Filed pursuant to Rule 424(b)(5)
                                                File No.: 333-37285

PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED NOVEMBER 4, 1997)

[LOGO]                            $150,000,000
                            KIMCO REALTY CORPORATION
                           SERIES A MEDIUM-TERM NOTES
                   DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
                            ------------------------
 
    Kimco Realty Corporation (the 'Company') may offer from time to time up to
$150,000,000 aggregate initial offering price, or the equivalent thereof in one
or more foreign or composite currencies, of its Series A Medium-Term Notes, Due
Nine Months or More from Date of Issue (the 'Notes'). Such aggregate initial
offering price is subject to reduction as a result of the sale by the Company of
other Offered Securities described in the accompanying Prospectus. Each Note
will mature on any day nine months or more from the date of issue, as specified
in the applicable pricing supplement hereto (each, a 'Pricing Supplement'), and
may be subject to redemption at the option of the Company or repayment at the
option of the Holder thereof, in each case, in whole or in part, prior to its
Stated Maturity Date, as specified in the applicable Pricing Supplement. In
addition, each Note will be denominated and/or payable in United States dollars
or a foreign or composite currency, as specified in the applicable Pricing
Supplement. The Notes, other than Foreign Currency Notes, will be issued in
minimum denominations of $1,000 and integral multiples thereof, unless otherwise
specified in the applicable Pricing Supplement, while Foreign Currency Notes
will be issued in the minimum denominations specified in the applicable Pricing
Supplement.
 
    Unless otherwise specified in the applicable Pricing Supplement, Notes will
bear interest at fixed rates ('Fixed Rate Notes') or at floating rates
('Floating Rate Notes'). The applicable Pricing Supplement will specify whether
a Floating Rate Note is a Regular Floating Rate Note, a Floating Rate/Fixed Rate
Note or an Inverse Floating Rate Note and whether the rate of interest thereon
is determined by reference to one or more of the CD Rate, the CMT Rate, the
Commercial Paper Rate, the Eleventh District Cost of Funds Rate, the Federal
Funds Rate, LIBOR, the Prime Rate or the Treasury Rate (each, an 'Interest Rate
Basis'), or any other interest rate basis or formula, as adjusted by any Spread
and/or Spread Multiplier. Interest on each Floating Rate Note will accrue from
its date of issue and, unless otherwise specified in the applicable Pricing
Supplement, will be payable monthly, quarterly, semiannually or annually in
arrears, as specified in the applicable Pricing Supplement, and on the Maturity
Date. Unless otherwise specified in the applicable Pricing Supplement, the rate
of interest on each Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semiannually or annually, as specified in the applicable Pricing
Supplement. Interest on each Fixed Rate Note will accrue from its date of issue
and, unless otherwise specified in the applicable Pricing Supplement, will be
payable semiannually in arrears on April 1 and October 1 of each year and on the
Maturity Date. Notes may also be issued that do not bear any interest currently
or that bear interest at a below market rate. See 'Description of Notes.'
 

    The interest rate, or formula for the determination of the interest rate,
applicable to each Note and the other variable terms thereof will be established
by the Company on the date of issue of such Note and will be specified in the
applicable Pricing Supplement. Interest rates or formulas and other terms of
Notes are subject to change by the Company, but no change will affect any Note
already issued or as to which an offer to purchase has been accepted by the
Company.
 
    Each Note will be issued in book-entry form (a 'Book-Entry Note') or in
fully registered certificated form (a 'Certificated Note'), as specified in the
applicable Pricing Supplement. Each Book-Entry Note will be represented by one
or more fully registered global securities (the 'Global Securities') deposited
with or on behalf of The Depository Trust Company (the 'Depositary') and
registered in the name of the Depositary or the Depositary's nominee. Interests
in the Global Securities will be shown on, and transfers thereof will be
effected only through, records maintained by the Depositary (with respect to its
participants) and the Depositary's participants (with respect to beneficial
owners).
 
    SEE 'CERTAIN RISK FACTORS' COMMENCING ON PAGE S-2 FOR A DISCUSSION OF
CERTAIN RISKS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE
NOTES OFFERED HEREBY.
                            ------------------------
 
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
   AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
     THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, THE PROSPECTUS
          OR ANY SUPPLEMENT HERETO. ANY REPRESENTATION TO THE CONTRARY IS
                              A CRIMINAL OFFENSE.
 


                                                            PRICE TO             AGENTS' DISCOUNTS              PROCEEDS TO
                                                            PUBLIC(1)           AND COMMISSIONS(1)(2)           COMPANY(1)(3)
                                                                                                
Per Note...........................................            100%                  .125%-.750%               99.875%-99.250%
Total(4)...........................................        $150,000,000          $187,500-$1,125,000      $149,812,500-$148,875,000

 
(1) Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
    Chase Securities Inc., First Chicago Capital Markets, Inc., Goldman, Sachs &
    Co., J.P. Morgan Securities Inc. and Morgan Stanley & Co. Incorporated (the
    'Agents') may purchase the Notes, as principal, from the Company, for resale
    to investors and other purchasers at varying prices relating to prevailing
    market prices at the time of resale as determined by the applicable Agent,
    or, if so specified in the applicable Pricing Supplement, for resale at a
    fixed offering price. Unless otherwise specified in the applicable Pricing
    Supplement, any Note sold to an Agent as principal will be purchased by such
    Agent at a price equal to 100% of the principal amount thereof less a
    percentage of the principal amount equal to the commission applicable to an
    agency sale (as described below) of a Note of identical maturity. If agreed
    to by the Company and an Agent, such Agent may utilize its reasonable
    efforts on an agency basis to solicit offers to purchase the Notes at 100%

    of the principal amount thereof, unless otherwise specified in the
    applicable Pricing Supplement. The Company will pay a commission to the
    applicable Agent, ranging from .125% to .750% of the principal amount of a
    Note, depending upon its stated maturity, sold through such Agent.
    Commissions with respect to Notes with stated maturities in excess of 30
    years that are sold through an Agent will be negotiated between the Company
    and such Agent at the time of such sale. See 'Plan of Distribution.'
(2) The Company has agreed to indemnify the Agents against, and to provide
    contribution with respect to, certain liabilities, including liabilities
    under the Securities Act of 1933, as amended. See 'Plan of Distribution.'
(3) Before deducting expenses payable by the Company estimated at $325,000,000.
(4) Or the equivalent thereof in one or more foreign or composite currencies.
                            ------------------------
    The Notes are being offered on a continuous basis by the Company to or
through the Agents. Unless otherwise specified in the applicable Pricing
Supplement, the Notes will not be listed on any securities exchange and there
can be no assurance that the Notes offered hereby will be sold, that there will
be a secondary market for the Notes or that there will be liquidity in such
market if one develops. The Company reserves the right to cancel or modify the
offer made hereby without notice. The Company or an Agent, if it solicits the
offer on an agency basis, may reject any offer to purchase Notes in whole or in
part. See 'Plan of Distribution.'
                            ------------------------
MERRILL LYNCH & CO.
           CHASE SECURITIES INC.
                      FIRST CHICAGO CAPITAL MARKETS, INC.
                                GOLDMAN, SACHS & CO.
                                        J.P. MORGAN & CO.
                                                 MORGAN STANLEY DEAN WITTER
                            ------------------------
 
          The date of this Prospectus Supplement is November 4, 1997.


                         ------------------------------
 
     IN CONNECTION WITH AN OFFERING OF NOTES PURCHASED BY ONE OR MORE AGENTS AS
PRINCIPAL ON A FIXED OFFERING PRICE BASIS, SUCH AGENT(S) MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF NOTES TO
COVER SHORT POSITIONS OF SUCH AGENT(S). FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE 'PLAN OF DISTRIBUTION.'
                         ------------------------------
 
                              CERTAIN RISK FACTORS
 
     This Prospectus Supplement does not describe all of the risks of an
investment in Notes, whether resulting from such Notes being denominated or
payable in or determined by reference to a currency or composite currency other
than United States dollars or to one or more interest rate, currency or other
indices or formulas or otherwise. The Company and the Agents disclaim any
responsibility to advise prospective investors of such risks as they exist at
the date of this Prospectus Supplement or as they change from time to time.
Prospective investors should consult their own financial and legal advisors as
to the risks entailed by an investment in such Notes and the suitability of
investing in such Notes in light of their particular circumstances. Such Notes
are not an appropriate investment for investors who are unsophisticated with
respect to foreign currency transactions or transactions involving the
applicable interest rate index or currency index or other indices or formulas.
Prospective investors should carefully consider, among other factors, the
matters discussed below.
 
STRUCTURE RISKS
 
     An investment in Notes indexed, as to principal, premium, if any, and/or
interest, if any, to one or more currencies or composite currencies (including
exchange rates and swap indices between currencies or composite currencies),
commodities, interest rates or other indices or formulas, either directly or
inversely, entails significant risks that are not associated with similar
investments in a conventional fixed rate or floating rate debt security. Such
risks include, without limitation, the possibility that such indices or formulas
may be subject to significant changes, that no interest will be payable or that
interest will be payable at a rate lower than one applicable to a conventional
fixed rate or floating rate debt security issued by the Company at the same
time, that the repayment of principal and/or premium, if any, may occur at times
other than that expected by the Holder (as defined in the accompanying
Prospectus), and that the Holder could lose all or a substantial portion of
principal and/or premium, if any, payable on the Maturity Date (as defined under
'Description of Notes--General'). Such risks depend on a number of interrelated
factors, including economic, financial and political events, over which the
Company has no control. Additionally, if the formula used to determine the
amount of principal, premium, if any, and/or interest, if any, payable with
respect to such Notes contains a multiplier or leverage factor, the effect of
any change in the applicable index or indices or formula or formulas will be
magnified. In recent years, values of certain indices and formulas have been
highly volatile and such volatility may be expected to continue in the future.
Fluctuations in the value of any particular index or formula that have occurred
in the past are not necessarily indicative, however, of fluctuations that may

occur in the future.
 
     Any optional redemption feature of Notes might affect the market value of
such Notes. Since the Company may be expected to redeem such Notes when
prevailing interest rates are relatively low, Holders generally will not be able
to reinvest the redemption proceeds in a comparable security at an effective
interest rate as high as the current interest rate on such Notes.
 
     The Notes will not have an established trading market when issued, and
there can be no assurance of a secondary market for the Notes or the liquidity
of such market if one develops. See 'Plan of Distribution.'
 
     The secondary market, if any, for Notes will be affected by a number of
factors independent of the creditworthiness of the Company and the value of the
applicable index or indices or formula or formulas, including the complexity and
volatility of each such index or formula, the method of calculating the
principal, premium, if any, and/or interest, if any, in respect of such Notes,
the time remaining to the maturity of such Notes, the outstanding amount of such
Notes, any redemption features of such Notes, the amount of other debt
securities linked to such index or formula and the level, direction and
volatility of market interest rates generally. Such factors also will affect the
market value of such Notes. In addition, certain Notes may be designed for
specific investment objectives or strategies and, therefore, may have a more
limited secondary market and experience more price volatility than conventional
debt securities. Holders may not be able to sell such Notes
 
                                      S-2

readily or at prices that will enable them to realize their anticipated yield.
No investor should purchase Notes unless such investor understands and is able
to bear the risk that such Notes may not be readily saleable, that the value of
such Notes will fluctuate over time and that such fluctuations may be
significant.
 
EXCHANGE RATES AND EXCHANGE CONTROLS
 
     An investment in Foreign Currency Notes (as defined under 'Description of
Notes--General') entails significant risks that are not associated with a
similar investment in a debt security denominated and payable in United States
dollars. Such risks include, without limitation, the possibility of significant
changes in the rate of exchange between the United States dollar and the
Specified Currency (as defined under 'Description of Notes--General') and the
possibility of the imposition or modification of exchange controls by the
applicable governments or monetary authorities. Such risks generally depend on
factors over which the Company has no control, such as economic, financial and
political events and the supply and demand for the applicable currencies or
composite currencies. In addition, if the formula used to determine the amount
of principal, premium, if any, and/or interest, if any, payable with respect to
Foreign Currency Notes contains a multiplier or leverage factor, the effect of
any change in the applicable currencies or composite currencies will be
magnified. In recent years, rates of exchange between the United States dollar
and foreign currencies or composite currencies have been highly volatile and
such volatility may be expected to continue in the future. Fluctuations in any
particular exchange rate that have occurred in the past are not necessarily

indicative, however, of fluctuations that may occur in the future. Depreciation
of the Specified Currency applicable to a Foreign Currency Note against the
United States dollar would result in a decrease in the United States
dollar-equivalent yield of such Foreign Currency Note, in the United States
dollar-equivalent value of the principal and premium, if any, payable on the
Maturity Date of such Foreign Currency Note, and, generally, in the United
States dollar-equivalent market value of such Foreign Currency Note.
 
     Governments or monetary authorities have imposed from time to time, and may
in the future impose or revise, exchange controls at or prior to the date on
which any payment of principal of, or premium, if any, or interest, if any, on,
a Foreign Currency Note is due, which could affect exchange rates as well as the
availability of the Specified Currency on such date. Even if there are no
exchange controls, it is possible that the Specified Currency would not be
available on the applicable payment date due to other circumstances beyond the
control of the Company. In such cases, the Company will be entitled to satisfy
its obligations in respect of such Foreign Currency Note in United States
dollars. See 'Special Provisions Relating to Foreign Currency Notes--
Availability of Specified Currency.'
 
CREDIT RATINGS
 
     Any credit ratings assigned to the Company's medium-term note program may
not reflect the potential impact of all risks related to structure and other
factors on the value of the Notes. Accordingly, prospective investors should
consult their own financial and legal advisors as to the risks entailed by an
investment in the Notes and the suitability of investing in such Notes in light
of their particular circumstances.
 
                              DESCRIPTION OF NOTES
 
     The Notes will be issued as a series of Debt Securities under an Indenture,
dated as of September 1, 1993, as amended by the First Supplemental Indenture
dated as of August 4, 1994, the Second Supplemental Indenture dated as of April
7, 1995 and as further amended or supplemented from time to time (the
'Indenture'), between the Company and IBJ Schroder Bank & Trust Company, as
trustee (the 'Trustee'). The Indenture is subject to, and governed by, the Trust
Indenture Act of 1939, as amended. The following summary of certain provisions
of the Notes and the Indenture does not purport to be complete and is qualified
in its entirety by reference to the actual provisions of the Notes and the
Indenture. Capitalized terms used but not defined herein shall have the meanings
given to them in the accompanying Prospectus, the Notes or the Indenture, as the
case may be. The term 'Debt Securities,' as used in this Prospectus Supplement,
refers to all debt securities, including the Notes, issued and issuable from
time to time under the Indenture. The following description of Notes will apply
to each Note offered hereby unless otherwise specified in the applicable Pricing
Supplement.
 
                                      S-3

GENERAL
 
     All Debt Securities, including the Notes, issued and to be issued under the
Indenture will be unsecured general obligations of the Company and will rank

pari passu with all other unsecured and unsubordinated indebtedness of the
Company from time to time outstanding. However, the Notes are effectively
subordinated to mortgages and other secured indebtedness of the Company
(approximately $108.1 million at September 30, 1997), which encumbered certain
assets of the Company. The Indenture does not limit the aggregate initial
offering price of Debt Securities that may be issued thereunder and Debt
Securities may be issued thereunder from time to time in one or more series up
to the aggregate initial offering price from time to time authorized by the
Company for each series.
 
     The Notes are currently limited to up to $150,000,000 aggregate initial
offering price, or the equivalent thereof in one or more foreign or composite
currencies. The Company may, from time to time, without the consent of the
Holders of the Notes, provide for the issuance of additional Notes or other Debt
Securities under the Indenture in addition to the $150,000,000 aggregate initial
offering price of Notes offered hereby. The Notes will be offered on a
continuous basis and will mature on any day nine months or more from their dates
of issue (each, a 'Stated Maturity Date'), as specified in the applicable
Pricing Supplement. Unless otherwise specified in the applicable Pricing
Supplement, interest-bearing Notes will either be Fixed Rate Notes or Floating
Rate Notes, as specified in the applicable Pricing Supplement. Notes may also be
issued that do not bear any interest currently or that bear interest at a below
market rate.
 
     Unless otherwise specified in the applicable Pricing Supplement, the Notes
will be denominated in, and payments of principal, premium, if any, and/or
interest will be made in, United States dollars. The Notes also may be
denominated in, and payments of principal, premium, if any, and/or interest may
be made in, one or more foreign currencies or composite currencies ('Foreign
Currency Notes'). See 'Special Provisions Relating to Foreign Currency
Notes--Payment of Principal, Premium, if any, and Interest.' The currency or
composite currency in which a Note is denominated (or, if such currency or
composite currency is no longer legal tender for the payment of public and
private debts in the relevant country, such other currency or composite currency
which is then legal tender in such country for the payment of such debts) is
herein referred to as the 'Specified Currency.' References herein to 'United
States dollars,' 'U.S. dollars' and 'U.S.$' are to the lawful currency of the
United States of America ('United States').
 
     Unless otherwise specified in the applicable Pricing Supplement, purchasers
are required to pay for the Notes in the applicable Specified Currencies. At the
present time, there are limited facilities in the United States for the
conversion of United States dollars into foreign currencies or composite
currencies and vice versa, and commercial banks do not generally offer
non-United States dollar checking or savings account facilities in the United
States. Each applicable Agent may be prepared to arrange for the conversion of
United States dollars into the applicable Specified Currency to enable the
purchaser to pay for the related Foreign Currency Note, provided that a request
is made to such Agent on or prior to the fifth Business Day (as hereinafter
defined) preceding the date of delivery of such Foreign Currency Note, or by
such other day determined by such Agent. Each such conversion will be made by an
Agent on such terms and subject to such conditions, limitations and charges as
such Agent may from time to time establish in accordance with its regular
foreign exchange practices. All costs of exchange will be borne by the purchaser

of each such Foreign Currency Note. See 'Special Provisions Relating to Foreign
Currency Notes.'
 
     Interest rates offered by the Company with respect to the Notes may differ
depending upon, among other things, the aggregate principal amount of Notes
purchased in any single transaction. Notes with different variable terms other
than interest rates may also be offered concurrently to different investors.
Interest rates or formulas and other terms of Notes are subject to change by the
Company from time to time, but no such change will affect any Note already
issued or as to which an offer to purchase has been accepted by the Company.
 
     Each Note will be issued as a Book-Entry Note represented by one or more
fully registered Global Securities or as a fully registered Certificated Note.
The authorized denominations of each Note other than a Foreign Currency Note
will be $1,000 and integral multiples thereof, unless otherwise specified in the
applicable Pricing Supplement, while the authorized denominations of each
Foreign Currency Note will be specified in the applicable Pricing Supplement.
 
     Payments of principal of, and premium, if any, and interest on, Book-Entry
Notes will be made by the Company through the Trustee to the Depositary. See
'--Book-Entry Notes.' In the case of Certificated Notes,
 
                                      S-4

payment of principal and premium, if any, due on the Stated Maturity Date or any
prior date on which the principal, or an installment of principal, of each
Certificated Note becomes due and payable, whether by the declaration of
acceleration, notice of redemption at the option of the Company, notice of the
Holder's option to elect repayment or otherwise (the Stated Maturity Date or
such prior date, as the case may be, is herein referred to as the 'Maturity
Date' with respect to the principal of the applicable Note repayable on such
date) will be made in immediately available funds upon presentation and
surrender thereof (and, in the case of any repayment on an Optional Repayment
Date, upon delivery of a duly completed election form in accordance with the
provisions described below) at the office or agency maintained by the Company
for such purpose in the Borough of Manhattan, The City of New York, currently
the corporate trust office of the Trustee located at One State Street, New York,
New York 10004. Payment of interest due on the Maturity Date of each
Certificated Note will be made to the person to whom payment of the principal
and premium, if any, shall be made. Payment of interest due on each Certificated
Note on any Interest Payment Date (as hereinafter defined) other than the
Maturity Date will be made by check mailed to the address of the Holder entitled
thereto as such address shall appear in the Security Register of the Company.
Notwithstanding the foregoing, a Holder of $10,000,000 (or, if the applicable
Specified Currency is other than United States dollars, the equivalent thereof
in such Specified Currency) or more in aggregate principal amount of Notes
(whether having identical or different terms and provisions) will be entitled to
receive interest payments on any Interest Payment Date other than the Maturity
Date by wire transfer of immediately available funds if appropriate wire
transfer instructions have been received in writing by the Trustee not less than
15 days prior to such Interest Payment Date. Any such wire transfer instructions
received by the Trustee shall remain in effect until revoked by such Holder. For
special payment terms applicable to Foreign Currency Notes, see 'Special
Provisions Relating to Foreign Currency Notes--Payment of Principal, Premium, if

any, and Interest.'
 
     As used herein, 'Business Day' means any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking institutions
are authorized or required by law, regulation or executive order to close in The
City of New York; provided, however, that, with respect to Foreign Currency
Notes, such day is also not a day on which banking institutions are authorized
or required by law, regulation or executive order to close in the Principal
Financial Center (as hereinafter defined) of the country issuing the Specified
Currency (or, in the case of European Currency Units ('ECU'), is not a day that
appears as an ECU non-settlement day on the display designated as 'ISDE' on the
Reuter Monitor Money Rates Service (or is not a day so designated by the ECU
Banking Association) or, if ECU non-settlement days do not appear on that page
(and are not so designated), is not a day on which payments in ECU cannot be
settled in the international interbank market); provided, further, that, with
respect to Notes as to which LIBOR is an applicable Interest Rate Basis, such
day is also a London Business Day (as hereinafter defined). 'London Business
Day' means any day on which dealings in the Index Currency (as hereinafter
defined) are transacted in the London interbank market.
 
     'Principal Financial Center' means (i) the capital city of the country
issuing the Specified Currency (except as described in the immediately preceding
paragraph with respect to ECU) or (ii) the capital city of the country in which
the Index Currency relates (or, in the case of ECU, Luxenbourg), as applicable,
except, in the case of (i) or (ii) above, that with respect to United States
dollars, Australian dollars, Canadian dollars, Deutsche marks, Dutch guilders,
Italian lire and Swiss francs, the 'Principal Financial Center' shall be The
City of New York, Sydney, Toronto, Frankfurt, Amsterdam, Milan (solely in the
case of the Specified Currency) and Zurich, respectively.
 
     Book-Entry Notes may be transferred or exchanged only through the
Depositary. See '--Book-Entry Notes.' Registration of transfer or exchange of
Certificated Notes will be made at the office or agency maintained by the
Company for such purpose in the Borough of Manhattan, The City of New York. No
service charge will be made by the Company or the Trustee for any such
registration of transfer or exchange of Notes, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection therewith (other than exchanges pursuant to the
Indenture not involving any transfer).
 
REDEMPTION AT THE OPTION OF THE COMPANY
 
     Unless otherwise specified in the applicable Pricing Supplement, the Notes
will not be subject to any sinking fund. The Notes will be redeemable at the
option of the Company prior to the Stated Maturity Date only if agreed to by the
Company and the purchasers thereof at the time of sale and an Initial Redemption
Date is specified in the applicable Pricing Supplement. If so specified, the
Notes will be subject to redemption at the option of the
 
                                      S-5

Company on any date on and after the applicable Initial Redemption Date in whole
or from time to time in part in increments of $1,000 or such other minimum
denomination specified in such Pricing Supplement (provided that any remaining

principal amount thereof shall be at least $1,000 or such minimum denomination),
at the applicable Redemption Price (as hereinafter defined), together with
unpaid interest accrued to the date of redemption, on notice given not more than
60 nor less than 30 calendar days prior to the date of redemption and in
accordance with the provisions of the Indenture. 'Redemption Price', with
respect to a Note, means an amount equal to the Initial Redemption Percentage
specified in the applicable Pricing Supplement (as adjusted by the Annual
Redemption Percentage Reduction, if applicable) multiplied by the unpaid
principal amount to be redeemed. The Initial Redemption Percentage, if any,
applicable to a Note shall decline at each anniversary of the Initial Redemption
Date by an amount equal to the applicable Annual Redemption Percentage
Reduction, if any, until the Redemption Price is equal to 100% of the unpaid
principal amount to be redeemed. See also
'--Original Issue Discount Notes.'
 
REPAYMENT AT THE OPTION OF THE HOLDER
 
     The Notes will be repayable by the Company at the option of the Holders
thereof prior to the Stated Maturity Date only if agreed to by the Company and
the purchasers thereof at the time of sale and one or more Optional Repayment
Dates are specified in the applicable Pricing Supplement. If so specified, the
Notes will be subject to repayment at the option of the Holders thereof on any
Optional Repayment Date in whole or from time to time in part in increments of
$1,000 or such other minimum denomination specified in the applicable Pricing
Supplement (provided that any remaining principal amount thereof shall be at
least $1,000 or such other minimum denomination), at a repayment price equal to
100% of the unpaid principal amount to be repaid, together with unpaid interest
accrued to the date of repayment. For any Note to be repaid, such Note must be
received, together with the form thereon entitled 'Option to Elect Repayment'
duly completed, by the Trustee at its Corporate Trust Office (or such other
address of which the Company shall from time to time notify the Holders) not
more than 60 nor less than 30 calendar days prior to the date of repayment.
Exercise of such repayment option by the Holder will be irrevocable.
 
     Only the Depositary may exercise the repayment option in respect of Global
Securities representing Book-Entry Notes. Accordingly, Beneficial Owners (as
hereinafter defined) of Global Securities that desire to have all or any portion
of the Book-Entry Notes represented by such Global Securities repaid must direct
the Participant (as hereinafter defined) through which they own their interest
to direct the Depositary to exercise the repayment option on their behalf by
delivering the related Global Security and duly completed election form to the
Trustee as aforesaid. In order to ensure that such Global Security and election
form are received by the Trustee on a particular day, the applicable Beneficial
Owner must so direct the Participant through which it owns its interest before
such Participant's deadline for accepting instructions for that day. Different
firms may have different deadlines for accepting instructions from their
customers. Accordingly, Beneficial Owners should consult the Participants
through which they own their interest for the respective deadlines for such
Participants. All instructions given to Participants from Beneficial Owners of
Global Securities relating to the option to elect repayment shall be
irrevocable. In addition, at the time such instructions are given, each such
Beneficial Owner shall cause the Participant through which it owns its interest
to transfer such Beneficial Owner's interest in the Global Security or
Securities representing the related Book-Entry Notes, on the Depositary's

records, to the Trustee. See '--Book-Entry Notes.'
 
     If applicable, the Company will comply with the requirements of Section
14(e) of the Securities Exchange Act of 1934, as amended (the 'Exchange Act'),
and the rules promulgated thereunder and any other securities laws or
regulations in connection with any such repayment.
 
     The Company may at any time purchase Notes at any price or prices in the
open market or otherwise. Notes so purchased by the Company may, at the
discretion of the Company, be held, resold or surrendered to the Trustee for
cancellation.
 
                                      S-6

INTEREST
 
  General
 
     Unless otherwise specified in the applicable Pricing Supplement, each
interest-bearing Note will bear interest from its date of issue at the rate per
annum, in the case of a Fixed Rate Note, or pursuant to the interest rate
formula, in the case of a Floating Rate Note, in each case as specified in the
applicable Pricing Supplement, until the principal thereof is paid or duly made
available for payment. Unless otherwise specified in the applicable Pricing
Supplement, interest payments in respect of Fixed Rate Notes and Floating Rate
Notes will equal the amount of interest accrued from and including the
immediately preceding Interest Payment Date in respect of which interest has
been paid or duly made available for payment (or from and including the date of
issue, if no interest has been paid or duly made available for payment with
respect to the applicable Note) to but excluding the applicable Interest Payment
Date or the Maturity Date, as the case may be (each, an 'Interest Period').
 
     Interest on Fixed Rate Notes and Floating Rate Notes will be payable in
arrears on each Interest Payment Date and on the Maturity Date. Unless otherwise
specified in the applicable Pricing Supplement, the first payment of interest on
any such Note originally issued between a Record Date (as hereinafter defined)
and the related Interest Payment Date will be made on the Interest Payment Date
immediately following the next succeeding Record Date to the Holder on such next
succeeding Record Date. Unless otherwise specified in the applicable Pricing
Supplement, a 'Record Date' shall be the fifteenth calendar day (whether or not
a Business Day) immediately preceding the related Interest Payment Date.
 
  Fixed Rate Notes
 
     Unless otherwise specified in the applicable Pricing Supplement, interest
on Fixed Rate Notes will be payable on April 1 and October 1 of each year (each,
an 'Interest Payment Date') and on the Maturity Date. Unless otherwise specified
in the applicable Pricing Supplement, interest on Fixed Rate Notes will be
computed on the basis of a 360-day year of twelve 30-day months.
 
     If any Interest Payment Date or the Maturity Date of a Fixed Rate Note
falls on a day that is not a Business Day, the required payment of principal,
premium, if any, and/or interest will be made on the next succeeding Business
Day with the same force and effect as if made on the date such payment was due,

and no interest will accrue on such payment for the period from and after such
Interest Payment Date or the Maturity Date, as the case may be, to the date of
such payment on the next succeeding Business Day.
 
  Floating Rate Notes
 
     Unless otherwise specified in the applicable Pricing Supplement, Floating
Rate Notes will be issued as described below. The applicable Pricing Supplement
will specify certain terms with respect to which each Floating Rate Note is
being delivered, including: whether such Floating Rate Note is a 'Regular
Floating Rate Note,' a 'Floating Rate/Fixed Rate Note' or an 'Inverse Floating
Rate Note,' the Fixed Rate Commencement Date, if applicable, Fixed Interest
Rate, if applicable, Interest Rate Basis or Bases, Initial Interest Rate, if
any, Interest Reset Period and Dates, Interest Payment Period and Dates, Index
Maturity, Maximum Interest Rate and/or Minimum Interest Rate, if any, and Spread
and/or Spread Multiplier, if any, as such terms are defined below. If one or
more of the applicable Interest Rate Bases is LIBOR or the CMT Rate, the
applicable Pricing Supplement will specify the Index Currency and Designated
LIBOR Page or the Designated CMT Maturity Index and Designated CMT Telerate
Page, respectively, as such terms are defined below.
 
     The interest rate borne by the Floating Rate Notes will be determined as
follows:
 
          (i) Unless such Floating Rate Note is designated as a 'Floating
     Rate/Fixed Rate Note' or an 'Inverse Floating Rate Note,' or as having an
     Addendum attached or as having 'Other/Additional Provisions' apply, in each
     case relating to a different interest rate formula, such Floating Rate Note
     will be designated as a 'Regular Floating Rate Note' and, except as
     described below or in the applicable Pricing Supplement, will bear interest
     at the rate determined by reference to the applicable Interest Rate Basis
     or Bases (a) plus or minus the applicable Spread, if any, and/or (b)
     multiplied by the applicable Spread Multiplier, if any. Commencing on the
     first Interest Reset Date, the rate at which interest on such Regular
     Floating Rate Note shall be payable shall be reset as of each Interest
     Reset Date; provided, however, that the interest rate in
 
                                      S-7

     effect for the period, if any, from the date of issue to the first Interest
     Reset Date will be the Initial Interest Rate.
 
          (ii) If such Floating Rate Note is designated as a 'Floating
     Rate/Fixed Rate Note,' then, except as described below or in the applicable
     Pricing Supplement, such Floating Rate Note will bear interest at the rate
     determined by reference to the applicable Interest Rate Basis or Bases (a)
     plus or minus the applicable Spread, if any, and/or (b) multiplied by the
     applicable Spread Multiplier, if any. Commencing on the first Interest
     Reset Date, the rate at which interest on such Floating Rate/Fixed Rate
     Note shall be payable shall be reset as of each Interest Reset Date;
     provided, however, that (y) the interest rate in effect for the period, if
     any, from the date of issue to the first Interest Reset Date will be the
     Initial Interest Rate and (z) the interest rate in effect for the period
     commencing on the Fixed Rate Commencement Date to the Maturity Date shall

     be the Fixed Interest Rate, if such rate is specified in the applicable
     Pricing Supplement or, if no such Fixed Interest Rate is specified, the
     interest rate in effect thereon on the day immediately preceding the Fixed
     Rate Commencement Date.
 
          (iii) If such Floating Rate Note is designated as an 'Inverse Floating
     Rate Note,' then, except as described below or in the applicable Pricing
     Supplement, such Floating Rate Note will bear interest at the Fixed
     Interest Rate minus the rate determined by reference to the applicable
     Interest Rate Basis or Bases (a) plus or minus the applicable Spread, if
     any, and/or (b) multiplied by the applicable Spread Multiplier, if any;
     provided, however, that, unless otherwise specified in the applicable
     Pricing Supplement, the interest rate thereon will not be less than zero.
     Commencing on the first Interest Reset Date, the rate at which interest on
     such Inverse Floating Rate Note shall be payable shall be reset as of each
     Interest Reset Date; provided, however, that the interest rate in effect
     for the period, if any, from the date of issue to the first Interest Reset
     Date will be the Initial Interest Rate.
 
     The 'Spread' is the number of basis points to be added to or subtracted
from the related Interest Rate Basis or Bases applicable to such Floating Rate
Note. The 'Spread Multiplier' is the percentage of the related Interest Rate
Basis or Bases applicable to such Floating Rate Note by which such Interest Rate
Basis or Bases will be multiplied to determine the applicable interest rate on
such Floating Rate Note. The 'Index Maturity' is the period to maturity of the
instrument or obligation with respect to which the related Interest Rate Basis
or Bases will be calculated.
 
     Unless otherwise specified in the applicable Pricing Supplement, the
interest rate with respect to each Interest Rate Basis will be determined in
accordance with the applicable provisions below. Except as set forth above or in
the applicable Pricing Supplement, the interest rate in effect on each day shall
be (i) if such day is an Interest Reset Date, the interest rate determined as of
the Interest Determination Date (as hereinafter defined) immediately preceding
such Interest Reset Date or (ii) if such day is not an Interest Reset Date, the
interest rate determined as of the Interest Determination Date immediately
preceding the most recent Interest Reset Date.
 
     Interest on Floating Rate Notes will be determined by reference to the
applicable Interest Rate Basis or Interest Rate Bases, which may, as described
below, include (i) the CD Rate, (ii) the CMT Rate, (iii) the Commercial Paper
Rate, (iv) the Eleventh District Cost of Funds Rate, (v) the Federal Funds Rate,
(vi) LIBOR, (vii) the Prime Rate, (viii) the Treasury Rate, or (ix) such other
Interest Rate Basis or interest rate formula as may be specified in the
applicable Pricing Supplement; provided, however, that the interest rate in
effect on a Floating Rate Note for the period, if any, from the date of issue to
the first Interest Reset Date will be the Initial Interest Rate; provided,
further, that with respect to a Floating Rate/Fixed Rate Note the interest rate
in effect for the period commencing on the Fixed Rate Commencement Date to the
Maturity Date shall be the Fixed Interest Rate, if such rate is specified in the
applicable Pricing Supplement or, if no such Fixed Interest Rate is specified,
the interest rate in effect thereon on the day immediately preceding the Fixed
Rate Commencement Date.
 

     The applicable Pricing Supplement will specify whether the rate of interest
on the related Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semiannually or annually or on such other specified basis (each, an
'Interest Reset Period') and the dates on which such rate of interest will be
reset (each, an 'Interest Reset Date'). Unless otherwise specified in the
applicable Pricing Supplement, the Interest Reset Dates will be, in the case of
Floating Rate Notes which reset: (i) daily, each Business Day; (ii) weekly, the
Wednesday of each week (with the exception of weekly reset Floating Rate Notes
as to which the Treasury Rate is an applicable Interest Rate Basis, which will
reset the Tuesday of each week, except as described below); (iii) monthly, the
third Wednesday of each month (with the exception of monthly reset Floating Rate
Notes as to which the Eleventh
 
                                      S-8

District Cost of Funds Rate is an applicable Interest Rate Basis, which will
reset on the first calendar day of the month); (iv) quarterly, the third
Wednesday of March, June, September and December of each year; (v) semiannually,
the third Wednesday of the two months specified in the applicable Pricing
Supplement; and (vi) annually, the third Wednesday of the month specified in the
applicable Pricing Supplement; provided however, that, with respect to Floating
Rate/Fixed Rate Notes, the rate of interest thereon will not reset after the
applicable Fixed Rate Commencement Date. If any Interest Reset Date for any
Floating Rate Note would otherwise be a day that is not a Business Day, such
Interest Reset Date will be postponed to the next succeeding Business Day,
except that in the case of a Floating Rate Note as to which LIBOR is an
applicable Interest Rate Basis and such Business Day falls in the next
succeeding calendar month, such Interest Reset Date will be the immediately
preceding Business Day.
 
     The interest rate applicable to each Interest Reset Period commencing on
the related Interest Reset Date will be the rate determined as of the applicable
Interest Determination Date and calculated on or prior to the Calculation Date
(as hereinafter defined), except with respect to LIBOR and the Eleventh District
Cost of Funds Rate, which will be calculated on such Interest Determination
Date. The 'Interest Determination Date' with respect to the CD Rate, the CMT
Rate, the Commercial Paper Rate, the Federal Funds Rate and the Prime Rate will
be the second Business Day immediately preceding the applicable Interest Reset
Date; the 'Interest Determination Date' with respect to the Eleventh District
Cost of Funds Rate will be the last working day of the month immediately
preceding the applicable Interest Reset Date on which the Federal Home Loan Bank
of San Francisco (the 'FHLB of San Francisco') publishes the Index (as
hereinafter defined); and the 'Interest Determination Date' with respect to
LIBOR will be the second London Business Day immediately preceding the
applicable Interest Reset Date, unless the Index Currency is British pounds
sterling, in which case the 'Interest Determination Date' will be the applicable
Interest Reset Date. With respect to the Treasury Rate, the 'Interest
Determination Date' will be the day in the week in which the applicable Interest
Reset Date falls on which day Treasury Bills (as hereinafter defined) are
normally auctioned (Treasury Bills are normally sold at an auction held on
Monday of each week, unless that day is a legal holiday, in which case the
auction is normally held on the following Tuesday, except that such auction may
be held on the preceding Friday); provided, however, that if an auction is held
on the Friday of the week preceding the applicable Interest Reset Date, the

Interest Determination Date will be such preceding Friday; provided, further,
that if an auction falls on the applicable Interest Reset Date, then the
Interest Reset Date will instead be the first Business Day following such
auction. The 'Interest Determination Date' pertaining to a Floating Rate Note
the interest rate of which is determined by reference to two or more Interest
Rate Bases will be the most recent Business Day which is at least two Business
Days prior to the applicable Interest Reset Date for such Floating Rate Note on
which each Interest Rate Basis is determinable. Each Interest Rate Basis will be
determined as of such date, and the applicable interest rate will take effect on
the applicable Interest Reset Date.
 
     A Floating Rate Note may also have either or both of the following: (i) a
Maximum Interest Rate, or ceiling, that may accrue during any Interest Period
and (ii) a Minimum Interest Rate, or floor, that may accrue during any Interest
Period. In addition to any Maximum Interest Rate that may apply to any Floating
Rate Note, the interest rate on Floating Rate Notes will in no event be higher
than the maximum rate permitted by New York law, as the same may be modified by
United States law of general application.
 
     Except as provided below or in the applicable Pricing Supplement, interest
will be payable, in the case of Floating Rate Notes which reset: (i) daily,
weekly or monthly, on the third Wednesday of each month or on the third
Wednesday of March, June, September and December of each year, as specified in
the applicable Pricing Supplement; (ii) quarterly, on the third Wednesday of
March, June, September and December of each year; (iii) semiannually, on the
third Wednesday of the two months of each year specified in the applicable
Pricing Supplement; and (iv) annually, on the third Wednesday of the month of
each year specified in the applicable Pricing Supplement (each, an 'Interest
Payment Date') and, in each case, on the Maturity Date. If any Interest Payment
Date other than the Maturity Date for any Floating Rate Note would otherwise be
a day that is not a Business Day, such Interest Payment Date will be postponed
to the next succeeding Business Day, except that in the case of a Floating Rate
Note as to which LIBOR is an applicable Interest Rate Basis and such Business
Day falls in the next succeeding calendar month, such Interest Payment Date will
be the immediately preceding Business Day. If the Maturity Date of a Floating
Rate Note falls on a day that is not a Business Day, the required payment of
principal, premium, if any, and interest will be made on the next succeeding
Business Day with the
 
                                      S-9

same force and effect as if made on the date such payment was due, and no
interest will accrue on such payment for the period from and after the Maturity
Date to the date of such payment on the next succeeding Business Day.
 
     All percentages resulting from any calculation on Floating Rate Notes will
be rounded to the nearest one hundred-thousandth of a percentage point, with
five-one millionths of a percentage point rounded upwards (e.g., 9.876545% (or
 .09876545) would be rounded to 9.87655% (or .0987655)), and all amounts used in
or resulting from such calculation on Floating Rate Notes will be rounded, in
the case of United States dollars, to the nearest cent or, in the case of a
foreign currency or composite currency, to the nearest unit (with one-half cent
or unit being rounded upwards).
 

     With respect to each Floating Rate Note, accrued interest is calculated by
multiplying its principal amount by an accrued interest factor. Such accrued
interest factor is computed by adding the interest factor calculated for each
day in the applicable Interest Period. Unless otherwise specified in the
applicable Pricing Supplement, the interest factor for each such day will be
computed by dividing the interest rate applicable to such day by 360, in the
case of Floating Rate Notes for which an applicable Interest Rate Basis is the
CD Rate, the Commercial Paper Rate, the Eleventh District Cost of Funds Rate,
the Federal Funds Rate, LIBOR or the Prime Rate, or by the actual number of days
in the year in the case of Floating Rate Notes for which an applicable Interest
Rate Basis is the CMT Rate or the Treasury Rate. Unless otherwise specified in
the applicable Pricing Supplement, the interest factor for Floating Rate Notes
for which the interest rate is calculated with reference to two or more Interest
Rate Bases will be calculated in each period in the same manner as if only one
of the applicable Interest Rate Bases applied as specified in the applicable
Pricing Supplement.
 
     Unless otherwise specified in the applicable Pricing Supplement, IBJ
Schroder Bank & Trust Company will be the 'Calculation Agent.' Upon request of
the Holder of any Floating Rate Note, the Calculation Agent will disclose the
interest rate then in effect and, if determined, the interest rate that will
become effective as a result of a determination made for the next succeeding
Interest Reset Date with respect to such Floating Rate Note. Unless otherwise
specified in the applicable Pricing Supplement, the 'Calculation Date,' if
applicable, pertaining to any Interest Determination Date will be the earlier of
(i) the tenth calendar day after such Interest Determination Date, or, if such
day is not a Business Day, the next succeeding Business Day or (ii) the Business
Day immediately preceding the applicable Interest Payment Date or the Maturity
Date, as the case may be.
 
     Unless otherwise specified in the applicable Pricing Supplement, the
Calculation Agent shall determine each Interest Rate Basis in accordance with
the following provisions.
 
     CD RATE.  Unless otherwise specified in the applicable Pricing Supplement,
'CD Rate' means, with respect to any Interest Determination Date relating to a
Floating Rate Note for which the interest rate is determined with reference to
the CD Rate (a 'CD Rate Interest Determination Date'), the rate on such date for
negotiable United States dollar certificates of deposit having the Index
Maturity specified in the applicable Pricing Supplement as published by the
Board of Governors of the Federal Reserve System in 'Statistical Release
H.15(519), Selected Interest Rates' or any successor publication ('H.15(519)')
under the heading 'CDs (Secondary Market),' or, if not published by 3:00 P.M.,
New York City time, on the related Calculation Date, the rate on such CD Rate
Interest Determination Date for negotiable United States dollar certificates of
deposit of the Index Maturity specified in the applicable Pricing Supplement as
published by the Federal Reserve Bank of New York in its daily statistical
release 'Composite 3:30 P.M. Quotations for U.S. Government Securities' or any
successor publication ('Composite Quotations') under the heading 'Certificates
of Deposit.' If such rate is not yet published in either H.15(519) or Composite
Quotations by 3:00 P.M., New York City time, on the related Calculation Date,
then the CD Rate on such CD Rate Interest Determination Date will be calculated
by the Calculation Agent and will be the arithmetic mean of the secondary market
offered rates as of 10:00 A.M., New York City time, on such CD Rate Interest

Determination Date, of three leading nonbank dealers in negotiable United States
dollar certificates of deposit in The City of New York (which may include the
Agent or its affiliates) selected by the Calculation Agent for negotiable United
States dollar certificates of deposit of major United States money center banks
for negotiable certificates of deposit with a remaining maturity closest to the
Index Maturity specified in the applicable Pricing Supplement in an amount that
is representative for a single transaction in that market at that time;
provided, however, that if the dealers so selected by the Calculation Agent are
not quoting as mentioned in this sentence, the CD Rate determined as of such CD
Rate Interest Determination Date will be the CD Rate in effect on such CD Rate
Interest Determination Date.
 
                                      S-10

     CMT RATE.  Unless otherwise specified in the applicable Pricing Supplement,
'CMT Rate' means, with respect to any Interest Determination Date relating to a
Floating Rate Note for which the interest rate is determined with reference to
the CMT Rate (a 'CMT Rate Interest Determination Date'), the rate displayed on
the Designated CMT Telerate Page under the caption '. . .Treasury Constant
Maturities. . .Federal Reserve Board Release H.15. . .Mondays Approximately 3:45
P.M.,' under the column for the Designated CMT Maturity Index for (i) if the
Designated CMT Telerate Page is 7055, the rate on such CMT Rate Interest
Determination Date and (ii) if the Designated CMT Telerate Page is 7052, the
weekly or monthly average, as specified in the applicable Pricing Supplement,
for the week or the month, as applicable, ended immediately preceding the week
or the month, as applicable, in which the related CMT Rate Interest
Determination Date occurs. If such rate is no longer displayed on the relevant
page or is not displayed by 3:00 P.M., New York City time, on the related
Calculation Date, then the CMT Rate for such CMT Rate Interest Determination
Date will be such treasury constant maturity rate for the Designated CMT
Maturity Index as published in H.15(519). If such rate is no longer published or
is not published by 3:00 P.M., New York City time, on the related Calculation
Date, then the CMT Rate on such CMT Rate Interest Determination Date will be
such treasury constant maturity rate for the Designated CMT Maturity Index (or
other United States Treasury rate for the Designated CMT Maturity Index) for the
CMT Rate Interest Determination Date with respect to such Interest Reset Date as
may then be published by either the Board of Governors of the Federal Reserve
System or the United States Department of the Treasury that the Calculation
Agent determines to be comparable to the rate formerly displayed on the
Designated CMT Telerate Page and published in H.15(519). If such information is
not provided by 3:00 P.M., New York City time, on the related Calculation Date,
then the CMT Rate on the CMT Rate Interest Determination Date will be calculated
by the Calculation Agent and will be a yield to maturity, based on the
arithmetic mean of the secondary market closing offer side prices as of
approximately 3:30 P.M., New York City time, on such CMT Rate Interest
Determination Date reported, according to their written records, by three
leading primary United States government securities dealers (each, a 'Reference
Dealer') in The City of New York (which may include the Agent or its affiliates)
selected by the Calculation Agent (from five such Reference Dealers selected by
the Calculation Agent and eliminating the highest quotation (or, in the event of
equality, one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for the most recently issued direct noncallable
fixed rate obligations of the United States ('Treasury Notes') with an original
maturity of approximately the Designated CMT Maturity Index and a remaining term

to maturity of not less than such Designated CMT Maturity Index minus one year.
If the Calculation Agent is unable to obtain three such Treasury Note
quotations, the CMT Rate on such CMT Rate Interest Determination Date will be
calculated by the Calculation Agent and will be a yield to maturity based on the
arithmetic mean of the secondary market offer side prices as of approximately
3:30 P.M., New York City time, on such CMT Rate Interest Determination Date of
three Reference Dealers in The City of New York (from five such Reference
Dealers selected by the Calculation Agent and eliminating the highest quotation
(or, in the event of equality, one of the highest) and the lowest quotation (or,
in the event of equality, one of the lowest)), for Treasury Notes with an
original maturity of the number of years that is the next highest to the
Designated CMT Maturity Index and a remaining term to maturity closest to the
Designated CMT Maturity Index and in an amount of at least $100 million. If
three or four (and not five) of such Reference Dealers are quoting as described
above, then the CMT Rate will be based on the arithmetic mean of the 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 so
selected by the Calculation Agent are quoting as mentioned herein, the CMT Rate
determined as of such CMT Rate Interest Determination Date will be the CMT Rate
in effect on such CMT Rate Interest Determination Date. If two Treasury Notes
with an original maturity as described in the second preceding sentence have
remaining terms to maturity equally close to the Designated CMT Maturity Index,
the 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 (or any successor service) on the page specified in the applicable
Pricing Supplement (or any other page as may replace such page on that service)
for the purpose of displaying Treasury Constant Maturities as reported in
H.15(519). If no such page is specified in the applicable Pricing Supplement,
the Designated CMT Telerate Page shall be 7052, for the most recent week.
 
     'Designated CMT Maturity Index' means the original period to maturity of
the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years)
specified in the applicable Pricing Supplement with respect to which the
 
                                      S-11

CMT Rate will be calculated. If no such maturity is specified in the applicable
Pricing Supplement, the Designated CMT Maturity Index shall be 2 years.
 
     COMMERCIAL PAPER RATE.  Unless otherwise specified in the applicable
Pricing Supplement, 'Commercial Paper Rate' means, with respect to any Interest
Determination Date relating to a Floating Rate Note for which the interest rate
is determined with reference to the Commercial Paper Rate (a 'Commercial Paper
Rate Interest Determination Date'), the Money Market Yield (as hereinafter
defined) on such date of the rate for commercial paper having the Index Maturity
specified in the applicable Pricing Supplement as published in H.15(519) under
the caption 'Commercial Paper--Nonfinancial.' In the event that such rate is not
published by 3:00 P.M., New York City time, on the related Calculation Date,
then the Commercial Paper Rate on such Commercial Paper Rate Interest
Determination Date will be the Money Market Yield of the rate for commercial
paper having the Index Maturity specified in the applicable Pricing Supplement
as published in Composite Quotations under the heading 'Commercial Paper' (with

an Index Maturity of one month or three months being deemed to be equivalent to
an Index Maturity of 30 days or 90 days, respectively). If such rate is not yet
published in either H.15(519) or Composite Quotations by 3:00 P.M., New York
City time, on the related Calculation Date, then the Commercial Paper Rate on
such Commercial Paper Rate Interest Determination Date will be calculated by the
Calculation Agent and will be the Money Market Yield of the arithmetic mean of
the offered rates at approximately 11:00 A.M., New York City time, on such
Commercial Paper Rate Interest Determination Date of three leading dealers of
commercial paper in The City of New York (which may include the Agent or its
affiliates) selected by the Calculation Agent for commercial paper having the
Index Maturity specified in the applicable Pricing Supplement placed for a
non-financial issuer whose bond rating is 'Aa', or the equivalent, from a
nationally recognized statistical rating organization; provided, however, that
if the dealers so selected by the Calculation Agent are not quoting as mentioned
in this sentence, the Commercial Paper Rate determined as of such Commercial
Paper Rate Interest Determination Date will be the Commercial Paper Rate in
effect on such Commercial Paper Rate Interest Determination Date.
 
     'Money Market Yield' means a yield (expressed as a percentage) calculated
in accordance with the following formula:
                                        D x 360       
                Money Market Yield = ------------- X 100
                                     360 - (D x M)
where 'D' refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and 'M' refers to the actual
number of days in the applicable Interest Reset Period.
 
     ELEVENTH DISTRICT COST OF FUNDS RATE.  Unless otherwise specified in the
applicable Pricing Supplement, 'Eleventh District Cost of Funds Rate' means,
with respect to any Interest Determination Date relating to a Floating Rate Note
for which the interest rate is determined with reference to the Eleventh
District Cost of Funds Rate (an 'Eleventh District Cost of Funds Rate Interest
Determination Date'), the rate equal to the monthly weighted average cost of
funds for the calendar month immediately preceding the month in which such
Eleventh District Cost of Funds Rate Interest Determination Date falls, as set
forth under the caption '11th District' on Telerate Page 7058 as of 11:00 A.M.,
San Francisco time, on such Eleventh District Cost of Funds Rate Interest
Determination Date. If such rate does not appear on Telerate Page 7058 on such
Eleventh District Cost of Funds Rate Interest Determination Date, then the
Eleventh District Cost of Funds Rate on such Eleventh District Cost of Funds
Rate Interest Determination Date shall be the monthly weighted average cost of
funds paid by member institutions of the Eleventh Federal Home Loan Bank
District that was most recently announced (the 'Index') by the FHLB of San
Francisco as such cost of funds for the calendar month immediately preceding
such Eleventh District Cost of Funds Rate Interest Determination Date. If the
FHLB of San Francisco fails to announce the Index on or prior to such Eleventh
District Cost of Funds Rate Interest Determination Date for the calendar month
immediately preceding such Eleventh District Cost of Funds Rate Interest
Determination Date, the Eleventh District Cost of Funds Rate determined as of
such Eleventh District Cost of Funds Rate Interest Determination Date will be
the Eleventh District Cost of Funds Rate in effect on such Eleventh District
Cost of Funds Rate Interest Determination Date.
 
     FEDERAL FUNDS RATE.  Unless otherwise specified in the applicable Pricing

Supplement, 'Federal Funds Rate' means, with respect to any Interest
Determination Date relating to a Floating Rate Note for which the interest rate
is determined with reference to the Federal Funds Rate (a 'Federal Funds Rate
Interest Determination Date'), the rate on such date for United States dollar
federal funds as published in H.15(519) under the heading 'Federal Funds
(Effective)' or, if not published by 3:00 P.M., New York City time, on the
 
                                      S-12

related Calculation Date, the rate on such Federal Funds Rate Interest
Determination Date as published in Composite Quotations under the heading
'Federal Funds/Effective Rate.' If such rate is not published in either
H.15(519) or Composite Quotations by 3:00 P.M., New York City time, on the
related Calculation Date, then the Federal Funds Rate on such Federal Funds Rate
Interest Determination Date will be calculated by the Calculation Agent and will
be the arithmetic mean of the rates for the last transaction in overnight United
States dollar federal funds arranged by three leading brokers of federal funds
transactions in The City of New York (which may include the Agent or its
affiliates) selected by the Calculation Agent prior to 9:00 A.M., New York City
time, on such Federal Funds Rate Interest Determination Date; provided, however,
that if the brokers so selected by the Calculation Agent are not quoting as
mentioned in this sentence, the Federal Funds Rate determined as of such Federal
Funds Rate Interest Determination Date will be the Federal Funds Rate in effect
on such Federal Funds Rate Interest Determination Date.
 
     LIBOR.  Unless otherwise specified in the applicable Pricing Supplement,
'LIBOR' means the rate determined in accordance with the following provisions:
 
          (i) With respect to any Interest Determination Date relating to a
     Floating Rate Note for which the interest rate is determined with reference
     to LIBOR (a 'LIBOR Interest Determination Date'), LIBOR will be either: (a)
     if 'LIBOR Reuters' is specified in the applicable Pricing Supplement, the
     arithmetic mean of the offered rates (unless the Designated LIBOR Page by
     its terms provides only for a single rate, in which case such single rate
     shall be used) for deposits in the Index Currency having the Index Maturity
     specified in such Pricing Supplement, commencing on the applicable Interest
     Reset Date, that appear (or, if only a single rate is required as
     aforesaid, appears) on the Designated LIBOR Page as of 11:00 A.M., London
     time, on such LIBOR Interest Determination Date, or (b) if 'LIBOR Telerate'
     is specified in the applicable Pricing Supplement or if neither 'LIBOR
     Reuters' nor 'LIBOR Telerate' is specified in the applicable Pricing
     Supplement as the method for calculating LIBOR, the rate for deposits in
     the Index Currency having the Index Maturity specified in such Pricing
     Supplement, commencing on such Interest Reset Date, that appears on the
     Designated LIBOR Page as of 11:00 A.M., London time, on such LIBOR Interest
     Determination Date. If fewer than two such offered rates so appear, or if
     no such rate so appears, as applicable, LIBOR on such LIBOR Interest
     Determination Date will be determined in accordance with the provisions
     described in clause (ii) below.
 
          (ii) With respect to a LIBOR Interest Determination Date on which
     fewer than two offered rates appear, or no rate appears, as the case may
     be, on the Designated LIBOR Page as specified in clause (i) above, the
     Calculation Agent will request the principal London offices of each of four

     major reference banks in the London interbank market, as selected by the
     Calculation Agent, to provide the Calculation Agent with its offered
     quotation for deposits in the Index Currency for the period of the Index
     Maturity specified in the applicable Pricing Supplement, commencing on the
     applicable Interest Reset Date, to prime banks in the London interbank
     market at approximately 11:00 A.M., London time, on such LIBOR Interest
     Determination Date and in a principal amount that is representative for a
     single transaction in such Index Currency in such market at such time. If
     at least two such quotations are so provided, then LIBOR on such LIBOR
     Interest Determination Date will be the arithmetic mean of such quotations.
     If fewer than two such quotations are so provided, then LIBOR on such LIBOR
     Interest Determination Date will be the arithmetic mean of the rates quoted
     at approximately 11:00 A.M., in the applicable Principal Financial Center,
     on such LIBOR Interest Determination Date by three major banks in such
     Principal Financial Center selected by the Calculation Agent for loans in
     the Index Currency to leading European banks, having the Index Maturity
     specified in the applicable Pricing Supplement and in a principal amount
     that is representative for a single transaction in such Index Currency in
     such market at such time; provided, however, that if the banks so selected
     by the Calculation Agent are not quoting as mentioned in this sentence,
     LIBOR determined as of such LIBOR Interest Determination Date will be LIBOR
     in effect on such LIBOR Interest Determination Date.
 
     'Index Currency' means the currency or composite currency specified in the
applicable Pricing Supplement as to which LIBOR shall be calculated. If no such
currency or composite currency is specified in the applicable Pricing
Supplement, the Index Currency shall be United States dollars.
 
     'Designated LIBOR Page' means (a) if 'LIBOR Reuters' is specified in the
applicable Pricing Supplement, the display on the Reuter Monitor Money Rates
Service (or any successor service) on the page
 
                                      S-13

specified in such Pricing Supplement (or any other page as may replace such page
on that service) for the purpose of displaying the London interbank rates of
major banks for the applicable Index Currency, or (b) if 'LIBOR Telerate' is
specified in the applicable Pricing Supplement or neither 'LIBOR Reuters' nor
'LIBOR Telerate' is specified in the applicable Pricing Supplement as the method
for calculating LIBOR, the display on the Dow Jones Telerate Service (or any
successor service) on the page specified in such Pricing Supplement (or any
other page as may replace such page on that service) for the purpose of
displaying the London interbank rates of major banks for the applicable Index
Currency.
 
     PRIME RATE.  Unless otherwise specified in the applicable Pricing
Supplement, 'Prime Rate' means, with respect to any Interest Determination Date
relating to a Floating Rate Note for which the interest rate is determined with
reference to the Prime Rate (a 'Prime Rate Interest Determination Date'), the
rate on such date as such rate is published in H.15(519) under the heading 'Bank
Prime Loan.' If such rate is not published prior to 3:00 P.M., New York City
time, on the related Calculation Date, then the Prime Rate shall be the
arithmetic mean of the rates of interest publicly announced by each bank that
appears on the Reuters Screen USPRIME1 Page (as hereinafter defined) as such

bank's prime rate or base lending rate as in effect for such Prime Rate Interest
Determination Date. If fewer than four such rates appear on the Reuters Screen
USPRIME1 Page for such Prime Rate Interest Determination Date, then the Prime
Rate shall be the arithmetic mean of the prime rates quoted on the basis of the
actual number of days in the year divided by a 360-day year as of the close of
business on such Prime Rate Interest Determination Date by four major money
center banks in The City of New York selected by the Calculation Agent. If fewer
than four such quotations are so provided, then the Prime Rate shall be the
arithmetic mean of four prime rates quoted on the basis of the actual number of
days in the year divided by a 360-day year as of the close of business on such
Prime Rate Interest Determination Date as furnished in The City of New York by
the major money center banks, if any, that have provided such quotations and by
a reasonable number of substitute banks or trust companies as necessary in order
to obtain four such prime rate quotations, provided such substitute banks or
trust companies are organized and doing business under the laws of the United
States, or any State thereof, each having total equity capital of at least $500
million and being subject to supervision or examination by Federal or State
authority, selected by the Calculation Agent to provide such rate or rates;
provided, however, that if the banks or trust companies so selected by the
Calculation Agent are not quoting as mentioned in this sentence, the Prime Rate
determined as of such Prime Rate Interest Determination Date will be the Prime
Rate in effect on such Prime Rate Interest Determination Date.
 
     'Reuters Screen USPRIME1 Page' means the display on the Reuter Monitor
Money Rates Service (or any successor service) on the 'USPRIME1' page (or any
other page as may replace such page on that service) for the purpose of
displaying prime rates or base lending rates of major United States banks.
 
     TREASURY RATE.  Unless otherwise specified in the applicable Pricing
Supplement, 'Treasury Rate' means, with respect to any Interest Determination
Date relating to a Floating Rate Note for which the interest rate is determined
by reference to the Treasury Rate (a 'Treasury Rate Interest Determination
Date'), the rate from the auction held on such Treasury Rate Interest
Determination Date (the 'Auction') of direct obligations of the United States
('Treasury Bills') having the Index Maturity specified in the applicable Pricing
Supplement, as such rate is published in H.15(519) under the heading 'Treasury
Bills-auction average (investment)' or, if not published by 3:00 P.M., New York
City time, on the related Calculation Date, the auction average rate of such
Treasury Bills (expressed as a bond equivalent on the basis of a year of 365 or
366 days, as applicable, and applied on a daily basis) as otherwise announced by
the United States Department of the Treasury. In the event that the results of
the Auction of Treasury Bills having the Index Maturity specified in the
applicable Pricing Supplement are not reported as provided by 3:00 P.M., New
York City time, on the related Calculation Date, or if no such Auction is held,
then the Treasury Rate will be calculated by the Calculation Agent and will be a
yield to maturity (expressed as a bond equivalent on the basis of a year of 365
or 366 days, as applicable, and applied on a daily basis) of the arithmetic mean
of the secondary market bid rates, as of approximately 3:30 P.M., New York City
time, on such Treasury Rate Interest Determination Date, of three leading
primary United States government securities dealers (which may include the Agent
or its affiliates) selected by the Calculation Agent, for the issue of Treasury
Bills with a remaining maturity closest to the Index Maturity specified in the
applicable Pricing Supplement; provided, however, that if the dealers so
selected by the Calculation Agent are not quoting as mentioned in this sentence,

the Treasury Rate determined as of such Treasury Rate Interest Determination
Date will be the Treasury Rate in effect on such Treasury Rate Interest
Determination Date.
 
                                      S-14

OTHER PROVISIONS; ADDENDA
 
     Any provisions with respect to the Notes, including the specification and
determination of one or more Interest Rate Bases, the calculation of the
interest rate applicable to a Floating Rate Note, the Interest Payment Dates,
the Maturity Date or any other term relating thereto, may be modified and/or
supplemented as specified under 'Other/Additional Provisions' on the face
thereof or in an Addendum relating thereto, if so specified on the face thereof
and in the applicable Pricing Supplement.
 
AMORTIZING NOTES
 
     The Company may from time to time offer Amortizing Notes. Unless otherwise
specified in the applicable Pricing Supplement, interest on each Amortizing Note
will be computed on the basis of a 360-day year of twelve 30-day months.
Payments with respect to Amortizing Notes will be applied first to interest due
and payable thereon and then to the reduction of the unpaid principal amount
thereof. Further information concerning additional terms and provisions of
Amortizing Notes will be specified in the applicable Pricing Supplement,
including a table setting forth repayment information for such Amortizing Notes.
 
ORIGINAL ISSUE DISCOUNT NOTES
 
     The Company may from time to time offer Notes ('Original Issue Discount
Notes') that have an Issue Price (as specified in the applicable Pricing
Supplement) that is less than 100% of the principal amount thereof (i.e., par).
Original Issue Discount Notes may not bear any interest currently or may bear
interest at a rate that is below market rates at the time of issuance. Unless
otherwise specified in the applicable Pricing Supplement, the difference between
the Issue Price of an Original Issue Discount Note and par is referred to herein
as the 'Discount' by more than a percentage equal to the product of 0.25% and
the number of full years to the Stated Maturity Date. In the event of
redemption, repayment or acceleration of maturity of an Original Issue Discount
Note, the amount payable to the Holder of such Original Issue Discount Note will
be equal to the sum of: (i) the Issue Price (increased by any accruals of
Discount) and, in the event of any redemption of such Original Issue Discount
Note (if applicable), multiplied by the Initial Redemption Percentage specified
in the applicable Pricing Supplement (as adjusted by the Annual Redemption
Percentage Reduction, if applicable); and (ii) any accrued and unpaid interest
on such Original Issue Discount Note to the date of redemption, repayment or
acceleration of maturity.
 
     Unless otherwise specified in the applicable Pricing Supplement, for
purposes of determining the amount of Discount that has accrued as of any date
on which a redemption, repayment or acceleration of maturity occurs for an
Original Issue Discount Note, such Discount will be accrued using a constant
yield method. The constant yield will be calculated using a 30-day month,
360-day year convention, a compounding period that, except for the Initial

Period (as hereinafter defined), corresponds to the shortest period between
Interest Payment Dates for the applicable Original Issue Discount Note (with
ratable accruals within a compounding period), a coupon rate equal to the
initial coupon rate applicable to such Original Issue Discount Note and an
assumption that the maturity of such Original Issue Discount Note will not be
accelerated. If the period from the date of issue to the initial Interest
Payment Date for an Original Issue Discount Note (the 'Initial Period') is
shorter than the compounding period for such Original Issue Discount Note, a
proportionate amount of the yield for an entire compounding period will be
accrued. If the Initial Period is longer than the compounding period, then such
period will be divided into a regular compounding period and a short period with
the short period being treated as provided in the preceding sentence. The
accrual of the applicable Discount may differ from the accrual of original issue
discount for purposes of the Internal Revenue Code of 1986, as amended (the
'Code'), certain Original Issue Discount Notes may not be treated as having
original issue discount within the meaning of the Code, and Notes other than
Original Issue Discount Notes may be treated as issued with original issue
discount for federal income tax purposes. See 'United States Federal Income Tax
Considerations'.
 
INDEXED NOTES
 
     Notes may be issued with the amount of principal, premium and/or interest
payable in respect thereof to be determined with reference to the price or
prices of specified commodities or stocks, to the exchange rate of one or more
designated currencies (including a composite currency such as the ECU) relative
to an indexed currency or to such other price(s) or exchange rate(s) ('Indexed
Notes'), as specified in the applicable Pricing Supplement. In certain cases,
Holders of Indexed Notes may receive a principal payment on the Maturity Date
that is greater
 
                                      S-15

than or less than the principal amount of such Indexed Notes depending upon the
relative value on the Maturity Date of the specified indexed item. Information
as to the method for determining the amount of principal, premium, if any,
and/or interest payable in respect of Indexed Notes, certain historical
information with respect to the specified indexed item and any material tax
considerations associated with an investment in Indexed Notes will be specified
in the applicable Pricing Supplement.
 
BOOK-ENTRY NOTES
 
     The Company has established a depositary arrangement with The Depository
Trust Company with respect to the Book-Entry Notes, the terms of which are
summarized below. Any additional or differing terms of the depositary
arrangement with respect to the Book-Entry Notes will be described in the
applicable Pricing Supplement.
 
     Upon issuance, all Book-Entry Notes up to $200,000,000 aggregate principal
amount bearing interest (if any) at the same rate or pursuant to the same
formula and having the same date of issue, Specified Currency Interest Payment
Dates (if any), Stated Maturity Date, redemption provisions (if any), repayment
provisions (if any) and other terms will be represented by a single Global

Security. Each Global Security representing Book-Entry Notes will be deposited
with, or on behalf of, the Depositary and will be registered in the name of the
Depositary or a nominee of the Depositary. No Global Security may be transferred
except as a whole by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or such nominee to a successor
of the Depositary or a nominee of such successor.
 
     So long as the Depositary or its nominee is the registered owner of a
Global Security, the Depositary or its nominee, as the case may be, will be the
sole Holder of the Book-Entry Notes represented thereby for all purposes under
the Indenture. Except as otherwise provided in this section, the Beneficial
Owners of the Global Security or Securities representing Book-Entry Notes will
not be entitled to receive physical delivery of Certificated Notes and will not
be considered the Holders thereof for any purpose under the Indenture, and no
Global Security representing Book-Entry Notes shall be exchangeable or
transferable. Accordingly, each Beneficial Owner must rely on the procedures of
the Depositary and, if such Beneficial Owner is not a Participant, on the
procedures of the Participant through which such Beneficial Owner owns its
interest in order to exercise any rights of a Holder under such Global Security
or the Indenture. The laws of some jurisdictions require that certain purchasers
of securities take physical delivery of such securities in certificated form.
Such limits and such laws may impair the ability to transfer beneficial
interests in a Global Security representing Book-Entry Notes.
 
     Unless otherwise specified in the applicable Pricing Supplement, each
Global Security representing Book-Entry Notes will be exchangeable for
Certificated Notes of like tenor and terms and of differing authorized
denominations aggregating a like principal amount, only if (i) the Depositary
notifies the Company that it is unwilling or unable to continue as Depositary
for the Global Securities or the Depositary ceases to be a clearing agency
registered under the Exchange Act (if so required by applicable law or
regulation) and, in each case, a successor Depositary is not appointed by the
Company within 90 days after the Company receives such notice or becomes aware
of such unwillingness, inability or ineligibility, (ii) the Company in its sole
discretion determines that the Global Securities shall be exchangeable for
Certificated Notes or (iii) there shall have occurred and be continuing an Event
of Default under the Indenture with respect to the Notes and beneficial owners
representing a majority in aggregate principal amount of the Book-Entry Notes
represented by Global Securities advise the Depositary to cease acting as
depositary. Upon any such exchange, the Certificated Notes shall be registered
in the names of the Beneficial Owners of the Global Security or Securities
representing Book-Entry Notes, which names shall be provided by the Depositary's
relevant Participants (as identified by the Depositary) to the Trustee.
 
                                      S-16

     The following is based on information furnished by the Depositary:
 
          The Depositary will act as securities depository for the Book-Entry
     Notes. The Book-Entry Notes will be issued as fully registered securities
     registered in the name of Cede & Co. (the Depositary's partnership
     nominee). One fully registered Global Security will be issued for each
     issue of Book-Entry Notes, each in the aggregate principal amount of such
     issue, and will be deposited with the Depositary. If, however, the

     aggregate principal amount of any issue exceeds $200,000,000, one Global
     Security will be issued with respect to each $200,000,000 of principal
     amount and an additional Global Security will be issued with respect to any
     remaining principal amount of such issue.
 
          The Depositary is a limited-purpose trust company organized under the
     New York Banking Law, a 'banking organization'within the meaning of the New
     York Banking Law, a member of the Federal Reserve System, a 'clearing
     corporation' within the meaning of the New York Uniform Commercial Code,
     and a 'clearing agency' registered pursuant to the provisions of Section
     17A of the Exchange Act. The Depositary holds securities that its
     participants ('Participants') deposit with the Depositary. The Depositary
     also facilitates the settlement among Participants of securities
     transactions, such as transfers and pledges, in deposited securities
     through electronic computerized book-entry changes in Participants'
     accounts, thereby eliminating the need for physical movement of securities
     certificates. Direct Participants of the Depositary ('Direct Participants')
     include securities brokers and dealers (including the Agent), banks, trust
     companies, clearing corporations and certain other organizations. The
     Depositary is owned by a number of its Direct Participants and by the New
     York Stock Exchange, Inc., the American Stock Exchange, Inc., and the
     National Association of Securities Dealers, Inc. Access to the Depositary's
     system is also available to others such as securities brokers and dealers,
     banks and trust companies that clear through or maintain a custodial
     relationship with a Direct Participant, either directly or indirectly
     ('Indirect Participants'). The rules applicable to the Depositary and its
     Participants are on file with the Securities and Exchange Commission.
 
          Purchases of Book-Entry Notes under the Depositary's system must be
     made by or through Direct Participants, which will receive a credit for
     such Book-Entry Notes on the Depositary's records. The ownership interest
     of each actual purchaser of each Book-Entry Note represented by a Global
     Security ('Beneficial Owner') is in turn to be recorded on the records of
     the Direct Participants and Indirect Participants. Beneficial Owners will
     not receive written confirmation from the Depositary of their purchase, but
     Beneficial Owners are expected to receive written confirmations providing
     details of the transaction, as well as periodic statements of their
     holdings, from the Direct Participants or Indirect Participants through
     which such Beneficial Owner entered into the transaction. Transfers of
     ownership interests in a Global Security representing Book-Entry Notes are
     to be accomplished by entries made on the books of Participants acting on
     behalf of Beneficial Owners. Beneficial Owners of a Global Security
     representing Book-Entry Notes will not receive Certificated Notes
     representing their ownership interests therein, except in the event that
     use of the book-entry system for such Book-Entry Notes is discontinued.
 
          To facilitate subsequent transfers, all Global Securities representing
     Book-Entry Notes which are deposited with, or on behalf of, the Depositary
     are registered in the name of the Depositary's nominee, Cede & Co. The
     deposit of Global Securities with, or on behalf of, the Depositary and
     their registration in the name of Cede & Co. effect no change in beneficial
     ownership. The Depositary has no knowledge of the actual Beneficial Owners
     of the Global Securities representing the Book-Entry Notes; the
     Depositary's records reflect only the identity of the Direct Participants

     to whose accounts such Book-Entry Notes are credited, which may or may not
     be the Beneficial Owners. The Participants will remain responsible for
     keeping account of their holdings on behalf of their customers.
 
          Conveyance of notices and other communications by the Depositary to
     Direct Participants, by Direct Participants to Indirect Participants, and
     by Direct Participants and Indirect Participants to Beneficial Owners will
     be governed by arrangements among them, subject to any statutory or
     regulatory requirements as may be in effect from time to time.
 
          Neither the Depositary nor Cede & Co. will consent or vote with
     respect to the Global Securities representing the Book-Entry Notes. Under
     its usual procedures, the Depositary mails an Omnibus Proxy to the Company
     as soon as possible after the applicable record date. The Omnibus Proxy
     assigns Cede & Co.'s
 
                                      S-17

     consenting or voting rights to those Direct Participants to whose accounts
     the Book-Entry Notes are credited on the applicable record date (identified
     in a listing attached to the Omnibus Proxy).
 
          Principal, premium, if any, and/or interest payments on the Global
     Securities representing the Book-Entry Notes will be made in immediately
     available funds to the Depositary. The Depositary's practice is to credit
     Direct Participants' accounts on the applicable payment date in accordance
     with their respective holdings shown on the Depositary's records unless the
     Depositary has reason to believe that it will not receive payment on such
     date. Payments by Participants to Beneficial Owners will be governed by
     standing instructions and customary practices, as is the case with
     securities held for the accounts of customers in bearer form or registered
     in 'street name', and will be the responsibility of such Participant and
     not of the Depositary, the Trustee or the Company, subject to any statutory
     or regulatory requirements as may be in effect from time to time. Payment
     of principal, premium, if any, and/or interest to the Depositary is the
     responsibility of the Company or the Trustee, disbursement of such payments
     to Direct Participants shall be the responsibility of the Depositary, and
     disbursement of such payments to the Beneficial Owners shall be the
     responsibility of Direct Participants and Indirect Participants.
 
          If applicable, redemption notices shall be sent to Cede & Co. If less
     than all of the Book-Entry Notes within an issue are being redeemed, the
     Depositary's practice is to determine by lot the amount of the interest of
     each Direct Participant in such issue to be redeemed.
 
          A Beneficial Owner shall give notice of any option to elect to have
     its Book-Entry Notes repaid by the Company, through its Participant, to the
     Trustee, and shall effect delivery of such Book-Entry Notes by causing the
     Direct Participant to transfer the Participant's interest in the Global
     Security or Securities representing such Book-Entry Notes, on the
     Depositary's records, to the Trustee. The requirement for physical delivery
     of Book-Entry Notes in connection with a demand for repayment will be
     deemed satisfied when the ownership rights in the Global Security or
     Securities representing such Book-Entry Notes are transferred by Direct

     Participants on the Depositary's records.
 
          The Depositary may discontinue providing its services as securities
     depository with respect to the Book-Entry Notes at any time by giving
     reasonable notice to the Company or the Trustee. Under such circumstances,
     in the event that a successor securities depository is not obtained,
     Certificated Notes are required to be printed and delivered.
 
          The Company may decide to discontinue use of the system of book-entry
     transfers through the Depositary (or a successor securities depository). In
     that event, Certificated Notes will be printed and delivered.
 
     The information in this section concerning the Depositary and the
Depositary's system has been obtained from sources that the Company believes to
be reliable, but the Company takes no responsibility for the accuracy thereof.
 
             SPECIAL PROVISIONS RELATING TO FOREIGN CURRENCY NOTES
 
GENERAL
 
     Unless otherwise specified in the applicable Pricing Supplement, Foreign
Currency Notes will not be sold in, or to residents of, the country issuing the
applicable currency. The information set forth in this Prospectus Supplement is
directed to prospective purchasers who are Untied States residents and, with
respect to Foreign Currency Notes, is by necessity incomplete. The Company
disclaims any responsibility to advise prospective purchasers who are residents
of countries other than the United States with respect to any matters that may
affect the purchase, holding or receipt of payments of principal of, and
premium, if any, and interest on, the Foreign Currency Notes. Such persons
should consult their own financial and legal advisors with regard to such
matters.
 
PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST
 
     Unless otherwise specified in the applicable Pricing Supplement, the
Company is obligated to make payments of principal of, and premium, if any, and
interest on, Foreign Currency Notes in the applicable Specified Currency. Any
such amounts payable by the Company in the Specified Currency will, unless
otherwise specified in the applicable Pricing Supplement, be converted by the
Exchange Rate Agent named in the applicable Pricing Supplement into United
States dollars for payment to Holders. However, the Holder of a Foreign Currency
Note may elect to receive such amounts in the Specified Currency as hereinafter
described.
 
                                      S-18


     Any United States dollar amount to be received by a Holder of a Foreign
Currency Note will be based on the highest bid quotation in The City of New York
received by the Exchange Rate Agent at approximately 11:00 A.M., New York City
time, on the second Business Day preceding the applicable payment date from
three recognized foreign exchange dealers (one of whom may be the Exchange Rate
Agent) selected by the Exchange Rate Agent and approved by the Company for the
purchase by the quoting dealer of the Specified Currency for United States
dollars for settlement on such payment date in the aggregate amount of such
Specified Currency payable to all Holders of Foreign Currency Notes scheduled to
receive United States dollar payments and at which the applicable dealer commits
to execute a contract. All currency exchange costs will be borne by the Holders
of such Foreign Currency Notes by deductions from such payments. If three such
bid quotations are not available, payments will be made in the Specified
Currency.
 
     A Holder of a Foreign Currency Note may elect to receive all or a specified
portion of any payment of the principal of, and premium, if any, and/or interest
on, such Foreign Currency Note in the Specified Currency by submitting a written
request for such payment to the Trustee at its corporate trust office in The
City of New York on or prior to the applicable Record Date or at least fifteen
calendar days prior to the Maturity Date, as the case may be. Such written
request may be mailed or hand delivered or sent by cable, telex or other form of
facsimile transmission. A Holder of a Foreign Currency Note may elect to receive
all or a specified portion of all future payments in the Specified Currency and
need not file a separate election for each payment. Such election will remain in
effect until revoked by written notice to the Trustee, but written notice of any
such revocation must be received by the Trustee on or prior to the applicable
Record Date or at least fifteen calendar days prior to the Maturity Date, as the
case may be. Holders of Foreign Currency Notes whose Notes are to be held in the
name of a broker or nominee should contact such broker or nominee to determine
whether and how an election to receive payments in the Specified Currency may be
made.
 
     Payments of the principal of, and premium, if any, and/or interest on,
Foreign Currency Notes which are to be made in United States dollars will be
made in the manner specified herein with respect to Notes denominated in United
States dollars. See 'Description of Notes--General.' Payments of interest on
Foreign Currency Notes which are to be made in the Specified Currency on an
Interest Payment Date other than the Maturity Date will be made by check mailed
to the address of the Holders of such Foreign Currency Notes as they appear in
the Security Register, subject to the right to receive such interest payments by
wire transfer of immediately available funds under certain circumstances
described under 'Description of Notes--General.' Payments of principal of, and
premium, if any, and/or interest on, Foreign Currency Notes which are to be made
in the Specified Currency on the Maturity Date will be made by wire transfer of
immediately available funds to an account with a bank designated at least
fifteen calendar days prior to the Maturity Date by each Holder thereof,
provided that such bank has appropriate facilities therefor and that the
applicable Foreign Currency Note is presented and surrendered at the principal
corporate trust office of the Trustee in time for the Trustee to make such
payments in such funds in accordance with its normal procedures.
 
     Unless otherwise specified in the applicable Pricing Supplement, if the

Specified Currency is other than United States dollars, a Beneficial Owner of a
Global Security or Securities which elects to receive payments of principal,
premium, if any, and/or interest in such Specified Currency must notify the
Participant through which it owns its interest on or prior to the applicable
Record Date or at least fifteen calendar days prior to the Maturity Date, as the
case may be, of such Beneficial Owner's election. Such Participant must notify
the Depositary of such election on or prior to the third Business Day after such
Record Date or at least twelve calendar days prior to the Maturity Date, as the
case may be, and the Depositary will notify the Trustee of such election on or
prior to the fifth Business Day after such Record Date or at least ten calendar
days prior to the Maturity Date, as the case may be. If complete instructions
are received by the Participant from the Beneficial Owner and forwarded by the
Participant to the Depositary, and by the Depositary to the Trustee, on or prior
to such dates, then such Beneficial Owner will receive payments in the Specified
Currency.
 
AVAILABILITY OF SPECIFIED CURRENCY
 
     If the Specified Currency for a Foreign Currency Note is not available for
the required payment of principal, premium, if any, and/or interest due to the
imposition of exchange controls or other circumstances beyond the control of the
Company, the Company will be entitled to satisfy its obligations to the Holder
of such Foreign
 
                                      S-19

Currency Note by making such payment in United States dollars on the basis of
the Market Exchange Rate on the second Business Day prior to such payment or, if
such Market Exchange Rate is not then available, on the basis of the most
recently available Market Exchange Rate or as otherwise specified in the
applicable Pricing Supplement.
 
     If payment in respect of a Foreign Currency Note is required to be made in
any composite currency (e.g., ECU), and such composite currency is unavailable
due to the imposition of exchange controls or other circumstances beyond the
control of the Company, the Company will be entitled to satisfy its obligations
to the Holder of such Foreign Currency Note by making such payment in United
States dollars. The amount of each payment in United States dollars shall be
computed by the Exchange Rate Agent on the basis of the equivalent of the
composite currency in United States dollars. The component currencies of the
composite currency for this purpose (collectively, the 'Component Currencies'
and each, a 'Component Currency') shall be the currency amounts that were
components of the composite currency as of the last day on which the composite
currency was used. The equivalent of the composite currency in United States
dollars shall be calculated by aggregating the United States dollar equivalents
of the Component Currencies. The United States dollar equivalent of each of the
Component Currencies shall be determined by the Exchange Rate Agent on the basis
of the most recently available Market Exchange Rate for each such Component
Currency, or as otherwise specified in the applicable Pricing Supplement.
 
     If the official unit of any Component Currency is altered by way of
combination or subdivision, the number of units of the currency as a Component
Currency shall be divided or multiplied in the same proportion. If two or more
Component Currencies are consolidated into a single currency, the amounts of

those currencies as Component Currencies shall be replaced by an amount in such
single currency equal to the sum of the amounts of the consolidated Component
Currencies expressed in such single currency. If any Component Currency is
divided into two or more currencies, the amount of the original Component
Currency shall be replaced by the amounts of such two or more currencies, the
sum of which shall be equal to the amount of the original Component Currency.
 
     The 'Market Exchange Rate' for a currency or composite currency other than
United States dollars means the noon dollar buying rate in The City of New York
for cable transfers for such currency or composite currency as certified for
customs purposes by (or if not so certified, as otherwise determined by) the
Federal Reserve Bank of New York. Any payment made in United States dollars
under such circumstances where the required payment is in a currency or
composite currency other than United States dollars will not constitute an Event
of Default under the Indenture with respect to the Notes.
 
     All determinations referred to above made by the Exchange Rate Agent shall
be at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on the Holders of the Foreign Currency
Notes.
 
GOVERNING LAW; JUDGMENTS
 
     The Notes will be governed by and construed in accordance with the laws of
the State of New York. Under current New York law, a state court in the State of
New York rendering a judgment on a Foreign Currency Note would be required to
render such judgment in the Specified Currency, and such judgment would be
converted into United States dollars at the exchange rate prevailing on the date
of entry of such judgment. Accordingly, Holders of Foreign Currency Notes would
be subject to exchange rate fluctuations after the date of entry of such
judgment. It is not certain, however, that a non-New York state court would
follow the same rules and procedures for conversions of foreign currency
judgments.
 
                                      S-20


            CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
 
     The following summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of the Notes is based
upon laws, regulations, rulings and decisions now in effect, all of which are
subject to change (including changes in effective dates) or possible differing
interpretations. It deals only with Notes held as capital assets and does not
purport to deal with persons in special tax situations, such as financial
institutions, insurance companies, tax-exempt organizations, regulated
investment companies, dealers in securities or currencies, persons holding Notes
as a hedge against currency risks or as a position in a 'straddle' for tax
purposes, or persons whose functional currency is not the United States dollar.
It also does not deal with holders other than original purchasers (except where
otherwise specifically noted). BECAUSE THE EXACT PRICING AND OTHER TERMS OF THE
NOTES WILL VARY, NO ASSURANCE CAN BE GIVEN THAT THE CONSIDERATIONS DESCRIBED
BELOW WILL APPLY TO A PARTICULAR ISSUANCE OF NOTES. CERTAIN MATERIAL UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE OWNERSHIP OF PARTICULAR
NOTES (WHERE APPLICABLE) WILL BE SUMMARIZED IN THE PRICING SUPPLEMENT RELATING
TO SUCH NOTES. PERSONS CONSIDERING THE PURCHASE OF NOTES SHOULD CONSULT THEIR
OWN TAX ADVISORS CONCERNING THE APPLICATION OF UNITED STATES FEDERAL INCOME TAX
LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES OF THE PURCHASE,
OWNERSHIP AND DISPOSITION OF THE NOTES ARISING UNDER THE LAWS OF ANY STATE,
LOCAL OR FOREIGN TAXING JURISDICTION.
 
     As used herein, the term 'U.S. Holder' means a beneficial owner of a Note
that is for United States Federal income tax purposes (i) a citizen or resident
of the United States, (ii) a corporation, or a partnership (including an entity
treated as a corporation or partnership for United States Federal income tax
purposes) unless, in the case of a partnership, Treasury regulations are adopted
that provide otherwise, created or organized in or under the laws of the United
States or any State thereof or the District of Columbia (iii) an estate the
income of which is subject to United States Federal income taxation regardless
of its source, (iv) a trust whose administration is subject to the primary
supervision of a United States court and which has one or more United States
persons who have the authority to control all substantial decisions of such
trust or (v) any other person whose income or gain in respect of a Note is
effectively connected with the conduct of a United States trade or business. As
used herein, the term 'non-U.S. Holder' means a beneficial owner of a Note that
is not a U.S. Holder.
 
U.S. HOLDERS
 
     Payments of Interest. Payments of interest on a Note generally will be
taxable to a U.S. Holder as ordinary interest income at the time such payments
are accrued or are received (in accordance with the U.S. Holder's regular method
of tax accounting).
 
     Original Issue Discount. The following summary is a general discussion of
the United States Federal income tax consequences to U.S. Holders of the
purchase, ownership and disposition of Notes issued with original issue discount
('Discount Notes'). The following summary is based upon final Treasury
regulations (the 'OID Regulations') released by the Internal Revenue Service
('IRS') on January 27, 1994, as amended on June 11, 1996, under the original

issue discount provisions of the Internal Revenue Code of 1986, as amended (the
'Code').
 
     For United States Federal income tax purposes, original issue discount is
the excess of the stated redemption price at maturity of a Note over its issue
price, if such excess equals or exceeds a de minimis amount (generally 1/4 of 1%
of the Note's stated redemption price at maturity multiplied by the number of
complete years to its maturity from its issue date or, in the case of a Note
providing for the payment of any amount other than qualified stated interest (as
hereinafter defined) prior to maturity, multiplied by the weighted average
maturity of such Note). The issue price of each Note in an issue of Notes equals
the first price at which a substantial amount of such Notes have been sold
(ignoring sales to bond houses, brokers, or similar persons or organizations
acting in the capacity of underwriters, placement agents, or wholesalers). The
stated redemption price at maturity of a Note is the sum of all payments
provided by the Note other than 'qualified stated interest' payments. The term
'qualified stated interest' generally means stated interest that is
unconditionally payable in cash or property (other than debt instruments of the
issuer) at least annually at a single fixed rate. In addition, under the OID
 
                                      S-21

Regulations, if a Note bears interest for one or more accrual periods at a rate
below the rate applicable for the remaining term of such Note (e.g., Notes with
teaser rates or interest holidays), and if the greater of either the resulting
foregone interest on such Note or any 'true' discount on such Note (i.e., the
excess of the Note's stated principal amount over its issue price) equals or
exceeds a specified de minimis amount, then the stated interest on the Note
would be treated as original issue discount rather than qualified stated
interest.
 
     Payments of qualified stated interest on a Note are taxable to a U.S.
Holder as ordinary interest income at the time such payments are accrued or are
received (in accordance with the U.S. Holder's regular method of tax
accounting). A U.S. Holder of a Discount Note must include original issue
discount in income as ordinary interest for United States Federal income tax
purposes as it accrues under a constant yield method in advance of receipt of
the cash payments attributable to such income, regardless of such U.S. Holder's
regular method of tax accounting. In general, the amount of original issue
discount included in income by the initial U.S. Holder of a Discount Note is the
sum of the daily portions of original issue discount with respect to such
Discount Note for each day during the taxable year (or portion of the taxable
year) on which such U.S. Holder held such Discount Note. The 'daily portion' of
original issue discount on any Discount Note is determined by allocating to each
day in any accrual period a ratable portion of the original issue discount
allocable to that accrual period. An 'accrual period' may be of any length and
the accrual periods may vary in length over the term of the Discount Note,
provided that each accrual period is no longer than one year and each scheduled
payment of principal or interest occurs either on the final day of an accrual
period or on the first day of an accrual period. The amount of original issue
discount allocable to each accrual period is generally equal to the difference
between (i) the product of the Discount Note's adjusted issue price at the
beginning of such accrual period and its yield to maturity (determined on the
basis of compounding at the close of each accrual period and appropriately

adjusted to take into account the length of the particular accrual period) and
(ii) the amount of any qualified stated interest payments allocable to such
accrual period. The 'adjusted issue price' of a Discount Note at the beginning
of any accrual period is the sum of the issue price of the Discount Note plus
the amount of original issue discount allocable to all prior accrual periods
minus the amount of any prior payments on the Discount Note that were not
qualified stated interest payments. Under these rules, U.S. Holders generally
will have to include in income increasingly greater amounts of original issue
discount in successive accrual periods.
 
     A U.S. Holder who purchases a Discount Note for an amount that is greater
than its adjusted issue price as of the purchase date and less than or equal to
the sum of all amounts payable on the Discount Note after the purchase date
other than payments of qualified stated interest, will be considered to have
purchased the Discount Note at an 'acquisition premium.' Under the acquisition
premium rules, the amount of original issue discount which such U.S. Holder must
include in its gross income with respect to such Discount Note for any taxable
year (or portion thereof in which the U.S. Holder holds the Discount Note) will
be reduced (but not below zero) by the portion of the acquisition premium
properly allocable to the period.
 
     Under the OID Regulations, Floating Rate Notes and Indexed Notes ('Variable
Notes') are subject to special rules whereby a Variable Note will qualify as a
'variable rate debt instrument' if (a) its issue price does not exceed the total
noncontingent principal payments due under the Variable Note by more than a
specified de minimis amount and (b) it provides for stated interest, paid or
compounded at least annually, at current values of (i) one or more qualified
floating rates, (ii) a single fixed rate and one or more qualified floating
rates, (iii) a single objective rate, or (iv) a single fixed rate and a single
objective rate that is a qualified inverse floating rate.
 
     A 'qualified floating rate' is any variable rate where variations in the
value of such rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
Variable Note is denominated. A variable rate is a qualified floating rate if it
is equal to either (1) the product of a qualified floating rate and a fixed
multiple that is greater than 0.65 but not more than 1.35 or (2) the product of
a qualified floating rate and a fixed multiple that is greater than 0.65 but not
more than 1.35, increased or decreased by a fixed rate. In addition, under the
OID Regulations, two or more qualified floating rates that can reasonably be
expected to have approximately the same values throughout the term of the
Variable Note (e.g., two or more qualified floating rates with values within 25
basis points of each other as determined on the Variable Note's issue date) will
be treated as a single qualified floating rate. Notwithstanding the foregoing, a
variable rate that would otherwise constitute a qualified floating rate but
which is subject to one or more restrictions such as a maximum numerical
limitation (i.e., a cap) or a minimum numerical limitation (i.e., a floor) may,
under certain circumstances, fail to be treated as a qualified floating rate
under the OID Regulations unless
 
                                      S-22

such cap or floor is fixed throughout the term of the Note. An 'objective rate'
is a rate (other than a qualified floating rate) that is obtained using a single

fixed formula and that is based on objective financial or economic information
outside of the issuer's control. The OID Regulations also provide that other
variable interest rates may be treated as objective rates if so designated by
the IRS in the future. Despite the foregoing, a variable rate of interest on a
Variable Note will not constitute an objective rate if it is reasonably expected
that the average value of such rate during the first half of the Variable Note's
term will be either significantly less than or significantly greater than the
average value of the rate during the final half of the Variable Note's term. A
'qualified inverse floating rate' is any objective rate where such rate is equal
to a fixed rate minus a qualified floating rate, as long as variations in the
rate can reasonably be expected to inversely reflect contemporaneous variations
in the cost of newly borrowed funds. The OID Regulations also provide that if a
Variable Note provides for stated interest at a fixed rate for an initial period
of less than one year followed by a variable rate that is either a qualified
floating rate or an objective rate and if the variable rate on the Variable
Note's issue date is intended to approximate the fixed rate (e.g., the value of
the variable rate on the issue date does not differ from the value of the fixed
rate by more than 25 basis points), then the fixed rate and the variable rate
together will constitute either a single qualified floating rate or objective
rate, as the case may be.
 
     If a Variable Note that provides for stated interest at either a single
qualified floating rate or a single objective rate throughout the term thereof
qualifies as a 'variable rate debt instrument' under the OID Regulations, then
any stated interest on such Note which is unconditionally payable in cash or
property (other than debt instruments of the issuer) at least annually will
constitute qualified stated interest and will be taxed accordingly. Thus, a
Variable Note that provides for stated interest at either a single qualified
floating rate or a single objective rate throughout the term thereof and that
qualifies as a 'variable rate debt instrument' under the OID Regulations will
generally not be treated as having been issued with original issue discount
unless the Variable Note is issued at a 'true' discount (i.e., at a price below
the Note's stated principal amount) in excess of a specified de minimis amount.
Original issue discount on such a Variable Note arising from 'true' discount is
allocated to an accrual period using the constant yield method described above
by assuming that the variable rate is a fixed rate equal to (i) in the case of a
qualified floating rate or qualified inverse floating rate, the value as of the
issue date, of the qualified floating rate or qualified inverse floating rate,
or (ii) in the case of an objective rate (other than a qualified inverse
floating rate), a fixed rate that reflects the yield that is reasonably expected
for the Variable Note.
 
     In general, any other Variable Note that qualifies as a 'variable rate debt
instrument' will be converted into an 'equivalent' fixed rate debt instrument
for purposes of determining the amount and accrual of original issue discount
and qualified stated interest on the Variable Note. The OID Regulations
generally require that such a Variable Note be converted into an 'equivalent'
fixed rate debt instrument by substituting any qualified floating rate or
qualified inverse floating rate provided for under the terms of the Variable
Note with a fixed rate equal to the value of the qualified floating rate or
qualified inverse floating rate, as the case may be, as of the Variable Note's
issue date. Any objective rate (other than a qualified inverse floating rate)
provided for under the terms of the Variable Note is converted into a fixed rate
that reflects the yield that is reasonably expected for the Variable Note. In

the case of a Variable Note that qualifies as a 'variable rate debt instrument'
and provides for stated interest at a fixed rate in addition to either one or
more qualified floating rates or a qualified inverse floating rate, the fixed
rate is initially converted into a qualified floating rate (or a qualified
inverse floating rate, if the Variable Note provides for a qualified inverse
floating rate). Under such circumstances, the qualified floating rate or
qualified inverse floating rate that replaces the fixed rate must be such that
the fair market value of the Variable Note as of the Variable Note's issue date
is approximately the same as the fair market value of an otherwise identical
debt instrument that provides for either the qualified floating rate or
qualified inverse floating rate rather than the fixed rate. Subsequent to
converting the fixed rate into either a qualified floating rate or a qualified
inverse floating rate, the Variable Note is then converted into an 'equivalent'
fixed rate debt instrument in the manner described above.
 
     Once the Variable Note is converted into an 'equivalent' fixed rate debt
instrument pursuant to the foregoing rules, the amount of original issue
discount and qualified stated interest, if any, are determined for the
'equivalent' fixed rate debt instrument by applying the general original issue
discount rules to the 'equivalent' fixed rate debt instrument and a U.S. Holder
of the Variable Note will account for such original issue discount and qualified
stated interest as if the U.S. Holder held the 'equivalent' fixed rate debt
instrument. Each accrual
 
                                      S-23

period appropriate adjustments will be made to the amount of qualified stated
interest or original issue discount assumed to have been accrued or paid with
respect to the 'equivalent' fixed rate debt instrument in the event that such
amounts differ from the actual amount of interest accrued or paid on the
Variable Note during the accrual period.
 
     If a Variable Note does not qualify as a 'variable rate debt instrument'
under the OID Regulations, then the Variable Note would be treated as a
contingent payment debt obligation. Generally, if a Variable Note is treated as
a contingent payment obligation, interest payments thereon will be treated as
'contingent interest' payments. Under applicable Treasury Regulations, any
contingent and noncontingent interest payments on a Variable Note would be
includible in income in a taxable year whether or not the amount of any payment
is fixed or determinable in that year. The amount of interest included in income
in any particular accrual period would be determined by constructing a projected
payment schedule (as determined under the Regulations) for the Variable Note and
applying daily accrual rules similar to those for accruing original issue
discount on Notes issued with original issue discount (as discussed above). If
the actual amount of contingent interest payments is not equal to the projected
amount, an adjustment to income at the time of the payment must be made to
reflect the difference. This treatment causes the timing and character of
income, gain or loss reported on a contingent payment debt instrument to
substantially differ from the timing and character of income, gain or loss that
would have been reported on a contingent payment debt instrument under general
principles of United States Federal income tax law. In general, any gain
recognized by a U.S. Holder on the sale, exchange, or retirement of a contingent
payment debt instrument will be treated as ordinary income and all or a portion
of any loss realized could be treated as ordinary loss as opposed to capital

loss (depending upon the circumstances). The proper United States Federal income
tax treatment of Variable Notes that are treated as contingent payment debt
obligations will be more fully described in the applicable Pricing Supplement.
 
     Certain of the Notes (i) may be redeemable at the option of the Company
prior to their stated maturity (a 'call option') and/or (ii) may be repayable at
the option of the holder prior to their stated maturity (a 'put option'). Notes
containing such features may be subject to rules that differ from the general
rules discussed above. Investors intending to purchase Notes with such features
should consult their own tax advisors, since the original issue discount
consequences will depend, in part, on the particular terms and features of the
purchased Notes.
 
     U.S. Holders may generally, upon election, include in income all interest
(including stated interest, acquisition discount, original issue discount, de
minimis original issue discount, market discount, de minimis market discount,
and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium) that accrues on a debt instrument by using the constant
yield method applicable to original issue discount, subject to certain
limitations and exceptions.
 
     Short-Term Notes. Notes that have a fixed maturity of one year or less
('Short-Term Notes') will be treated as having been issued with original issue
discount. In general, an individual or other cash method U.S. Holder is not
required to accrue such original issue discount unless the U.S. Holder elects to
do so. If such an election is not made, any gain recognized by the U.S. Holder
on the sale, exchange or maturity of the Short-Term Note will be ordinary income
to the extent of the original issue discount accrued on a straight-line basis,
or upon election under the constant yield method (based on daily compounding),
through the date of sale or maturity, and a portion of the deductions otherwise
allowable to the U.S. Holder for interest on borrowings allocable to the
Short-Term Note will be deferred until a corresponding amount of income is
realized. U.S. Holders who report income for United States Federal income tax
purposes under the accrual method, and certain other holders including banks and
dealers in securities, are required to accrue original issue discount on a
Short-Term Note on a straight-line basis unless an election is made to accrue
the original issue discount under a constant yield method (based on daily
compounding).
 
     Market Discount. If a U.S. Holder purchases a Note, other than a Discount
Note, for an amount that is less than its issue price (or, in the case of a
subsequent purchaser, its stated redemption price at maturity) or, in the case
of a Discount Note, for an amount that is less than its adjusted issue price as
of the purchase date, such U.S. Holder will be treated as having purchased such
Note at a 'market discount,' unless such market discount is less than a
specified de minimis amount.
 
                                      S-24

     Under the market discount rules, a U.S. Holder will be required to treat
any partial principal payment (or, in the case of a Discount Note, any payment
that does not constitute qualified stated interest) on, or any gain realized on
the sale, exchange, retirement or other disposition of, a Note as ordinary
income to the extent of the lesser of (i) the amount of such payment or realized

gain or (ii) the market discount which has not previously been included in
income and is treated as having accrued on such Note at the time of such payment
or disposition. Market discount will be considered to accrue ratably during the
period from the date of acquisition to the maturity date of the Note, unless the
U.S. Holder elects to accrue market discount on the basis of semiannual
compounding.
 
     A U.S. Holder may be required to defer the deduction of all or a portion of
the interest paid or accrued on any indebtedness incurred or maintained to
purchase or carry a Note with market discount until the maturity of the Note or
certain earlier dispositions, because a current deduction is only allowed to the
extent the interest expense exceeds an allocable portion of market discount. A
U.S. Holder may elect to include market discount in income currently as it
accrues (on either a ratable or semiannual compounding basis), in which case the
rules described above regarding the treatment as ordinary income of gain upon
the disposition of the Note and upon the receipt of certain cash payments and
regarding the deferral of interest deductions will not apply. Generally, such
currently included market discount is treated as ordinary interest for United
States Federal income tax purposes. Such an election will apply to all debt
instruments acquired by the U.S. Holder on or after the first day of the taxable
year to which such election applies and may be revoked only with the consent of
the IRS.
 
     Premium. If a U.S. Holder purchases a Note for an amount that is greater
than the sum of all amounts payable on the Note after the purchase date other
than payments of qualified stated interest, such U.S. Holder will be considered
to have purchased the Note with 'amortizable bond premium' equal in amount to
such excess. A U.S. Holder may elect to amortize such premium using a constant
yield method over the remaining term of the Note and may offset interest
otherwise required to be included in respect of the Note during any taxable year
by the amortized amount of such excess for the taxable year. However, if the
Note may be optionally redeemed after the U.S. Holder acquires it at a price in
excess of its stated redemption price at maturity, special rules would apply
which could result in a deferral of the amortization of some bond premium until
later in the term of the Note. Any election to amortize bond premium applies to
all taxable debt obligations then owned and thereafter acquired by the U.S.
Holder and may be revoked only with the consent of the IRS.
 
     Disposition of a Note. Except as discussed above, upon the sale, exchange
or retirement of a Note, a U.S. Holder generally will recognize taxable gain or
loss equal to the difference between the amount realized on the sale, exchange
or retirement (other than amounts representing accrued and unpaid interest) and
such U.S. Holder's adjusted tax basis in the Note. A U.S. Holder's adjusted tax
basis in a Note generally will equal such U.S. Holder's initial investment in
the Note increased by any original issue discount included in income (and
accrued market discount, if any, if the U.S. Holder has included such market
discount in income) and decreased by the amount of any payments, other than
qualified stated interest payments, received and amortizable bond premium taken
with respect to such Note. Such gain or loss would be capital gain or loss and
in the case of a non-corporate U.S. Holder would be mid-term or long-term
capital gain or loss if the holding period for the Notes is more than one year
or eighteen months, respectively.
 
                                      S-25


             NOTES DENOMINATED, OR IN RESPECT OF WHICH INTEREST IS
                         PAYABLE, IN A FOREIGN CURRENCY
 
     As used herein, 'Foreign Currency' means a currency or currency unit other
than U.S. dollars.
 
PAYMENTS OF INTEREST IN A FOREIGN CURRENCY.
 
     Cash Method. A U.S. Holder who uses the cash method of accounting for
United States Federal income tax purposes and who receives a payment of interest
on a Note (other than original issue discount or market discount) will be
required to include in income the U.S. dollar value of the Foreign Currency
payment (determined on the date such payment is received) regardless of whether
the payment is in fact converted to U.S. dollars at that time, and such U.S.
dollar value will be the U.S. Holder's tax basis in such Foreign Currency.
 
     Accrual Method. A U.S. Holder who uses the accrual method of accounting for
United States Federal income tax purposes, or who otherwise is required to
accrue interest prior to receipt, will be required to include in income the U.S.
dollar value of the amount of interest income (including original issue discount
or market discount and reduced by amortizable bond premium to the extent
applicable) that has accrued and is otherwise required to be taken into account
with respect to a Note during an accrual period. The U.S. dollar value of such
accrued income will be determined by translating such income at the average rate
of exchange for the accrual period or, with respect to an accrual period that
spans two taxable years, at the average rate for the partial period within the
taxable year. A U.S. Holder may elect, however, to translate such accrued
interest income using the rate of exchange on the last day of the accrual period
or, with respect to an accrual period that spans two taxable years, using the
rate of exchange on the last day of the taxable year. If the last day of an
accrual period is within five business days of the date of receipt of the
accrued interest, a U.S. Holder may translate such interest using the rate of
exchange on the date of receipt. The above election will apply to other debt
obligations held by the U.S. Holder and may not be changed without the consent
of the IRS. A U.S. Holder should consult a tax advisor before making the above
election. A U.S. Holder will recognize exchange gain or loss (which will be
treated as ordinary income or loss) with respect to accrued interest income on
the date such income is received. The amount of ordinary income or loss
recognized will equal the difference, if any, between the U.S. dollar value of
the Foreign Currency payment received (determined on the date such payment is
received) in respect of such accrual period and the U.S. dollar value of
interest income that has accrued during such accrual period (as determined
above).
 
     Purchase, Sale and Retirement of Notes. A U.S. Holder who purchases a Note
with previously owned Foreign Currency will recognize ordinary income or loss in
an amount equal to the difference, if any, between such U.S. Holder's tax basis
in the Foreign Currency and the U.S. dollar fair market value of the Foreign
Currency used to purchase the Note, determined on the date of purchase.
 
     Except as discussed above with respect to Short-Term Notes, upon the sale,
exchange or retirement of a Note, a U.S. Holder will recognize taxable gain or
loss equal to the difference between the amount realized on the sale, exchange

or retirement and such U.S. Holder's adjusted tax basis in the Note. Such gain
or loss generally will be capital gain or loss (except to the extent of any
accrued market discount not previously included in the U.S. Holder's income) and
in the case of a non-corporate U.S. Holder would be mid-term or long-term
capital gain or loss if the holding period for the Notes is more than one year
or eighteen months, respectively. To the extent the amount realized represents
accrued but unpaid interest, however, such amounts must be taken into account as
interest income, with exchange gain or loss computed as described in 'Payments
of Interest in a Foreign Currency' above. If a U.S. Holder receives Foreign
Currency on such a sale, exchange or retirement the amount realized will be
based on the U.S. dollar value of the Foreign Currency on the date the payment
is received or the Note is disposed of (or deemed disposed of in the case of a
taxable exchange of the Note for a new Note). In the case of a Note that is
denominated in Foreign Currency and is traded on an established securities
market, a cash basis U.S. Holder (or, upon election, an accrual basis U.S.
Holder) will determine the U.S. dollar value of the amount realized by
translating the Foreign Currency payment at the spot rate of exchange on the
settlement date of the sale. A U.S. Holder's adjusted tax basis in a Note will
equal the cost of the Note to such holder, increased by the amounts of any
market discount or original issue discount previously included in income by the
holder with respect to such Note and reduced by any amortized acquisition or
other premium and any principal payments received by the holder. A U.S. Holder's
tax basis in a Note, and the amount of any subsequent adjustments to such
holder's tax basis, will be the U.S. dollar value of the Foreign Currency amount
 
                                      S-26

paid for such Note, or of the Foreign Currency amount of the adjustment,
determined on the date of such purchase or adjustment.
 
     Gain or loss realized upon the sale, exchange or retirement of a Note that
is attributable to fluctuations in currency exchange rates will be ordinary
income or loss which will not be treated as interest income or expense. Gain or
loss attributable to fluctuations in exchange rates will equal the difference
between the U.S. dollar value of the Foreign Currency principal amount of the
Note, determined on the date such payment is received or the Note is disposed
of, and the U.S. dollar value of the Foreign Currency principal amount of the
Note, determined on the date the U.S. Holder acquired the Note. Such Foreign
Currency gain or loss will be recognized only to the extent of the total gain or
loss realized by the U.S. Holder on the sale, exchange or retirement of the
Note.
 
     Original Issue Discount. In the case of a Discount Note or Short-Term Note,
(i) original issue discount is determined in units of the Foreign Currency, (ii)
accrued original issue discount is translated into U.S. dollars as described in
'Payments of Interest in a Foreign Currency--Accrual Method' above and (iii) the
amount of Foreign Currency gain or loss on the accrued original issue discount
is determined by comparing the amount of income received attributable to the
discount (either upon payment, maturity or an earlier disposition), as
translated into U.S. dollars at the rate of exchange on the date of such
receipt, with the amount of original issue discount accrued, as translated
above.
 
     Premium and Market Discount. In the case of a Note with market discount,

(i) market discount is determined in units of the Foreign Currency, (ii) accrued
market discount taken into account upon the receipt of any partial principal
payment or upon the sale, exchange, retirement or other disposition of the Note
(other than accrued market discount required to be taken into account currently)
is translated into U.S. dollars at the exchange rate on such disposition date
(and no part of such accrued market discount is treated as exchange gain or
loss) and (iii) accrued market discount currently includible in income by a U.S.
Holder for any accrual period is translated into U.S. dollars on the basis of
the average exchange rate in effect during such accrual period, and the exchange
gain or loss is determined upon the receipt of any partial principal payment or
upon the sale, exchange, retirement or other disposition of the Note in the
manner described in 'Payments of Interest in a Foreign Currency--Accrual Method'
above with respect to computation of exchange gain or loss on accrued interest.
 
     With respect to a Note issued with amortizable bond premium, such premium
is determined in the relevant Foreign Currency and reduces interest income in
units of the Foreign Currency. Although not entirely clear, a U.S. Holder should
recognize exchange gain or loss equal to the difference between the U.S. dollar
value of the bond premium amortized with respect to a period, determined on the
date the interest attributable to such period is received, and the U.S. dollar
value of the bond premium determined on the date of the acquisition of the Note.
 
     Exchange of Foreign Currencies. A U.S. Holder will have a tax basis in any
Foreign Currency received as interest or on the sale, exchange or retirement of
a Note equal to the U.S. dollar value of such Foreign Currency, determined at
the time the interest is received or at the time of the sale, exchange or
retirement. Any gain or loss realized by a U.S. Holder on a sale or other
disposition of Foreign Currency (including its exchange for U.S. dollars or its
use to purchase Notes) will be ordinary income or loss.
 
NON-U.S. HOLDERS
 
     A non-U.S. Holder will not be subject to United States Federal income taxes
on payments of principal, premium (if any) or interest (including original issue
discount, if any) on a Note, unless such non-U.S. Holder is a direct or indirect
10% or greater shareholder of the Company, a controlled foreign corporation
related to the Company or a bank receiving interest described in section
881(c)(3)(A) of the Code. To qualify for the exemption from taxation, the last
United States payor in the chain of payment prior to payment to a non-U.S.
Holder (the 'Withholding Agent') must have received in the year in which a
payment of interest or principal occurs, or in either of the two preceding
calendar years, a statement that (i) is signed by the beneficial owner of the
Note under penalties of perjury, (ii) certifies that such owner is not a U.S.
Holder and (iii) provides the name and address of the beneficial owner. The
statement may be made on an IRS Form W-8 or a substantially similar form, and
the beneficial owner must inform the Withholding Agent of any change in the
information on the statement within 30 days of such change. If a Note is held
through a securities clearing organization or certain other financial
institutions, the organization or institution may provide a signed statement to
the Withholding
 
                                      S-27

Agent. However, in such case, the signed statement must be accompanied by a copy

of the IRS Form W-8 or the substitute form provided by the beneficial owner to
the organization or institution. The Treasury Department is considering
implementation of further certification requirements aimed at determining
whether the issuer of a debt obligation is related to holders thereof.
 
     Generally, a non-U.S. Holder will not be subject to Federal income taxes on
any amount which constitutes capital gain upon retirement or disposition of a
Note, provided the gain is not effectively connected with the conduct of a trade
or business in the United States by the non-U.S. Holder. Certain other
exceptions may be applicable, and a non-U.S. Holder should consult its tax
advisor in this regard.
 
     The Notes will not be includible in the estate of a non-U.S. Holder unless
the individual is a direct or indirect 10% or greater shareholder of the Company
or, at the time of such individual's death, payments in respect of the Notes
would have been effectively connected with the conduct by such individual of a
trade or business in the United States.
 
BACKUP WITHHOLDING
 
     Backup withholding of United States Federal income tax at a rate of 31% may
apply to payments made in respect of the Notes to registered owners who are not
'exempt recipients' and who fail to provide certain identifying information
(such as the registered owner's taxpayer identification number) in the required
manner. Generally, individuals are not exempt recipients, whereas corporations
and certain other entities generally are exempt recipients. Payments made in
respect of the Notes to a U.S. Holder must be reported to the IRS, unless the
U.S. Holder is an exempt recipient or establishes an exemption. Compliance with
the identification procedures described in the preceding section would establish
an exemption from backup withholding for those non-U.S. Holders who are not
exempt recipients.
 
     In addition, upon the sale of a Note to (or through) a broker, the broker
must withhold 31% of the entire purchase price, unless either (i) the broker
determines that the seller is a corporation or other exempt recipient or (ii)
the seller provides, in the required manner, certain identifying information
and, in the case of a non-U.S. Holder, certifies that such seller is a non-U.S.
Holder (and certain other conditions are met). Such a sale must also be reported
by the broker to the IRS, unless either (i) the broker determines that the
seller is an exempt recipient or (ii) the seller certifies its non-U.S. status
(and certain other conditions are met). Certification of the registered owner's
non-U.S. status would be made normally on an IRS Form W-8 under penalties of
perjury, although in certain cases it may be possible to submit other
documentary evidence.
 
     Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.
 
     Recently, the Treasury Department promulgated final regulations regarding
the withholding and information reporting rules discussed above. In general, the
final regulations do not significantly alter the substantive withholding and
information reporting requirements but unify current procedures and forms and

clarify reliance standards. Under the final regulations, special rules apply
which permit the shifting of primary responsibility to certain financial
institutions acting on behalf of beneficial owners. The final regulations are
generally effective for payments made after December 31, 1998, subject to
certain transition rules. Non-U.S. Holders are urged to consult their tax
advisors with respect to the application of these final regulations.
 
                              PLAN OF DISTRIBUTION
 
     The Notes are being offered on a continuous basis for sale by the Company
to or through Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Chase Securities Inc., First Chicago Capital Markets, Inc.,
Goldman, Sachs & Co., J.P. Morgan Securities Inc. and Morgan Stanley & Co.
Incorporated (the 'Agents'). The Agents may purchase Notes, as principal, from
the Company from time to time for resale to investors and other purchasers at
varying prices relating to prevailing market prices at the time of resale as
determined by the applicable Agent, or, if so specified in the applicable
Pricing Supplement, for resale at a fixed offering price. If agreed to by the
Company and an Agent, such Agent may also utilize its reasonable efforts on an
agency basis to solicit offers to purchase the Notes at 100% of the principal
amount thereof, unless otherwise
 
                                      S-28

specified in the applicable Pricing Supplement. The Company will pay a
commission to an Agent, ranging from .125% to .750% of the principal amount of
each Note, depending upon its stated maturity, sold through such Agent.
Commissions with respect to Notes with stated maturities in excess of 30 years
that are sold through an Agent will be negotiated between the Company and such
Agent at the time of such sale.
 
     Unless otherwise specified in the applicable Pricing Supplement, any Note
sold to an Agent as principal will be purchased by such Agent at a price equal
to 100% of the principal amount thereof less a percentage of the principal
amount equal to the commission applicable to an agency sale of a Note of
identical maturity. An Agent may sell Notes it has purchased from the Company as
principal to other dealers for resale to investors and other purchasers, and may
reallow all or any portion of the discount received in connection with such
purchase from the Company to such dealers. After the initial offering of Notes,
the offering price (in the case of Notes to be resold on a fixed offering price
basis), the concession and the discount may be changed.
 
     The Company reserves the right to withdraw, cancel or modify the offer made
hereby without notice and may reject offers in whole or in part (whether placed
directly with the Company or through the Agents). Each Agent will have the
right, in its discretion reasonably exercised, to reject in whole or in part any
offer to purchase Notes received by it on an agency basis.
 
     Unless otherwise specified in the applicable Pricing Supplement, payment of
the purchase price of the Notes will be required to be made in immediately
available funds in the Specified Currency in The City of New York on the date of
settlement. See 'Description of Notes--General.'
 
     Upon issuance, the Notes will not have an established trading market. The

Notes will not be listed on any securities exchange. The Agents may from time to
time purchase and sell Notes in the secondary market, but the Agents are not
obligated to do so, and there can be no assurance that there will be a secondary
market for the Notes or that there will be liquidity in the secondary market if
one develops. From time to time, the Agents may make a market in the Notes, but
the Agents are not obligated to do so and may discontinue any market-making
activity at any time.
 
     In connection with an offering of Notes purchased by one or more Agents as
principal on a fixed offering price basis, such Agent(s) will be permitted to
engage in certain transactions that stabilize the price of Notes. Such
transactions may consist of bids or purchases for the purpose of pegging, fixing
or maintaining the price of Notes. If the Agent creates or the Agents create, as
the case may be, a short position in Notes, i.e., if it sells or they sell Notes
in an aggregate principal amount exceeding that set forth in the applicable
Pricing Supplement, such Agent(s) may reduce that short position by purchasing
Notes in the open market. In general, purchases of Notes for the purpose of
stabilization or to reduce a short position could cause the price of Notes to be
higher than it might be in the absence of such purchases.
 
     Neither the Company nor any of the Agents makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described in the immediately preceding paragraph may have on the price of Notes.
In addition, neither the Company nor any of the Agents makes any representation
that the Agents will engage in any such transactions or that such transactions,
once commenced, will not be discontinued without notice.
 
     The Agents may be deemed to be 'underwriters' within the meaning of the
Securities Act of 1933, as amended (the 'Securities Act'). The Company has
agreed to indemnify the Agents against certain liabilities (including
liabilities under the Securities Act), or to contribute to payments the Agents
may be required to make in respect thereof. The Company has agreed to reimburse
the Agents for certain other expenses.
 
     In the ordinary course of their respective businesses, certain of the
Agents and their affiliates have engaged and may in the future engage in
investment and commercial banking transactions with the Company and certain of
its affiliates. In particular, affiliates of certain of the Agents participate
in the Company's revolving credit facility and, accordingly, if any proceeds
from the sale of Notes are applied by the Company to amounts borrowed under such
facility, such affiliates will receive a proportionate share of repaid amounts.
In addition, a senior officer of Chemical Bank, an affiliate of Chase Securities
Inc., is a director of the Company.
 
     From time to time, the Company may issue and sell other Offered Securities
described in the accompanying Prospectus, and such sales may reduce the
aggregate initial offering price of the Notes offered hereby.
 
                                      S-29


PROSPECTUS
                            KIMCO REALTY CORPORATION
                                  $500,000,000
                       DEBT SECURITIES, PREFERRED STOCK,
           DEPOSITARY SHARES, COMMON STOCK AND COMMON STOCK WARRANTS
 
     Kimco Realty Corporation ('Kimco' or the 'Company') may from time to time
offer in one or more classes or series (i) its unsecured senior debt securities
(the 'Debt Securities'), (ii) shares or fractional shares of its preferred
stock, par value $1.00 per share (the 'Preferred Stock'), (iii) shares of
Preferred Stock represented by depositary shares (the 'Depositary Shares'), (iv)
shares of its common stock, par value $.01 per share (the 'Common Stock'), or
(v) warrants to purchase Common Stock (the 'Common Stock Warrants'), with an
aggregate public offering price of up to $500,000,000 on terms to be determined
at the time of offering. The Debt Securities, Preferred Stock, Depositary
Shares, Common Stock, and Common Stock Warrants (collectively, the 'Offered
Securities') may be offered separately, together or as units, in separate
classes or series in amounts, at prices and on terms to be set forth in a
supplement to this Prospectus (each, a 'Prospectus Supplement').
 
     The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement and will include, where applicable: (i) in the case of Debt
Securities, the specific title, aggregate principal amount, currency of
denomination and payment, form (which may be registered or bearer, or
certificated or global), authorized denominations, maturity, rate (or manner of
calculation thereof) and time of payment of interest, terms for redemption at
the option of the Company or repayment at the option of the Holder, terms for
sinking fund payments, terms for conversion into Preferred Stock or Common
Stock, and any initial public offering price; (ii) in the case of Preferred
Stock, the specific title and stated value, any dividend, liquidation,
redemption, conversion, voting and other rights, and any initial public offering
price; (iii) in the case of Depositary Shares, the fractional share of Preferred
Stock represented by each such Depositary Share; (iv) in the case of Common
Stock, any initial public offering price; and (v) in the case of Common Stock
Warrants, the duration, offering price, exercise price and detachability. In
addition, such specific terms may include limitations on direct or beneficial
ownership and restrictions on transfer of the Offered Securities, in each case
as may be appropriate to preserve the status of the Company as a real estate
investment trust ('REIT') for federal income tax purposes.
 
     The applicable Prospectus Supplement will also contain information, where
applicable, about certain United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Offered Securities
covered by such Prospectus Supplement.
 
     The Offered Securities may be offered directly, through agents designated
from time to time by the Company, or to or through underwriters or dealers. If
any agents or underwriters are involved in the sale of any of the Offered
Securities, their names, and any applicable purchase price, fee, commission or
discount arrangement between or among them, will be set forth, or will be
calculable from the information set forth, in the applicable Prospectus
Supplement. See 'Plan of Distribution.' No Offered Securities may be sold

without delivery of the applicable Prospectus Supplement describing the method
and terms of the offering of such series of Offered Securities.
 
                              ------------------
 
 THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
      EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
          SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
           COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
             PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
                              CRIMINAL OFFENSE.
 
                              ------------------
 
               The date of this Prospectus is November 4, 1997.



                             AVAILABLE INFORMATION
 
     The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the 'Exchange Act'), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the 'Commission'). The Registration
Statement, the exhibits and schedules forming a part thereof and the reports,
proxy statements and other information filed by the Company with the Commission
in accordance with the Exchange Act can be inspected and copied at the
Commission's Public Reference Section, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the following regional offices of the Commission: Seven World
Trade Center, 13th Floor, New York, New York 10048 and 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material can be obtained
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. If available, such information also
may be accessed through the Commission's electronic data gathering, analysis and
retrieval system ('EDGAR') via electronic means, including the Commission's
home-page on the Internet (http://www.sec.gov). In addition, certain of the
Company's securities are listed on the New York Stock Exchange and similar
information concerning the Company can be inspected and copied at the offices of
the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
 
     The Company has filed with the Commission a registration statement (the
'Registration Statement') (of which this Prospectus is a part) under the
Securities Act of 1933, as amended (the 'Securities Act'), with respect to the
Offered Securities. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain portions of which have been omitted
as permitted by the rules and regulations of the Commission. Statements
contained in this Prospectus as to the contents of any contract or other
document are not necessarily complete, and in each instance reference is made to
the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference and the exhibits and schedules thereto. For further information
regarding the Company and the Offered Securities, reference is hereby made to
the Registration Statement and such exhibits and schedules which may be obtained
from the Commission at its principal office in Washington, D.C. upon payment of
the fees prescribed by the Commission.
 
                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
 
     The documents listed below have been filed by the Company under the
Exchange Act with the Commission and are incorporated herein by reference:
 
           a. Annual Report on Form 10-K for the year ended December 31, 1996;
              and
 
           b. Quarterly Reports on Form 10-Q for the quarters ended March 31,
     1997 and June 30, 1997.
 
     All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Offered Securities shall be
deemed to be incorporated by reference in this Prospectus and the applicable

Prospectus Supplement and to be part hereof and thereof from the date of filing
such documents. Any statement contained herein or therein or in a document
incorporated or deemed to be incorporated by reference herein or therein shall
be deemed to be modified or superseded for purposes of this Prospectus and the
applicable Prospectus Supplement to the extent that a statement contained herein
or therein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein and therein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus or the applicable Prospectus Supplement.
 
     Copies of all documents which are incorporated by reference in this
Prospectus and the applicable Prospectus Supplement (not including the exhibits
to such information, unless such exhibits are specifically incorporated by
reference in such information) will be provided without charge to each person,
including any beneficial owner of the Offered Securities, to whom this
Prospectus and the applicable Prospectus Supplement are delivered, upon written
or oral request. Requests should be directed to the Secretary of the Company,
3333 New Hyde Park Road, New Hyde Park, New York 11042-0020 (telephone number:
(516) 869-9000).
 
                                       2


                                  THE COMPANY
 
     The Company began operations through a predecessor in 1966, and today is
the nation's largest publicly-traded owner and operator of neighborhood and
community shopping centers. As of September 1, 1997, the Company's portfolio was
comprised of approximately 39.0 million square feet of gross leasable area
('GLA') in 254 neighborhood and community shopping center properties, two
regional malls and 62 retail stores, located in 37 states.
 
     The Company is self-administered and self-managed through present
management which has owned and managed neighborhood and community shopping
centers for more than 30 years. The executive officers are engaged in the
day-to-day management and operation of real estate exclusively with the Company,
with nearly all operating functions, including leasing, legal, construction,
data processing, maintenance, finance and accounting administered by the
Company.
 
     In order to maintain its qualification as a REIT for federal income tax
purposes, the Company is required to distribute at least 95% of its taxable
income each year. Dividends on any preferred stock issued by the Company are
included as distributions for this purpose. Historically, the Company's
distributions have exceeded, and the Company expects that its distributions will
continue to exceed, taxable income each year. A portion of such distributions
may constitute a return of capital. As a result of the foregoing, the
consolidated net worth of the Company may decline. The Company, however, does
not believe that consolidated stockholders' equity is a meaningful reflection of
net real estate values.
 
                                USE OF PROCEEDS
 
     Unless otherwise described in the applicable Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Offered Securities
for general corporate purposes, which may include the acquisition of
neighborhood and community shopping centers as suitable opportunities arise, the
expansion and improvement of certain properties in the Company's portfolio, and
the repayment of indebtedness outstanding at such time.
 
                         DESCRIPTION OF DEBT SECURITIES
 
     The Debt Securities are to be issued under an Indenture, dated as of
September 1, 1993, as amended by the First Supplemental Indenture dated as of
August 4, 1994, the Second Supplemental Indenture dated as of April 7, 1995 and
as further amended or supplemented from time to time (the 'Indenture'), between
the Company and IBJ Schroder Bank & Trust Company, as Trustee (the 'Trustee').
The Indenture has been filed as an exhibit to the Registration Statement of
which this Prospectus is a part and is available for inspection at the corporate
trust office of the Trustee at One State Street, New York, New York 10004 or as
described above under 'Available Information.' The Indenture is subject to, and
governed by, the Trust Indenture Act of 1939, as amended (the 'TIA'). The
statements made hereunder relating to the Indenture and the Debt Securities to
be issued thereunder are summaries of certain provisions thereof and do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all provisions of the Indenture and such Debt Securities. All

section references appearing herein are to sections of the Indenture, and
capitalized terms used but not defined herein shall have the respective meanings
set forth in the Indenture.
 
GENERAL
 
     The Debt Securities will be direct, unsecured obligations of the Company
and will rank equally with all other unsecured and unsubordinated indebtedness
of the Company. The Indenture provides that the Debt Securities may be issued
without limit as to aggregate principal amount, in one or more series, in each
case as established from time to time in or pursuant to authority granted by a
resolution of the Board of Directors of the Company or as established in one or
more indentures supplemental to the Indenture. All Debt Securities of one series
need not be issued at the same time and, unless otherwise provided, a series may
be reopened, without the consent of the Holders of the Debt Securities of such
series, for issuances of additional Debt Securities of such series (Section
301).
 
                                       3

     The Indenture provides that there may be more than one Trustee thereunder,
each with respect to one or more series of Debt Securities. Any Trustee under
the Indenture may resign or be removed with respect to one or more series of
Debt Securities, and a successor Trustee may be appointed to act with respect to
such series (Section 608). In the event that two or more persons are acting as
Trustee with respect to different series of Debt Securities, each such Trustee
shall be a Trustee of a trust under the Indenture separate and apart from the
trust administered by any other Trustee (Section 609), and, except as otherwise
indicated herein, any action described herein to be taken by the Trustee may be
taken by each such Trustee with respect to, and only with respect to, the one or
more series of Debt Securities for which it is Trustee under the Indenture.
 
     Reference is made to the Prospectus Supplement relating to the series of
Debt Securities being offered for the specific terms thereof, including:
 
      (1) the title of such Debt Securities;
 
      (2) the aggregate principal amount of such Debt Securities and any limit
          on such aggregate principal amount;
 
      (3) if other than the principal amount thereof, the portion of the
          principal amount thereof payable upon declaration of acceleration of
          the maturity thereof, or (if applicable) the portion of the principal
          amount of such Debt Securities which is convertible into Common Stock
          or Preferred Stock, or the method by which any such portion shall be
          determined;
 
      (4) if convertible, in connection with the preservation of the Company's
          status as a REIT, any applicable limitations on the ownership or
          transferability of the Common Stock or Preferred Stock into which such
          Debt Securities are convertible;
 
      (5) the date or dates, or the method for determining such date or dates,
          on which the principal of such Debt Securities will be payable;

 
      (6) the rate or rates (which may be fixed or variable), or the method by
          which such rate or rates shall be determined, at which such Debt
          Securities will bear interest, if any;
 
      (7) the date or dates, or the method for determining such date or dates,
          from which any interest will accrue, the Interest Payment Dates on
          which any such interest will be payable, the Regular Record Dates for
          such Interest Payment Dates, or the method by which any such Date
          shall be determined, the Person to whom such interest shall be
          payable, and the basis upon which interest shall be calculated if
          other than that of a 360-day year of twelve 30-day months;
 
      (8) the place or places where the principal of (and premium, if any) and
          interest, if any, on such Debt Securities will be payable, such Debt
          Securities may be surrendered for conversion or registration of
          transfer or exchange and notices or demands to or upon the Company in
          respect of such Debt Securities and the Indenture may be served;
 
      (9) the period or periods within which, the price or prices at which and
          the terms and conditions upon which such Debt Securities may be
          redeemed, as a whole or in part, at the option of the Company, if the
          Company is to have such an option;
 
     (10) the obligation, if any, of the Company to redeem, repay or purchase
          such Debt Securities pursuant to any sinking fund or analogous
          provision or at the option of a Holder thereof, and the period or
          periods within which, the price or prices at which and the terms and
          conditions upon which such Debt Securities will be redeemed, repaid or
          purchased, as a whole or in part, pursuant to such obligation;
 
     (11) if other than U.S. dollars, the currency or currencies in which such
          Debt Securities are denominated and payable, which may be units of two
          or more foreign currencies or a composite currency or currencies, and
          the terms and conditions relating thereto;
 
     (12) whether the amount of payments of principal of (and premium, if any)
          or interest, if any, on such Debt Securities may be determined with
          reference to an index, formula or other method (which index, formula
          or method may, but need not be, based on a currency, currencies,
          currency unit or units or composite currency or currencies) and the
          manner in which such amounts shall be determined;
 
                                       4

     (13) any additions to, modifications of or deletions from the terms of such
          Debt Securities with respect to the Events of Default or covenants set
          forth in the Indenture;
 
     (14) whether such Debt Securities will be issued in certificated and/or
          book-entry form;
 
     (15) whether such Debt Securities will be in registered or bearer form and,
          if in registered form, the denominations thereof if other than $1,000

          and any integral multiple thereof and, if in bearer form, the
          denominations thereof and terms and conditions relating thereto;
 
     (16) the applicability, if any, of the defeasance and covenant defeasance
          provisions of Article XIV of the Indenture;
 
     (17) if such Debt Securities are to be issued upon the exercise of debt
          warrants, the time, manner and place for such Debt Securities to be
          authenticated and delivered;
 
     (18) the terms, if any, upon which such Debt Securities may be convertible
          into Common Stock or Preferred Stock of the Company and the terms and
          conditions upon which such conversion will be effected, including,
          without limitation, the initial conversion price or rate and the
          conversion period;
 
     (19) whether and under what circumstances the Company will pay Additional
          Amounts as contemplated in the Indenture on such Debt Securities in
          respect of any tax, assessment or governmental charge and, if so,
          whether the Company will have the option to redeem such Debt
          Securities in lieu of making such payment; and
 
     (20) any other terms of such Debt Securities not inconsistent with the
          provisions of the Indenture (Section 301).
 
     The Debt Securities may provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the maturity thereof
('Original Issue Discount Securities'). If material or applicable, special U.S.
federal income tax, accounting and other considerations applicable to Original
Issue Discount Securities will be described in the applicable Prospectus
Supplement.
 
     Except as described under 'Certain Covenants--Limitations on Incurrence of
Debt' and under 'Merger, Consolidation or Sale,' the Indenture does not contain
any other provisions that would limit the ability of the Company to incur
indebtedness or to substantially reduce or eliminate the Company's assets, which
may have an adverse effect on the Company's ability to service its indebtedness
(including the Debt Securities) or that would afford Holders of the Debt
Securities protection in the event of (i) a highly leveraged or similar
transaction involving the Company, the management of the Company, or any
Affiliate of either such party, (ii) a change of control, or (iii) a
reorganization, restructuring, merger or similar transaction involving the
Company that may adversely affect the Holders of the Debt Securities.
Furthermore, subject to the limitations set forth under 'Merger, Consolidation
or Sale,' the Company may, in the future, enter into certain transactions, such
as the sale of all or substantially all of its assets or the merger or
consolidation of the Company, that would increase the amount of the Company's
indebtedness or substantially reduce or eliminate the Company's assets, which
may have an adverse effect on the Company's ability to service its indebtedness,
including the Debt Securities. In addition, restrictions on ownership and
transfers of the Company's common stock and preferred stock are designed to
preserve its status as a REIT and, therefore, may act to prevent or hinder a
change of control. See 'Description of Common Stock' and 'Description of
Preferred Stock.' Reference is made to the applicable Prospectus Supplement for

information with respect to any deletions from, modifications of or additions to
the Events of Default or covenants of the Company that are described below,
including any addition of a covenant or other provision providing event risk or
similar protection.
 
     A significant number of the Company's properties are owned through its
subsidiaries. Therefore, the rights of the Company and its creditors, including
Holders of Debt Securities, to participate in the assets of such subsidiaries
upon the liquidation or recapitalization of such subsidiaries or otherwise will
be subject to the prior claims of such subsidiaries' respective creditors
(except to the extent that claims of the Company itself as a creditor may be
recognized).
 
                                       5

DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER
 
     Unless otherwise described in the applicable Prospectus Supplement, the
Debt Securities of any series will be issuable in denominations of $1,000 and
integral multiples thereof (Section 302).
 
     Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and premium, if any) and interest on any series of Debt Securities
will be payable at the corporate trust office of the Trustee, initially located
at One State Street, New York, New York 10004, provided that, at the option of
the Company, payment of interest may be made by check mailed to the address of
the Person entitled thereto as it appears in the Security Register or by wire
transfer of funds to such Person at an account maintained within the United
States (Sections 301, 305, 306, 307 and 1002).
 
     Any interest not punctually paid or duly provided for on any Interest
Payment Date with respect to a Debt Security ('Defaulted Interest') will
forthwith cease to be payable to the Holder on the applicable Regular Record
Date and may either be paid to the person in whose name such Debt Security is
registered at the close of business on a special record date (the 'Special
Record Date') for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to the Holder of such Debt Security not
less than 10 days prior to such Special Record Date, or may be paid at any time
in any other lawful manner, all as more completely described in the Indenture.
 
     Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series will be exchangeable for
other Debt Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations upon surrender of such
Debt Securities at the corporate trust office of the Trustee referred to above.
In addition, subject to certain limitations imposed upon Debt Securities issued
in book-entry form, the Debt Securities of any series may be surrendered for
conversion or registration of transfer or exchange thereof at the corporate
trust office of the Trustee referred to above. Every Debt Security surrendered
for conversion, registration of transfer or exchange shall be duly endorsed or
accompanied by a written instrument of transfer. No service charge will be made
for any registration of transfer or exchange of any Debt Securities, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith (Section 305). If the

applicable Prospectus Supplement refers to any transfer agent (in addition to
the Trustee) initially designated by the Company with respect to any series of
Debt Securities, the Company may at any time rescind the designation of any such
transfer agent or approve a change in the location through which any such
transfer agent acts, except that the Company will be required to maintain a
transfer agent in each place of payment for such series. The Company may at any
time designate additional transfer agents with respect to any series of Debt
Securities (Section 1002).
 
     Neither the Company nor the Trustee shall be required to (i) issue,
register the transfer of or exchange Debt Securities of any series during a
period beginning at the opening of business 15 days before any selection of Debt
Securities of that series to be redeemed and ending at the close of business on
the day of mailing of the relevant notice of redemption; (ii) register the
transfer of or exchange any Debt Security, or portion thereof, called for
redemption, except the unredeemed portion of any Debt Security being redeemed in
part; or (iii) issue, register the transfer of or exchange any Debt Security
which has been surrendered for repayment at the option of the Holder, except the
portion, if any, of such Debt Security not to be so repaid (Section 305).
 
MERGER, CONSOLIDATION OR SALE
 
     The Company may consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into, any other
corporation, provided that (a) either the Company shall be the continuing
corporation, or the successor corporation (if other than the Company) formed by
or resulting from any such consolidation or merger or which shall have received
the transfer of such assets shall expressly assume payment of the principal of
(and premium, if any) and interest on all of the Debt Securities and the due and
punctual performance and observance of all of the covenants and conditions
contained in the Indenture; (b) immediately after giving effect to such
transaction and treating any indebtedness which becomes an obligation of the
Company or any Subsidiary as a result thereof as having been incurred by the
Company or such Subsidiary at the time of such transaction, no Event of Default
under the Indenture, and no event which, after notice or the lapse of time, or
both, would become such an Event of Default, shall have occurred and be
continuing; and (c) an officer's certificate and legal opinion covering such
conditions shall be delivered to the Trustee (Sections 801 and 803).
 
                                       6

CERTAIN COVENANTS
 
     Limitations on Incurrence of Debt. The Company will not, and will not
permit any Subsidiary to, incur any Debt (as defined below) if, immediately
after giving effect to the incurrence of such additional Debt, the aggregate
principal amount of all outstanding Debt of the Company and its Subsidiaries on
a consolidated basis determined in accordance with generally accepted accounting
principles is greater than 65% of the sum of (i) the Company's Undepreciated
Real Estate Assets (as defined below) as of the end of the calendar quarter
covered in the Company's Annual Report on Form 10-K or Quarterly Report on Form
10-Q, as the case may be, most recently filed with the Commission (or, if such
filing is not permitted under the Exchange Act, with the Trustee) prior to the
incurrence of such additional Debt and (ii) the purchase price of any real

estate assets acquired by the Company or any Subsidiary since the end of such
calendar quarter, including those obtained in connection with the incurrence of
such additional Debt (Section 1004).
 
     In addition to the foregoing limitation on the incurrence of Debt, the
Company will not, and will not permit any Subsidiary to, incur any Debt secured
by any mortgage, lien, charge, pledge, encumbrance or security interest of any
kind upon any of the property of the Company or any Subsidiary if, immediately
after giving effect to the incurrence of such additional Debt, the aggregate
principal amount of all outstanding Debt of the Company and its Subsidiaries on
a consolidated basis which is secured by any mortgage, lien, charge, pledge,
encumbrance or security interest on property of the Company or any Subsidiary is
greater than 40% of the sum of (i) the Company's Undepreciated Real Estate
Assets as of the end of the calendar quarter covered in the Company's Annual
Report on Form 10-K or Quarterly Report on Form 10-Q, as the case may be, most
recently filed with the Commission (or, if such filing is not permitted under
the Exchange Act, with the Trustee) prior to the incurrence of such additional
Debt and (ii) the purchase price of any real estate assets acquired by the
Company or any Subsidiary since the end of such calendar quarter, including
those obtained in connection with the incurrence of such additional Debt
(Section 1004).
 
     In addition to the foregoing limitations on the incurrence of Debt, the
Company will not, and will not permit any Subsidiary to, incur any Debt if
Consolidated Income Available for Debt Service (as defined below) for any 12
consecutive calendar months within the 15 calendar months immediately preceding
the date on which such additional Debt is to be incurred shall have been less
than 1.5 times the Maximum Annual Service Charge (as defined below) on the Debt
of the Company and all Subsidiaries to be outstanding immediately after the
incurring of such additional Debt (Section 1004).
 
     Restrictions on Dividends and Other Distributions. The Company will not, in
respect of any shares of any class of its capital stock, (a) declare or pay any
dividends (other than dividends payable in capital stock of the Company)
thereon, (b) apply any of its property or assets to the purchase, redemption or
other acquisition or retirement thereof, (c) set apart any sum for the purchase,
redemption or other acquisition or retirement thereof, or (d) make any other
distribution, by reduction of capital or otherwise if, immediately after such
declaration or other action referred to above, the aggregate of all such
declarations and other actions since the date on which the Indenture was
originally executed shall exceed the sum of (i) Funds from Operations (as
defined below) from June 30, 1993 until the end of the calendar quarter covered
in the Company's Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as
the case may be, most recently filed with the Commission (or, if such filing is
not permitted under the Exchange Act, with the Trustee) prior to such
declaration or other action and (ii) $26,000,000; provided, however, that the
foregoing limitation shall not apply to any declaration or other action referred
to above which is necessary to maintain the Company's status as a REIT under the
Internal Revenue Code of 1986, as amended (the 'Code'), if the aggregate
principal amount of all outstanding Debt of the Company and its Subsidiaries at
such time is less than 65% of the Company's Undepreciated Real Estate Assets as
of the end of the calendar quarter covered in the Company's Annual Report on
Form 10-K or Quarterly Report on Form 10-Q, as the case may be, most recently
filed with the Commission (or, if such filing is not permitted under the

Exchange Act, with the Trustee) prior to such declaration or other action
(Section 1005).
 
     Notwithstanding the foregoing, the Company will not be prohibited from
making the payment of any dividend within 30 days of the declaration thereof if
at such date of declaration such payment would have complied with the provisions
of the immediately preceding paragraph (Section 1005).
 
     Existence. Except as permitted under 'Merger, Consolidation or Sale,' the
Company will do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence, rights (charter and
 
                                       7

statutory) and franchises; provided, however, that the Company shall not be
required to preserve any right or franchise if it determines that the
preservation thereof is no longer desirable in the conduct of its business and
that the loss thereof is not disadvantageous in any material respect to the
Holders of the Debt Securities (Section 1006).
 
     Maintenance of Properties. The Company will cause all of its properties
used or useful in the conduct of its business or the business of any Subsidiary
to be maintained and kept in good condition, repair and working order and
supplied with all necessary equipment and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
the judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that the Company and its Subsidiaries shall not be prevented
from selling or otherwise disposing for value its properties in the ordinary
course of business (Section 1007).
 
     Insurance. The Company will, and will cause each of its Subsidiaries to,
keep all of its insurable properties insured against loss or damage at least
equal to their then full insurable value with insurers of recognized
responsibility and having a rating of at least A:VIII in Best's Key Rating Guide
(Section 1008).
 
     Payment of Taxes and Other Claims. The Company will pay or discharge or
cause to be paid or discharged, before the same shall become delinquent, (i) all
taxes, assessments and governmental charges levied or imposed upon it or any
Subsidiary or upon the income, profits or property of the Company or any
Subsidiary, and (ii) all lawful claims for labor, materials and supplies which,
if unpaid, might by law become a lien upon the property of the Company or any
Subsidiary; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings (Section 1009).
 
     Provision of Financial Information. Whether or not the Company is subject
to Section 13 or 15(d) of the Exchange Act, the Company will, to the extent
permitted under the Exchange Act, file with the Commission the annual reports,
quarterly reports and other documents which the Company would have been required
to file with the Commission pursuant to such Section 13 or 15(d) (the 'Financial
Statements') if the Company were so subject, such documents to be filed with the

Commission on or prior to the respective dates (the 'Required Filing Dates') by
which the Company would have been required so to file such documents if the
Company were so subject. The Company will also in any event (x) within 15 days
of each Required Filing Date (i) transmit by mail to all Holders of Debt
Securities, as their names and addresses appear in the Security Register,
without cost to such Holders copies of the annual reports and quarterly reports
which the Company would have been required to file with the Commission pursuant
to Section 13 or 15(d) of the Exchange Act if the Company were subject to such
Sections and (ii) file with the Trustee copies of the annual reports, quarterly
reports and other documents which the Company would have been required to file
with the Commission pursuant to Section 13 or 15(d) of the Exchange Act if the
Company were subject to such Sections and (y) if filing such documents by the
Company with the Commission is not permitted under the Exchange Act, promptly
upon written request and payment of the reasonable cost of duplication and
delivery, supply copies of such documents to any prospective Holder (Section
1010).
 
     Maintenance of Unencumbered Total Asset Value. The Company will at all
times maintain an Unencumbered Total Asset Value in an amount of not less than
one hundred percent (100%) of the aggregate principal amount of all outstanding
Debt of the Company and its Subsidiaries that is unsecured (Section 1014).
 
     As used herein,
 
     'Consolidated Income Available for Debt Service' for any period means
Consolidated Net Income (as defined below) of the Company and its Subsidiaries
plus amounts which have been deducted for (a) interest on Debt of the Company
and its Subsidiaries, (b) provision for taxes of the Company and its
Subsidiaries based on income, (c) amortization of debt discount, (d) property
depreciation and amortization and (e) the effect of any noncash charge resulting
from a change in accounting principles in determining Consolidated Net Income
for such period.
 
     'Consolidated Net Income' for any period means the amount of consolidated
net income (or loss) of the Company and its Subsidiaries for such period
determined on a consolidated basis in accordance with generally accepted
accounting principles.
 
                                       8

     'Debt' of the Company or any Subsidiary means any indebtedness of the
Company or any Subsidiary, whether or not contingent, in respect of (i) borrowed
money or evidenced by bonds, notes, debentures or similar instruments, (ii)
indebtedness secured by any mortgage, pledge, lien, charge, encumbrance or any
security interest existing on property owned by the Company or any Subsidiary,
(iii) letters of credit or amounts representing the balance deferred and unpaid
of the purchase price of any property except any such balance that constitutes
an accrued expense or trade payable or (iv) any lease of property by the Company
or any Subsidiary as lessee which is reflected on the Company's Consolidated
Balance Sheet as a capitalized lease in accordance with generally accepted
accounting principles, in the case of items of indebtedness under (i) through
(iii) above to the extent that any such items (other than letters of credit)
would appear as a liability on the Company's Consolidated Balance Sheet in
accordance with generally accepted accounting principles, and also includes, to

the extent not otherwise included, any obligation by the Company or any
Subsidiary to be liable for, or to pay, as obligor, guarantor or otherwise
(other than for purposes of collection in the ordinary course of business),
indebtedness of another person (other than the Company or any Subsidiary) (it
being understood that Debt shall be deemed to be incurred by the Company or any
Subsidiary whenever the Company or such Subsidiary shall create, assume,
guarantee or otherwise become liable in respect thereof).
 
     'Funds from Operations' for any period means the Consolidated Net Income of
the Company and its Subsidiaries for such period without giving effect to
depreciation and amortization, gains or losses from extraordinary items, gains
or losses on sales of real estate, gains or losses on investments in marketable
securities and any provision/benefit for income taxes for such period, plus
Funds from Operations of unconsolidated joint ventures, all determined on a
consistent basis for such period.
 
     'Maximum Annual Service Charge' as of any date means the maximum amount
which may become payable in any period of 12 consecutive calendar months from
such date for interest on, and required amortization of, Debt. The amount
payable for amortization shall include the amount of any sinking fund or other
analogous fund for the retirement of Debt and the amount payable on account of
principal on any such Debt which matures serially other than at the final
maturity date of such Debt.
 
     'Total Assets' as of any date means the sum of (i) the Company's
Undepreciated Real Estate Assets and (ii) all other assets of the Company
determined in accordance with generally accepted accounting principles (but
excluding goodwill and amortized debt costs).
 
     'Undepreciated Real Estate Assets' as of any date means the amount of real
estate assets of the Company and its Subsidiaries on such date, before
depreciation and amortization determined on a consolidated basis in accordance
with generally accepted accounting principles.
 
     'Unencumbered Total Asset Value' as of any date means the sum of the
Company's Total Assets which are unencumbered by any mortgage, lien, charge,
pledge or security interest that secures the payment of any obligations under
any Debt.
 
EVENTS OF DEFAULT, NOTICE AND WAIVER
 
     The Indenture provides that the following events are 'Events of Default'
with respect to any series of Debt Securities issued thereunder: (a) default for
30 days in the payment of any installment of interest on any Debt Security of
such series; (b) default in the payment of the principal of (or premium, if any,
on) any Debt Security of such series at its Maturity; (c) default in making any
sinking fund payment as required for any Debt Security of such series; (d)
default in the performance of any other covenant of the Company contained in the
Indenture (other than a covenant added to the Indenture solely for the benefit
of a series of Debt Securities issued thereunder other than such series),
continued for 60 days after written notice as provided in the Indenture; (e)
default in the payment of an aggregate principal amount exceeding $10,000,000 of
any evidence of indebtedness of the Company or any mortgage, indenture or other
instrument under which such indebtedness is issued or by which such indebtedness

is secured, such default having occurred after the expiration of any applicable
grace period and having resulted in the acceleration of the maturity of such
indebtedness, but only if such indebtedness is not discharged or such
acceleration is not rescinded or annulled; (f) certain events of bankruptcy,
insolvency or reorganization, or court appointment of a receiver, liquidator or
trustee of the Company or any Significant Subsidiary or either of its property;
and (g) any other Event of Default provided with
 
                                       9

respect to a particular series of Debt Securities (Section 501). The term
'Significant Subsidiary' means each significant subsidiary (as defined in
Regulation S-X promulgated under the Securities Act) of the Company.
 
     If an Event of Default under the Indenture with respect to Debt Securities
of any series at the time Outstanding occurs and is continuing, then in every
such case the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding Debt Securities of that series may declare the principal amount
(or, if the Debt Securities of that series are Original Issue Discount
Securities or Indexed Securities, such portion of the principal amount as may be
specified in the terms thereof) of all of the Debt Securities of that series to
be due and payable immediately by written notice thereof to the Company (and to
the Trustee if given by the Holders). However, at any time after such a
declaration of acceleration with respect to Debt Securities of such series (or
of all Debt Securities then Outstanding under the Indenture, as the case may be)
has been made, but before a judgment or decree for payment of the money due has
been obtained by the Trustee, the Holders of not less than a majority in
principal amount of Outstanding Debt Securities of such series (or of all Debt
Securities then Outstanding under the Indenture, as the case may be) may rescind
and annul such declaration and its consequences if (a) the Company shall have
deposited with the Trustee all required payments of the principal of (and
premium, if any) and interest on the Debt Securities of such series (or of all
Debt Securities then Outstanding under the Indenture, as the case may be), plus
certain fees, expenses, disbursements and advances of the Trustee and (b) all
Events of Default, other than the non-payment of accelerated principal (or
specified portion thereof), with respect to Debt Securities of such series (or
of all Debt Securities then Outstanding under the Indenture, as the case may be)
have been cured or waived as provided in the Indenture (Section 502). The
Indenture also provides that the Holders of not less than a majority in
principal amount of the Outstanding Debt Securities of any series (or of all
Debt Securities then Outstanding under the Indenture, as the case may be) may
waive any past default with respect to such series and its consequences, except
a default (x) in the payment of the principal of (or premium, if any) or
interest on any Debt Security of such series or (y) in respect of a covenant or
provision contained in the Indenture that cannot be modified or amended without
the consent of the Holder of each Outstanding Debt Security affected thereby
(Section 513).
 
     The Trustee is required to give notice to the Holders of Debt Securities
within 90 days of a default under the Indenture; provided, however, that the
Trustee may withhold notice to the Holders of any series of Debt Securities of
any default with respect to such series (except a default in the payment of the
principal of (or premium, if any) or interest on any Debt Security of such
series or in the payment of any sinking fund installment in respect of any Debt

Security of such series) if the Responsible Officers of the Trustee consider
such withholding to be in the interest of such Holders (Section 601).
 
     The Indenture provides that no Holders of Debt Securities of any series may
institute any proceedings, judicial or otherwise, with respect to the Indenture
or for any remedy thereunder, except in the case of failure of the Trustee, for
60 days, to act after it has received a written request to institute proceedings
in respect of an Event of Default from the Holders of not less than 25% in
principal amount of the Outstanding Debt Securities of such series, as well as
an offer of indemnity reasonably satisfactory to it (Section 507). This
provision will not prevent, however, any Holder of Debt Securities from
instituting suit for the enforcement of payment of the principal of (and
premium, if any) and interest on such Debt Securities at the respective due
dates thereof (Section 508).
 
     Subject to provisions in the Indenture relating to its duties in case of
default, the Trustee is under no obligation to exercise any of its rights or
powers under the Indenture at the request or direction of any Holders of any
series of Debt Securities then Outstanding under the Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
(Section 602). The Holders of not less than a majority in principal amount of
the Outstanding Debt Securities of any series (or of all Debt Securities then
Outstanding under the Indenture, as the case may be) shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or of exercising any trust or power conferred upon the
Trustee. However, the Trustee may refuse to follow any direction which is in
conflict with any law or the Indenture, which may involve the Trustee in
personal liability or which may be unduly prejudicial to the Holders of Debt
Securities of such series not joining therein (Section 512).
 
                                       10

     Within 120 days after the close of each fiscal year, the Company must
deliver to the Trustee a certificate, signed by one of several specified
officers, stating whether or not such officer has knowledge of any default under
the Indenture and, if so, specifying each such default and the nature and status
thereof (Section 1011).
 
MODIFICATION
 
     Modifications and amendments of the Indenture and Debt Securities may be
made only with the consent of the Holders of not less than a majority in
principal amount of all Outstanding Debt Securities which are affected by such
modification or amendment; provided, however, that no such modification or
amendment may, without the consent of the Holder of each such Debt Security
affected thereby, (a) change the Stated Maturity of the principal of, or any
installment of interest (or premium, if any) on, any such Debt Security; (b)
reduce the principal amount of, or the rate or amount of interest on, or any
premium payable on redemption of, any such Debt Security, or reduce the amount
of principal of an Original Issue Discount Security that would be due and
payable upon declaration of acceleration of the maturity thereof or would be
provable in bankruptcy, or adversely affect any right of repayment of the Holder
of any such Debt Security; (c) change the Place of Payment, or the coin or
currency, for payment of principal of (or premium, if any) or interest on any

such Debt Security; (d) impair the right to institute suit for the enforcement
of any payment on or with respect to any such Debt Security; (e) reduce the
above-stated percentage of Outstanding Debt Securities of any series necessary
to modify or amend the Indenture, to waive compliance with certain provisions
thereof or certain defaults and consequences thereunder or to reduce the quorum
or voting requirements set forth in the Indenture; or (f) modify any of the
foregoing provisions or any of the provisions relating to the waiver of certain
past defaults or certain covenants, except to increase the required percentage
to effect such action or to provide that certain other provisions may not be
modified or waived without the consent of the Holder of such Debt Security
(Section 902).
 
     The Holders of not less than a majority in principal amount of Outstanding
Debt Securities have the right to waive compliance by the Company with certain
covenants in the Indenture (Section 1013).
 
     Modifications and amendments of the Indenture may be made by the Company
and the Trustee without the consent of any Holder of Debt Securities for any of
the following purposes: (i) to evidence the succession of another Person to the
Company as obligor under the Indenture; (ii) to add to the covenants of the
Company for the benefit of the Holders of all or any series of Debt Securities
or to surrender any right or power conferred upon the Company in the Indenture;
(iii) to add Events of Default for the benefit of the Holders of all or any
series of Securities; (iv) to add or change any provisions of the Indenture to
facilitate the issuance of, or to liberalize certain terms of, Debt Securities
in bearer form, or to permit or facilitate the issuance of Debt Securities in
uncertificated form, provided that such action shall not adversely affect the
interests of the Holders of the Debt Securities of any series in any material
respect; (v) to change or eliminate any provisions of the Indenture, provided
that any such change or elimination shall become effective only when there are
no Debt Securities Outstanding of any series created prior thereto which are
entitled to the benefit of such provision; (vi) to secure the Debt Securities;
(vii) to establish the form or terms of Debt Securities of any series, including
the provisions and procedures, if applicable, for the conversion of such Debt
Securities into Common Stock or Preferred Stock of the Company; (viii) to
provide for the acceptance of appointment by a successor Trustee or facilitate
the administration of the trusts under the Indenture by more than one Trustee;
(ix) to cure any ambiguity, defect or inconsistency in the Indenture, provided
that such action shall not adversely affect the interests of Holders of Debt
Securities of any series in any material respect; or (x) to supplement any of
the provisions of the Indenture to the extent necessary to permit or facilitate
defeasance and discharge of any series of such Debt Securities, provided that
such action shall not adversely affect the interests of the Holders of the Debt
Securities of any series in any material respect (Section 901).
 
     The Indenture provides that in determining whether the Holders of the
requisite principal amount of Outstanding Debt Securities of a series have given
any request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of Holders of Debt
Securities, (i) the principal amount of an Original Issue Discount Security that
shall be deemed to be outstanding shall be the amount of the principal thereof
that would be due and payable as of the date of such determination upon
declaration of acceleration of the maturity thereof, (ii) the principal amount
of a Debt Security denominated in a foreign currency that shall be deemed

outstanding shall be the U.S. dollar equivalent, determined on the issue date
for
 
                                       11

such Debt Security, of the principal amount (or, in the case of an Original
Issue Discount Security, the U.S. dollar equivalent on the issue date of such
Debt Security of the amount determined as provided in (i) above), (iii) the
principal amount of an Indexed Security that shall be deemed outstanding shall
be the principal face amount of such Indexed Security at original issuance,
unless otherwise provided with respect to such Indexed Security pursuant to
Section 301 of the Indenture, and (iv) Debt Securities owned by the Company or
any other obligor upon the Debt Securities or any Affiliate of the Company or of
such other obligor shall be disregarded (Section 101).
 
     The Indenture contains provisions for convening meetings of the Holders of
Debt Securities of a series (Section 1501). A meeting may be called at any time
by the Trustee, and also, upon request, by the Company or the Holders of at
least 10% in principal amount of the Outstanding Debt Securities of such series,
in any such case upon notice given as provided in the Indenture (Section 1502).
Except for any consent that must be given by the Holder of each Debt Security
affected by certain modifications and amendments of the Indenture, any
resolution presented at a meeting or adjourned meeting duly reconvened at which
a quorum is present may be adopted by the affirmative vote of the Holders of a
majority in principal amount of the Outstanding Debt Securities of that series;
provided, however, that, except as referred to above, any resolution with
respect to any request, demand, authorization, direction, notice, consent,
waiver or other action that may be made, given or taken by the Holders of a
specified percentage, which is less than a majority, in principal amount of the
Outstanding Debt Securities of a series may be adopted at a meeting or adjourned
meeting duly reconvened at which a quorum is present by the affirmative vote of
the Holders of such specified percentage in principal amount of the Outstanding
Debt Securities of that series. Any resolution passed or decision taken at any
meeting of Holders of Debt Securities of any series duly held in accordance with
the Indenture will be binding on all Holders of Debt Securities of that series.
The quorum at any meeting called to adopt a resolution, and at any reconvened
meeting, will be Persons holding or representing a majority in principal amount
of the Outstanding Debt Securities of a series; provided, however, that if any
action is to be taken at such meeting with respect to a consent or waiver which
may be given by the Holders of not less than a specified percentage in principal
amount of the Outstanding Debt Securities of a series, the Persons holding or
representing such specified percentage in principal amount of the Outstanding
Debt Securities of such series will constitute a quorum (Section 1504).
 
     Notwithstanding the foregoing provisions, if any action is to be taken at a
meeting of Holders of Debt Securities of any series with respect to any request,
demand, authorization, direction, notice, consent, waiver or other action that
the Indenture expressly provides may be made, given or taken by the Holders of a
specified percentage in principal amount of all Outstanding Debt Securities
affected thereby, or of the Holders of such series and one or more additional
series: (i) there shall be no minimum quorum requirement for such meeting and
(ii) the principal amount of the Outstanding Debt Securities of such series that
vote in favor of such request, demand, authorization, direction, notice,
consent, waiver or other action shall be taken into account in determining

whether such request, demand, authorization, direction, notice, consent, waiver
or other action has been made, given or taken under the Indenture (Section
1504).
 
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
 
     The Company may discharge certain obligations to Holders of any series of
Debt Securities that have not already been delivered to the Trustee for
cancellation and that either have become due and payable or will become due and
payable within one year (or scheduled for redemption within one year) by
irrevocably depositing with the Trustee, in trust, funds in such currency or
currencies, currency unit or units or composite currency or currencies in which
such Debt Securities are payable in an amount sufficient to pay the entire
indebtedness on such Debt Securities in respect of principal (and premium, if
any) and interest to the date of such deposit (if such Debt Securities have
become due and payable) or to the Stated Maturity or Redemption Date, as the
case may be (Section 401).
 
     The Indenture provides that, if the provisions of Article Fourteen are made
applicable to the Debt Securities of or within any series pursuant to Section
301 of the Indenture, the Company may elect either (a) to defease and be
discharged from any and all obligations with respect to such Debt Securities
(except for the obligation to pay Additional Amounts, if any, upon the
occurrence of certain events of tax, assessment or governmental charge with
respect to payments on such Debt Securities and the obligations to register the
transfer or exchange of such Debt Securities, to replace temporary or mutilated,
destroyed, lost or stolen Debt Securities, to maintain an office
 
                                       12

or agency in respect of such Debt Securities and to hold moneys for payment in
trust) ('defeasance') (Section 1402) or (b) to be released from its obligations
with respect to such Debt Securities under Sections 1004 to 1010, inclusive, and
Section 1014 of the Indenture (being the restrictions described under 'Certain
Covenants') or, if provided pursuant to Section 301 of the Indenture, its
obligations with respect to any other covenant, and any omission to comply with
such obligations shall not constitute a default or an Event of Default with
respect to such Debt Securities ('covenant defeasance') (Section 1403), in
either case upon the irrevocable deposit by the Company with the Trustee, in
trust, of an amount, in such currency or currencies, currency unit or units or
composite currency or currencies in which such Debt Securities are payable at
Stated Maturity, or Government Obligations (as defined below), or both,
applicable to such Debt Securities which through the scheduled payment of
principal and interest in accordance with their terms will provide money in an
amount sufficient to pay the principal of (and premium, if any) and interest on
such Debt Securities, and any mandatory sinking fund or analogous payments
thereon, on the scheduled due dates therefor.
 
     Such a trust may only be established if, among other things, the Company
has delivered to the Trustee an Opinion of Counsel (as specified in the
Indenture) to the effect that the Holders of such Debt Securities will not
recognize income, gain or loss for U.S. federal income tax purposes as a result
of such defeasance or covenant defeasance and will be subject to U.S. federal
income tax on the same amounts, in the same manner and at the same times as

would have been the case if such defeasance or covenant defeasance had not
occurred, and such Opinion of Counsel, in the case of defeasance, must refer to
and be based upon a ruling of the Internal Revenue Service or a change in
applicable United States federal income tax law occurring after the date of the
Indenture (Section 1404).
 
     'Government Obligations' means securities which are (i) direct obligations
of the United States of America or the government which issued the Foreign
Currency in which the Debt Securities of a particular series are payable, for
the payment of which its full faith and credit is pledged or (ii) obligations of
a Person controlled or supervised by and acting as an agency or instrumentality
of the United States of America or such government which issued the Foreign
Currency in which the Debt Securities of such series are payable, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States of America or such other government, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust company as custodian with
respect to any such Government Obligation or a specific payment of interest on
or principal of any such Government Obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
depository receipt (Section 101).
 
     Unless otherwise provided in the applicable Prospectus Supplement, if after
the Company has deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to Debt Securities of any series,
(a) the Holder of a Debt Security of such series is entitled to, and does, elect
pursuant to Section 301 of the Indenture or the terms of such Debt Security to
receive payment in a currency, currency unit or composite currency other than
that in which such deposit has been made in respect of such Debt Security, or
(b) a Conversion Event (as defined below) occurs in respect of the currency,
currency unit or composite currency in which such deposit has been made, the
indebtedness represented by such Debt Security shall be deemed to have been, and
will be, fully discharged and satisfied through the payment of the principal of
(and premium, if any) and interest on such Debt Security as they become due out
of the proceeds yielded by converting the amount so deposited in respect of such
Debt Security into the currency, currency unit or composite currency in which
such Debt Security becomes payable as a result of such election or such
cessation of usage based on the applicable market exchange rate (Section 1405).
'Conversion Event' means the cessation of use of (i) a currency, currency unit
or composite currency both by the government of the country which issued such
currency and for the settlement of transactions by a central bank or other
public institutions of or within the international banking community, (ii) the
ECU both within the European Monetary System and for the settlement of
transactions by public institutions of or within the European Communities or
(iii) any currency unit or composite currency other than the ECU for the
purposes for which it was established. Unless otherwise provided in the
applicable Prospectus Supplement, all payments of principal of (and premium, if
any) and interest on any Debt Security that
 
                                       13


is payable in a Foreign Currency that ceases to be used by its government of
issuance shall be made in U.S. dollars (Section 101).
 
     In the event the Company effects covenant defeasance with respect to any
Debt Securities and such Debt Securities are declared due and payable because of
the occurrence of any Event of Default other than the Event of Default described
in clause (d) under 'Events of Default, Notice and Waiver' with respect to
Sections 1004 to 1010, inclusive, and Section 1014 of the Indenture (which
Sections would no longer be applicable to such Debt Securities) or described in
clause (g) under 'Events of Default, Notice and Waiver' with respect to any
other covenant as to which there has been covenant defeasance, the amount in
such currency, currency unit or composite currency in which such Debt Securities
are payable, and Government Obligations on deposit with the Trustee, will be
sufficient to pay amounts due on such Debt Securities at the time of their
Stated Maturity but may not be sufficient to pay amounts due on such Debt
Securities at the time of the acceleration resulting from such Event of Default.
However, the Company would remain liable to make payment of such amounts due at
the time of acceleration.
 
     The applicable Prospectus Supplement may further describe the provisions,
if any, permitting such defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series.
 
CONVERSION RIGHTS
 
     The terms and conditions, if any, upon which the Debt Securities are
convertible into other Debt Securities, Common Stock or Preferred Stock will be
set forth in the applicable Prospectus Supplement relating thereto. Such terms
will include whether such Debt Securities are convertible into other Debt
Securities, Common Stock or Preferred Stock, the conversion price (or manner of
calculation thereof), the conversion period, provisions as to whether conversion
will be at the option of the Holders or the Company, the events requiring an
adjustment of the conversion price and provisions affecting conversion in the
event of the redemption of such Debt Securities.
 
GLOBAL SECURITIES
 
     The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities (the 'Global Securities') that will be
deposited with, or on behalf of, a depositary (the 'Depositary') identified in
the applicable Prospectus Supplement relating to such series. Global Securities
may be issued in either registered or bearer form and in either temporary or
permanent form. The specific terms of the depositary arrangement with respect to
a series of Debt Securities will be described in the applicable Prospectus
Supplement relating to such series.
 
                                       14


                          DESCRIPTION OF COMMON STOCK
 
     The Company has the authority to issue 100,000,000 shares of common stock,
par value $.01 per share, and 51,000,000 shares of excess stock, par value $.01
per share. At October 1, 1997, the Company had outstanding 40,390,889 shares of
common stock and no shares of excess stock. On August 4, 1994, the Company,
previously a Delaware corporation, reincorporated as a Maryland corporation
pursuant to an Agreement and Plan of Merger approved by the Company's
stockholders.
 
     The following description of the Common Stock sets forth certain general
terms and provisions of the Common Stock to which any Prospectus Supplement may
relate, including a Prospectus Supplement providing that Common Stock will be
issuable upon conversion of Debt Securities or Preferred Stock of the Company or
upon the exercise of the Common Stock Warrants issued by the Company. The
statements below describing the Common Stock are in all respects subject to and
qualified in their entirety by reference to the applicable provisions of the
Company's charter and Bylaws.
 
     Holders of the Company's Common Stock will be entitled to receive dividends
when, as and if declared by the Board of Directors of the Company, out of assets
legally available therefor. Payment and declaration of dividends on the Common
Stock and purchases of shares thereof by the Company will be subject to certain
restrictions if the Company fails to pay dividends on the preferred stock. See
'Description of Preferred Stock.' Upon any liquidation, dissolution or winding
up of the Company, holders of Common Stock will be entitled to share equally and
ratably in any assets available for distribution to them, after payment or
provision for payment of the debts and other liabilities of the Company and the
preferential amounts owing with respect to any outstanding preferred stock. The
Common Stock will possess ordinary voting rights for the election of directors
and in respect of other corporate matters, with each share entitling the holder
thereof to one vote. Holders of Common Stock will not have cumulative voting
rights in the election of directors, which means that holders of more than 50%
of all of the shares of the Company's common stock voting for the election of
directors will be able to elect all of the directors if they choose to do so
and, accordingly, the holders of the remaining shares will be unable to elect
any directors. Holders of shares of Common Stock will not have preemptive
rights, which means they have no right to acquire any additional shares of
Common Stock that may be issued by the Company at a subsequent date. The Common
Stock will, when issued, be fully paid and nonassessable and will not be subject
to preemptive or similar rights.
 
     Under Maryland law and the Company's charter, a distribution (whether by
dividend, redemption or other acquisition of shares) to holders of shares of
common stock may be made only if, after giving effect to the distribution, the
Company's total assets are greater than the Company's total liabilities plus the
amount necessary to satisfy the preferential rights upon dissolution of
stockholders whose preferential rights on dissolution are superior to the
holders of common stock. The Company has complied with this requirement in all
of its prior distributions to holders of Common Stock.
 
RESTRICTIONS ON OWNERSHIP
 

     For the Company to qualify as a REIT under the Code, not more than 50% in
value of its outstanding stock may be owned, actually or constructively, by five
or fewer individuals (as defined in the Code to include certain entities) during
the last half of a taxable year, and its stock must be beneficially owned by 100
or more persons during at least 335 days of a taxable year of 12 months or
during a proportionate part of a shorter taxable year. In addition, rent from
Related Party Tenants (as defined below) is not qualifying income for purposes
of the income tests under the Code.
 
     Subject to certain exceptions specified in the Company's charter, no holder
may own, or be deemed to own by virtue of the constructive ownership provisions
of the Code, more than 2% (the 'Ownership Limit') in value of the outstanding
shares of the Company's common stock. The constructive ownership rules are
complex and may cause common stock owned actually or constructively by a group
of related individuals and/or entities to be deemed constructively owned by one
individual or entity. As a result, the acquisition of less than 2% in value of
the common stock (or the acquisition of an interest in an entity which owns
common stock) by an individual or entity could cause that individual or entity
(or another individual or entity) to own constructively in excess of 2% in value
of the common stock, and thus subject such common stock to the Ownership Limit.
 
     Existing stockholders who exceeded the Ownership Limit immediately after
the completion of the Company's initial public offering of its common stock (the
'IPO') in November 1991, may continue to do so
 
                                       15

and may acquire additional shares through the stock option plan, or from other
existing stockholders who exceed the Ownership Limit, but may not acquire
additional shares from such sources such that the five largest beneficial owners
of common stock could own, actually or constructively, more than 49.6% of the
outstanding common stock, and in any event may not acquire additional shares
from any other sources. In addition, because rent from Related Party Tenants
(generally, a tenant owned, actually or constructively, 10% or more by a REIT,
or a 10% owner of a REIT) is not qualifying rent for purposes of the gross
income tests under the Code, the Company's charter provides that no individual
or entity may own, or be deemed to own by virtue of the attribution provisions
of the Code (which differ from the attribution provisions applied to the
Ownership Limit), in excess of 9.8% in value of the outstanding common stock
(the 'Related Party Limit'). The Board of Directors may waive the Ownership
Limit and the Related Party Limit with respect to a particular stockholder (such
Related Party Limit has been waived with respect to the existing stockholders
who exceeded the Related Party Limit immediately after the IPO) if evidence
satisfactory to the Board of Directors and the Company's tax counsel is
presented that such ownership will not then or in the future jeopardize the
Company's status as a REIT. As a condition of such waiver, the Board of
Directors may require opinions of counsel satisfactory to it and/or an
undertaking from the applicant with respect to preserving the REIT status of the
Company. The foregoing restrictions on transferability and ownership will not
apply if the Board of Directors determines that it is no longer in the best
interests of the Company to attempt to qualify, or to continue to qualify, as a
REIT. If shares of common stock in excess of the Ownership Limit or the Related
Party Limit, or shares which would cause the REIT to be beneficially owned by
less than 100 persons or which would cause the Company to be 'closely held'

within the meaning of the Code or would otherwise result in failure to qualify
as a REIT, are issued or transferred to any person, such issuance or transfer
shall be null and void to the intended transferee, and the intended transferee
would acquire no rights to the stock. Shares transferred in excess of the
Ownership Limit or the Related Party Limit, or shares which would otherwise
cause the Company to be 'closely held' within the meaning of the Code or would
otherwise result in failure to qualify as a REIT, will automatically be
exchanged for shares of a separate class of stock ('Excess Stock') that will be
transferred by operation of law to the Company as trustee for the exclusive
benefit of the person or persons to whom the shares are ultimately transferred,
until such time as the intended transferee retransfers the shares. While these
shares are held in trust, they will not be entitled to vote or to share in any
dividends or other distributions (except upon liquidation). The shares may be
retransferred by the intended transferee to any person who may hold such shares
at a price not to exceed (i) the price paid by the intended transferee, or (ii)
if the intended transferee did not give value for such shares, a price per share
equal to the market value of the shares on the date of the purported transfer to
the intended transferee, at which point the shares will automatically be
exchanged for ordinary common stock. In addition, such shares of Excess Stock
held in trust are purchasable by the Company for a 90-day period at a price
equal to the lesser of the price paid for the stock by the intended transferee
and the market price for the stock on the date the Company determines to
purchase the stock. This period commences on the date of the violative transfer
if the intended transferee gives notice to the Company of the transfer, or the
date the Board of Directors determines that a violative transfer has occurred if
no notice is provided.
 
     All certificates representing shares of common stock will bear a legend
referring to the restrictions described above.
 
     All persons who own, directly or by virtue of the attribution provisions of
the Code, more than a specified percentage of the outstanding shares of common
stock must file an affidavit with the Company containing the information
specified in the Company's charter within 30 days after January 1 of each year.
In addition, each common stockholder shall upon demand be required to disclose
to the Company in writing such information with respect to the actual and
constructive ownership of shares as the Board of Directors deems necessary to
comply with the provisions of the Code applicable to a REIT or to comply with
the requirements of any taxing authority or governmental agency.
 
     The Registrar and Transfer Agent for the Company's common stock is The
First National Bank of Boston.
 
                      DESCRIPTION OF COMMON STOCK WARRANTS
 
     The Company may issue Common Stock Warrants for the purchase of Common
Stock. Common Stock Warrants may be issued independently or together with any
other Offered Securities offered by any Prospectus Supplement and may be
attached to or separate from such Offered Securities. Each series of Common
Stock
 
                                       16

Warrants will be issued under a separate warrant agreement (each, a 'Warrant

Agreement') to be entered into between the Company and a warrant agent specified
in the applicable Prospectus Supplement (the 'Warrant Agent'). The Warrant Agent
will act solely as an agent of the Company in connection with the Common Stock
Warrants of such series and will not assume any obligation or relationship of
agency or trust for or with any holders or beneficial owners of Common Stock
Warrants.
 
     The applicable Prospectus Supplement will describe the terms of the Common
Stock Warrants in respect of which this Prospectus is being delivered,
including, where applicable, the following: (1) the title of such Common Stock
Warrants; (2) the aggregate number of such Common Stock Warrants; (3) the price
or prices at which such Common Stock Warrants will be issued; (4) the
designation, number and terms of the shares of Common Stock purchasable upon
exercise of such Common Stock Warrants; (5) the designation and terms of the
other Offered Securities with which such Common Stock Warrants are issued and
the number of such Common Stock Warrants issued with each such Offered Security;
(6) the date, if any, on and after which such Common Stock Warrants and the
related Common Stock will be separately transferable; (7) the price at which
each share of Common Stock purchasable upon exercise of such Common Stock
Warrants may be purchased; (8) the date on which the right to exercise such
Common Stock Warrants shall commence and the date on which such right shall
expire; (9) the minimum or maximum amount of such Common Stock Warrants which
may be exercised at any one time; (10) information with respect to book-entry
procedures, if any; (11) a discussion of certain federal income tax
considerations; and (12) any other material terms of such Common Stock Warrants,
including terms, procedures and limitations relating to the exchange and
exercise of such Common Stock Warrants.
 
                         DESCRIPTION OF PREFERRED STOCK
 
     The Company is authorized to issue 5,000,000 shares of preferred stock, par
value $1.00 per share, 345,000 shares of 7 3/4% Class A Cumulative Redeemable
Preferred Stock, $1.00 par value per share ('Class A Preferred Stock'), 230,000
shares of 8 1/2% Class B Cumulative Redeemable Preferred Stock, $1.00 par value
per share ('Class B Preferred Stock') and 460,000 shares of 8 3/8% Class C
Cumulative Redeemable Preferred Stock, $1.00 par value per share ('Class C
Preferred Stock'). The Company is also authorized to issue 345,000 shares of
Class A Excess Preferred Stock, $1.00 par value per share ('Class A Excess
Preferred Stock'), 230,000 shares of Class B Excess Preferred Stock, $1.00 par
value per share ('Class B Excess Preferred Stock') and 460,000 shares of Class C
Excess Preferred Stock, $1.00 par value per share ('Class C Excess Preferred
Stock'), which are reserved for issuance upon conversion of certain outstanding
Class A Preferred Stock, Class B Preferred Stock or Class C Preferred Stock, as
the case may be, as necessary to preserve the Company's status as a REIT. At
October 1, 1997, 300,000 shares of Class A Preferred Stock, represented by
3,000,000 depositary shares, 200,000 shares of Class B Preferred Stock,
represented by 2,000,000 depositary shares, and 400,000 shares of Class C
Preferred Stock, represented by 4,000,000 depositary shares, were outstanding.
 
     Under the Company's charter, the Board of Directors may from time to time
establish and issue one or more classes or series of preferred stock and fix the
designations, powers, preferences and rights of the shares of such classes or
series and the qualifications, limitations or restrictions thereon, including,
but not limited to, the fixing of the dividend rights, dividend rate or rates,

conversion rights, voting rights, rights and terms of redemption (including
sinking fund provisions) and the liquidation preferences.
 
     The following description of the Preferred Stock sets forth certain general
terms and provisions of the Preferred Stock to which any Prospectus Supplement
may relate. The statements below describing the Preferred Stock are in all
respects subject to and qualified in their entirety by reference to the
applicable provisions of the Company's charter (including the applicable
articles supplementary) and Bylaws.
 
GENERAL
 
     Subject to limitations prescribed by Maryland law and the Company's
charter, the Board of Directors is authorized to fix the number of shares
constituting each class or series of Preferred Stock and the designations and
powers, preferences and relative, participating, optional or other special
rights and qualifications, limitations or restrictions thereof, including such
provisions as may be desired concerning voting, redemption, dividends,
dissolution or the distribution of assets, conversion or exchange, and such
other subjects or matters as may be fixed by resolution of the Board of
Directors or duly authorized committee thereof. The Preferred Stock will, when
issued, be fully paid and nonassessable and will not have, or be subject to, any
preemptive or similar rights.
 
                                       17

     Reference is made to the Prospectus Supplement relating to the class or
series of Preferred Stock offered thereby for specific terms, including:
 
           (1) The class or series, title and stated value of such Preferred
               Stock;
 
           (2) The number of shares of such Preferred Stock offered, the
               liquidation preference per share and the offering price of such
               Preferred Stock;
 
           (3) The dividend rate(s), period(s) and/or payment date(s) or
               method(s) of calculation thereof applicable to such Preferred
               Stock;
 
           (4) Whether dividends on such Preferred Stock shall be cumulative or
               not and, if cumulative, the date from which dividends on such
               Preferred Stock shall accumulate;
 
           (5) The procedures for any auction and remarketing, if any, for such
               Preferred Stock;
 
           (6) Provisions for a sinking fund, if any, for such Preferred Stock;
 
           (7) Provisions for redemption, if applicable, of such Preferred
               Stock;
 
           (8) Any listing of such Preferred Stock on any securities exchange;
 

           (9) The terms and conditions, if applicable, upon which such
               Preferred Stock will be convertible into Common Stock of the
               Company, including the conversion price (or manner of calculation
               thereof);
 
          (10) Whether interests in such Preferred Stock will be represented by
               Depositary Shares;
 
          (11) A discussion of certain federal income tax considerations
               applicable to such Preferred Stock;
 
          (12) In addition to those limitations described below, any other
               limitations on direct or beneficial ownership and restrictions on
               transfer of such Preferred Stock and, if convertible, the related
               Common Stock, in each case as may be appropriate to preserve the
               status of the Company as a REIT; and
 
          (13) Any other material terms, preferences, rights, limitations or
               restrictions of such Preferred Stock.
 
RANK
 
     Unless otherwise specified in the Prospectus Supplement, the Preferred
Stock will, with respect to (as applicable) dividend rights and rights upon
liquidation, dissolution or winding up of the Company, rank (i) senior to all
classes or series of common stock and excess stock of the Company and to all
equity securities of the Company the terms of which provide that such equity
securities are subordinated to the Preferred Stock; (ii) on a parity with all
equity securities of the Company other than those referred to in clauses (i) and
(iii) and (iii) junior to all equity securities of the Company which the terms
of such Preferred Stock provide will rank senior to it. As used in the Company's
charter for these purposes, the term 'equity securities' does not include
convertible debt securities.
 
DIVIDENDS
 
     Holders of shares of the Preferred Stock of each class or series shall be
entitled to receive, when, as and if declared by the Board of Directors of the
Company, out of assets of the Company legally available for payment, cash
dividends at such rates and on such dates as will be set forth in the applicable
Prospectus Supplement. Each such dividend shall be payable to holders of record
as they appear on the stock transfer books of the Company on such record dates
as shall be fixed by the Board of Directors of the Company.
 
     Dividends on any class or series of the Preferred Stock may be cumulative
or non-cumulative, as provided in the applicable Prospectus Supplement.
Dividends, if cumulative, will accumulate from and after the date set forth in
the applicable Prospectus Supplement. If the Board of Directors of the Company
fails to declare a dividend payable on a dividend payment date on any class or
series of the Preferred Stock for which dividends are noncumulative, then the
holders of such class or series of the Preferred Stock will have no right to
receive a dividend in respect of the dividend period ending on such dividend
payment date, and the Company will have no obligation to pay the dividend
accrued for such period, whether or not dividends on such class or series are

declared payable on any future dividend payment date.
 
     If any shares of the Preferred Stock of any class or series are
outstanding, no full dividends shall be declared or paid or set apart for
payment on the preferred stock of the Company of any other class or series
ranking, as to
 
                                       18

dividends, on a parity with or junior to the Preferred Stock of such class or
series for any period unless (i) if such class or series of Preferred Stock has
a cumulative dividend, full cumulative dividends have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for such payment on the Preferred Stock of such class or series for
all past dividend periods and the then current dividend period or (ii) if such
class or series of Preferred Stock does not have a cumulative dividend, full
dividends for the then current dividend period have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for such payment on the Preferred Stock of such class or series. When
dividends are not paid in full (or a sum sufficient for such full payment is not
so set apart) upon the shares of Preferred Stock of any class or series and the
shares of any other class or series of preferred stock ranking on a parity as to
dividends with the Preferred Stock of such class or series, all dividends
declared upon shares of Preferred Stock of such class or series and any other
class or series of preferred stock ranking on a parity as to dividends with such
Preferred Stock shall be declared pro rata so that the amount of dividends
declared per share on the Preferred Stock of such class or series and such other
class or series of preferred stock shall in all cases bear to each other the
same ratio that accrued and unpaid dividends per share on the shares of
Preferred Stock of such class or series (which shall not include any
accumulation in respect of unpaid dividends for prior dividend periods if such
Preferred Stock does not have a cumulative dividend) and such other class or
series of preferred stock bear to each other. No interest, or sum of money in
lieu of interest, shall be payable in respect of any dividend payment or
payments on Preferred Stock of such series which may be in arrears.
 
     Except as provided in the immediately preceding paragraph, unless (i) if
such class or series of Preferred Stock has a cumulative dividend, full
cumulative dividends on the Preferred Stock of such class or series have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for payment for all past dividend periods and the then
current dividend period and (ii) if such class or series of Preferred Stock does
not have a cumulative dividend, full dividends on the Preferred Stock of such
class or series have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set aside for payment for the then
current dividend period, no dividends (other than in common stock or other stock
ranking junior to the Preferred Stock of such class or series as to dividends
and upon liquidation, dissolution or winding up of the Company) shall be
declared or paid or set aside for payment or other distribution shall be
declared or made upon the common stock, excess stock or any other stock of the
Company ranking junior to or on a parity with the Preferred Stock of such class
or series as to dividends or upon liquidation, nor shall any common stock,
excess stock or any other capital stock of the Company ranking junior to or on a
parity with the Preferred Stock of such class or series as to dividends or upon

liquidation, dissolution or winding up of the Company be redeemed, purchased or
otherwise acquired for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any shares of any such stock)
by the Company (except by conversion into or exchange for other stock of the
Company ranking junior to the Preferred Stock of such class or series as to
dividends and upon liquidation, dissolution or winding up of the Company).
 
     Any dividend payment made on shares of a class or series of Preferred Stock
shall first be credited against the earliest accrued but unpaid dividend due
with respect to shares of such class or series which remains payable.
 
REDEMPTION
 
     If so provided in the applicable Prospectus Supplement, the shares of
Preferred Stock will be subject to mandatory redemption or redemption at the
option of the Company, as a whole or in part, in each case upon the terms, at
the times and at the redemption prices set forth in such Prospectus Supplement.
 
     The Prospectus Supplement relating to a class or series of Preferred Stock
that is subject to mandatory redemption will specify the number of shares of
such Preferred Stock that shall be redeemed by the Company in each year
commencing after a date to be specified, at a redemption price per share to be
specified, together with an amount equal to all accrued and unpaid dividends
thereon (which shall not, if such Preferred Stock does not have a cumulative
dividend, include any accumulation in respect of unpaid dividends for prior
dividend periods) to the date of redemption. The redemption price may be payable
in cash or other property, as specified in the applicable Prospectus Supplement.
If the redemption price for Preferred Stock of any series is payable only from
the net proceeds of the issuance of stock of the Company, the terms of such
Preferred Stock may provide that, if no such stock shall have been issued or to
the extent the net proceeds from any issuance are insufficient to pay in full
the aggregate redemption price then due, such Preferred Stock shall
automatically and mandatorily be
 
                                       19

converted into shares of the applicable stock of the Company pursuant to
conversion provisions specified in the applicable Prospectus Supplement.
 
     Notwithstanding the foregoing, unless (i) if such class or series of
Preferred Stock has a cumulative dividend, full cumulative dividends on all
shares of any class or series of Preferred Stock shall have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for payment for all past dividend periods and the then
current dividend period and (ii) if such class or series of Preferred Stock does
not have a cumulative dividend, full dividends on the Preferred Stock of any
class or series have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for payment for the then
current dividend period, no shares of any class or series of Preferred Stock
shall be redeemed unless all outstanding shares of Preferred Stock of such class
or series are simultaneously redeemed; provided, however, that the foregoing
shall not prevent the purchase or acquisition of shares of Preferred Stock of
such class or series pursuant to a purchase or exchange offer made on the same
terms to holders of all outstanding shares of Preferred Stock of such class or

series; and, unless (i) if such class or series of Preferred Stock has a
cumulative dividend, full cumulative dividends on all outstanding shares of any
class or series of Preferred Stock have been or contemporaneously are declared
and paid or declared and a sum sufficient for the payment thereof set apart for
payment for all past dividend periods and the then current dividend period and
(ii) if such class or series of Preferred Stock does not have a cumulative
dividend, full dividends on the Preferred Stock of any class or series have been
or contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for payment for the then current dividend period,
the Company shall not purchase or otherwise acquire directly or indirectly any
shares of Preferred Stock of such class or series (except by conversion into or
exchange for stock of the Company ranking junior to the Preferred Stock of such
class or series as to dividends and upon liquidation, dissolution or winding up
of the Company).
 
     If fewer than all of the outstanding shares of Preferred Stock of any class
or series are to be redeemed, the number of shares to be redeemed will be
determined by the Company and such shares may be redeemed pro rata from the
holders of record of such shares in proportion to the number of such shares held
by such holders (with adjustments to avoid redemption of fractional shares) or
any other equitable method determined by the Company that will not result in the
issuance of any Excess Preferred Stock (as hereinafter defined).
 
     Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of a share of Preferred
Stock of any class or series to be redeemed at the address shown on the stock
transfer books of the Company. Each notice shall state: (i) the redemption date;
(ii) the number of shares and class or series of the Preferred Stock to be
redeemed; (iii) the redemption price; (iv) the place or places where
certificates for such Preferred Stock are to be surrendered for payment of the
redemption price; (v) that dividends on the shares to be redeemed will cease to
accrue on such redemption date; and (vi) the date upon which the holder's
conversion rights, if any, as to such shares shall terminate. If fewer than all
the shares of Preferred Stock of any class or series are to be redeemed, the
notice mailed to each such holder thereof shall also specify the number of
shares of Preferred Stock to be redeemed from each such holder. If notice of
redemption of any shares of Preferred Stock has been given and if the funds
necessary for such redemption have been set apart by the Company in trust for
the benefit of the holders of any shares of Preferred Stock so called for
redemption, then from and after the redemption date dividends will cease to
accrue on such shares of Preferred Stock, such shares of Preferred Stock shall
no longer be deemed outstanding and all rights of the holders of such shares
will terminate, except the right to receive the redemption price.
 
LIQUIDATION PREFERENCE
 
     Upon any voluntary or involuntary liquidation, dissolution or winding up of
the Company, then, before any distribution or payment shall be made to the
holders of any common stock, excess stock or any other class or series of stock
of the Company ranking junior to such class or series of Preferred Stock in the
distribution of assets upon any liquidation, dissolution or winding up of the
Company, the holders of each class or series of Preferred Stock shall be
entitled to receive out of assets of the Company legally available for
distribution to stockholders liquidating distributions in the amount of the

liquidation preference per share (set forth in the applicable Prospectus
Supplement), plus an amount equal to all dividends accrued and unpaid thereon
(which shall not include any accumulation in respect of unpaid dividends for
prior dividend periods if such class or series of Preferred Stock does not have
a cumulative dividend). After payment of the full amount of the liquidating
 
                                       20

distributions to which they are entitled, the holders of such class or series of
Preferred Stock will have no right or claim to any of the remaining assets of
the Company. In the event that, upon any voluntary or involuntary liquidation,
dissolution or winding up of the Company, the legally available assets of the
Company are insufficient to pay the amount of the liquidating distributions on
all outstanding shares of such class or series of Preferred Stock and the
corresponding amounts payable on all shares of other classes or series of stock
of the Company ranking on a parity with such class or series of Preferred Stock
in the distribution of assets upon any liquidation, dissolution or winding up of
the Company, then the holders of such class or series of Preferred Stock and all
other such classes or series of stock shall share ratably in any such
distribution of assets in proportion to the full liquidating distributions to
which they would otherwise be respectively entitled.
 
     If liquidating distributions shall have been made in full to all holders of
shares of such class or series of Preferred Stock, the remaining assets of the
Company shall be distributed among the holders of any other classes or series of
stock ranking junior to such class or series of Preferred Stock upon any
liquidation, dissolution or winding up of the Company, according to their
respective rights and preferences and in each case according to their respective
number of shares. For such purposes, neither the consolidation or merger of the
Company with or into any other corporation nor the sale, lease, transfer or
conveyance of all or substantially all of the property or business of the
Company shall be deemed to constitute a liquidation, dissolution or winding up
of the Company.
 
VOTING RIGHTS
 
     Holders of such class or series of Preferred Stock will not have any voting
rights, except as set forth below or as otherwise from time to time required by
law or as indicated in the applicable Prospectus Supplement.
 
     Whenever dividends on any shares of such class or series of Preferred Stock
shall be in arrears for six or more quarterly periods, regardless of whether
such quarterly periods are consecutive, the holders of such shares of such class
or series of Preferred Stock (voting separately as a class with all other
classes or series of preferred stock upon which like voting rights have been
conferred and are exercisable) will be entitled to vote for the election of two
additional directors of the Company at a special meeting called by an officer of
the Company at the request of a holder of such class or series of Preferred
Stock or, if such special meeting is not called by an officer of the Company
within 30 days, at a special meeting called by a holder of such class or series
of Preferred Stock designated by the holders of record of at least 10% of the
shares of any such class or series of Preferred Stock (unless such request is
received less than 90 days before the date fixed for the next annual or special
meeting of the stockholders), or at the next annual meeting of stockholders, and

at each subsequent annual meeting until (i) if such class or series of Preferred
Stock has a cumulative dividend, all dividends accumulated on such shares of
Preferred Stock for the past dividend periods and the then current dividend
period shall have been fully paid or declared and a sum sufficient for the
payment thereof set apart for payment or (ii) if such class or series of
Preferred Stock does not have a cumulative dividend, four consecutive quarterly
dividends shall have been fully paid or declared and a sum sufficient for the
payment thereof set apart for payment. In such case, the entire Board of
Directors of the Company will be increased by two directors.
 
     Unless provided otherwise for any series of Preferred Stock, so long as any
shares of Preferred Stock remain outstanding, the Company shall not, without the
affirmative vote or consent of the holders of at least two-thirds of the shares
of each class or series of Preferred Stock outstanding at the time, given in
person or by proxy, either in writing or at a meeting (such class or series
voting separately as a class), (i) authorize or create, or increase the
authorized or issued amount of, any class or series of stock ranking senior to
such class or series of Preferred Stock with respect to payment of dividends or
the distribution of assets upon liquidation, dissolution or winding up of the
Company or reclassify any authorized stock of the Company into any such shares,
or create, authorize or issue any obligation or security convertible into or
evidencing the right to purchase any such shares; or (ii) amend, alter or repeal
the provisions of the charter in respect of such class or series of Preferred
Stock, whether by merger, consolidation or otherwise, so as to materially and
adversely affect any right, preference, privilege or voting power of such class
or series of Preferred Stock or the holders thereof; provided, however, that any
increase in the amount of the authorized Preferred Stock or the creation or
issuance of any other class or series of Preferred Stock, or any increase in the
amount of authorized shares of such class or series, in each case ranking on a
parity with or junior to the Preferred Stock of such class or series with
respect to payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up, shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting powers.
 
                                       21

     The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of such class or series of Preferred Stock
shall have been redeemed or called for redemption upon proper notice and
sufficient funds shall have been irrevocably deposited in trust to effect such
redemption.
 
CONVERSION RIGHTS
 
     The terms and conditions, if any, upon which shares of any class or series
of Preferred Stock are convertible into Common Stock, Debt Securities or another
series of Preferred Stock will be set forth in the applicable Prospectus
Supplement relating thereto. Such terms will include the number of shares of
Common Stock or such other series of Preferred Stock or the principal amount of
Debt Securities into which the Preferred Stock is convertible, the conversion
price (or manner of calculation thereof), the conversion period, provisions as
to whether conversion will be at the option of the holders of such class or
series of Preferred Stock or the Company, the events requiring an adjustment of

the conversion price and provisions affecting conversion in the event of the
redemption of such class or series of Preferred Stock.
 
RESTRICTIONS ON OWNERSHIP
 
     As discussed above under 'Description of Common Stock--Restrictions on
Ownership,' for the Company to qualify as a REIT under the Code, not more than
50% in value of its outstanding stock may be owned, actually or constructively,
by five or fewer individuals (as defined in the Code to include certain
entities) during the last half of a taxable year, and the stock must be
beneficially owned by 100 or more persons during at least 335 days of a taxable
year of 12 months (or during a proportionate part of a shorter taxable year). In
addition, rent from Related Party Tenants (as defined above) is not qualifying
income for purposes of the gross income tests under the Code. Therefore, the
applicable articles supplementary for each class or series of Preferred Stock
will contain certain provisions restricting the ownership and transfer of such
class or series of Preferred Stock (the 'Preferred Stock Ownership Limit
Provision'). Except as otherwise described in the applicable Prospectus
Supplement relating thereto, the provisions of each applicable articles
supplementary relating to the applicable Preferred Stock Ownership Limit will
provide as follows:
 
     The Preferred Stock Ownership Limit Provision will provide that, subject to
certain exceptions contained in the applicable articles supplementary, no holder
of such class or series of Preferred Stock may own, or be deemed to own by
virtue of the constructive ownership provisions of the Code, Preferred Stock in
excess of the Preferred Stock Ownership Limit, which will be equal to 9.8% of
the outstanding Preferred Stock of any class or series. The constructive
ownership rules are complex and may cause Preferred Stock owned actually or
constructively by a group of related individuals and/or entities to be deemed to
be constructively owned by one individual or entity. As a result, the
acquisition of less than 9.8% of any class or series of Preferred Stock (or the
acquisition of an interest in an entity which owns Preferred Stock) by an
individual or entity could cause that individual or entity (or another
individual or entity) to own constructively in excess of 9.8% of such class or
series of Preferred Stock, and thus subject such Preferred Stock to the
Preferred Stock Ownership Limit.
 
     The Board of Directors will be entitled to waive the Preferred Stock
Ownership Limit with respect to a particular stockholder if evidence
satisfactory to the Board of Directors, with advice of the Company's tax
counsel, is presented that such ownership will not then or in the future
jeopardize the Company's status as a REIT. As a condition of such waiver, the
Board of Directors may require opinions of counsel satisfactory to it and/or an
undertaking from the applicant with respect to preserving the REIT status of the
Company.
 
     Such articles supplementary will provide that a transfer of the class or
series of Preferred Stock that results in a person actually or constructively
owning shares of Preferred Stock in excess of the Preferred Stock Ownership
Limit, or which would cause the Company to be 'closely held' within the meaning
of the Code or would otherwise result in failure to qualify as a REIT, will be
null and void as to the intended transferee, and the intended transferee will
acquire no rights or economic interest in those shares. In addition, shares

actually or constructively owned by a person in excess of the Preferred Stock
Ownership Limit, or which would otherwise cause the Company to be 'closely held'
within the meaning of the Code or would otherwise result in failure to qualify
as a REIT, will be automatically exchanged for shares of a separate class of
preferred stock that will be transferred, by operation of law to the Company as
trustee of a trust for the exclusive benefit of the transferee or transferees to
whom the shares are ultimately transferred (without violating the Preferred
Stock Ownership Limit) (the 'Excess Preferred Stock'). While held in trust, a
class of Excess Preferred Stock will not be entitled to vote, it will not be
considered for purposes of any stockholder vote or the determination of a quorum
for such vote, and
 
                                       22

it will not be entitled to participate in any distributions made by the Company
(except upon liquidation). The intended transferee or owner may, at any time a
class of Excess Preferred Stock is held by the Company in trust, transfer the
class of Excess Preferred Stock to any person whose ownership of such class or
series of Excess Preferred Stock would be permitted under the Preferred Stock
Ownership Limit, at a price not to exceed either (i) the price paid by the
intended transferee or owner in the purported transfer which resulted in the
issuance of such class of Excess Preferred Stock or (ii) if the intended
transferee did not give full value for such class of Excess Preferred Stock, a
price equal to the market price on the date of the purported transfer or the
other event that resulted in the issuance of such class of Excess Preferred
Stock, at which time such class of Excess Preferred Stock would automatically be
exchanged for the corresponding class or series of Preferred Stock. In addition,
the Company would have the right, for a period of 90 days during the time a
class of Excess Preferred Stock is held by the Company in trust, to purchase all
or any portion of such class of Excess Preferred Stock from the intended
transferee or owner at a price equal to the lesser of the price paid for the
stock by the intended transferee or owner (or, if the intended transferee did
not give full value for such class of Excess Preferred Stock, a price equal to
the market price on the date of the purported transfer or other event that
resulted in the issuance of such class of Excess Preferred Stock) and the
closing market price for the corresponding class of Preferred Stock on the date
the Company exercises its option to purchase the stock. This period commences on
the date of the violative transfer of ownership if the intended transferee or
owner gives notice of the transfer to the Company, or the date the Board of
Directors determines that a violative transfer or ownership has occurred if no
notice is provided.
 
     All certificates representing shares of a class or series of Preferred
Stock will bear a legend referring to the restrictions described above.
 
     The Preferred Stock Ownership Limit Provision is set as a percentage of the
number of outstanding shares of any class or series of Preferred Stock. As a
result, if the number of shares of any class or series of Preferred Stock is
reduced on a non-pro rata basis among all holders of such class or series,
Excess Preferred Stock may be created as a result of such reduction. In the
event that the Company's action causes such reduction of shares, the Company has
agreed to exercise its option to repurchase such shares of such class or series
of Excess Preferred Stock if the intended owner notifies the Company that it is
unable to sell its rights to such class or series of Excess Preferred Stock.

 
     All persons who own a specified percentage (or more) of the outstanding
stock of the Company must file an affidavit with the Company containing
information regarding their ownership of stock as set forth in the Treasury
Regulations. Under current Treasury Regulations, the percentage is set between
one-half of one percent and five percent, depending on the number of record
holders of stock. In addition, each stockholder shall upon demand be required to
disclose to the Company in writing such information with respect to the actual
and constructive ownership of shares of stock of the Company as the Board of
Directors deems necessary to comply with the provisions of the Code applicable
to a REIT or to comply with the requirements of any taxing authority or
governmental agency.
 
                        DESCRIPTION OF DEPOSITARY SHARES
 
GENERAL
 
     The Company may issue Depositary Shares, each of which will represent a
fractional interest of a share of a particular class or series of Preferred
Stock, as specified in the applicable Prospectus Supplement. Shares of a class
or series of Preferred Stock represented by Depositary Shares will be deposited
under a separate Deposit Agreement (each, a 'Deposit Agreement') among the
Company, the depositary named therein (the 'Preferred Stock Depositary') and the
holders from time to time of the depositary receipts issued by the Preferred
Stock Depositary which will evidence the Depositary Shares ('Depositary
Receipts'). Subject to the terms of the Deposit Agreement, each owner of a
Depositary Receipt will be entitled, in proportion to the fractional interest of
a share of a particular class or series of Preferred Stock represented by the
Depositary Shares evidenced by such Depositary Receipt, to all the rights and
preferences of the class or series of Preferred Stock represented by such
Depositary Shares (including dividend, voting, conversion, redemption and
liquidation rights).
 
                                       23


     The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the applicable Deposit Agreement. Immediately following the issuance
and delivery of a class or series of Preferred Stock by the Company to the
Preferred Stock Depositary, the Company will cause the Preferred Stock
Depositary to issue, on behalf of the Company, the Depositary Receipts. Copies
of the applicable form of Deposit Agreement and Depositary Receipt may be
obtained from the Company upon request, and the statements made hereunder
relating to the Deposit Agreement and the Depositary Receipts to be issued
thereunder are summaries of certain provisions thereof and do not purport to be
complete and are subject to, and qualified in their entirety by reference to,
all of the provisions of the applicable Deposit Agreement and related Depositary
Receipts.
 
DIVIDENDS AND OTHER DISTRIBUTIONS
 
     The Preferred Stock Depositary will distribute all cash dividends or other
cash distributions received in respect of a class or series of Preferred Stock
to the record holders of Depositary Receipts evidencing the related Depositary
Shares in proportion to the number of such Depositary Receipts owned by such
holders, subject to certain obligations of holders to file proofs, certificates
and other information and to pay certain charges and expenses to the Preferred
Stock Depositary.
 
     In the event of a distribution other than in cash, the Preferred Stock
Depositary will distribute property received by it to the record holders of
Depositary Receipts entitled thereto, subject to certain obligations of holders
to file proofs, certificates and other information and to pay certain charges
and expenses to the Preferred Stock Depositary, unless the Preferred Stock
Depositary determines that it is not feasible to make such distribution, in
which case the Preferred Stock Depositary may, with the approval of the Company,
sell such property and distribute the net proceeds from such sale to such
holders.
 
     No distribution will be made in respect of any Depositary Share to the
extent that it represents any class or series of Preferred Stock converted into
Excess Preferred Stock or otherwise converted or exchanged.
 
WITHDRAWAL OF PREFERRED STOCK
 
     Upon surrender of the Depositary Receipts at the corporate trust office of
the Preferred Stock Depositary (unless the related Depositary Shares have
previously been called for redemption or converted into Excess Preferred Stock
or otherwise), the holders thereof will be entitled to delivery at such office,
to or upon such holder's order, of the number of whole or fractional shares of
the class or series of Preferred Stock and any money or other property
represented by the Depositary Shares evidenced by such Depositary Receipts.
Holders of Depositary Receipts will be entitled to receive whole or fractional
shares of the related class or series of Preferred Stock on the basis of the
proportion of Preferred Stock represented by each Depositary Share as specified
in the applicable Prospectus Supplement, but holders of such shares of Preferred
Stock will not thereafter be entitled to receive Depositary Shares therefor. If
the Depositary Receipts delivered by the holder evidence a number of Depositary
Shares in excess of the number of Depositary Shares representing the number of

shares of Preferred Stock to be withdrawn, the Preferred Stock Depositary will
deliver to such holder at the same time a new Depositary Receipt evidencing such
excess number of Depositary Shares.
 
REDEMPTION
 
     Whenever the Company redeems shares of a class or series of Preferred Stock
held by the Preferred Stock Depositary, the Preferred Stock Depositary will
redeem as of the same redemption date the number of Depositary Shares
representing shares of such class or series of Preferred Stock so redeemed,
provided the Company shall have paid in full to the Preferred Stock Depositary
the redemption price of the Preferred Stock to be redeemed plus an amount equal
to any accrued and unpaid dividends thereon to the date fixed for redemption.
The redemption price per Depositary Share will be equal to the corresponding
proportion of the redemption price and any other amounts per share payable with
respect to such class or series of Preferred Stock. If fewer than all the
Depositary Shares are to be redeemed, the Depositary Shares to be redeemed will
be selected pro rata (as nearly as may be practicable without creating
fractional Depositary Shares) or by any other equitable method determined by the
Company that will not result in the issuance of any Excess Preferred Stock.
 
     From and after the date fixed for redemption, all dividends in respect of
the shares of a class or series of Preferred Stock so called for redemption will
cease to accrue, the Depositary Shares so called for redemption will
 
                                       24

no longer be deemed to be outstanding and all rights of the holders of the
Depositary Receipts evidencing the Depositary Shares so called for redemption
will cease, except the right to receive any moneys payable upon such redemption
and any money or other property to which the holders of such Depositary Receipts
were entitled upon such redemption and surrender thereof to the Preferred Stock
Depositary.
 
VOTING
 
     Upon receipt of notice of any meeting at which the holders of a class or
series of Preferred Stock deposited with the Preferred Stock Depositary are
entitled to vote, the Preferred Stock Depositary will mail the information
contained in such notice of meeting to the record holders of the Depositary
Receipts evidencing the Depositary Shares which represent such class or series
of Preferred Stock. Each record holder of Depositary Receipts evidencing
Depositary Shares on the record date (which will be the same date as the record
date for such class or series of Preferred Stock) will be entitled to instruct
the Preferred Stock Depositary as to the exercise of the voting rights
pertaining to the amount of Preferred Stock represented by such holder's
Depositary Shares. The Preferred Stock Depositary will vote the amount of such
class or series of Preferred Stock represented by such Depositary Shares in
accordance with such instructions, and the Company will agree to take all
reasonable action which may be deemed necessary by the Preferred Stock
Depositary in order to enable the Preferred Stock Depositary to do so. The
Preferred Stock Depositary will abstain from voting the amount of such class or
series of Preferred Stock represented by such Depositary Shares to the extent it
does not receive specific instructions from the holders of Depositary Receipts

evidencing such Depositary Shares. The Preferred Stock Depositary shall not be
responsible for any failure to carry out any instruction to vote, or for the
manner or effect of any such vote made, as long as any such action or non-action
is in good faith and does not result from negligence or willful misconduct of
the Preferred Stock Depositary.
 
LIQUIDATION PREFERENCE
 
     In the event of the liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, the holders of each Depositary Receipt will be
entitled to the fraction of the liquidation preference accorded each share of
Preferred Stock represented by the Depositary Shares evidenced by such
Depositary Receipt, as set forth in the applicable Prospectus Supplement.
 
CONVERSION
 
     The Depositary Shares, as such, are not convertible into Common Stock or
any other securities or property of the Company, except in connection with
certain conversions in connection with the preservation of the Company's status
as a REIT. See 'Description of Preferred Stock--Restrictions on Ownership.'
Nevertheless, if so specified in the applicable Prospectus Supplement relating
to an offering of Depositary Shares, the Depositary Receipts may be surrendered
by holders thereof to the Preferred Stock Depositary with written instructions
to the Preferred Stock Depositary to instruct the Company to cause conversion of
a class or series of Preferred Stock represented by the Depositary Shares
evidenced by such Depositary Receipts into whole shares of Common Stock, other
shares of a class or series of Preferred Stock (including Excess Preferred
Stock) of the Company or other shares of stock, and the Company has agreed that
upon receipt of such instructions and any amounts payable in respect thereof, it
will cause the conversion thereof utilizing the same procedures as those
provided for delivery of Preferred Stock to effect such conversion. If the
Depositary Shares evidenced by a Depositary Receipt are to be converted in part
only, a new Depositary Receipt or Receipts will be issued for any Depositary
Shares not to be converted. No fractional shares of Common Stock will be issued
upon conversion, and if such conversion would result in a fractional share being
issued, an amount will be paid in cash by the Company equal to the value of the
fractional interest based upon the closing price of the Common Stock on the last
business day prior to the conversion.
 
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
 
     The form of Depositary Receipt evidencing the Depositary Shares which
represent the Preferred Stock and any provision of the Deposit Agreement may at
any time be amended by agreement between the Company and the Preferred Stock
Depositary. However, any amendment that materially and adversely alters the
rights of the holders of Depositary Receipts or that would be materially and
adversely inconsistent with the rights granted to
 
                                       25

the holders of the related class or series of Preferred Stock will not be
effective unless such amendment has been approved by the existing holders of at
least two thirds of the Depositary Shares evidenced by the Depositary Receipts
then outstanding. No amendment shall impair the right, subject to certain

exceptions in the Deposit Agreement, of any holder of Depositary Receipts to
surrender any Depositary Receipt with instructions to deliver to the holder the
related class or series of Preferred Stock and all money and other property, if
any, represented thereby, except in order to comply with law. Every holder of an
outstanding Depositary Receipt at the time any such amendment becomes effective
shall be deemed, by continuing to hold such Receipt, to consent and agree to
such amendment and to be bound by the Deposit Agreement as amended thereby.
 
     The Deposit Agreement may be terminated by the Company upon not less than
30 days' prior written notice to the Preferred Stock Depositary if (i) such
termination is necessary to preserve the Company's status as a REIT or (ii) a
majority of each class or series of Preferred Stock subject to such Deposit
Agreement consents to such termination, whereupon the Preferred Stock Depositary
shall deliver or make available to each holder of Depositary Receipts, upon
surrender of the Depositary Receipts held by such holder, such number of whole
or fractional shares of each such class or series of Preferred Stock as are
represented by the Depositary Shares evidenced by such Depositary Receipts
together with any other property held by the Preferred Stock Depositary with
respect to such Depositary Receipts. The Company has agreed that if the Deposit
Agreement is terminated to preserve the Company's status as a REIT, then the
Company will use its best efforts to list each class or series of Preferred
Stock issued upon surrender of the related Depositary Shares on a national
securities exchange. In addition, the Deposit Agreement will automatically
terminate if (i) all outstanding Depositary Shares issued thereunder shall have
been redeemed, (ii) there shall have been a final distribution in respect of
each class or series of Preferred Stock subject to such Deposit Agreement in
connection with any liquidation, dissolution or winding up of the Company and
such distribution shall have been distributed to the holders of Depositary
Receipts evidencing the Depositary Shares representing such class or series of
Preferred Stock or (iii) each share of Preferred Stock subject to such Deposit
Agreement shall have been converted into stock of the Company not so represented
by Depositary Shares.
 
CHARGES OF PREFERRED STOCK DEPOSITARY
 
     The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the Deposit Agreement. In addition, the
Company will pay the fees and expenses of the Preferred Stock Depositary in
connection with the performance of its duties under the Deposit Agreement.
However, holders of Depositary Receipts will pay the fees and expenses of the
Preferred Stock Depositary for any duties requested by such holders to be
performed which are outside of those expressly provided for in the Deposit
Agreement.
 
RESIGNATION AND REMOVAL OF PREFERRED STOCK DEPOSITARY
 
     The Preferred Stock Depositary may resign at any time by delivering to the
Company notice of its election to do so, and the Company may at any time remove
the Preferred Stock Depositary, any such resignation or removal to take effect
upon the appointment of a successor Preferred Stock Depositary. A successor
Preferred Stock Depositary must be appointed within 60 days after delivery of
the notice of resignation or removal and must be a bank or trust company having
its principal office in the United States and having a combined capital and
surplus of at least $50,000,000.

 
MISCELLANEOUS
 
     The Preferred Stock Depositary will forward to holders of Depositary
Receipts any reports and communications from the Company which are received by
the Preferred Stock Depositary with respect to the related Preferred Stock.
 
     Neither the Preferred Stock Depositary nor the Company will be liable if it
is prevented from or delayed in, by law or any circumstances beyond its control,
performing its obligations under the Deposit Agreement. The obligations of the
Company and the Preferred Stock Depositary under the Deposit Agreement will be
limited to performing their duties thereunder in good faith and without
negligence (in the case of any action or inaction in the voting of a class or
series of Preferred Stock represented by the Depositary Shares), gross
negligence or
 
                                       26

willful misconduct, and the Company and the Preferred Stock Depositary will not
be obligated to prosecute or defend any legal proceeding in respect of any
Depositary Receipts, Depositary Shares or shares of a class or series of
Preferred Stock represented thereby unless satisfactory indemnity is furnished.
The Company and the Preferred Stock Depositary may rely on written advice of
counsel or accountants, or information provided by persons presenting shares of
a class or series of Preferred Stock represented thereby for deposit, holders of
Depositary Receipts or other persons believed in good faith to be competent to
give such information, and on documents believed in good faith to be genuine and
signed by a proper party.
 
     In the event the Preferred Stock Depositary shall receive conflicting
claims, requests or instructions from any holders of Depositary Receipts, on the
one hand, and the Company, on the other hand, the Preferred Stock Depositary
shall be entitled to act on such claims, requests or instructions received from
the Company.
 
                      RATIOS OF EARNINGS TO FIXED CHARGES
 
     The Company's ratio of earnings to fixed charges for the six months ended
June 30, 1997 and for the years ended December 31, 1996, 1995, 1994, 1993 and
1992 was 3.9, 3.5, 2.8, 2.9, 2.7 and 1.9, respectively. The Company's ratio of
earnings to combined fixed charges and preferred stock dividend requirements for
the six months ended June 30, 1997 and for the years ended December 31, 1996,
1995, 1994 and 1993 was 2.4, 2.3, 2.2, 2.3 and 2.5, respectively. Prior to the
year ended December 31, 1993, the Company had not issued any preferred stock;
therefore the ratios of earnings to combined fixed charges and preferred stock
dividend requirements for prior periods are unchanged from the ratios of
earnings to fixed charges in the previous sentence.
 
     For purposes of computing these ratios, earnings have been calculated by
adding fixed charges (excluding capitalized interest) to income before income
taxes and extraordinary items. Fixed charges consist of interest costs, whether
expensed or capitalized, the interest component of rental expense, and
amortization of debt discounts and issue costs, whether expensed or capitalized.
 

                   CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
                      TO THE COMPANY OF ITS REIT ELECTION
 
     The following summary of certain federal income tax considerations to the
Company is based on current law, is for general information only, and is not tax
advice. The tax treatment of a holder of any of the Offered Securities will vary
depending upon the terms of the specific securities acquired by such holder, as
well as his particular situation, and this discussion does not attempt to
address any aspects of federal income taxation relating to holders of Offered
Securities. Certain federal income tax considerations relevant to holders of the
Offered Securities will be provided in the applicable Prospectus Supplement
relating thereto.
 
     EACH INVESTOR IS ADVISED TO CONSULT THE APPLICABLE PROSPECTUS SUPPLEMENT,
AS WELL AS HIS OWN TAX ADVISOR, REGARDING THE TAX CONSEQUENCES TO HIM OF THE
ACQUISITION, OWNERSHIP AND SALE OF THE OFFERED SECURITIES, INCLUDING THE
FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF SUCH ACQUISITION,
OWNERSHIP AND SALE AND OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
 
TAXATION OF THE COMPANY AS A REIT
 
     General. The Company has elected to be taxed as a real estate investment
trust under Sections 856 through 860 of the Code, commencing with its taxable
year beginning January 1, 1992. The Company believes that, commencing with its
taxable year beginning January 1, 1992, it has been organized and is operating
in such a manner as to qualify for taxation as a REIT under the Code commencing
with such taxable year, and the Company intends to continue to operate in such a
manner, but no assurance can be given that it has operated or will operate in a
manner so as to qualify or remain qualified.
 
     These sections of the Code are highly technical and complex. The following
sets forth the material aspects of the sections that govern the federal income
tax treatment of a REIT. This summary is qualified in its entirety by the
applicable Code provisions, rules and regulations promulgated thereunder, and
administrative and judicial
 
                                       27

interpretations thereof. Latham & Watkins has acted as tax counsel to the
Company in connection with the Offering and the Company's election to be taxed
as a REIT.
 
     As a condition to the closing of each offering of Offered Securities, other
than offerings of medium term notes and as otherwise specified in the applicable
Prospectus Supplement, tax counsel to the Company will render an opinion to the
underwriters of such offering to the effect that, commencing with the Company's
taxable year which began January 1, 1992, the Company has been organized in
conformity with the requirements for qualification as a REIT, and its proposed
method of operation will enable it to continue to meet the requirements for
qualification and taxation as a REIT under the Code. It must be emphasized that
this opinion will be based on various assumptions and will be conditioned upon
certain representations to be made by the Company as to factual matters and that
such tax counsel to the Company undertakes no obligation hereby to update any
such opinion subsequent to its date. In addition, this opinion will be based

upon the factual representations of the Company as set forth in this Prospectus
and assumes that the actions described in this Prospectus are completed in a
timely fashion. Moreover, such qualification and taxation as a REIT depends upon
the Company's ability to meet, through actual annual operating results,
distribution levels and diversity of stock ownership, the various qualification
tests imposed under the Code discussed below, the results of which have not been
and will not be reviewed by such tax counsel to the Company. Accordingly, no
assurance can be given that the actual results of the Company's operation of any
particular taxable year will satisfy such requirements. See'--Failure to
Qualify.'
 
     If the Company qualifies for taxation as a REIT, it generally will not be
subject to federal corporate income taxes on its net income that is currently
distributed to stockholders. This treatment substantially eliminates the 'double
taxation' (at the corporate and stockholder levels) that generally results from
investment in a regular corporation. However, the Company will be subject to
federal income tax as follows: First, the Company will be taxed at regular
corporate rates on any undistributed real estate investment trust taxable
income, including undistributed net capital gains. Second, under certain
circumstances, the Company may be subject to the 'alternative minimum tax' on
its items of tax preference. Third, if the Company has (i) net income from the
sale or other disposition of 'foreclosure property' which is held primarily for
sale to customers in the ordinary course of business or (ii) other
non-qualifying income from foreclosure property, it will be subject to tax at
the highest corporate rate on such income. Fourth, if the Company has net income
from prohibited transactions (which are, in general, certain sales or other
dispositions of property held primarily for sale to customers in the ordinary
course of business other than foreclosure property), such income will be subject
to a 100% tax. Fifth, if the Company should fail to satisfy the 75% gross income
test or the 95% gross income test (as discussed below), but has nonetheless
maintained its qualification as a real estate investment trust because certain
other requirements have been met, it will be subject to a 100% tax on an amount
equal to (a) the gross income attributable to the greater of the amount by which
the Company fails the 75% or 95% test, multiplied by (b) a fraction intended to
reflect the Company's profitability. Sixth, if the Company should fail to
distribute during each calendar year at least the sum of (i) 85% of its real
estate investment trust ordinary income for such year, (ii) 95% of its real
estate investment trust capital gain net income for such year, and (iii) any
undistributed taxable income from prior periods, the Company would be subject to
a 4% excise tax on the excess of such required distribution over the amounts
actually distributed. Seventh, if during the 10-year period (the 'Recognition
Period') beginning on the first day of the first taxable year for which the
Company qualified as a REIT, the Company recognizes gain on the disposition of
any asset held by the Company as of the beginning of such Recognition Period,
then, to the extent of the excess of (a) the fair market value of such asset as
of the beginning of such Recognition Period over (b) the Company's adjusted
basis in such asset as of the beginning of such Recognition Period (the
'Built-in Gain'), such gain will be subject to tax at the highest regular
corporate rate pursuant to Internal Revenue Service ('IRS') regulations that
have not yet been promulgated. Eighth, if the Company acquires any asset from a
C Corporation (i.e., generally a corporation subject to full corporate-level
tax) in certain transactions in which the basis of the asset in the hands of the
Company is determined by reference to the basis of the asset (or any other
property) in the hands of the C corporation, and the Company recognizes gain on

the disposition of such asset during the Recognition Period beginning on the
date on which such asset was acquired by the Company, then, to the extent of the
Built-in Gain, such gain will be subject to tax at the highest regular corporate
rate pursuant to IRS regulations that have not yet been promulgated. The results
described above with respect to the recognition of Built-In Gain assume that the
Company will make an election pursuant to IRS Notice 88-19.
 
                                       28

     Requirements for Qualification. The Code defines a REIT as a corporation,
trust or association (1) which is managed by one or more trustees or directors,
(2) the beneficial ownership of which is evidenced by transferable shares, or by
transferable certificates of beneficial interest, (3) which would be taxable as
a domestic corporation, but for Sections 856 through 859 of the Code, (4) which
is neither a financial institution nor an insurance company subject to certain
provisions of the Code, (5) the beneficial ownership of which is held by 100 or
more persons, (6) during the last half of each taxable year, not more than 50%
in value of the outstanding stock of which is owned, directly or constructively,
by five or fewer individuals (as defined in the Code to include certain
entities) and (7) which meets certain other tests, described below, regarding
the nature of its income and assets. The Code provides that conditions (1) to
(4) must be met during the entire taxable year and that condition (5) must be
met during at least 335 days of a taxable year of 12 months, or during a
proportionate part of a taxable year of less than 12 months. Conditions (5) and
(6) will not apply until after the first taxable year for which an election is
made to be taxed as a real estate investment trust.
 
     The Company has satisfied condition (5) and believes that it has issued
sufficient shares to allow it to satisfy condition (6). In addition, the
Company's charter provides (and the Articles Supplementary for any series of
Preferred Stock will provide) for restrictions regarding ownership and transfer
of the Company's capital stock, which restrictions are intended to assist the
Company in continuing to satisfy the share ownership requirements described in
(5) and (6) above. The ownership and transfer restrictions pertaining generally
to the Common Stock and the Preferred Stock are described in 'Description of
Common Stock--Restrictions on Ownership and Transfer' and 'Description of
Preferred Stock--Restrictions on Ownership and Transfer' or, to the extent such
restrictions differ from those described in this Prospectus, such restrictions
will be described in the applicable Prospectus Supplement. There can be no
assurance, however, that such transfer restrictions will in all cases prevent a
violation of the stock ownership provisions described in (5) and (6) above.
 
     The Company owns and operates a number of properties through subsidiaries.
Code Section 856(i) provides that a corporation which is a 'qualified REIT
subsidiary' shall not be treated as a separate corporation, and all assets,
liabilities, and items of income, deduction, and credit of a 'qualified REIT
subsidiary' shall be treated as assets, liabilities and such items (as the case
may be) of the REIT. Thus, in applying the requirements described herein, the
Company's 'qualified REIT subsidiaries' will be ignored, and all assets,
liabilities and items of income, deduction, and credit of such subsidiaries will
be treated as assets, liabilities and items of the Company. The Company has
received a ruling from the IRS to the effect that all of the subsidiaries that
were held by the Company prior to January 1, 1992, the effective date of its
election to be taxed as a REIT, will be 'qualified REIT subsidiaries' upon such

effective date of the Company's REIT election. Moreover, with respect to each
subsidiary of the Company formed subsequent to January 1, 1992, the Company has
owned 100% of the stock of such subsidiary at all times during the period such
subsidiary has been in existence. Therefore, all of the Company's subsidiaries
are 'qualified REIT subsidiaries' within the meaning of the Code. See
'--Recently Enacted Legislation.'
 
     In the case of a REIT that is a partner in a partnership, Treasury
Regulations provide that the REIT will be deemed to own its proportionate share
of the assets of the partnership and will be deemed to be entitled to the income
of the partnership attributable to such share. In addition, the character of the
assets and gross income of the partnership will retain the same character in the
hands of the real estate investment trust for purposes of Section 856 of the
Code, including satisfying the gross income tests and the asset tests. Thus, the
Company's proportionate share of the assets, liabilities and items of income of
the partnerships in which the Company is a partner will be treated as assets,
liabilities and items of income of the Company for purposes of applying the
requirements described herein.
 
     Income Tests. In order to maintain qualification as a REIT, the Company
annually must satisfy three gross income requirements. First, at least 75% of
the Company's gross income (excluding gross income from prohibited transactions)
for each taxable year must be derived directly or indirectly from investments
relating to real property or mortgages on real property (including 'rents from
real property' and, in certain circumstances, interest) or from certain types of
temporary investments. Second, at least 95% of the Company's gross income
(excluding gross income from prohibited transactions) for each taxable year must
be derived from such real property investments, dividends, interest and gain
from the sale or disposition of stock or securities (or from any combination of
the foregoing). Third, short-term gain from the sale or other disposition of
stock or securities,
 
                                       29

gain from prohibited transactions and gain on the sale or other disposition of
real property held for less than four years (apart from involuntary conversions
and sales of foreclosure property) must represent less than 30% of the Company's
gross income (including gross income from prohibited transactions) for each
taxable year. This 30% gross income test has been repealed for tax years
beginning on or after January 1, 1998. See '--Recently Enacted Legislation.'
 
     Rents received by the Company will qualify as 'rents from real property' in
satisfying the gross income requirements for a real estate investment trust
described above only if several conditions are met. First, the amount of rent
must not be based in whole or in part on the income or profits of any person.
However, an amount received or accrued generally will not be excluded from the
term 'rents from real property' solely by reason of being based on a fixed
percentage or percentages of receipts or sales. Second, the Code provides that
rents received from a tenant will not qualify as 'rents from real property' in
satisfying the gross income tests if the real estate investment trust, or an
owner of 10% or more of the real estate investment trust, directly or
constructively owns 10% or more of such tenant (a 'Related Party Tenant').
Third, if rent attributable to personal property leased in connection with a
lease of real property is greater than 15% of the total rent received under the

lease, then the portion of rent attributable to such personal property will not
qualify as 'rents from real property.' Finally, for rents received to qualify as
'rents from real property,' the real estate investment trust generally must not
operate or manage the property or furnish or render services to the tenants of
such property, other than through an independent contractor from whom the real
estate investment trust derives no revenue; provided, however, the Company may
directly perform certain services that are 'usually or customarily rendered' in
connection with the rental of space for occupancy only and are not otherwise
considered 'rendered to the occupant' of the property. The Company has not
charged and will not charge rent for any property that is based in whole or in
part on the income or profits of any person (except by reason of being based on
a percentage of receipts or sales, as described above), the Company has not and
will not rent any property to a Related Party Tenant, and the Company has not
and will not derive rental income attributable to personal property (other than
personal property leased in connection with the lease of real property, the
amount of which is less than 15% of the total rent received under the lease).
The Company directly performs services under certain of its leases. The Company
has received a ruling from the IRS providing that the performance of the types
of services provided by the Company will not cause the rents received with
respect to such leases to fail to qualify as 'rents from real property.' See
'--Recently Enacted Legislation' for modifications to certain of the rules
described in this paragraph.
 
     The term 'interest' generally does not include any amount received or
accrued (directly or indirectly) if the determination of such amount depends in
whole or in part on the income or profits of any person. However, an amount
received or accrued generally will not be excluded from the term 'interest'
solely by reason of being based on a fixed percentage or percentages of receipts
or sales.
 
     If the Company fails to satisfy one or both of the 75% or 95% gross income
tests for any taxable year, it may nevertheless qualify as a real estate
investment trust for such year if it is entitled to relief under certain
provisions of the Code. These relief provisions will generally be available if
the Company's failure to meet such tests was due to reasonable cause and not due
to willful neglect, the Company attaches a schedule of the sources of its income
to its federal income tax return, and any incorrect information on the schedule
was not due to fraud with intent to evade tax. It is not possible, however, to
state whether in all circumstances the Company would be entitled to the benefit
of these relief provisions. As discussed above under '--General,' even if these
relief provisions apply, a tax would be imposed with respect to the excess net
income.
 
     Asset Tests. The Company, at the close of each quarter of its taxable year,
must also satisfy three tests relating to the nature of its assets. First, at
least 75% of the value of the Company's total assets must be represented by real
estate assets (including (i) assets held by the Company's qualified REIT
subsidiaries and the Company's allocable share of real estate assets held by
partnerships in which the Company owns an interest and (ii) stock or debt
instruments held for not more than one year purchased with the proceeds of a
stock offering or long-term (at least five years) debt offering of the Company),
cash, cash items and government securities. Second, not more than 25% of the
Company's total assets may be represented by securities other than those in the
75% asset class. Third, of the investments included in the 25% asset class, the

value of any one issuer's securities
 
                                       30

owned by the Company may not exceed 5% of the value of the Company's total
assets and the Company may not own more than 10% of any one issuer's outstanding
voting securities.
 
     The Company currently has numerous direct and indirect wholly-owned
subsidiaries. As set forth above, the ownership of more than 10% of the voting
securities of any one issuer by a REIT is prohibited by the asset tests.
However, if the Company's subsidiaries are 'qualified REIT subsidiaries' as
defined in the Code, such subsidiaries will not be treated as separate
corporations for federal income tax purposes. Thus, the Company's ownership of
stock of a 'qualified REIT subsidiary' will not cause the Company to fail the
asset tests.
 
     Annual Distribution Requirements. The Company, in order to qualify as a
REIT, is required to distribute dividends (other than capital gain dividends) to
its stockholders in an amount at least equal to (A) the sum of (i) 95% of the
Company's 'REIT taxable income' (computed without regard to the dividends paid
deduction and the Company's net capital gain) and (ii) 95% of the net income
(after tax), if any, from foreclosure property, minus (B) the sum of certain
items of non-cash income. In addition, if the Company disposes of any asset
during its Recognition Period, the Company will be required, pursuant to IRS
regulations which have not yet been promulgated, to distribute at least 95% of
the Built-in Gain (after tax), if any, recognized on the disposition of such
asset. Such distributions must be paid in the taxable year to which they relate,
or in the following taxable year if declared before the Company timely files its
tax return for such year and if paid on or before the first regular dividend
payment after such declaration. To the extent that the Company does not
distribute all of its net capital gain or distributes at least 95%, but less
than 100%, of its 'real estate investment trust taxable income,' as adjusted, it
will be subject to tax thereon at regular ordinary and capital gain corporate
tax rates. Furthermore, if the Company should fail to distribute during each
calendar year at least the sum of (i) 85% of its real estate investment trust
ordinary income for such year, (ii) 95% of its real estate investment trust
capital gain income for such year, and (iii) any undistributed taxable income
from prior periods, the Company would be subject to a 4% excise tax on the
excess of such required distribution over the amounts actually distributed. The
Company intends to make timely distributions sufficient to satisfy this annual
distribution requirement.
 
     It is possible that the Company, from time to time, may not have sufficient
cash or other liquid assets to meet the 95% distribution requirement due to
timing differences between (i) the actual receipt of income and actual payment
of deductible expenses and (ii) the inclusion of such income and deduction of
such expenses in arriving at taxable income of the Company. In the event that
such timing differences occur, in order to meet the 95% distribution
requirement, the Company may find it necessary to arrange for short-term, or
possibly long-term, borrowings or to pay dividends in the form of taxable stock
dividends.
 
     Under certain circumstances, the Company may be able to rectify a failure

to meet the distribution requirement for a year by paying 'deficiency dividends'
to stockholders in a later year, which may be included in the Company's
deduction for dividends paid for the earlier year. Thus, the Company may be able
to avoid being taxed on amounts distributed as deficiency dividends; however,
the Company will be required to pay interest based upon the amount of any
deduction taken for deficiency dividends.
 
FAILURE TO QUALIFY
 
     If the Company fails to qualify for taxation as a REIT in any taxable year,
and the relief provisions do not apply, the Company will be subject to tax
(including any applicable alternative minimum tax) on its taxable income at
regular corporate rates. Such a failure to qualify for taxation as a REIT could
have an adverse effect on the market value and marketability of the Offered
Securities. Distributions to stockholders in any year in which the Company fails
to qualify will not be deductible by the Company nor will they be required to be
made. In such event, to the extent of current and accumulated earnings and
profits, all distributions to stockholders will be taxable as ordinary income
and, subject to certain limitations of the Code, corporate distributees may be
eligible for the dividends received deduction. Unless entitled to relief under
specific statutory provisions, the Company will also be disqualified from
taxation as a REIT for the four taxable years following the year during which
qualification was lost. It is not possible to state whether in all circumstances
the Company would be entitled to such statutory relief.
 
                                       31

RECENTLY ENACTED LEGISLATION
 
     On August 5, 1997, President Clinton signed into law the Taxpayer Relief
Act of 1997 (H.R. 2014), which will have the effect of modifying certain
REIT-related Code provisions for tax years of the Company beginning on or after
January 1, 1998. The following list sets forth the significant changes contained
in this legislation: (i) the rule disqualifying a REIT for any year in which it
fails to comply with certain regulations requiring the REIT to monitor its stock
ownership is replaced with an intermediate financial penalty; (ii) the rule
disqualifying a REIT that it is 'closely held' (i.e., during the last half of
each taxable year, 50% or more in value of a REIT's outstanding stock is owned
by five or fewer individuals) does not apply if during such year the REIT
complied with certain regulations which require the REIT to monitor its stock
ownership, and the REIT did not know or have reason to know that it was closely
held; (iii) a REIT is permitted to render a de minimis amount of impermissible
services to tenants in connection with the management of property and still
treat amounts received with respect to such property (other than certain amounts
relating to such services) as qualified rent; (iv) the rules regarding
attribution to partnerships for purposes of defining qualified rent and
independent contractors are modified so that attribution occurs only when a
partner owns a 25% or greater interest in the partnership; (v) the 30% gross
income test is repealed; (vi) any corporation wholly-owned by a REIT is
permitted to be treated as a qualified REIT subsidiary regardless of whether
such subsidiary has always been owned by the REIT; (vii) the class of excess
noncash items for purposes of the REIT distribution requirements is expanded;
(viii) property that is involuntarily converted is excluded from the prohibited
transaction rules; (ix) the rules relating to shared appreciation mortgages are

modified; (x) income from all hedges that reduce the interest rate risk of REIT
liabilities, including rate swap or cap agreements, options, futures and forward
rate contracts, is included in qualifying income for purposes of the 95% income
test; (xi) a REIT is able to elect to retain and pay income tax on its net
long-term capital gains, and if such election is made, the REIT's shareholders
include in income their proportionate share of the undistributed long-term
capital gain and are deemed to have paid their proportionate share of tax paid
by the REIT; (xii) the rules relating to the grace period for foreclosure
property are modified and (xiii) certain other Code provisions relating to REITS
are amended.
 
OTHER TAX MATTERS
 
     Certain of the Company's investments are through partnerships which may
involve special tax risks. Such risks include possible challenge by the IRS of
(a) allocations of income and expense items, which could affect the computation
of income of the Company and (b) the status of the partnerships as partnerships
(as opposed to associations taxable as corporations) for income tax purposes.
Recently issued Treasury Regulations provide that a domestic partnership is
generally taxed as a partnership unless it elects to be taxed as an association
taxable as a corporation. None of the partnerships in which the Company is a
partner has made or intends to make such an election. These Treasury Regulations
are effective as of January 1, 1997. Such Regulations provide, however, that a
partnership's claimed classification will be respected for periods prior to such
date if the entity had a reasonable basis for its claimed classification, and
such partnership had not been notified in writing on or before May 8, 1996 that
the classification of such entity was under examination. If any of the
partnerships were treated as an association for a prior period, and (i) if the
Company's ownership in any such partnership exceeded 10% of the partnership's
voting interest or (ii) the value of such interest exceeded 5% of the value of
the Company's assets, the Company would cease to qualify as a REIT for such
period and possibly future periods. See '--Failure to Qualify.' Moreover, the
deemed change in classification of such a partnership from an association to a
partnership effective as of January 1, 1997 would be a taxable event. The
Company believes that each of the partnerships have been properly treated for
tax purposes as a partnership (and not as an association taxable as a
corporation). However, no assurance can be given that the IRS may not
successfully challenge the status of any of the partnerships.
 
     The Company may be subject to state or local taxation in various state or
local jurisdictions, including those in which it transacts business. The state
or local tax treatment of the Company may not conform to the federal income tax
consequences described above. Consequently, prospective investors should consult
their own tax advisors regarding the effect of state and local tax laws on an
investment in the Company.
 
                                       32

                              PLAN OF DISTRIBUTION
 
     The Company may sell the Offered Securities to one or more underwriters for
public offering and sale by them or may sell the Offered Securities to investors
directly or through agents. Any such underwriter or agent involved in the offer
and sale of the Offered Securities will be named in the applicable Prospectus

Supplement.
 
     Underwriters may offer and sell the Offered Securities at a fixed price or
prices, which may be changed, at prices related to the prevailing market prices
at the time of sale or at negotiated prices. The Company also may, from time to
time, authorize underwriters acting as the Company's agents to offer and sell
the Offered Securities upon the terms and conditions as are set forth in the
applicable Prospectus Supplement. In connection with the sale of Offered
Securities, underwriters may be deemed to have received compensation from the
Company in the form of underwriting discounts or commissions and may also
receive commissions from purchasers of Offered Securities for whom they may act
as agent. Underwriters may sell Offered Securities to or through dealers, and
such dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agent.
 
     Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of Offered Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the applicable Prospectus Supplement. Underwriters, dealers
and agents participating in the distribution of the Offered Securities may be
deemed to be underwriters, and any discounts and commissions received by them
and any profit realized by them on resale of the Offered Securities may be
deemed to be underwriting discounts and commissions, under the Securities Act.
Underwriters, dealers and agents may be entitled, under agreements entered into
with the Company, to indemnification against and contribution toward certain
civil liabilities, including liabilities under the Securities Act.
 
     If so indicated in the applicable Prospectus Supplement, the Company will
authorize dealers acting as the Company's agents to solicit offers by certain
institutions to purchase Offered Securities from the Company at the public
offering price set forth in such Prospectus Supplement pursuant to Delayed
Delivery Contracts ('Contracts') providing for payment and delivery on the date
or dates stated in such Prospectus Supplement.
 
     Each Contract will be for an amount not less than, and the aggregate
principal amount of Offered Securities sold pursuant to Contracts shall be not
less nor more than, the respective amounts stated in the applicable Prospectus
Supplement. Institutions with whom Contracts, when authorized, may be made
include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions, and other
institutions but will in all cases be subject to the approval of the Company.
Contracts will not be subject to any conditions except (i) the purchase by an
institution of the Offered Securities covered by its Contracts shall not at the
time of delivery be prohibited under the laws of any jurisdiction in the United
States to which such institution is subject, and (ii) if the Offered Securities
are being sold to underwriters, the Company shall have sold to such underwriters
the total principal amount of the Offered Securities less the principal amount
thereof covered by Contracts.
 
     Certain of the underwriters and their affiliates may be customers of,
engage in transactions with and perform services for the Company and its
subsidiaries in the ordinary course of business.
 

                                    EXPERTS
 
     The consolidated balance sheets as of December 31, 1996 and 1995 and the
consolidated statements of income, stockholders' equity and cash flows for each
of the three years in the period ended December 31, 1996 and the related
financial statement schedules incorporated by reference in this Prospectus have
been incorporated herein in reliance on the report of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
 
                                       33

                                 LEGAL MATTERS
 
     The validity of the Offered Securities will be passed upon for the Company
by Latham & Watkins, New York, New York and for any underwriters, dealers or
agents by Brown & Wood LLP, New York, New York. Latham & Watkins and Brown &
Wood LLP will rely on Ballard Spahr Andrews & Ingersoll, Baltimore, Maryland, as
to certain matters of Maryland law. Certain members of Latham & Watkins and
their families own beneficial interests in less than 1% of the common stock of
the Company.
 
                                       34


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  NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE AGENTS. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCE, CREATE ANY IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS SUPPLEMENT OR IN
THE PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
 
                            ------------------------
 
                               TABLE OF CONTENTS


                                                                       PAGE
                                                                       ----
                                                                    
                             PROSPECTUS SUPPLEMENT
 
     Certain Risk Factors............................................   S-2
     Description of Notes............................................   S-3
     Special Provisions Relating to Foreign Currency Notes...........  S-18
     Certain United States Federal Income Tax Considerations.........  S-21
     Notes Denominated, or in Respect of Which Interest is Payable,
       in a Foreign Currency.........................................  S-26
     Plan of Distribution............................................  S-28
 

 
                                   PROSPECTUS
                                                                    
     Available Information...........................................     2
     Incorporation of Certain Documents by Reference.................     2
     The Company.....................................................     3
     Use of Proceeds.................................................     3
     Description of Debt Securities..................................     3
     Description of Common Stock.....................................    15
     Description of Common Stock Warrants............................    16
     Description of Preferred Stock..................................    17
     Description of Depositary Shares................................    23
     Ratios of Earnings to Fixed Charges.............................    27
     Certain Federal Income Tax Considerations to the Company of its
       REIT Election.................................................    27
     Plan of Distribution............................................    33

     Experts.........................................................    33
     Legal Matters...................................................    34


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                                  $150,000,000

                                    [LOGO]
 
                           SERIES A MEDIUM TERM NOTES
                   DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
 
                            ------------------------
                             PROSPECTUS SUPPLEMENT
                            ------------------------

                              MERRILL LYNCH & CO.
                             CHASE SECURITIES INC.
                      FIRST CHICAGO CAPITAL MARKETS, INC.
                              GOLDMAN, SACHS & CO.
                               J.P. MORGAN & CO.
                           MORGAN STANLEY DEAN WITTER
 
                                NOVEMBER 4, 1997
 
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