revenues of 54.6% to $211.1 million in the first six months of 1995 as compared to the same period in 1994. This increase was primarily due to a $56.2 million increase in sales in the Company's propylene business, reflecting increased sales volumes and prices, attributable to continued strong demand for polymer grade propylene. Also contributing to the increase in sales and operating revenues was a 27.3% increase from the Company's natural gas liquids marketing business, reflecting a 19.1% and a 6.9% increase in natural gas liquids sales volumes and prices, respectively. Operating profits were $28.4 million for the first six months of 1995 compared to $7.1 million in 1994. Operating profits increased primarily due to a $17.1 million and a $4.1 million increase in operating profit from the Company's propane/propylene and Nitromite fertilizer businesses, respectively. The outlook for the refining and marketing industry for the rest of 1995 is positive. Even though the driving season is coming to an end, gasoline demand remains strong and gasoline inventories are tight, which should benefit refining margins. Distillate inventories that had built up due to the unseasonably warm winter in 1994 have come back down to historically normal levels which is positive as the Company enters into the winter season. The pipeline and new product terminal in El Paso, planned for completion in October 1995, will give the Company access to large and growing markets in the Southwest. Diamond Shamrock's retail marketing continues its aggressive expansion of its Corner Store network with the construction of 13 new stores and the acquisition of 21 stores thus far in 1995. Additionally, 13 properties in Arizona are now under option, and the Company plans to begin construction of the first four of these sites in September as its initial move into the Arizona market. Allied Businesses continue to be strong contributors in the third quarter. Liquidity and Capital Resources Cash Flow and Working Capital For the six months ended June 30, 1995, cash provided by operations was $41.5 million, compared with $98.9 million in the same period of 1994. Working capital at June 30, 1995 was up $38.1 million from December 31, 1994, and consisted of current assets of $513.0 million and current liabilities of $308.5 million, or a current ratio of 1.7. At December 31, 1994, current assets were $540.4 million and current liabilities were $374.1 million, or a current ratio of 1.4. The increase in working capital in the first six months of 1995 was primarily due to a 27.4% decrease in accounts payable, partially offset by a 17.2% decrease in inventories. Crude oil inventories were higher than normal at December 31, 1994, primarily due to the Company's decision to purchase additional crude oil in December 1994 in order to overcome potential supply disruptions caused by the implementation of the Oil Pollution Act of 1990. The 27.4% decrease in accounts payable reflected the payment in the first quarter of 1995 for the additional crude oil purchased in December 1994 and the return to lower inventory levels. Capital Expenditures In recent years, capital expenditures have represented a variety of projects designed to expand and maintain up-to-date refinery facilities, improve terminal and distribution systems, modernize and expand retail outlets, comply with environmental regulatory requirements, and pursue new ventures in related businesses. The Company's capital expenditures budget for 1995 has been increased to approximately $250.0 million from an earlier estimate of $225.0 million. Such increases are partly attributable to the recently announced plans to construct a second 730 million pound per year propylene splitter at Mont Belvieu, with construction that began in the second quarter of 1995 and completion slated for the third quarter of 1996. Also included in the Company's 1995 increased capital expenditures budget are amounts associated with the Company's decision to own outright rather than lease more of the retail outlets to be built or acquired in 1995. The Company's capital and investment expenditures during 1994 were $162.1 million. The Company's capital and investment expenditures were $124.2 million during the first six months of 1995, including a non-cash investment of $12.0 million for the crude oil import and storage terminal acquired under an installment purchase arrangement. The Company announced in June 1995 a BTX extraction project at its Three Rivers, Texas refinery. This project will extract benzene, toluene, and xylene from motor gasoline for sale into various petrochemical markets. The Company announced in February 1995 plans to increase the capacity and efficiency of its Three Rivers, Texas refinery with an expansion of the crude unit and construction of a DeMetalized Oil (DMO) hydrotreater, a hydrogen plant, and a sulfur recovery plant. The expansion will increase the capacity of the refinery from 72,000 barrels per day to 85,000 barrels per day and allow heavy oils to be upgraded to more profitable products. The project, which is scheduled for completion in the third quarter of 1996, will increase the production of gasoline and diesel at the refinery by approximately 10 percent. The Company also announced in February 1995 that it is expanding operations at its Mont Belvieu hydrocarbon facility. As part of the expansion project, the Company recently completed drilling a brine production well at the facility's East Terminal and purchased four underground storage wells at the facility's West Terminal. In addition, the Company is installing additional pumping and metering equipment at both terminals. The Company continued to expand its retail marketing business in the first six months of 1995 with the acquisition of 21 outlets in New Mexico. In addition, the Company opened 13 new outlets through June 30, 1995. The newly opened outlets are leased by the Company under a pre-existing long-term lease arrangement. The Company has leased approximately $167.6 million in retail outlets and related equipment under these arrangements. At June 30, 1995, approximately $22.4 million of the $190.0 million commitment remained available to construct and/or acquire retail outlets. The Company presently anticipates leasing approximately 7 to 8 additional outlets during 1995. Financing Activities The Company anticipates that its capital expenditures, as well as expenditures for debt service, lease obligations, working capital, and dividend requirements might at times exceed cash generated by operations. To the extent that the Company's requirements exceed cash generated by operations, the Company anticipates that it may access its commercial paper and bank money market facilities or issue medium-to long-term notes. The Company may also consider other alternatives depending upon various factors, including changes in its capital requirements, results of operations, and developments in the capital markets. In May, 1995 the Company registered $150.0 million of unallocated securities in a Universal Shelf Registration. That registration, which was declared effective by the Securities and Exchange Commission in June, 1995, allows the Company to issue up to $150.0 million of debt, equity, or warrants, or any combination thereof, to the public on terms to be set at the time of issuance. The Company will issue the securities so registered from time to time, based upon the Company's capital requirements and market conditions. On June 1, 1995, the Company issued $25.0 million of 7 1/4% debentures due June 15, 2010, and on February 13, 1995, the Company issued $75.0 million in non- callable debentures due June 15, 2015. The proceeds from the issuance of the debentures were and will continue to be used for general corporate purposes, including payment of a $30.0 million principal installment on the Company's 10.75% Senior Notes on May 1, 1995, and to fund anticipated capital expenditures in 1995. Regulatory Matters It is expected that rules and regulations implementing the federal, state, and local laws relating to health and environmental quality will continue to affect the operations of the Company. The Company cannot predict what health or environmental legislation, rules, or regulations will be enacted in the future or how existing or future laws, rules, or regulations will be administered or enforced with respect to products or activities of the Company. However, compliance with more stringent laws or regulations, as well as more expansive interpretation of existing laws and their more vigorous enforcement by the regulatory agencies could have an adverse effect on the operations of the Company and could require substantial additional expenditures by the Company, such as for the installation and operation of pollution control systems and equipment. PART II. OTHER INFORMATION Item 1. Legal Proceedings On June 22, 1995, the Texas Natural Resource Conservation Commission ("TNRCC") proposed to assess the Company a civil penalty of $2,085,600 based on the allegation that the Company violated certain permitting requirements for underground injection of waste water at the McKee Refinery. The Company will make every effort to reduce the penalty to a level that bears a more reasonable relationship to the alleged violations. Item 4. Submission of Matters to a Vote of Security Holders The Company's 1995 Annual Meeting of Stockholders was held on May 2, 1995 in El Paso, Texas. At that meeting, the Company's Stockholders elected three directors to serve for a three-year term expiring in 1998, approved amendments to the Company's Long Term Incentive Plan, and ratified the appointment of Price Waterhouse LLP to serve as independent accountants for the Company and its subsidiaries for 1995. The number of votes cast for, against, or withheld, as well as the number of abstentions as to each matter, is set forth below: Election of Directors Name Total Votes For Total Votes Withheld E. Glenn Biggs 26,087,845 476,533 W.E. Bradford 26,252,311 312,067 Bob Marbut 26,250,355 314,023 Amendments to 1990 Long Term Incentive Plan For Against Abstain 24,615,142 1,595,334 353,902 Ratification of Appointment of Independent Accountants For Against Abstain 26,307,108 119,198 138,072 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 15.1 Independent Accountants' Awareness Letter 99.1 Forms of Diamond Shamrock, Inc. Medium Term Notes, Series B (b) Reports on Form 8-K A Report on Form 8-K was filed by the Company in the second quarter of 1995 on June 1, 1995. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DIAMOND SHAMROCK, INC. By /S/GARY E. JOHNSON Gary E. Johnson Vice President and Controller (Principal Accounting Officer) August 10, 1995 EX-15.1 2 EXHIBIT 15.1 INDEPENDENT ACCOUNTANTS' AWARENESS LETTER Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Dear Sirs: We are aware that Diamond Shamrock, Inc. has included our report dated August 10, 1995 (issued pursuant to the provisions of Statement on Auditing Standards No. 71) in the Prospectuses constituting part of its Registration Statements on Form S-3 (Nos. 33-67166 and 33-59451) filed on August 9, 1993, and May 19, 1995, respectively, and on Form S-8 (Nos. 33-15268, 33-34306, 33-47761, 33-47761, 33-50573 and 33-59025) filed on June 22, 1987, April 13, 1990, May 6, 1992, October 6, 1993 and May 2, 1995, respectively. We are also aware of our responsibilities under the Securities Act of 1933. Yours very truly, /S/ PRICE WATERHOUSE LLP PRICE WATERHOUSE LLP San Antonio, Texas August 10, 1995 EX-99.1 3 Exhibit 99.1 CUSIP NO.____________ DIAMOND SHAMROCK, INC. PRINCIPAL AMOUNT: REGISTERED NO. FX____________ MEDIUM-TERM NOTE, SERIES B $ (Fixed Rate) If the registered owner of this Note (as indicated below) is The Depository Trust Company (the "U.S. Depositary") or a nominee of the U.S. Depositary a Global Note and the following legend is applicable: Unless this certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) to the issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of CEDE & CO., or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, CEDE & CO., has an interest herein. The following summary of terms is subject to the information set forth on the reverse hereof: ORIGINAL ISSUE DATE: OPTIONAL REDEMPTION: YES____ NO_____ STATED MATURITY: INITIAL REDEMPTION DATE: SPECIFIED CURRENCY: REDEMPTION PRICE: Initially __% of Principal Amount and declining by __% of the Principal Amount on each anniversary of the Initial Redemption Date until the Redemption Price is 100% of the Principal Amount. AUTHORIZED DENOMINATIONS: OPTION TO ELECT PAYMENTS IN U.S. DOLLARS: ____YES _____NO FORM: ______BOOK ENTRY ______CERTIFICATED OPTION TO ELECT PREPAYMENT: ____YES ____NO INTEREST RATE: OPTIONAL PREPAYMENT DATES: INTEREST PAYMENT DATE[S]: OPTIONAL PREPAYMENT PRICES: REGULAR RECORD DATE[S]: OPTIONAL INTEREST RESET: ____YES ____NO OVERDUE RATE: OPTIONAL INTEREST RESET DATES: U.S. DEPOSITARY: OPTIONAL EXTENSIONS OF MATURITY___YES NO CURRENCY DETERMINATION AGENT: EXTENSION PERIOD: AMORTIZATION NOTE: ___YES ___NO NUMBER OF EXTENSION PERIODS: OTHER PROVISIONS: FINAL MATURITY DATE: If this Debt Security was issued with "original issue discount" for purposes of Section 1273 of the Internal Revenue Code of 1986, as amended, the following shall be completed: ORIGINAL ISSUE DISCOUNT SECURITY: TOTAL AMOUNT OF OID: ISSUE PRICE (expressed _____YES _____NO as a percentage of aggregate principal amount): YIELD TO MATURITY: SHORT ACCRUAL PERIOD OID: METHOD USED TO DETERMINE YIELD FOR SHORT ACCRUAL PERIOD: ____Approximate ____Exact DIAMOND SHAMROCK, INC., a corporation duly organized and existing under the laws of Delaware (herein called the "Company" which term includes any successor corporation under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to CEDE & Co., or registered assigns, the principal sum set forth above on the Stated Maturity shown above, and to pay interest thereon from the Original Issue Date shown above or from and including the most recent Interest Payment Date (as defined below) to which interest has been paid or duly provided for, as the case may be. (Continued on next page.) IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. Dated: TRUSTEE'S CERTIFICATION OF AUTHENTICATION DIAMOND SHAMROCK, INC. This is one of the Debt Securities of the series designated herein and referred to in the within-mentioned Indenture. By:__________________________ THE FIRST NATIONAL BANK OF CHICAGO Attest: _____________________ as Trustee By:_________________________ (Continued from previous page.) Interest will be paid on the Interest Payment Date or Dates shown above ("Interest Payment Dates"), commencing with the first such Interest Payment Date next succeeding the Original Issue Date shown above (except as provided below), at the rate per annum specified above, until the principal hereof is paid or made available for payment and on Stated Maturity, and, if specified above, interest shall accrue on any overdue principal and on any overdue installment of interest (to the extent that the payment of such interest shall be legally enforceable) at the overdue rate per annum set forth above. The interest so payable and punctually paid or duly provided for on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Note (or one or more predecessor Notes) is registered at the close of business on the Regular Record Date set forth above next preceding such Interest Payment Date, which shall be the 15th calendar day next preceding such Interest Payment Date. The first payment of interest on any Note originally issued between a Regular Record Date and an Interest Payment Date will be made on the Interest Payment Date following the next succeeding Regular Record Date to the registered owner on such succeeding Regular Record Date. Except as otherwise provided in the Indenture, any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Note (or one or more predecessor Notes) is registered at the close of business on a Special Record Date for the payment of such defaulted interest to be fixed by the Trustee, notice whereof to be given to Holders of Notes of this series not less than 10 calendar days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. Payments of interest to be paid in U.S. dollars (other than interest, and if this is an Amortizing Note, principal (if this is not a Global Note) payable at Stated Maturity) will be made by mailing a check to the Holder at the address of the Holder appearing in the Security Register as of the applicable Regular Record Date. Notwithstanding the foregoing, at the option of the Company, all payments of interest and, if this is an Amortizing Note, principal on this Note may be made by wire transfer of immediately available funds to an account maintained by such Holder with a bank located in the United States as designated by the Holder not less than 15 calendar days prior to the Interest Payment Date. If a Holder holds U.S. $10,000,000 or more in aggregate principal amount of Notes of like tenor and terms (including the same Interest Payment Date) (or is the Holder of the equivalent thereof in a Specified Currency other than U.S. dollars), such Holder shall be entitled to receive payments of interest (other than at Stated Maturity or upon earlier redemption or repayment) in U.S. dollars by wire transfer of immediately available funds, but only if appropriate payment instructions have been received in writing by the Trustee not less than 15 calendar days prior to the applicable Interest Payment Date. Simultaneously with the election by the Holder to receive payments in a Specified Currency other than U.S dollars (by written request to the Trustee, as provided below), the Holder shall provide appropriate payment instructions to the Trustee, and all such payments will be made in immediately available funds to a bank account maintained by the Holder in the country of the Specified Currency (or, with respect to ECUs, Brussels). If such a payment with respect to this Note cannot be made by wire transfer because the required designation has not been received by the Trustee on or before the requisite date or for any other reason, a notice will be mailed to the Holder at its registered address requesting a designation pursuant to which such wire transfer can be made and, upon the Trustee's receipt of such a designation, such payment will be made within 15 days of such receipt. The Company will pay any administrative costs imposed by banks in connection with making payments by wire transfer, but not any tax, assessment, or governmental charge imposed upon the Holder of this Note. In the event that payment is so made in accordance with the instructions of the Holder, such wire transfer shall be deemed to constitute full and complete payment of such interest and principal on this Note. If this is not a Global Note, payment of the principal, premium, if any, and interest payable at Maturity in respect of this Note will be paid in immediately available funds upon surrender of this Note accompanied by wire instructions at the principal office of the Trustee, provided that the Note is presented in time for the Trustee to make such payments in such funds in accordance with its normal procedures. If the Holder of this Note (as indicated above) is the U.S. Depository or a nominee of the U.S. Depositary, this Note is a global Note and the following legend is applicable except as specified on the reverse hereof: THIS GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE U.S. DEPOSITARY OR BY A NOMINEE OF THE U.S. DEPOSITARY TO THE U.S. DEPOSITARY OR ANOTHER NOMINEE OF THE U.S. DEPOSITARY OR BY THE U.S. DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR OF THE U.S. DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof, directly or through an Authenticating Agent, by manual signature of an authorized signatory, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. [Reverse of Note] DIAMOND SHAMROCK, INC. MEDIUM-TERM NOTE, SERIES B SECTION 1. General. This Note is one of a duly authorized issue of Securities of the Company (herein called the "Notes"), issued and to be issued in one or more series under an Indenture, dated as of December 15, 1989 (herein called the "Indenture"), between the Company and The First National Bank of Chicago, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Notes and of the terms upon which the Debt Securities are, and are to be, authenticated and delivered. This Note is one of the Debt Securities of the series designated on the face hereof. The Notes may bear different dates, mature at different times, bear interest at different rates, be subject to different redemption provisions and may otherwise vary, all as provided in the Indenture. The Notes are limited to $150,000,000 in aggregate principal amount (or the equivalent thereof in the Specified Currency, calculated at the Market Exchange Rate (as defined below) on the applicable trade date). SECTION 2. Payments. Interest on this Note will be payable on the Interest Payment Date or Interest Payment Dates as specified on the face hereof and, in either case, at Stated Maturity or earlier redemption or repayment. Interest payments on each Interest Payment Date for this Note will include accrued interest from the Original Issue Date or from and including the last date in respect of which interest has been paid, as the case may be, to, but excluding, such Interest Payment Date or the date of Maturity, as the case may be. Interest payments for this Note shall be computed and paid on the basis of a 360-day year of twelve 30-day months. Unless otherwise specified on the face hereof, if this Note is specified on the face hereof as an Amortizing Note, payments with respect to this Note will be applied first to interest due and payable hereon and then to the reduction of the unpaid principal amount hereof. If this Note is specified on the face hereof as an Amortizing Note, a table setting forth repayment information in respect to this Note will be provided to the original purchaser hereof and will be available, upon request, to subsequent Holders. If the Specified Currency shown on the face hereof is a currency or currency unit other than U. S. dollars, except as provided below, payments of interest and principal (and premium, if any) with respect to this Note will be made in U. S. dollars if the Holder of this Note on the relevant Regular Record Date or at Maturity, as the case may be, has transmitted a written request for such payment in U. S. dollars to the Paying Agent at its principal office on or prior to such Regular Record Date or the date 15 days prior to Maturity, as the case may be. Such request may be delivered by mail, by hand or by cable, telex or any other form of facsimile transmission. Any such request made with respect to this Note by a Holder will remain in effect with respect to this Note payable to such Holder, unless such request is revoked by written notice received by the Paying Agent on or prior to the relevant Regular Record Date or the date 15 days prior to Maturity, as the case may be (but no such revocation may be made with respect to payments made on this Note if an Event of Default has occurred with respect hereto or upon the giving of a notice of redemption). A Holder whose Note is registered in the name of a broker or nominee should contact such broker or nominee to determine whether and how an election to receive payments in U.S. dollars may be made. The U.S. dollar amount to be received by a Holder of a Note who elects to receive payments in U.S. dollars will be based on the highest indicated bid quotation for the purchase of U.S. dollars in exchange for the Specified Currency obtained by the Currency Determination Agent (as defined below) at approximately 11:00 A.M., New York City time, on the second Business Day next preceding the applicable payment date (the "Conversion Date") from the bank composite or multicontributor pages of the Quoting Source (as defined below) for three (or two if three are not available) major banks in The City of New York. The first three (or two) such banks selected by the Currency Determination Agent which are offering quotes on the Quoting Source will be used. If fewer than two such bid quotations are available at 11:00 A.M., New York City time, on the second Business Day next preceding the applicable payment date, such payment will be based on the Market Exchange Rate as of the second Business Day next preceding the applicable payment date. If the Market Exchange Rate for such date is not then available, such payment will be made in the Specified Currency. As used herein, the "Quoting Source" means Reuters Monitor Foreign Exchange Service, or if the Currency Determination Agent determines that such service is not available, Telerate Monitor Foreign Exchange Service, or if the Currency Determination Agent determines that neither service is available, such comparable display or other comparable manner of obtaining quotations as shall be agreed between the Company and the Currency Determination Agent. All currency exchange costs associated with any payment in U.S. dollars on this Note will be borne by the Holder by deductions from such payment. Any currency determination agent (the "Currency Determination Agent") is specified on the face hereof. If payment in respect of this Note is required to be made in any currency unit (e.g. ECUs) and such currency unit is unavailable, in the good faith judgment of the Company, due to the imposition of exchange controls or other circumstances beyond the Company's control, then all payments in respect of this Note shall be made in U.S. dollars until such currency unit is again available. The amount of each payment of U.S. dollars shall be computed on the basis of the equivalent of the currency unit in U.S. dollars, which shall be determined by the Currency Determination Agent on the following basis. The component currencies of the currency unit for this purpose (the "Component Currencies") shall be the currency amounts that were components of the currency unit as of the Conversion Date. The equivalent of the currency unit in U.S. dollars shall be calculated by aggregating the U.S. dollar equivalents of the Component Currencies. The U.S. dollar equivalent of each of the Component Currencies shall be determined by the Currency Determination Agent on the basis of the Market Exchange Rate for each such Component Currency as of the Conversion Date. "Market Exchange Rate" means the noon buying rate in The City of New York for cable transfers of such Specified Currency as certified for customs purposes by the Federal Reserve Bank of New York. If the official unit of any Component Currency is altered by way of combination or subdivision, the number of units of that currency as a Component Currency shall be divided or multiplied in the same proportion. If two or more Component Currencies are consolidated into a single currency, the amounts of those currencies as Component Currencies shall be replaced by an amount in such single currency equal to the sum of the amounts of the consolidated Component Currencies expressed in such single currency. If any Component Currency is divided into two or more currencies, the amount of the original Component Currency shall be replaced by the amounts of such two or more currencies, the sum of which shall be equal to the amount of the original Component Currency. All determinations referred to above made by the Currency Determination Agent shall be at its sole discretion and shall, in the absence of manifest error, be conclusive for all purposes and binding on the Holder of this Note. All percentages resulting from any calculations under this Note will be rounded, if necessary, to the nearest one hundred thousandth of a percentage point (with five one-millionths of a percentage point being rounded upward) and all currency or currency unit or dollar amounts used in or resulting from any such calculation in respect of the Notes will be rounded to the nearest one- hundredth of a unit (with five one-thousandths being rounded upward) or nearest cent, as the case may be. SECTION 3. Redemption. If so specified on the face hereof, the Company may at its option redeem this Note in whole or from time to time in part on or after the date designated as the Initial Redemption Date on the face hereof at the redemption price specified on the face hereof, together with accrued and unpaid interest to the date of redemption, but interest installments whose Stated Maturity is on or prior to the date of redemption will be payable to the Holder of this Note of record at the close of business on the relevant Regular Record Date referred to on the face hereof, all as provided in the Indenture. The Company may exercise such option by causing the Trustee to mail a notice of such redemption at least 30 but not more than 60 calendar days prior to the date of redemption, subject to all the conditions and provisions of the Indenture. In the event of redemption of this Note in part only, a new Note or Notes for the unredeemed portion hereof shall be issued in the name of the Holder hereof upon the cancellation hereof. SECTION 4. Prepayment. If so specified on the face hereof, this Note will be prepayable prior to Stated Maturity at the option of the Holder on the Optional Prepayment Dates shown on the face hereof at the Optional Prepayment Prices shown on the face hereof together with interest accrued and unpaid thereon to the date of prepayment. In order for this Note (if it is prepayable at the option of the Holder) to be prepaid prior to Stated Maturity, the Paying Agent must receive at least 30 but not more than 45 calendar days prior to an Optional Prepayment Date (i) this Note with the form below entitled "Option to Elect Prepayment" duly completed or (ii) a telegram, telex, facsimile transmission, or letter (first class, postage prepaid) from a member of a national securities exchange or the National Association of Securities Dealers, Inc. or a commercial bank or trust company in the United States of America setting forth the name of the Holder of this Note, the principal amount of the Note to be prepaid, the certificate number or a description of the tenor and terms of this Note, a statement that the option to elect prepayment is being exercised thereby and a guarantee that this Note with the form below entitled "Option to Elect Prepayment" duly completed will be received by the Paying Agent not later than five Business Days after the date of such telegram, telex, facsimile transmission, or letter (first class, postage prepaid). If the procedure described in clause (ii) of the preceding sentence is followed, this Note with such form duly completed must be received by the Trustee by such fifth Business Day. Exercise of the prepayment option by the Holder of this Note shall be irrevocable, except that a Holder who has tendered this Note for prepayment may revoke any such tender for prepayment by written notice to the Paying Agent received prior to the close of business on the tenth calendar day prior to the prepayment date. The prepayment option may be exercised by the Holder of this Note for less than the entire principal amount of the Note, provided that the principal amount of the Note remaining outstanding after prepayment is an authorized denomination. Upon such partial prepayment this Note shall be cancelled and a new Note or Notes for the remaining principal amount hereof shall be issued in the name of the Holder of this Note. SECTION 5. Optional Interest Reset. If so specified on the face hereof, the interest rate on this Note may be reset by the Company on the date or dates specified on the face hereof (each an "Optional Interest Reset Date"). The Company may exercise such option by notifying the Trustee of such exercise at least 45 but not more than 60 calendar days prior to an Optional Interest Reset Date. If the Company so notifies the Trustee of such exercise, not later than 40 calendar days prior to each Optional Interest Reset Date, the Trustee will send by telegram, telex, facsimile transmission, or letter (first class, postage prepaid) to the Holder of this Note a notice (the "Reset Notice") indicating (i) that the Company has elected to reset the interest rate, (ii) such new interest rate, and (iii) the provisions, if any, for redemption during the period from such Optional Interest Reset Date to the next Optional Interest Reset Date or, if there is no such next Optional Interest Reset Date, to Stated Maturity of this Note (each such period a "Subsequent Interest Period"), including the date or dates on which or the period or periods during which and the price or prices at which such redemption may occur during such Subsequent Interest Period. Notwithstanding the foregoing, not later than 20 calendar days prior to an Optional Interest Reset Date, the Company may, at its option, revoke the interest rate provided for in the Reset Notice and establish a higher interest rate for the Subsequent Interest Period commencing on such Optional Interest Reset Date by causing the Trustee to send by telegram, telex, facsimile transmission, or letter (first class, postage prepaid) notice of such higher interest rate to the Holder of this Note. Such notice shall be irrevocable. All Notes with respect to which the interest rate is reset on an Optional Interest Reset Date will bear such higher interest rate, whether or not tendered for repayment as provided in the next paragraph. If the Company elects prior to an Optional Interest Reset Date to reset the interest rate of this Note, the Holder of this Note will have the option to elect prepayment of this Note by the Company on such Optional Interest Reset Date at a price equal to the principal amount hereof plus interest accrued and unpaid thereon to such Optional Interest Reset Date. In order to obtain prepayment on an Optional Interest Reset Date, the Holder must follow the procedures set forth under Section 4 for optional prepayment except that the period for delivery or notification in the Trustee shall be at least 25 but not more than 35 calendar days prior to such Optional Interest Reset Date. If the Holder has tendered this Note for prepayment following receipt of a Reset Notice, the Holder may revoke such tender for prepayment by written notice to the Trustee received prior to the close of business on the 10th calendar day prior to such Optional Interest Reset Date. SECTION 6. Optional Extension of Maturity. If so specified on the face hereof, the Stated Maturity of this Note may be extended at the option of the Company for the period or periods of from one to five whole years specified on the face hereof (each an "Extension Period") up to but not beyond the date (the "Final Maturity Date") set forth on the face hereof. The Company may exercise such option with respect to a Note by notifying the Trustee of such exercise at least 45 but not more than 60 calendar days prior to Stated Maturity of such Note in effect prior to the exercise of such option (the "Original Stated Maturity Date"). If the Company so notifies the Trustee of such exercise, the Trustee will send by telegram, telex, facsimile transmission, or letter (first class, postage prepaid) to the Holder of this Note not later than 40 calendar days prior to the Original Stated Maturity Date a notice (the "Extension Notice") indicating (ii) that the Company has elected to extend the Stated Maturity of the Note, (i) the new Stated Maturity, (iii) the interest rate applicable to the Extension Period, and (iv) the provisions, if any, for redemption during such Extension Period, including the date or dates on which or the period or periods during which and the price or prices at which such redemption may occur during such Extension Period. Upon the Trustee's sending of the Extension Notice, Stated Maturity of this Notice shall be extended automatically and, except as modified by the Extension Notice and as described in the next two paragraphs, this Note will have the same terms as prior to the sending of such Extension Notice. Notwithstanding the foregoing, not later than 20 calendar days before the Original Stated Maturity Date of this Note, the Company may, at its option, revoke the interest rate provided for in the Extension Notice and establish a higher interest rate for the Extension Period by causing the Trustee to send by telegram, telex, facsimile transmission, or letter (first class, postage prepaid) notice of such higher interest rate to the Holder of this Note. Such notice shall be irrevocable. All Notes with respect to which Stated Maturity is extended will bear such higher interest rate for the Extension Period, whether or not tendered for repayment as provided in the next paragraph. If the Company extends the Stated Maturity of this Note, the Holder will have the option to elect prepayment of this Note by the Company on the Original Stated Maturity Date at a price equal to the principal amount hereof, plus interest accrued and unpaid thereon to such date. In order or obtain prepayment on the Original Stated Maturity Date once the Company has extended the Stated Maturity hereof, the Holder must follow the procedures set forth under Section 4 for optional prepayment except that the period for delivery or notification to the Trustee shall be at least 25 but not more than 35 calendar days prior to the Original Stated Maturity Date. A Holder who has tendered this Note for prepayment following receipt of an Extension Notice may revoke such tender for prepayment by written notice to the Trustee received prior to the close of business on the 10th calendar day before the Original Stated Maturity Date. SECTION 7. Sinking Fund. This Note will not be subject to any sinking fund. SECTION 8. Original Issue Discount Notes. Notwithstanding anything herein to the contrary, if this Note is an Original Issue Discount Note, the amount payable in the event of redemption or repayment prior to the Stated Maturity hereof in lieu of the principal amount due at the Stated Maturity hereof shall be the Amortized Face Amount of this Note as of the redemption date or the date of repayment, as the case may be. The "Amortized Face Amount" of this Note shall be the amount equal to (a) the Issue Price (as set forth on the face hereof) plus (b) that portion of the difference between the Issue Price and the principal amount hereof that has accrued at the yield to maturity (as set forth on the face hereof) (computed in accordance with generally accepted United States bond yield computation principles) at the date as of which the Amortized Face Amount is calculated but in no event shall the Amortized Face Amount of this Note exceed its principal amount. SECTION 9. Events of Default. If any Event of Default with respect to Notes of this series shall occur and be continuing, the principal of the Notes of this series may be declared due and payable in the manner and with the effect provided in the Indenture; provided, however, that notwithstanding anything herein to the contrary, if this Note is an Original Issue Discount Note, the amount so declared due and payable shall be the Amortized Face Amount of this Note as of the date of such declaration. SECTION 10. Modifications and Waivers; Obligation of the Company Absolute. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holder of the Debt Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in principal amount of the Debt Securities at the time outstanding for each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Debt Securities of each series at the time outstanding, on behalf of the Holders of all Debt Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and premium, if any, and interest on this Note at the times, places and rates, and in the coin or currency, herein prescribed. SECTION 11. Defeasance and Covenant Defeasance. The Indenture contains provisions for defeasance at any time of (a) the entire indebtedness of the Company on this Note and (b) certain restrictive covenants and the related Events of Default, upon compliance by the Company with certain conditions set forth therein, which provisions apply to this Note. SECTION 12. Authorized Denominations. Unless otherwise noted on the face hereof, the Notes of this series are issuable only in global or certificated registered form, without coupons, in denominations of $1,000 and integral multiples thereof. As provided in the Indenture and subject to certain limitations therein set forth and to the limitations described below, if applicable, Notes of this series are exchangeable for a like aggregate principal amount of Notes of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same. SECTION 13. Registration of Transfer. As provided in the Indenture and subject to certain limitations therein set forth and to the limitations described below, if applicable, the transfer of this Note is registerable in the securities register upon surrender of this Note for registration of transfer at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes of this series and of like tenor, of authorized denominations and for the same Stated Maturity and aggregate principal amount, will be issued to the designated transferee or transferees. If this Note is a Global Note (as specified on the face hereof), this Note is exchangeable only if (x) the U.S. Depositary notifies the Company that it is unwilling or unable to continue as U.S. Depositary for this global Note or if at any time the U.S. Depositary ceases to be a clearing agency registered under the Securities Exchange Act of 1934, as amended, (y) the Company in its sole discretion determines that this Note shall be exchangeable for certificated Notes in registered form, or (z) an Event of Default, or an event which with the passage of time or the giving of notice would become an Event of Default, with respect to the Notes represented hereby has occurred and is continuing, provided that the definitive Notes so issued in exchange for this permanent Global Note shall be in denominations of $1,000 and integral multiples thereof and be of like aggregate principal amount and tenor as the portion of this permanent Global Note to be exchanged, and provided further that, unless the Company agrees otherwise, Notes of this series in certificated registered form will be issued in exchange for this permanent Global Note, or any portion hereof, only if such Notes in certificated registered for were requested by written notice to the Trustee or the Securities Registrar by or on behalf of a person who is beneficial owner of an interest hereof given through the Holder hereof. Except as provided above, owners of beneficial interests in this permanent global Note will not be entitled to receive physical delivery of Notes in certificated registered form and will not be considered the Holders thereof for any purpose under the Indenture. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. SECTION 14. Owners. Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and none of the Company, the Trustee or any such agent shall be affected by notice to the contrary. SECTION 15. Governing Law. The Indenture and the Notes shall be governed by and construed in accordance with the laws of the State of New York. SECTION 16. Defined Terms. All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture; and all references in the Indenture to "Debt Security" or "Debt Securities" shall be deemed to include the Notes. "Business Day" means any Monday, Tuesday, Wednesday, Thursday, or Friday that in The City of New York is not a day on which banking institutions are authorized or required by law, regulation, or executive order to close; provided that with respect to a Specified Currency, such day is also not a day on which banking institutions are authorized or required by law, regulation, or executive order to close in the principal financial center of the country of such Specified Currency (or in the case of ECUs, is not a day designated as an ECU Non-Settlement Day by the ECU Banking Association in Paris or otherwise generally regarded in the ECU interbank market as a day on which payment on ECUs shall not be made). OPTION TO ELECT PREPAYMENT [To be completed only if this Note is prepayable at the option of the Holder and the Holder elects to exercise such rights] The undersigned owner of this Note hereby irrevocably elects to have the Company prepay the principal amount of this Note or portion hereof below designated at (i) the applicable Optional Prepayment Price indicated on the face hereof, together with interest accrued and unpaid thereon to the date of prepayment, if this Note is to be prepaid pursuant to Section 4 of this Note, or (ii) 100% of the principal amount of this Note to be prepaid plus interest accrued and unpaid thereon to the Optional Interest Reset Date, if this Note is to be prepaid pursuant to Section 5 hereof, or to the Original Stated Maturity Date, if this Note is to be prepaid pursuant to Section 6 hereof. Specify the denomination or denominations (which shall be $1,000 or integral multiples thereof or, if the Note is denominated in a currency other than U.S. dollars, an Authorized Denomination) of the Note or Notes to be issued to the Holder for the portion of the within Note not being prepaid (in the absence of any specification, one such Note will be issued for the portion not being prepaid): Dated:___________________ _____________________________ Signature Sign exactly as name appears on the front of this Note. Principal amount to be prepaid Indicate address where check is to be if amount to be prepaid is less sent, if prepaid: than the entire principal amount _____________________________ of this Note (principal amount _____________________________ remaining must be an authorized denomination) $________________________ _____________________________ (which shall be an integral multiple of $1,000 or, if the Note is denominated in a currency other than U.S. dollars, of an amount equal SOCIAL SECURITY OR OTHER to the integral multiples referred to TAXPAYER ID NUMBER on the face hereof under "Authorized Denominations" (or, if no such reference ____________________________ is made, an amount equal to the minimum Authorized Denomination)). ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as through they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivorship and not as tenants in common Custodian UNIF GIFT MIN ACT _________________________________ (Cust) (Minor) Under Uniform Gifts to Minors Act _________________________________ (State) Additional abbreviations may also be used though not in the above list. --------- FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE _____________________________ ______________________________________________________________________________ PLEASE PRINT OR TYPE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE _____________________________________________________________________________ the within Note and all rights thereunder, hereby irrevocably constituting and appointing _____________ attorney to transfer said Note on the books of the Company, with full power of substitution in the premises. Dated: _______________ _______________________________________________ Signature Sign exactly as name appears on the front of this Note [SIGNATURE MUST BE GUARANTEED by a commercial bank, a trust company or by a member of the New York Stock Exchange] NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE WITHIN INSTRUMENT IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. [Face of Note] CUSIP NO. _________________ PRINCIPAL AMOUNT: REGISTERED NO. FLR________________ $ DIAMOND SHAMROCK, INC. MEDIUM-TERM NOTE, SERIES B (Floating Rate) If the registered owner of this Note (as indicated below) is The Depository Trust Company (the "U.S. Depositary") or a nominee of the U.S. Depositary, this Note is a Global Note and the following legend is applicable: Unless this certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) to the issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of CEDE & CO., or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, CEDE & CO., has an interest herein. The following summary of terms is subject to the information set forth on the reverse hereof: ORIGINAL ISSUE DATE: OPTIONAL REDEMPTION: ____YES ____NO STATED MATURITY: INITIAL REDEMPTION DATE: SPECIFIED CURRENCY: REDEMPTION PRICE: Initially __% of Principal Amount and declining by __% of the Principal Amount on each anniversary of the Initial Redemption Date until the Redemption Price is 100% of the Principal Amount. AUTHORIZED DENOMINATIONS: OPTION TO ELECT PAYMENTS IN U.S. DOLLARS: ____YES ____NO FORM: _____ BOOK ENTRY _____ CERTIFICATED INTEREST RATE BASIS: OPTION TO ELECT PREPAYMENT: ____YES ____NO INDEX MATURITY: OPTIONAL PREPAYMENT DATES: REGULAR RECORD DATES: OPTIONAL PREPAYMENT PRICES: INITIAL INTEREST RATE: OPTIONAL INTEREST RESET: _____YES ____NO MAXIMUM INTEREST RATE: OPTIONAL INTEREST RESET DATES: MINIMUM INTEREST RATE: OPTIONAL EXTENSIONS OF MATURITY:____YES____NO SPREAD: EXTENSION PERIOD: SPREAD MULTIPLIER: NUMBER OF EXTENSION PERIODS: INTEREST RESET PERIOD: FINAL MATURITY DATE: INTEREST RESET DATES: OTHER PROVISIONS: INTEREST DETERMINATION DATE: INTEREST PAYMENT DATES: OVERDUE RATE: CALCULATION AGENT: CURRENCY DETERMINATION AGENT: U.S. DEPOSITARY: AMORTIZING NOTE: ____YES _____NO If this Debt Security was issued with "original issue discount" for purposes of Section 1273 of the Internal Revenue Code of 1986, as amended, the following shall be completed: ORIGINAL ISSUE DISCOUNT SECURITY: TOTAL AMOUNT OF OID: ISSUE PRICE (expressed ___Yes ____ No as percentage of aggregate principal amount): YIELD TO MATURITY: SHORT ACCRUAL PERIOD OID: METHOD USED TO DETERMINE YIELD FOR SHORT ACCRUAL PERIOD: ___Approximate ___Exact DIAMOND SHAMROCK, INC., a corporation duly organized and existing under the laws of Delaware (herein called the "Company," which term includes any successor corporation under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to _______________ or registered assigns, the principal sum set forth above on the Stated Maturity shown above, and to pay interest thereon from the Original Issue Date shown above or from and including the most recent Interest Payment Date (as defined below) to which interest has been paid or duly provided for, as the case may be. Interest will be paid on the Interest Payment Dates shown above ("Interest Payment Dates"), at the rate per annum determined in accordance with the provisions on the reverse hereof, depending on the Interest Rate Basis specified above, commencing with the first such Interest Payment Date next succeeding the Original Issue Date shown above (except as provided below) until the principal hereof is paid or made available for payment and on Stated Maturity, and, if specified above, interest shall accrue on any overdue principal and on any overdue installment of interest (to the extent that the payment of such interest shall be legally enforceable) at the Overdue Rate per annum set forth above. The interest so payable and punctually paid or duly provided for on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Note (or one or more predecessor Notes) is registered at the close of business on the Regular Record Date set forth above next preceding such Interest Payment Date, which shall be the 15th calendar day next preceding such Interest Payment Date. The first payment of interest on any Note originally issued between a Regular Record Date and an Interest Payment Date will be made on the Interest Payment Date following the next succeeding Regular Record Date to the registered owner on such succeeding Regular Record Date. Except as otherwise provided in the Indenture, any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Note (or one or more predecessor Notes) is registered at the close of business on a Special Record Date for the payment of such defaulted interest to be fixed by the Trustee, notice whereof to be given to Holders of Notes of this series not less than 10 calendar days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. Payments of interest to be paid in U.S. dollars (other than interest, and if this is an Amortizing Note, principal (if this is not a Global Note) payable at Stated Maturity) will be made by mailing a check to the Holder at the address of the Holder appearing in the Security Register as of the applicable Regular Record Date. Notwithstanding the foregoing, at the option of the Company, all payments of interest and, if this is an Amortizing Note, principal on this Note may be made by wire transfer of immediately available funds to an account maintained by such Holder with a bank located in the United States as designated by the Holder not less than 15 calendar days prior to the Interest Payment Date. If a Holder holds U.S. $10,000,000 or more in aggregate principal amount of Notes of like tenor and terms (including the same Interest Payment Date) (or is the Holder of the equivalent thereof in a Specified Currency other than U.S. dollars), such Holder shall be entitled to receive payments of interest (other than at Stated Maturity or upon earlier redemption or repayment) in U.S. dollars by wire transfer of immediately available funds, but only if appropriate payment instructions have been received in writing by the Trustee not less than 15 calendar days prior to the applicable Interest Payment Date. Simultaneously with the election by the Holder to receive payments in a Specified Currency other than U.S. dollars (by written request to the Trustee, as provided below), the Holder shall provide appropriate payment instructions to the Trustee, and all such payments will be made in immediately available funds to a bank account maintained by the Holder in the country of the Specified Currency (or, with respect to ECUs, Brussels). If such a payment with respect to this Note cannot be made by wire transfer because the required designation has not been received by the Trustee on or before the requisite date or for any other reason, a notice will be mailed to the Holder at its registered address requesting a designation pursuant to which such wire transfer can be made and, upon the Trustee's receipt of such a designation, such payment will be made within 15 days of such receipt. The Company will pay any administrative costs imposed by banks in connection with making payments by wire transfer, but not any tax, assessment, or governmental charge imposed upon the Holder of this Note. In the event that payment is so made in accordance with the instructions of the Holder, such wire transfer shall be deemed to constitute full and complete payment of such interest and principal on this Note. If this is not a Global Note, payment of the principal, premium, if any, and interest payable at Maturity in respect of this Note will be paid in immediately available funds upon surrender of this Note accompanied by wire instructions at the principal office of the Trustee, provided that the Note is presented in time for the Trustee to make such payments in such funds in accordance with its normal procedures. If the Holder of this Note (as indicated above) is the U.S. Depositary or a nominee of the U.S. Depositary, this Note is a Global Note and the following legend is applicable except as specified on the reverse hereof: THIS GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE U.S. DEPOSITARY OR BY A NOMINEE OF THE U.S. DEPOSITARY TO THE U.S. DEPOSITARY OR ANOTHER NOMINEE OF THE U.S. DEPOSITARY OR BY THE U.S. DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR OF THE U.S. DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof, directly or through an Authenticating Agent, by manual signature of an authorized signatory, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. Dated: DIAMOND SHAMROCK, INC. By: _________________________________ Its: _________________________________ Attest: ______________________________ Its: ______________________________ TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Debt Securities of the series designated herein and referred to in the within-mentioned Indenture. THE FIRST NATIONAL BANK OF CHICAGO as Trustee By: _____________________________ Authorized Officer [Reverse of Note] DIAMOND SHAMROCK, INC. MEDIUM-TERM NOTE, SERIES B SECTION 1. General. This Note is one of a duly authorized issue of Securities of the Company (herein called the "Notes"), issued and to be issued in one or more series under an Indenture, dated as of December 15, 1989 (herein called the "Indenture"), between the Company and The First National Bank of Chicago, as Trustee (herein called the "Trustee," which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Notes and of the terms upon which the Debt Securities are, and are to be, authenticated and delivered. This Note is one of the Debt Securities of the series designated on the face hereof. The Notes may bear different dates, mature at different times, bear interest at different rates, be subject to different redemption provisions and may otherwise vary, all as provided in the Indenture. The Notes are limited to $150,000,000 in aggregate principal amount (or the equivalent thereof in the Specified Currency, calculated at the Market Exchange Rate (as defined below) on the applicable trade date). SECTION 2. Interest Rate Calculations; Payments. The interest rate on this Note will be equal to either (i) the interest rate calculated by reference to the specified Interest Rate Basis plus or minus the Spread, if any, or (ii) the interest rate calculated by reference to the specified Interest Rate Basis multiplied by the Spread Multiplier, if any. The "Spread" is the number of basis points (one basis point equals one-hundredth of a percentage point) specified on the face hereof as being applicable to this Note, and the "Spread Multiplier" is the percentage specified on the face hereof as being applicable to this Note. Set forth on the face hereof is the Interest Rate Basis and the Spread or Spread Multiplier, if any, and the maximum or minimum interest rate limitation, if any, applicable to this Note. Set forth on the face hereof are particulars as to the Calculation Agent (unless specified otherwise, The First National Bank of Chicago (in such capacity, the "Calculation Agent")), Index Maturity, Original Issue Date, the interest rate in effect for the period from the Original Issue Date to the first Interest Reset Date set forth on the face hereof (the "Initial Interest Rate"), Interest Determination Dates, Interest Payment Dates, Regular Record Dates, and Interest Reset Dates with respect to this Note. Except as provided below, interest on this Note will be payable (i) if this Note resets daily, weekly, or monthly, on the third Wednesday of each month or on the third Wednesday of March, June, September, and December of each year, as specified on the face hereof; (ii) if this Note resets quarterly, on the third Wednesday of March, June, September, and December of each year; (iii) if this Note resets semiannually, on the third Wednesday of each of two months of each year specified on the face hereof; and (iv) if this Note resets annually, on the third Wednesday of one month of each year specified on the face hereof (each such day being an "Interest Payment Date"), and in each case at Maturity. If any Interest Payment Date, other than Maturity, for this Note would otherwise be a day that is not a Business Day, such Interest Payment Date shall be postponed to the next day that is a Business Day (as defined below), except that if this Note is a LIBOR Note, if such Business Day is in the next succeeding calendar month, such Interest Payment Date shall be the immediately preceding London Business Day. If the Maturity for this Note falls on a day that is not a Business Day, payment of principal, premium, if any, and interest with respect to this Note will be made on the next succeeding Business Day with the same force and effect as if made on the due date, and no interest shall be payable on the date of payment for the period from and after the due date. The rate of interest on this Note will be reset daily, weekly, quarterly, semiannually, or annually (such period being the "Reset Period" for such Note, and the first day of each Reset Period being an "Interest Reset Date"), as specified on the face hereof. The Interest Reset Date will be, if this Note resets daily, each Business Day; if this Note resets weekly (unless the Interest Rate Basis on the face hereof is the Treasury Rate), the Wednesday of each week; if this Note resets weekly and the Interest Rate Basis on the face hereof is the Treasury Rate, the Tuesday of each week; if this Note resets monthly (unless the Interest Rate Basis on the face hereof is the 11th District Cost of Funds Rate), the third Wednesday of each month; if this Note resets monthly and the Interest Rate Basis on the face hereof is the 11th District Cost of Funds Rate, the first calendar date of the month; if this Note resets quarterly, the third Wednesday of each March, June, September, and December; if this Note resets semiannually, the third Wednesday of the two months of each year specified on the face hereof; and if this Note resets annually, the third Wednesday of one month of each year specified on the face hereof; provided, however, that the interest rate in effect from the date of issue to the first Interest Reset Date will be the Initial Interest Rate specified on the face hereof. If the Interest Reset Date would otherwise be a day that is not a Business Day, the Interest Reset Date shall be postponed to the next day that is a Business Day, except that if the Interest Rate Basis on the face hereof is LIBOR, if such Business Day is in the next succeeding calendar month, such Interest Reset Date shall be the immediately preceding Business Day. Each adjusted rate shall be applicable on and after the Interest Reset Date to which it relates to, but not including, the next succeeding Interest Reset Date or until Stated Maturity or the date of redemption or prepayment, as the case may be. The interest rate for each Reset Period will be the rate determined by the Calculation Agent on the Calculation Date (as defined below) pertaining to the Interest Determination Date pertaining to the Interest Reset Date for such Reset Period. Unless otherwise specified on the face hereof, the "Interest Determination Date" pertaining to an Interest Reset Date for (a) a Commercial Paper Rate Note (the "Commercial Paper Interest Determination Date"), (b) a CD Rate Note (the "CD Interest Determination Date"), (c) a CMT Rate Note (the "CMT Interest Determination Date"), (d) a Federal Funds Rate Note (the "Federal Funds Interest Determination Date'), or (e) a Prime Rate Note (the "Prime Interest Determination Date") will be the second Business Day prior to such Interest Reset Date. Unless otherwise specified on the face hereof, the Interest Determination Date pertaining to an Interest Reset Date for an 11th District Cost of Funds Rate Note (the "11th District Interest Determination Date") will be the last Business Day of the month immediately preceding such Interest Reset Date on which the Federal Home Loan Bank of San Francisco (the "FHLB of San Francisco") publishes the Index (as defined below). Unless otherwise specified on the face hereof, the Interest Determination Date pertaining to an Interest Reset Date for a LIBOR Note (the "LIBOR Interest Determination Date") will be the second London Business Day (as defined below) immediately preceding each Interest Reset Date. Unless otherwise specified on the face hereof, the Interest Determination Date pertaining to an Interest Reset Date for a Treasury Rate Note (the "Treasury Interest Determination Date") will be the day of the week in which such Interest Reset Date falls on which Treasury bills would normally be auctioned. Treasury bills are usually sold at auction on Monday of each week, unless that day is a legal holiday, in which case the auction is usually held on the following Tuesday, except that such auction may be held on the preceding Friday. If, as a result of a legal holiday, an auction is so held on the preceding Friday, such Friday will be the Treasury Interest Determination Date pertaining to the Reset Period commencing in the next succeeding week, if an auction date shall fall on any Interest Reset Date for a Treasury Rate Note, then such Interest Reset Date shall instead be the first Business Day immediately following such auction date. Unless otherwise specified on the face hereof, the "Calculation Date" pertaining to any Interest Determination Date shall be the earlier of (i) the tenth calendar day after the 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, as the case may be. As used herein, "Business Day" means, unless otherwise specified on the face hereof, any Monday, Tuesday, Wednesday, Thursday or Friday that in The City of New york is not a day on which banking institutions are authorized or required by law, regulation, or executive order to close and, if the Interest Rate Basis of this Note is LIBOR, is also a London Business Day; provided that with respect to a Specified Currency, such day is also not a day on which banking institutions are authorized or required by law, regulation, or executive order to close in the principal financial center of the country of such Specified Currency (or in the case of ECUs, is not a day designated as an ECU Non-Settlement Day by the ECU Banking Association in Paris or otherwise generally regarded in the ECU interbank market as a day on which payment on ECUs shall not abe made). As used herein, "London Business Day" means any day (a) if the Designated LIBOR Currency is other than the ECU, on which dealings in deposits in such Designated LIBOR Currency are transacted in the London interbank market or (b) if the Designated LIBOR Currency is the ECU, that is not designated as an ECU Non-Settlement Day by the ECU Banking Association in Paris or otherwise generally regarded in the ECU interbank market as a day on which payments on ECUs shall not abe made. "Index Maturity" means the period to maturity of the instrument or obligation on which the interest rate formula is based, as specified on the face hereof. Unless otherwise specified on the face hereof, if this Note is specified on the face hereof as an Amortizing Note, payments with respect to this Note will be applied first to interest due and payable hereon and then to the reduction of the unpaid principal amount hereof. If this Note is specified on the face hereof as an Amortizing Note, a table setting forth repayment information in respect to this Note will be provided to the original purchaser hereof and will be available, upon request, to subsequent Holders. Unless otherwise indicated on the face hereof, interest on this Note will accrue from and including the date of issue or from and including the immediately preceding Interest Payment Date in respect of which interest has been paid or duly provided for, as the case may be, to but excluding the Interest Payment Date or the Maturity, as the case may be. Accrued interest is calculated by multiplying the face amount of this Note by an accrued interest factor. This accrued interest factor is computed by adding the interest factors calculated for each day from the date of issue, or from the last date to which interest has been paid, to the date for which accrued interest is being calculated. The interest factor for each such day is computed by dividing the interest rate applicable to such day by 360, in the case of Commercial Paper Rate Notes, CD Rate Notes, Federal Funds Rate Notes, 11th District Cost of Funds Rate Notes, LIBOR Notes, and Prime Rate Notes, or by the actual number of days in the year, in the case of CMT Rate Notes or Treasury Rate Notes. The Calculation Agent shall calculate the interest rate on this Note, as provided below. The Calculation Agent will, upon the request of the Holder of this Note, provide the interest rate then in effect and, if then determined, the interest rate which will become effective as a result of a determination made with respect to the most recent Interest Determination Date with respect to this Note. The Trustee shall act as the initial Calculation Agent for the Notes. For purposes of calculating the rate of interest payable on this Note, the Company will enter into an agreement with the Calculation Agent. The Calculation Agent's determination of any interest rate shall be final and binding in the absence of manifest error. Notwithstanding the determination of the interest rate as provided below, the interest rate on this Note for any interest period shall not be greater than the maximum interest rate, if any, or less than the minimum interest rate, if any, specified on the face hereof. The interest rate on this Note will in no event be higher than the maximum rate permitted by New York or other applicable law, as the same may be modified by United States law of general application. Determination of Commercial Paper Rate. If the Interest Rate Basis specified on the face hereof is Commercial Paper Rate, the interest rate determined with respect to the Commercial Paper Rate Interest Determination Date shall be the Commercial Paper Rate plus or minus the Spread, if any, or multiplied by the Spread Multiplier, if any, as specified on the face hereof, as determined on such Commercial Paper Rate Interest Determination Date. "Commercial Paper Rate" means, with respect to any Commercial Paper Interest Determination Date, the Money Market Yield (calculated as described below) of the rate on such date for commercial paper having the Index Maturity designated on the face hereof as published by the Board of Governors of the Federal Reserve System in "Statistical Release H.15(519), Selected Interest Rates" or any successor publication of the Board of Governors ("H.15(519)") under the heading "Commercial Paper." In the event that such rate is not published prior to 9:00 A.M., New York City time, on the Calculation Date pertaining to such Commercial Paper Interest Determination Date, then the Commercial Paper Rate with respect to such Commercial Paper Interest Determination Date shall be the Money Market Yield of the rate on such Commercial Paper Interest Determination Date for commercial paper having the Index Maturity designated on the face hereof as published by the Federal Reserve Bank of New York in its daily statistical release "Composite 3:30 P.M. Quotations for U.S. Government Securities" or any successor publication ("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 published in either H.15(519) or Composite Quotations, then the Commercial Paper Rate for such Commercial Paper Interest Determination Date shall be calculated by the Calculation Agent and shall be the Money Market Yield of the arithmetic mean of the offered rates (quoted on a bank discount basis) as of 11:00 A.M., New York City time, on such Commercial Paper Interest Determination Date, of three leading dealers of commercial paper in The City of New York selected by the Calculation Agent for commercial paper having the Index Maturity designated on the face hereof placed for an industrial issuer whose bond rating is "AA," or the equivalent, from a nationally recognized securities rating agency; provided, however, that if the dealers selected as aforesaid by the Calculation Agent are not quoting as mentioned in this sentence, the Commercial Paper Rate with respect to such Commercial Paper Interest Determination Date will be the Commercial Paper Rate in effect immediately prior to such Commercial Paper Interest Determination Date. "Money Market Yield" shall be a yield (expressed as a percentage rounded, if necessary, to the nearest one hundred-thousandth of a percent) calculated in accordance with the following formula: Money Market Yield = D x 360 360 - (D x M) x 100 where "D" refers to the per annum rate for commercial paper, quoted on a bank discount basis and expressed as a decimal; and "M" refers to the actual number of days in the period for which accrued interest is being calculated. Determination of CD Rate. If the Interest Rate Basis specified on the face hereof is CD Rate, the interest rate determined with respect to the CD Interest Determination Date shall be the CD Rate plus or minus the Spread, if any, or multiplied by the Spread Multiplier, if any, as specified on the face hereof, as determined on such CD Interest Determination Date. "CD Rate" means, with respect to any CD Interest Determination Date, the rate on such date for negotiable certificates of deposit having the Index Maturity designated on the face hereof as published in H.15(519) under the heading "CDs (Secondary Market)." In the event that such rate is not published prior to 9:00 A.M., New York City time, on the Calculation Date pertaining to such CD Interest Determination Date, then the CD Rate with respect to such CD Interest Determination Date shall be the rate on such CD Interest Determination Date for negotiable certificates of deposit having the Index Maturity designated on the face hereof as published in Composite Quotations under the heading "Certificates of Deposit." If by 3:00 P.M., New York City time, on such Calculation Date such rate is not published in either H.15(519) or Composite Quotations, then the CD Rate on such CD Interest Determination Date shall be calculated by the Calculation Agent and shall be the arithmetic mean of the secondary market offered rates as of 10:00 A.M., New York City time, on such CD Interest Determination Date of three leading nonbank dealers in negotiable U.S. dollar certificates of deposit in The City of New York selected by the Calculation Agent for negotiable certificates of deposit of major United States money market banks (in the market for negotiable certificates of deposit) with a remaining maturity closest to the Index Maturity specified on the face hereof in a denomination of $5,000,000; provided, however, that if the dealers selected as aforesaid by the Calculation Agent are not quoting as mentioned in this sentence, the CD Rate with respect to such CD Interest Determination Date will be the CD Rate in effect immediately prior to such CD Interest Determination Date. Determination of CMT Rate. If the Interest Rate Basis specified on the face hereof is CMT Rate, the interest rate determined with respect to the CMT Interest Determination Date shall be the CMT Rate plus or minus the Spread, if any, or multiplied by the Spread Multiplier, if any, as specified on the face hereof, as determined on such CMT Interest Determination Date. "CMT Rate" means, with respect to any CMT Interest Determination Date, the rate displayed in the Designated CMT Telerate Page (as defined below) under the caption ". . . Treasury Constant Maturities . . . Federal Reserve Board Release H.15 . . . Mondays Approximately 3:45 P.M.," under the column for the Designated CMT Maturity Index (as defined below) for (i) if the Designated CMT Telerate Page is 7055, the rate on such CMT 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 applicable CMT Interest Determination Date occurs. If such rate is no longer displayed on the relevant page, or if not displayed by 3:00 P.M., New York City time, on the Calculation Date pertaining to such CMT Interest Determination Date, then the CMT Rate for such CMT Interest Determination Date will be such treasury constant maturity rate for the Designated CMT Maturity Index as published in the relevant H.15(519). If such rate is no longer published, or if not published by 3:00 P.M., New York City time, on the Calculation Date pertaining to such CMT Interest Determination Date, then the CMT Rate for such CMT Interest Determination Date will be such treasury constant maturity rate for the Designated CMT Maturity Index (or other United States Treasury rate for the Designated CMT Maturity Index) for the CMT Interest Determination Date with respect to such Interest Reset Date as may then be published by either the Board of Governors of the Federal Reserve System or the United States Department of the Treasury that the Calculation Agent determines to be comparable to the rate formerly displayed on the Designated CMT Telerate Page and published in the relevant H.15(519). If such information is not provided by 3:00 P.M., New York City time, on the Calculation Date pertaining to such CMT Interest Determination Date, then the CMT Rate for the CMT Interest Determination Date will be calculated by the Calculation Agent and will be a yield to maturity, based on the arithmetic mean of the secondary market closing offer side prices as of approximately 3:30 P.M., New York City time, on the CMT Interest Determination Date reported, according to their written records, by three leading primary United States government securities dealers (each, a "Reference Dealer") in The City of New York selected by the Calculation Agent (from five such Reference Dealers selected by the Calculation Agent and eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for the most recently issued direct noncallable fixed rate obligations of the United States ("Treasury Notes") with an original maturity of approximately the Designated CMT Maturity Index and a remaining term to maturity of not less than such Designated CMT Maturity Index minus one year. If the Calculation Agent cannot obtain three such Treasury Note quotations, the CMT Rate for such CMT Interest Determination Date will be calculated by the Calculation Agent and will be a yield to maturity based on the arithmetic mean of the secondary market offer side prices as of approximately 3:30 P.M., New York City time, on the CMT Interest Determination Date of three Reference Dealers in The City of New York (form five such Reference Dealers selected by the Calculation Agent and eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for Treasury Notes with an original maturity of the number of years that is the next highest to the Designated CMT Maturity Index and a remaining term to maturity closest to the Designated CMT Maturity Index and in an amount of at least $100,000,000. 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 will be the CMT Rate in effect on such CMT Interest Determination Date. If two Treasury Notes with an original maturity as described in the 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 specified on the face hereof (or any other page as may replace such page on that service for the purpose of displaying Treasury Constant Maturities as published in H.15(519)), for the purposes of displaying Treasury Constant Maturities as published in H.15(519). If no such page is specified on the face hereof, the Designated CMT Telerate Page shall be 7052, for the most recent week. "Designated CMT Maturity Index" means the original period to maturity of the Treasury Notes (either one, two, three, five, seven, ten, twenty or thirty years) specified on the face hereof with respect to which the CMT Rate will be calculated. If no such maturity is specified on the face hereof, the Designated CMT Maturity Index shall be two years. Determination of Federal Funds Rate. If the Interest Rate Basis specified on the face hereof is Federal Funds Rate, the interest rate determined with respect to the Federal Funds Interest Determination Date shall be the Federal Funds Rate plus or minus the Spread, if any, or multiplied by the Spread Multiplier, if any, specified on the face hereof, as determined on such Federal Funds Interest Determination Date. "Federal Funds Rate" means, with respect to any Federal Funds Interest Determination Date, the rate on such date for Federal Funds as published in H.15(519) under the heading "Federal Funds (Effective)." In the event that such rate is not published prior to 9:00 A.M., New York City time, on the Calculation Date pertaining to such Federal Funds Interest Determination Date, then the Federal Funds Rate shall be the rate on such Federal Funds Interest Determination Date as published in Composite Quotations under the heading "Federal Funds/Effective Rate." If by 3:00 P.M., New York City time, on such Calculation Date such rate is not published in either H.15(519) or Composite Quotations, then the Federal Funds Rate with respect to such Federal Funds Interest Determination Date shall be calculated by the Calculation Agent and shall be the arithmetic mean (rounded, if necessary, to the nearest one hundred- thousandth of a percent) of the rates as of 9:00 A.M., New York City time, on such Federal Funds Interest Determination Date for the last transaction in overnight Federal Funds arranged by three leading brokers of Federal Funds transactions in The City of New York selected by the Calculation Agent; provided, however, that if the brokers selected as aforesaid by the Calculation Agent are not quoting as mentioned in this sentence, the Federal Funds Rate with respect to such Federal Funds Interest Determination Date will be the Federal Funds Rate in effect immediately prior to such Federal Funds Interest Determination Date. Determination of 11th District Cost of Funds Rate. If the Interest Rate Basis specified on the face hereof is 11th District Cost of Funds Rate, the interest rate determined with respect to the 11th District Interest Determination Date shall be the 11th District Cost of Funds Rate plus or minus the Spread, if any, or multiplied by the Spread Multiplier, if any, specified on the face hereof, as determined on such 11th District Interest Determination Date. "11th District Cost of Funds Rate" means, with respect to any 11th District Interest Determination Date, the rate equal to the monthly weighted average cost of funds for the calendar month preceding such 11th District Cost of Funds Rate Interest Determination Date as set forth under the caption "11th District" on Telerate Page 7058 as of 11:00 A.M., San Francisco time, on such 11th District Interest Determination Date. If such rate does not appear on Telerate page 7058 on any related 11th District Interest Determination Date, the 11th District Cost of Funds Rate for such 11th District Interest Determination Date shall be the monthly weighted average cost of funds paid by member institutions of the Eleventh Federal Home Loan Bank District that was most recently announced (the "Index") by the FHLB of San Francisco as such cost of funds for the calendar month preceding the date of such announcement. If the FHLB of San Francisco fails to announce such rate for the calendar month next preceding such 11th District Interest Determination Date, then the 11th District Cost of Funds Rate for such 11th District Interest Determination Date will be the 11th District Cost of Funds Rate then in effect on such 11th District Interest Determination Date. Determination of LIBOR. If the Interest Rate Basis specified on the face hereof is LIBOR, the interest rate determined with respect to the LIBOR Interest Determination Date shall be LIBOR plus or minus the Spread, if any, or multiplied by the Spread Multiplier, if any, specified on the face hereof, as determined on such LIBOR Interest Determination Date. LIBOR will be determined by the Calculation Agent in accordance with the following provisions: (i) With respect to any LIBOR Interest Determination Date, LIBOR will be either: (a) if "LIBOR Reuters" is specified on the face hereof, the arithmetic mean of the offered rates (unless the specified designated LIBOR Page (as defined below) by its terms provides only for a single rate, in which case such single rate shall be used) for deposits in the Designated LIBOR Currency (as defined below) having the Index Maturity designated on the face hereof, commencing on the second London Business Day immediately following the LIBOR Interest Determination Date, which appear on the Designated LIBOR Page specified on the face hereof as of 11:00 A.M., London time, on that LIBOR Interest Determination Date, if at least two such offered rates appear (unless, as aforesaid, only a single rate is required) on such Designated LIBOR Page, or (b) if "LIBOR Telerate" is specified on the face hereof, the rate for deposits in the Designated LIBOR Currency (as defined below) having the Index Maturity designated on the face hereof, commencing on the second London Business Day immediately following such LIBOR Interest Determination Date, which appears on the Designated LIBOR page specified on the face hereof as of 11:00 A.M. London time on that LIBOR Interest Determination Date. Notwithstanding the foregoing, if fewer than two offered rates appear on the Designated LIBOR Page with respect to LIBOR Reuters (unless the specified Designated LIBOR Page with respect to LIBOR Reuters by its terms provides only for a single rate, in which case such single rate shall be used), or if no rate appears on the Designated LIBOR Page with respect to LIBOR Telerate, whichever may be applicable, LIBOR in respect of the related LIBOR Interest Determination Date will be determined as if the parties had specified the rate described in clause (ii) below. (ii) With respect to any LIBOR Interest Determination Date on which fewer than two offered rates appear on the Designated LIBOR Page with respect to LIBOR Reuters (unless the Designated LIBOR Page by its terms provides only for a single rate, in which cases such single rate shall be used), or if no rate appears on the designated LIBOR Page with respect to LIBOR Telerate, as the case may be, the Calculation Agent will request the principal London office of each of four major banks in the London interbank market selected by the Calculation Agent to provide the Calculation Agent with its offered rate quotation for deposits in the Designated LIBOR Currency (as defined below) for the period of the Index Maturity specified on the face hereof, commencing on the second London Business Day immediately following such LIBOR Interest Determination Date, to prime banks in the London interbank market as of 11:00 A.M., London time, on such LIBOR Interest Determination Date and in a principal amount that is representative for a single transaction in such Designated LIBOR Currency in such market at such time. If at least two such quotations are provided, LIBOR determined on such LIBOR Interest Determination Date will be the arithmetic mean of such quotations. If fewer than two quotations are provided, LIBOR determined on such LIBOR Interest Determination Date will be the arithmetic mean of the rates quoted as of 11:00 A.M. in the applicable major banks in such Principal Financial Center (as defined below), on such LIBOR Interest Determination Date by three major banks in such Principal Financial Center selected by the Calculation Agent for loans in the Designated LIBOR Currency to leading banks, commencing on the second London Business Day immediately following such LIBOR Interest Determination Date, having the Index Maturity designated on the face hereof in a principal amount that is representative for a single transaction in such Designated LIBOR Currency in such market at such time; provided, however, that if the banks so selected by the Calculation Agent are not quoting as mentioned in this sentence, LIBOR determined on such LIBOR Interest Determination Date will be LIBOR in effect on such LIBOR Interest Determination Date. "Designated LIBOR Currency" means the currency (including a composite currency), if any, designated on the face hereof as the Designated LIBOR Currency. If no such currency is designated in on the face hereof, the Designated LIBOR Currency shall be U.S. dollars. "Designated LIBOR Page" means either (a) the display on the Reuters Monitor Money Rates Service for the purpose of displaying the London interbank rates of major banks for the applicable Designated LIBOR Currency (if "LIBOR Reuters" is designated on the face hereof), or (b) the display on the Dow Jones Telerate Service for the purpose of displaying the London interbank rates of major banks for the applicable designated LIBOR Currency (if "LIBOR Telerate" is designated on the face hereof). If neither LIBOR Reuters nor LIBOR Telerate is specified on the face hereof, LIBOR for the applicable Designated LIBOR Currency will be determined as if LIBOR Telerate (and, if the U.S. dollar is the Designated LIBOR Currency, page 3750) had been chosen. "Principal Financial Center" means, unless otherwise specified on the face hereof, the capital city of the country that issues as its legal tender the Designated LIBOR Currency of this Note, except that with respect to U.S. dollars and ECUs, the Principal Financial Center shall be The City of New York and Brussels, respectively. Determination of Prime Rate. If the Interest Rate Basis specified on the face hereof is the Prime Rate, the interest rate determined with respect to the Prime Interest Determination Date shall be the Prime Rate plus or minus the Spread, if any, or Spread Multiplier, if any, specified on the face hereof, as determined on such Prime Interest Determination Date. "Prime Rate" means, with respect to any Prime Interest Determination Date, the rate set forth on such date in H.15(519) under the heading "Bank Prime Loan." In the event that such rate is not published prior to 9:00 A.M., New York City time, on the Calculation Date pertaining to such Prime Rate Interest Determination Date, then the Prime Rate with respect to such Prime Interest Determination Date shall be the arithmetic mean of the rates of interest publicly announced by each bank that appears on the Reuters Screen NYMF Page as such bank's prime rate or base lending rate as in effect for that Prime Interest Determination Date. If fewer than four such rates appear on the Reuters Screen NYMF Page for the Prime Interest Determination Date, the Prime 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 a 360-day year as of the close of business on such Prime Interest Determination Date by four major money center banks in The City of New York selected by the Calculation Agent. If fewer than two quotations are provided, the Prime Rate with respect to such Prime Interest Determination Date shall be determined on the basis of the rates furnished 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, 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 provide such rate or rates; provided, however, that if the bank or trust company selected as aforesaid is not quoting as mentioned in this sentence, the Prime Rate with respect to such Prime Interest Determination Date will be the Prime Rate in effect immediately prior to such Prime Interest Determination Date. "Reuters Screen NYMF Page" means the display designated as page "NYMF" on the Reuters Monitor Money Rate Service (or such other page as may replace the NYMF page on the service for the purpose of displaying the prime rate or base lending rate of major banks). Determination of Treasury Rate. If the Interest Rate Basis specified on the face hereof is Treasury Rate, the interest rate determined with respect to the Treasury Interest Determination Date shall be the Treasury Rate plus or minus the Spread, if any, or multiplied by the Spread Multiplier, if any, specified on the face hereof, as determined on such Treasury Interest Determination Date. "Treasury Rate" means, with respect to any Treasury Interest Determination Date, the rate for the most recent auction of direct obligations of the United States ("Treasury bills") having the Index Maturity specified on the face hereof as published in H.15(519) under the heading, "Treasury bills -- auction average (investment)" or, if not so published by 3:00 P.M., New York City time, on the Calculation Date pertaining to such Treasury Interest Determination Date, the average auction rate (expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) as otherwise announced by the U.S. Department of the Treasury. In the event that such rate is not available by 3:00 P.M., New York City time, on such Treasury Interest Determination Date 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) of the arithmetic mean of the secondary market bid rates, as of approximately 3:30 P.M., New York City time, on such Treasury Interest Determination Date, of three leading primary U.S. government securities dealers selected by the Calculation Agent for the issue of Treasury bills with a remaining maturity closest to the Index Maturity designated on the face hereof; provided, however, that if the dealers selected as aforesaid by the Calculation Agent are not quoting as mentioned in this sentence, the Treasury Rate with respect to such Treasury Interest Determination Date will be the Treasury Rate in effect immediately prior to such Treasury Interest Determination Date. The Calculation Agent shall calculate the interest rate on this Note in accordance with the foregoing as soon as practicable after the Interest Determination Date. If the Specified Currency shown on the face hereof is a currency or currency unit other than U.S. dollars, except as provided below, payments of interest and principal (and premium, if any) with respect to this Note will be made in U.S. dollars if the Holder of this Note on the relevant Regular Record Date or at Maturity, as the case may be, has transmitted a written request may be delivered by mail, by hand or by cable, telex or any other form of facsimile transmission. Any such request for such payment in U.S. dollars to the Paying Agent at its principal office on or prior to such Regular Record Date or the date 15 days prior to Maturity, as the case may be. Such request made with respect to this Note by a Holder will remain in effect with respect to any further payments of interest and principal (and premium, if any) with respect to this Note payable to such Holder, unless such request is revoked by written notice received by the Paying Agent on or prior to the relevant Regular Record Date or the date 15 days prior to Maturity, as the case may be (but no such revocation may be made with respect to payments made on this Note if an Event of Default has occurred with respect thereto or upon the giving of a notice of redemption). A Holder whose Note is registered in the name of a broker or nominee should contact such broker or nominee to determine whether and how an election to receive payments in U.S. dollars may be made. The U.S. dollar amount to be received by the Holder of this Note who elects to receive payments in U.S. dollars will be based on the highest indicated bid quotation for the purchase of U.S. dollars in exchange for the Specified Currency obtained by the Currency Determination Agent (as defined below) as approximately 11:00 A.M., New York City time, on the second Business Day next preceding the applicable payment date (the "Conversion Date") from the bank composite or multicontributor pages of the Quoting Source for (as defined below) three (or two if three are not available) major banks in The City of New York. The first three (or two) such banks selected by the Currency Determination Agent which are offering quotes on the Quoting Source will be used. If fewer than two such bid quotations are available at 11:00 A.M., New York City time, on the second Business Day next preceding the applicable payment date, such payment will be based on the Market Exchange Rate as of the second Business Day next preceding the applicable payment date. If the Market Exchange Rate for such date is not then available, such payment will be made in the Specified Currency. As used herein, the "Quoting Source" means Reuters Monitor Foreign Exchange Service, or if the Currency Determination Agent determines that such service is not available, Telerate Monitor Foreign Exchange Service, or if the Currency Determination Agent determines that neither service is available such comparable display or other comparable manner of obtaining quotations as shall be agreed between the Company and the Currency Determination Agent. All currency exchange costs associated with any payment in U.S. dollars on this Note will be borne by the Holder by deductions from such payment. Any currency determination agent (the "Currency Determination Agent") with respect to this Note is specified on the face hereof. If payment in respect of this Note is required to be made in any currency unit (e.g. ECUs) and such currency unit is unavailable, in the good faith judgment of the Company, due to the imposition of exchange controls or other circumstances beyond the Company's control, then all payments in respect of this Note shall be made in U.S. dollars until such currency unit is again available. The amount of each payment of U.S. dollars shall be computed on the basis of the equivalent of the currency unit in U.S. dollars, which shall be determined by the Currency Determination Agent on the following basis. The component currencies of the currency unit for this purpose (the "Component Currencies") shall be the currency amounts that were components of the currency unit as of the Conversion Date. The equivalent of the currency unit in U.S. dollars shall be calculated by aggregating the U.S. dollar equivalents of the Component Currencies. The U.S. dollar equivalent of each of the Component Currencies shall be determined by the Currency Determination Agent on the Basis of the Market Exchange Rate for each such Component Currency as of the Conversion Date. "Market Exchange Rate" means the noon buying rate in The City of New York for cable transfers of such Specified Currency as certified for customs purposes by the Federal Reserve Bank of New York. If the official unit of any Component Currency is altered by way of combination or subdivision, the number of units of that currency as a Component Currency shall be divided or multiplied in the same proportion. If two or more Component Currencies are consolidated into a single currency, the amounts of those currencies as Component Currencies shall be replaced by an amount in such single currency equal to the sum of the amounts of the consolidated Component Currencies expressed in such single currency. If any Component Currency is divided into two or more currencies, the amount of the original Component Currency shall be replaced by the amounts of such two or more currencies, the sum of which shall be equal to the amount of the original Component Currency. All determinations referred to above made by the Currency Determination Agent shall be at its sole discretion and shall, in the absence of manifest error, be conclusive for all purposes and binding on the Holder of this Note. All percentages resulting from any calculations under this Note will be rounded, if necessary, to the nearest one hundred thousandth of a percentage point (with five one-millionths of a percentage point being rounded upward) and all currency or currency unit or dollar amounts used in or resulting from any such calculation in respect of the Notes will be rounded to the nearest one- hundredth of a unit (with five one-thousandths being rounded upward) or nearest cent, as the case may be. SECTION 3. Redemption. If so specified on the face hereof, the Company may at its option redeem this Note in whole or from time to time in part on or after the date designated as the Initial Redemption Date on the face hereof at the redemption price specified on the face hereof, together with accrued and unpaid interest to the date of redemption, but interest installments whose Stated Maturity is on or prior to the date of redemption will be payable to the Holder of this Note of record at the close of business on the relevant Regular Record Date referred to on the face hereof, all as provided in the Indenture. The Company may exercise such option by causing the Trustee to mail a notice of such redemption at least 30 but not more than 60 calendar days prior to the date of redemption. In the event of redemption of this Note in part only, a new Note or Notes for the unredeemed portion hereof shall be issued in the name of the Holder hereof upon the cancellation hereof. SECTION 4. Prepayment. If so specified on the face hereof, this Note will be prepayable prior to Stated Maturity at the option of the Holder on the Optional Prepayment Dates shown on the face hereof at the Optional Prepayment Prices shown on the face hereof together with interest accrued and unpaid thereon to the date of prepayment. In order for this Note (if it is prepayable at the option of the Holder) to be prepaid prior to Stated Maturity, the Paying Agent must receive at least 30 but not more than 45 calendar days prior to an Optional Prepayment Date (i) this Note with the form below entitled "Option to Elect Prepayment" duly completed or (ii) a telegram, telex, facsimile transmission, or letter (first class, postage prepaid) from a member of a national securities exchange or the National Association of Securities Dealers, Inc. or a commercial bank or trust company in the United States of America setting forth the name of the Holder of this Note, the principal amount of the Note to be prepaid, the certificate number or a description of the tenor and terms of this Note, a statement that the option to elect prepayment is being exercised thereby and a guarantee that this Note with the form below entitled "Option to Elect Prepayment" duly completed will be received by the Paying Agent not later than five Business Days after the date of such telegram, telex, facsimile transmission, or letter (first class, postage prepaid). If the procedure described in clause (ii) of the preceding sentence is followed, this Note with such form duly completed must be received by the Trustee by such fifth Business Day. Exercise of the prepayment option by the Holder of this Note shall be irrevocable, except that a Holder who has tendered this Note for prepayment may revoke any such tender for prepayment by written notice to the Paying Agent received prior to the close of business on the tenth calendar day prior to the prepayment date. The prepayment option may be exercised by the Holder of this Note for less than the entire principal amount of the Note, provided that the principal amount of the Note remaining outstanding after prepayment is an authorized denomination. Upon such partial prepayment this Note shall be cancelled and a new Note or Notes for the remaining principal amount hereof shall be issued in the name of the Holder of this Note. SECTION 5. Optional Interest Reset. If so specified on the face hereof, the Spread or the Spread multiplier on this Note may be reset by the Company on the date or dates specified on the face hereof (each an "Optional Interest Reset Date"). The Company may exercise such option by notifying the Trustee of such exercise at least 45 but not more than 60 calendar days prior to an Optional Interest Reset Date. If the Company so notifies the Trustee of such exercise, not later than 40 calendar days prior to each Optional Interest Reset Date, the Trustee will send by telegram, telex, facsimile transmission, or letter (first class, postage prepaid) to the Holder of this Note a notice (the "Reset Notice") indicating (i) that the Company has elected to reset the Spread or the Spread Multiplier, (ii) such new Spread or the Spread Multiplier and (iii) the provisions, if any, for redemption during the period from such Optional Interest Reset Date to the next Optional Interest Reset Date or, if there is no such next Optional Interest Reset Date, to Stated Maturity of this Note (each such period a "Subsequent Interest Period"), including the date or dates on which or the period or periods during which and the price or prices at which such redemption may occur during such Subsequent Interest Period. Notwithstanding the foregoing, not later than 20 calendar days prior to an Optional Interest Reset Date, the Company may, at its option, revoke the Spread and/or the Spread Multiplier provided for in the Reset Notice and establish a higher Spread and/or the Spread Multiplier for the Subsequent Interest Period commencing on such Optional Interest Reset Date by causing the Trustee to send by telegram, telex, facsimile transmission, or letter (first class, postage prepaid) notice of such higher interest rate to the Holder of this Note. Such notice shall be irrevocable. All Notes with respect to which the Spread and/or the Spread Multiplier is reset on an Optional Interest Reset Date will bear such higher Spread and/or the Spread Multiplier, whether or not tendered for repayment as provided in the next paragraph. If the Company elects prior to an Optional Interest Reset Date to reset the interest rate of this Note, the Holder of this Note will have the option to elect prepayment of this Note by the Company on such Optional Interest Reset Date at a price equal to the principal amount hereof plus interest accrued and unpaid thereon to such Optional Interest Reset Date. In order to obtain prepayment on an Optional Interest Reset Date, the Holder must follow the procedures set forth under Section 4 for optional prepayment except that the period for delivery or notification in the Trustee shall be at least 25 but not more than 35 calendar days prior to such Optional Interest Reset Date. If the Holder has tendered this Note for prepayment following receipt of a Reset Notice, the Holder may revoke such tender for prepayment by written notice to the Trustee received prior to the close of business on the 10th calendar day prior to such Optional Interest Reset Date. SECTION 6. Optional Extension of Maturity. If so specified on the face hereof, the Stated Maturity of this Note may be extended at the option of the Company for the period or periods of from one to five whole years specified on the face hereof (each an "Extension Period") up to but not beyond the date (the "Final Maturity Date") set forth on the face hereof. The Company may exercise such option with respect to a Note by notifying the Trustee of such exercise at least 45 but not more than 60 calendar days prior to Stated Maturity of such Note in effect prior to the exercise of such option (the "Original Stated Maturity Date"). If the Company so notifies the Trustee of such exercise, the Trustee will send by telegram, telex, facsimile transmission, or letter (first class, postage prepaid) to the Holder of this Note not later than 40 calendar days prior to the Original Stated Maturity Date a notice (the "Extension Notice") indicating (i) that the Company has elected to extend the Stated Maturity of this Note, (ii) the new Stated Maturity, (iii) the interest rate applicable to the Extension Period, and (iv) the provisions, if any, for redemption during such Extension Period, including the date or dates on which or the period or periods during which and the price or prices at which such redemption may occur during such Extension Period. Upon the Trustee's sending of the Extension Notice, Stated Maturity of this Note shall be extended automatically and, except as modified by the Extension Notice and as described in the next two paragraphs, this Note will have the same terms as prior to the sending of such Extension Notice. Notwithstanding the foregoing, not later than 20 calendar days before the Original Stated Maturity Date of this Note, the Company may, at its option, revoke the Spread and/or Spread Multiplier provided for in the Extension Notice and establish a higher interest rate for the Extension Period by causing the Trustee to send by telegram, telex, facsimile transmission, or letter (first class, postage prepaid) notice of such higher Spread and/or Spread Multiplier to the Holder of this Note. Such notice shall be irrevocable. All Notes with respect to which Stated Maturity is extended will bear such higher Spread and/or Spread Multiplier for the Extension Period, whether or not tendered for repayment as provided in the next paragraph. If the Company extends the Stated Maturity of this Note, the Holder will have the option to elect prepayment of this Note by the Company on the Original Stated Maturity Date at a price equal to the principal amount hereof, plus interest accrued and unpaid thereon to such date. In order to obtain prepayment on the Original Stated Maturity Date once the Company has extended the Stated Maturity hereof, the Holder must follow the procedures set forth under Section 4 for optional prepayment except that the period for delivery or notification to the Trustee shall be at least 25 but not more than 35 calendar days prior to the Original Stated Maturity Date. A Holder who has tendered this Note for repayment following receipt of an Extension Notice may revoke such tender for prepayment by written notice to the Trustee received prior to the close of business on the 10th calendar day before the Original Stated Maturity Date. SECTION 7. Sinking Fund. This Note will not be subject to any sinking fund. SECTION 8. Original Issue Discount Notes. Notwithstanding anything herein to the contrary, if this Note is an Original Issue Discount Note, the amount payable in the event of redemption or repayment prior to the Stated Maturity hereof in lieu of the principal amount due at the Stated Maturity hereof shall be the Amortized Face Amount of this Note as of the redemption date or the date of repayment, as the case may be. The "Amortized Face Amount" of this Note shall be the amount equal to (a) the Issue Price (as set forth on the face hereof) plus (b) that portion of the difference between the Issue Price and the principal amount hereof that has accreted at the yield to maturity (as set forth on the face hereof) (computed in accordance with generally accepted United States bond yield computation principles) at the date as of which the Amortized Face Amount is calculated but in no event shall the Amortized Face Amount of this Note exceed its principal amount. SECTION 9. Events of Default. If any Event of Default with respect to Notes of this series shall occur and be continuing, the principal of the Notes of this series may be declared due and payable in the manner and with the effect provided in the Indenture; provided, however, that notwithstanding anything herein to the contrary, if this Note is an Original Issue Discount Note, the amount so declared due and payable shall be the Amortized Face Amount of this Note as of the date of such declaration. SECTION 10. Modifications and Waivers; Obligation of the Company Absolute. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holder of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in principal amount of the Debt Securities at the time outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Debt Securities of each series at the time outstanding, on behalf of the Holders of all Debt Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and premium, if any, and interest on this Note at the times, places and rates, and in the coin or currency, herein prescribed. SECTION 11. Defeasance and Covenant Defeasance. The Indenture contains provisions for defeasance at any time of (a) the entire indebtedness of the Company on this Note and (b) certain restrictive covenants and the related Events of Default, upon compliance by the Company with certain conditions set forth therein, which provisions apply to this Note. SECTION 12. Authorized Denominations. Unless otherwise noted on the face hereof, the Notes of this series are issuable only in global or certified registered form, without coupons, in denominations of $1,000 and integral multiples thereof. As provided in the Indenture and subject to certain limitations therein set forth and to the limitations described below, if applicable, Notes of this series are exchangeable for a like aggregate principal amount of Notes of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same. SECTION 13. Registration of Transfer. As provided in the Indenture and subject to certain limitations therein set forth and to the limitations described below, if applicable, the transfer of this Note is registerable in the Security Register upon surrender of this Note for registration of transfer at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. If this Note is a Global Note (as specified on the face hereof), this Note is exchangeable only if (x) the U.S. Depositary notifies the Company that it is unwilling or unable to continue as U.S. Depositary for this Global Note or if at any time the U.S. Depositary ceases to be a clearing agency registered under the Securities Exchange Act of 1934, as amended, (y) the Company in its sole discretion determines that this Note shall be exchangeable for certificated Notes in registered form or (z) an Event of Default, or an event which with the passage of time or the giving of notice would become an Event of Default, with respect to the Notes represented hereby has occurred and is continuing, provided that the definitive Notes so issued in exchange for this permanent Global Notes shall be in denominations of $1,000 and integral multiples thereof and be of like aggregate principal amount and tenor as the portion of this permanent Global Note to be exchanged, and provided further that, unless the Company agrees otherwise, Notes of this series in certificated registered form will be issued in exchange for this permanent Global Note, or any portion hereof, only if such Notes in certificated registered form were requested by written notice to the Trustee or the Security Registrar by or on behalf of a person who is beneficial owner of an interest hereof given through the Holder hereof. Except as provided above, owners of beneficial interests in this permanent Global Note will not be entitled to receive physical delivery of Notes in certificated registered form and will not be considered the Holders thereof for any purpose under the Indenture. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. SECTION 14. Owners. Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note be registered as the owner hereof for all purposes, whether or not this Note be overdue, and none of the Company, the Trustee or any such agent shall be effected by notice to the contrary. SECTION 15. Governing Law. The Indenture and the Notes shall be governed by and construed in accordance with the laws of the State of New York. SECTION 16. Defined Terms. All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture; and all references in the Indenture to "Debt Security" or "Debt Securities" shall be deemed to include the Notes. OPTION TO ELECT PREPAYMENT [To be completed only if this Note is prepayable at the option of the Holder and the Holder elects to exercise such rights] The undersigned owner of this Note hereby irrevocably elects to have the Company prepay the principal amount of this Note or portion hereof below designated at (i) the applicable Optional Prepayment Price indicated on the face hereof, together with interest accrued and unpaid thereon to the date of prepayment, if this Note is to be prepaid pursuant to Section 4 of this Note, or (ii) 100% of the principal amount of this Note to be prepaid plus interest accrued and unpaid thereon to the Optional Interest Reset Date, if this Note is to be prepaid pursuant to Section 5 hereof, or to the Original Stated Maturity Date, if this Note is to be prepaid pursuant to Section 6 hereof. Specify the denomination or denominations (which shall be $1,000 or integral multiples thereof or, if the Note is denominated in a currency other than U.S. dollars, an Authorized Denomination) of the Note or Notes to be issued to the Holder for the portion of the within Note not being prepaid (in the absence of any specification, one such Note will be issued for the portion not being prepaid): Dated: ________________________ __________________________________ Signature Sign exactly as name appears on the front of this Note. Principal amount to be prepaid if Indicate address where check is amount to be prepaid is less than to be sent, if prepaid: the entire principal amount of this Note (principal amount remaining ______________________________ must be an authorized denomination) ______________________________ $___________________ (which shall be an integral multiple of $1,000 or, if the Note is denominated in a currency other than U.S. dollars, of an amount equal to the integral multiples referred to on the face hereof under "Authorized SOCIAL SECURITY OR OTHER TAXPAYER Denominations" (or, if no such ID NUMBER reference is made, and amount equal to the minimum Authorized Denomination). ______________________________ ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as through they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivorship and not as tenants in common Custodian UNIF GIFT MIN ACT ________________________________________ (Cust) (Minor) Under Uniform Gifts to Minors Act _______________________________________ (State) Additional abbreviations may also be used though not in the above list. -------- FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE ___________________________________________________________________________ PLEASE PRINT OR TYPE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE ___________________________________________________________________________ the within Note and all rights thereunder, hereby irrevocably constituting and appointing attorney to transfer said Note on the books of the Company, with full power of substitution in the premises. Dated: ______________ _____________________________________ Signature Sign exactly as name appears on the front of this Note [SIGNATURE MUST BE GUARANTEED by a commercial bank, a trust company or by a member of the New York Stock Exchange] NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE WITHIN INSTRUMENT IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. -----END PRIVACY-ENHANCED MESSAGE-----