PROSPECTUS SUPPLEMENT
(To Prospectus Dated April 29, 1998)
U.S. $500,000,000
PITNEY BOWES INC.

Medium-Term Notes, Series C
Due Nine Months or more from Date of Issue

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

Pitney Bowes Inc., a Delaware corporation (the "Company"), may offer from time
to time its Medium-Term Notes, Series C (the "Notes") in an aggregate principal
amount not to exceed $500,000,000 (and, if any Notes are to be Original Issue
Discount Notes, Foreign Currency Notes or Indexed Notes (as each such term is
defined under "Description of the Notes"), such principal amount as shall result
in an initial aggregate offering price equivalent to no more than $500,000,000),
subject to reduction as a result of the sale of other Debt Securities. See
"Description of the Notes" and "Supplemental Plan of Distribution of the Notes".

Each Note will mature on a date nine months or more from its date of original
issuance ("Issue Date"), as selected by the initial purchaser and agreed to by
the Company which Stated Maturity may be subject to extension at the option of
the Company or the Holder thereof. See "Description of the Notes -- Extension of
Maturity" and "-- Renewable Notes".

Unless otherwise indicated in the applicable Pricing Supplement to this
Prospectus Supplement, interest on Fixed Rate Notes will be payable on each
February 1 and August 1 and at Maturity. Interest on Floating Rate Notes will be
payable on the dates specified therein and in the applicable Pricing Supplement.
Notes may be issued as Original Issue Discount Notes, including Zero Coupon
Notes, which will not bear interest prior to Maturity. Notes may be issued as
Amortizing Notes, with payments of principal and interest made in equal
installments over the life of the Note. (Continuing on next page)

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 STATE ANY SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT
HERETO OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

DISTRIBUTORS'
PRICE TO              COMMISSIONS OR                       PROCEEDS
PUBLIC(1)              DISCOUNTS (2)                   TO COMPANY(2)(3)
--------------        ---------------------       --------------------------------

Per Note..................        100%                  .125%-.750%                     99.875%-99.250%
Total(4)..................    $500,000,000          $625,000-$3,750,000            $499,375,000-$496,250,000

(1)  Unless otherwise indicated in the applicable Pricing Supplement,  each Note
will be issued at 100% of its  principal  amount.  If so  indicated  in the
applicable  Pricing  Supplement,  Notes may be resold by the  Distributors,
acting as principals,  at market prices  prevailing at the time of sale, at
prices related to such prevailing market prices, at negotiated prices or at
a fixed public offering price.
(2)  The Company  will pay a commission  (or grant a discount) to Credit  Suisse
First Boston  Corporation,  Chase  Securities Inc.,  Goldman,  Sachs & Co.,
Merrill Lynch & Co., Merrill Lynch,  Pierce,  Fenner & Smith  Incorporated,
J.P. Morgan  Securities  Inc.,  NationsBanc  Montgomery  Securities LLC and
Salomon  Brothers  Inc  (the  "Distributors")  of  .125%  to  .750%  of the
principal  amount of any  Note,  depending  on its  Stated  Maturity,  sold
through any such Distributor,  acting as agent (or sold to such Distributor
as  principal  in  circumstances  in  which no other  discount  is  agreed;
provided,  however,  that  commissions (or discounts) with respect to Notes
with a Stated  Maturity  more than thirty  years from date of issue will be
negotiated at the time of sale). See "Supplemental  Plan of Distribution of
the Notes".
(3)  Before  deducting other expenses  payable by the Company  estimated at U.S.
$175,000,  including  expenses of the  Distributors to be reimbursed by the
Company.
(4)  Or the equivalent thereof in other currencies or currency units.

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

The Notes are being  offered on a continuing  basis by the Company  through
the  Distributors,  each of which has agreed to use  reasonable  best efforts to
solicit  offers to purchase  the Notes.  The Company  also may sell Notes to any
Distributor  on its own behalf at  negotiated  discounts for resale to investors
and other  purchasers at varying prices  related to prevailing  market prices at
the time of resale or, if so agreed,  at a fixed public offering  price.  Unless
otherwise  specified in the applicable  Pricing  Supplement,  any Note sold to a
Distributor as principal will be purchased by such  Distributor at a price equal
to 100% of the principal  amount thereof less a percentage equal to or less than
the commission applicable to an agency sale of a Note having an identical Stated
Maturity and may be resold by such  Distributor.  The Company reserves the right
to sell Notes directly on its own behalf. The Company also reserves the right to
withdraw,  cancel or modify the offer made hereby without notice. The Company or
any Distributor may reject any offer to purchase Notes, in whole or in part. The
Notes will not be listed on any securities exchange,  unless otherwise indicated
in the  applicable  Pricing  Supplement,  and there can be no assurance that the
Notes offered by this Prospectus Supplement will be sold or that there will be a
secondary  market for the Notes. See  "Supplemental  Plan of Distribution of the
Notes".

CREDIT SUISSE FIRST BOSTON
CHASE SECURITIES INC.                                       GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.                                            J.P. MORGAN & CO.
NATIONSBANC MONTGOMERY SECURITIES LLC                       SALOMON BROTHERS INC

The date of this Prospectus Supplement is September 17, 1998.

(Continued from previous page)

If so indicated in the  applicable  Pricing  Supplement to this  Prospectus
Supplement,  the Notes will be subject to optional  redemption  or will obligate
the  Company  to repay at the  option of the Holder  thereof.  Unless  otherwise
specified in an applicable Pricing Supplement,  the Notes will not be subject to
any sinking fund or analogous provisions.

The interest rate or interest rate  formula,  if any,  currency or currency
unit, issue price,  Stated Maturity,  any sinking fund,  redemption or repayment
provisions,  and other terms for each Note will be established by the Company at
the date of issuance of such Note and will be indicated in a Pricing Supplement.

Unless otherwise specified in the applicable Pricing Supplement, Notes will
be represented by a permanent  Global Security or Securities,  registered in the
name of The Depository  Trust Company,  as Depositary (the  "Depositary"),  or a
nominee  of the  Depositary  (a  "Book-Entry  Note").  Beneficial  interests  in
Book-Entry  Notes will only be evidenced by, and transfers  thereof will only be
effected  through,  records  maintained by the Depositary and its  participants.
Except as described under "Description of the Notes -- Book-Entry Notes", owners
of  beneficial  interests in a  Book-Entry  Note will not be entitled to receive
physical  delivery of Notes in definitive  form and will not be  considered  the
Holders  thereof.   Unless  otherwise   indicated  in  the  applicable   Pricing
Supplement,  the Notes will be issued in fully  registered form in denominations
of $1,000 and integral  multiples of $1,000 or, in the case of Foreign  Currency
Notes, in such minimum  denominations not less than the equivalent of $1,000 and
such other denomination or denominations in excess thereof as shall be set forth
in the applicable Pricing  Supplement.  See "Description of the Notes -- Foreign
Currency Notes".

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

CERTAIN PERSONS  PARTICIPATING  IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT  STABILIZE,  MAINTAIN,  OR  OTHERWISE  AFFECT  THE PRICE OF THE  SECURITIES
OFFERED HEREBY, INCLUDING OVER-ALLOTMENT,  STABILIZING  TRANSACTIONS,  SYNDICATE
SHORT  COVERING  TRANSACTIONS  AND  PENALTY  BIDS.  FOR A  DESCRIPTION  OF THESE
ACTIVITIES, SEE "SUPPLEMENTAL PLAN OF DISTRIBUTION OF THE NOTES".

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

DESCRIPTION OF THE NOTES

THE  FOLLOWING  DESCRIPTION  OF THE  PARTICULAR  TERMS OF THE NOTES OFFERED
HEREBY  SUPPLEMENTS  THE DESCRIPTION OF THE GENERAL TERMS AND CONDITIONS OF DEBT
SECURITIES SET FORTH UNDER THE HEADING  "DESCRIPTION OF DEBT  SECURITIES" IN THE
PROSPECTUS,  TO WHICH  DESCRIPTION  REFERENCE  IS  HEREBY  MADE.  THE  TERMS AND
CONDITIONS SET FORTH HEREIN WILL APPLY TO EACH NOTE UNLESS  OTHERWISE  SPECIFIED
IN THE APPLICABLE PRICING  SUPPLEMENT.  CAPITALIZED TERMS NOT DEFINED UNDER THIS
HEADING OR IN THE GLOSSARY  CONTAINED  IN THIS  PROSPECTUS  SUPPLEMENT  HAVE THE
MEANINGS ASSIGNED TO THEM IN THE PROSPECTUS OR THE INDENTURE.

GENERAL

The Notes offered hereby will be issued under the Indenture  referred to in
the accompanying  Prospectus between the Company and SunTrust Bank,  Atlanta, as
Trustee (the  "Trustee").  The Notes  constitute a single series for purposes of
the  Indenture,   limited  to  an  aggregate  principal  amount  not  to  exceed
$500,000,000 (or, if any Notes are to be Original Issue Discount Notes or are to
be  denominated in one or more foreign  currencies or currency  units  ("Foreign
Currency  Notes") or with  amounts  payable in  respect of  principal  of or any
premium or interest on the Notes to be  determined  by  reference  to the value,
rate or price of one or more specified indices ("Indexed Notes"), such principal
amount as shall result in an aggregate  initial  offering price equivalent to no
more than $500,000,000).  The aggregate principal amount of Notes offered hereby
may be reduced by an amount equal to the aggregate initial offering price of any
other Debt Securities (as defined in the  accompanying  Prospectus)  sold by the
Company. See "Supplemental Plan of Distribution of the Notes". For a description
of the rights attaching to different series of Securities  (including the Notes)
under the Indenture, see "Description of Debt Securities" in the Prospectus.

The Stated  Maturity  of each Note will be any day nine months or more from
its Issue  Date,  as  selected  by the  initial  purchaser  and agreed to by the
Company.  The applicable Pricing Supplement will also indicate whether a Note is
subject to an optional  extension  beyond its Stated Maturity as described under
"--Extension of Maturity" and "--Renewable Notes" below.

The Notes  will be  issuable  only in fully  registered  form  and,  unless
otherwise indicated in the applicable Pricing Supplement,  only in denominations
of $1,000 and integral  multiples of $1,000 or, in the case of Foreign  Currency
Notes, in such minimum  denomination  not less than the equivalent of $1,000 and
such other denomination or denominations in excess thereof as shall be set forth
in the applicable Pricing Supplement. See "--Foreign Currency Notes" below.

Unless specified otherwise in the applicable Pricing Supplement, Notes will
initially be represented by a Book-Entry Note. See "--Book-Entry Notes" below.

Unless otherwise indicated in the applicable Pricing Supplement,  the Notes
will be denominated in U.S. dollars and payments of principal of and any premium
and interest on the Notes will be made in U.S.  dollars in the manner  indicated
in the  accompanying  Prospectus and this Prospectus  Supplement.  If any of the
Notes are to be  denominated  in one or more  currencies or currency units other
than U.S. dollars,  additional information pertaining to the terms of such Notes
and other  matters  relevant to the Holders  thereof  will be  described  in the
applicable  Pricing  Supplement.  See  "--Foreign  Currency  Notes"  below,  and
"Foreign Currency Risks" and "Special Considerations Relating to Indexed Notes".

In  addition,  Notes  may  be  issued  as  Original  Issue  Discount  Notes
(including  Zero Coupon  Notes),  as Indexed Notes or as Amortizing  Notes.  See
"--Original Issue Discount Notes",  "--Indexed  Notes" and "--Amortizing  Notes"
below.

Payments of principal of, and any premium and interest on, Book-Entry Notes
(except Zero Coupon Notes) will be made to the  Depositary,  or its nominee,  as
the Holder thereof,  in accordance with  arrangements then in effect between the
Trustee and the Depositary.  Unless otherwise indicated in an applicable Pricing
Supplement,  payments of principal of, and any premium and interest on, Notes in
individually certificated form ("Certificated Notes") denominated and payable in
U.S.  dollars  will be made in  immediately  available  funds at the  Designated
Office (as defined in  "Glossary")  (of the Trustee in the Borough of Manhattan,
The City of New York, provided that the Note is presented to the Paying Agent in
time for the Paying Agent to make such payments in such funds in accordance with
its  normal  procedures  except  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 such  address  shall  appear  in the  Security  Register  or by wire
transfer to an account  maintained  by such  Holder  with a bank  located in the
United  States,  provided  such  Holder  shall

S-1

have  provided in writing to the Trustee,  on or prior to the  relevant  Regular
Record Date,  appropriate payment  instructions.  Notwithstanding the foregoing,
the  Holder  of  $10,000,000  or more in  aggregate  principal  amount  of Notes
denominated  and payable in U.S.  dollars and having the same  Interest  Payment
Date shall be entitled to receive such payments by wire transfer of  immediately
available  funds to an account  maintained by such Holder with a bank located in
the United  States,  provided  that the Holder shall have provided in writing to
the  Trustee,  on or prior to the  relevant  Regular  Record  Date,  appropriate
payment  instructions.  With respect to payments on Foreign  Currency Notes, see
"--Foreign Currency Notes" below.

Certificated  Notes  may be  presented  for  registration  of  transfer  or
exchange at the  Designated  Office of the Trustee in the Borough of  Manhattan,
The City of New York.  No service  charge will be made for any  registration  of
transfer or exchange of Certificated  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.  With respect to  registration of transfer and
exchange of Book-Entry Notes, see "--Book-Entry Notes" below and "Description of
Debt Securities--Book-Entry System" in the accompanying Prospectus.

Interest rates, interest rate bases and various other variable terms of the
Notes  described  herein 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.

Notices to Holders of Notes will be given by mail to the  addresses of such
Holders as they may appear in the Security Register.

INTEREST

Each  interest-bearing Note will bear interest from and including its Issue
Date or from and including the most recent Interest Payment Date with respect to
which  interest  on such  Note (or any  predecessor  Note) has been paid or duly
provided for to but  excluding the relevant  Interest  Payment Date at the fixed
rate per annum,  or at the rate per annum  determined  pursuant to the  interest
rate formula,  stated therein and in the applicable Pricing Supplement until the
principal thereof is paid or made available for payment.  Interest payments,  if
any,  will be in the amount of  interest  accrued  from and  including  the next
preceding  Interest  Payment Date in respect of which  interest has been paid or
duly provided for (or from and  including the date of issue,  if no interest has
been paid with respect to such Note) to, but excluding,  the applicable Interest
Payment Date or Maturity, as the case may be.

The Notes  (including  any Zero Coupon  Note) may be issued  with  original
issue discount as defined for United States federal income tax purposes. Holders
of Notes issued with original issue discount may be required to include  amounts
of accrued  interest in gross income for federal  income tax purposes in advance
of the  receipt of the cash to which such  income is  attributable.  See "United
States Federal Taxation--U.S. Holders--Original Issue Discount".

Interest,  if any, will be payable in arrears on each Interest Payment Date
and at Maturity. Interest will be payable generally to the Person (which, in the
case of a Book-Entry Note, shall be the Depositary) in whose name a Note (or any
predecessor  Note) is registered at the close of business on the Regular  Record
Date next preceding each Interest Payment Date; PROVIDED, HOWEVER, that interest
payable at  Maturity  will be payable  to the  Person  (which,  in the case of a
Book-Entry  Note,  shall be the  Depositary) to whom principal shall be payable.
Unless  otherwise  indicated in the  applicable  Pricing  Supplement,  the first
payment of interest on any Note originally  issued between a Regular Record Date
and an  Interest  Payment  Date  will be made on the  next  succeeding  Interest
Payment  Date  following  the Issue Date of such Note to the Holder of record on
the Regular Record Date with respect to such succeeding  Interest  Payment Date.
With  respect to payments of interest on  Book-Entry  Notes,  see  "--Book-Entry
Notes" below.

Each  interest-bearing  Note will bear  interest  at either a fixed rate (a
"Fixed Rate Note") or a variable  rate  determined  by  reference to an interest
rate  formula (a  "Floating  Rate  Note"),  which may be  adjusted  by adding or
subtracting the Spread and/or  multiplying by the Spread Multiplier as indicated
in the applicable Pricing Supplement.

FIXED RATE NOTES

The  applicable  Pricing  Supplement  relating  to a Fixed  Rate  Note will
designate  a fixed rate of  interest  per annum  payable  on such  Note.  Unless
otherwise indicated in the applicable Pricing  Supplement,  the Interest Payment
Dates with  respect to Fixed Rate Notes (other than  Amortizing  Notes) shall be
February  1 and August 1 of each year and at  Maturity  and the  Regular  Record
Dates for such  Notes  shall be the  January 15 and July 15 next  preceding  the
rel-

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evant  Interest  Payment  Dates.  Unless  otherwise  indicated 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 of a Fixed Rate Note falls on
a day that is not a Market Day, the related  payment of principal,  premium,  if
any, or interest  will be made on the next  succeeding  Market Day as if made on
the date such  payment  was due,  and no  interest  will accrue on the amount so
payable for the period from and after such Interest Payment Date or Maturity, as
the case may be.

FLOATING RATE NOTES

The  applicable  Pricing  Supplement  relating to a Floating Rate Note will
designate an interest rate basis for such Floating Rate Note.  Such basis may be
determined  by reference to one or more of the  following:  (a) the CD Rate,  in
which  case such Note will be a CD Rate  Note,  (b) the CMT Rate,  in which case
such Note will be a CMT Rate Note, (c) the Commercial  Paper Rate, in which case
such Note will be a Commercial  Paper Rate Note,  (d) the Federal Funds Rate, in
which case such Note will be a Federal Funds Rate Note, (e) LIBOR, in which case
such Note will be a LIBOR Note, (f) the Prime Rate, in which case such Note will
be a Prime Rate Note,  (g) the Treasury  Rate, in which case such Note will be a
Treasury Rate Note,  or (h) such other  interest rate basis or formula as may be
agreed to between the Company and the purchaser and set forth in the  applicable
Pricing Supplement.  In addition,  a Floating Rate Note may bear interest at the
lowest  or  highest  or  average  of two or more  interest  rate  formulae.  The
applicable  Pricing  Supplement  for a Floating  Rate Note also will specify the
Spread and/or  Spread  Multiplier,  if any, and the maximum or minimum  interest
rate  limitation,  if any,  applicable to each Note.  In addition,  such Pricing
Supplement  will  define  or  particularize  for  each  Floating  Rate  Note the
following terms, if applicable: Calculation Agent (which may be the Trustee or a
Distributor),  Calculation Date, Initial Interest Rate,  Interest Payment Dates,
Regular Record Dates, Index Maturity,  Interest Determination Dates and Interest
Reset Dates with respect to such Note. See "Glossary" for definitions of certain
of the foregoing terms.

The rate of interest  on a Floating  Rate Note in effect on any day will be
(a) if such day is an Interest  Reset Date with  respect to such  Floating  Rate
Note, the interest rate on such Floating Rate Note determined as of the Interest
Determination Date pertaining to such Interest Reset Date, or (b) if such day is
not an Interest Reset Date with respect to such Floating Rate Note, the interest
rate on such Floating Rate Note determined as of the Interest Determination Date
pertaining to the immediately preceding Interest Reset Date with respect to such
Floating Rate Note; PROVIDED, HOWEVER, that the interest rate in effect from the
Issue  Date of a  Floating  Rate  Note  (or that of a  predecessor  Note) to but
excluding the first  Interest Reset Date with respect to such Floating Rate Note
will be the  Initial  Interest  Rate  (as set  forth in the  applicable  Pricing
Supplement).  Subject to  applicable  provisions  of law and except as described
herein,  the rate of interest on a Floating Rate Note  beginning on any Interest
Reset Date with respect  thereto will be the rate of interest  determined by the
Calculation  Agent as of the  Interest  Determination  Date  pertaining  to such
Interest  Reset Date in  accordance  with the  applicable  provisions  described
below.

The Interest Reset Date for each Floating Rate Note will be daily,  weekly,
monthly,  quarterly,  semi-annually or annually,  as specified in the applicable
Pricing  Supplement.  Unless  otherwise  specified  in  the  applicable  Pricing
Supplement,  the Interest Reset Date will be, in the case of Floating Rate Notes
which reset  daily,  each Market Day; in the case of Floating  Rate Notes (other
than Treasury Rate Notes) which reset weekly, the Wednesday of each week; in the
case of  Treasury  Rate Notes  which  reset  weekly,  except as  provided in the
following  paragraph,  the Tuesday of each week;  in the case of  Floating  Rate
Notes which reset  monthly,  the third  Wednesday of each month;  in the case of
Floating Rate Notes which reset quarterly,  the third Wednesday of March,  June,
September  and  December;  in the  case  of  Floating  Rate  Notes  which  reset
semi-annually,  the third  Wednesday of two months of each year, as indicated in
the applicable Pricing Supplement;  and in the case of Floating Rate Notes which
reset  annually,  the third Wednesday of one month of each year, as indicated in
the applicable Pricing  Supplement.  If any Interest Reset Date for any Floating
Rate Note would otherwise be a day that is not a Market Day with respect to such
Note,  such  Interest  Reset Date shall be the next  succeeding  Market Day with
respect  to such  Note,  except  that if such Note is a LIBOR  Note and the next
succeeding Market Day falls in the next succeeding calendar month, such Interest
Reset Date shall be the immediately preceding Market Day.

The Interest  Determination Date pertaining to an Interest Reset Date for a
CD Rate Note (the "CD Rate Interest  Determination  Date"), a CMT Rate Note (the
"CMT Rate  Interest  Determination  Date"),  a  Commercial  Paper Rate Note (the
"Commercial Paper Interest  Determination Date"), a Federal Funds Rate Note (the
"Federal Funds Interest  Determination  Date"), or a Prime Rate Note (the "Prime
Rate Interest  Determination  Date") will be the second

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Market Day  preceding  the Interest  Reset Date with  respect to such Note.  The
Interest  Determination  Date  pertaining to an Interest  Reset Date for a LIBOR
Note  (the  "LIBOR  Interest  Determination  Date")  will be the  second  London
Business Day preceding such Interest Reset Date. The Interest Determination Date
pertaining  to an Interest  Reset Date for a Treasury  Rate Note (the  "Treasury
Interest  Determination  Date")  will be the day on  which  Treasury  bills  are
auctioned for the week in which such Interest Reset Date falls, or if no auction
is held for such week, the Monday of such week (or if Monday is a legal holiday,
the next  succeeding  Market Day) and the Interest Reset Date will be the Market
Day immediately  following such Treasury Interest  Determination  Date. Treasury
bills are usually  sold at auction on Monday of each week,  unless that day is a
legal  holiday,  in which  case the  auction is  usually  held on the  following
Tuesday,  except that such auction may be held on the  preceding  Friday.  If an
auction for such week is held on Monday or the preceding Friday,  such Monday or
preceding  Friday shall be the  Treasury  Interest  Determination  Date for such
week,  and the  Interest  Reset Date for such week shall be the  Tuesday of such
week (or, if such Tuesday is not a Market Day, the next succeeding  Market Day).
If the auction for such week is held on any day of such week other than  Monday,
then such day shall be the Treasury Interest Determination Date and the Interest
Reset Date for such week shall be the next succeeding Market Day.

A  Floating  Rate  Note may have  either  or both of the  following:  (a) a
maximum numerical interest rate limitation,  or ceiling, on the rate of interest
which may  accrue  during  any  interest  period;  and (b) a  minimum  numerical
interest rate  limitation,  or floor,  on the rate of interest  which may accrue
during any interest  period.  In addition to any maximum interest rate which may
be applicable to any Floating Rate Note, the interest rate on such Floating Rate
Note will in no event be higher than the maximum rate permitted by New York law,
as the same may be modified by United States law of general  application.  Under
present New York law the maximum rate of interest,  with certain exceptions,  is
25% per annum on a simple  interest  basis.  The limit may not apply to Notes in
which $2,500,000 or more has been invested.

Unless otherwise  indicated in the applicable Pricing Supplement and except
as provided  below,  the Interest  Payment Date will be, in the case of Floating
Rate Notes which reset  daily,  weekly or monthly,  the third  Wednesday of each
month or on the third Wednesday of March,  June,  September and December of each
year  (as  indicated  in the  applicable  Pricing  Supplement);  in the  case of
Floating Rate Notes which reset quarterly,  the third Wednesday of March,  June,
September  and December of each year;  in the case of Floating  Rate Notes which
reset  semi-annually,  the  third  Wednesday  of the two  months  of  each  year
specified in the applicable Pricing Supplement; and in the case of Floating Rate
Notes which reset  annually,  the third  Wednesday of the month specified in the
applicable  Pricing  Supplement.  If,  pursuant to the  preceding  sentence,  an
Interest  Payment  Date with  respect to any  Floating  Rate Note (other than an
Interest Payment Date at Maturity) would otherwise be a day that is not a Market
Day with  respect to such Note,  such  Interest  Payment  Date shall be the next
succeeding  Market Day with respect to such Note,  except that if such Note is a
LIBOR  Note and the next  succeeding  Market  Day  falls in the next  succeeding
calendar month,  such Interest  Payment Date shall be the immediately  preceding
Market Day. If the Maturity of a Floating Rate Note falls on a day that is not a
Market Day, the payment of principal, premium, if any, and interest will be made
on the next succeeding  Market Day, and no interest on such payment shall accrue
from and after such  Maturity.  Unless  otherwise  indicated  in the  applicable
Pricing Supplement,  the Regular Record Date with respect to Floating Rate Notes
shall be the date 15 calendar days prior to each Interest Payment Date,  whether
or not such date shall be a Market Day.

Unless  otherwise  specified  in the  applicable  Pricing  Supplement,  the
interest accrued from and including the date of issue, or from and including the
last date to which interest has been paid or duly provided for, is calculated by
multiplying  the face amount of such Floating  Rate Note by an accrued  interest
factor.  Such accrued  interest factor is computed by adding the interest factor
calculated for each day in such period from and including the date of issue,  or
from  and  including  the  last  date to which  interest  has been  paid or duly
provided  for, to but  excluding  the date for which  accrued  interest is being
calculated.  Unless otherwise  specified in the Note and the applicable  Pricing
Supplement,  the  interest  factor for each such day is computed by dividing the
interest  rate  applicable to such date by 360 (or, in the case of Treasury Rate
Notes or CMT Rate Notes, by the actual number of days in the year). The interest
factor for Notes for which two or more  interest  rate  formulae are  applicable
will be  calculated  in each  period in the same  manner as if only the  lowest,
highest or average of, as the case may be, such interest rate formulae applied.

Unless  otherwise  specified  in  a  Pricing  Supplement,  all  percentages
resulting  from any  calculation  on  Floating  Rate Notes will be  rounded,  if
necessary,  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)  being rounded to 9.87655% (or .0987655) and 9.876544% (or .09876544)
being  rounded to 9.87654%  (or  .0987654)),  and all dollar  amounts used

S-4

in or resulting from such  calculation on Floating Rate Notes will be rounded to
the nearest  cent or, in the case of Foreign  Currency  Notes,  the nearest unit
(with one-half cent or five one-thousandths of a unit being rounded upwards).

Upon the request of the Holder of any Floating Rate Note,  the  Calculation
Agent will provide the interest  rate then in effect,  and, if  determined,  the
interest rate which will become effective as of the next Interest Reset Date for
such  Floating  Rate  Note.  All  determinations  and  calculations  made by the
Calculation  Agent will, absent manifest error, be conclusive and binding on the
Holders and the Company.

CD RATE NOTES.  Each CD Rate Note will bear  interest at the interest  rate
(calculated  with  reference  to  the CD  Rate  and  the  Spread  and/or  Spread
Multiplier,  if any)  specified  on the  face of  such CD Rate  Note  and in the
applicable Pricing Supplement.

Unless otherwise indicated in the applicable Pricing Supplement,  "CD Rate"
means, with respect to any CD Rate Interest Determination Date, the rate on such
date for negotiable  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"  ("H.15(519)")  under  the  heading  "CDs  (Secondary  Market)",  or  any
successor  publication or heading.  In the event that such rate is not published
prior to 3:00 P.M., New York City time, on the  Calculation  Date  pertaining to
such CD Rate Interest  Determination Date, then the CD Rate shall be the rate on
such CD Rate Interest Determination Date for negotiable  certificates of deposit
having the Index  Maturity  specified in the  applicable  Pricing  Supplement as
published  through  the  world-wide  web site of the Board of  Governors  of the
Federal Reserve System at http://www.bog.frb.fed.us/releases/h.15/update  ("H.15
Daily  Update")  under the heading  "CDs  (secondary  market)" or any  successor
publication or heading. If by 3:00 P.M., New York City time, on such Calculation
Date such rate is not yet  published in either  H.15(519) or H.15 Daily  Update,
the CD Rate for that CD Interest  Determination  Date shall be calculated by the
Calculation  Agent  and shall be the  arithmetic  mean of the  secondary  market
offered  rates,  as of 10:00 A.M.,  New York City time, on that CD Rate Interest
Determination  Date, of three leading  nonbank dealers of negotiable U.S. dollar
certificates  of deposit  in The City of New York  selected  by the  Calculation
Agent (which may include one or more of the  Distributors  or their  affiliates)
for negotiable certificates of deposit of major United States money market banks
with a  remaining  maturity  closest  to the  Index  Maturity  specified  in the
applicable  Pricing  Supplement  in  a  denomination  of  $5,000,000;  PROVIDED,
HOWEVER,  that  if  fewer  than  three  dealers  selected  as  aforesaid  by the
Calculation Agent are quoting as mentioned in this sentence, the CD Rate will be
the CD Rate in effect on such CD Rate Interest Determination Date.

CMT RATE NOTES. CMT Rate Notes will bear interest at the rates  (calculated
with reference to the CMT Rate and the Spread and/or Spread Multiplier,  if any)
specified in such CMT Rate Notes and in the applicable Pricing Supplement.

Unless otherwise indicated in the applicable Pricing Supplement, "CMT Rate"
means,  with  respect  to any 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.",  or any successor  caption,  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 week or the month,  as  applicable,
ended  immediately  preceding  the week in which the related  CMT Rate  Interest
Determination  Date occurs. In the event such rate is no longer displayed on the
relevant  page, or is not displayed  prior to 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 the relevant  H.15(519) or any
successor publication.  If such rate is no longer published, or is not published
by 3:00 P.M., New York City time, on the related  Calculation Date, then the CMT
Rate for  such  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  the  relevant  H.15(519)  or  any  successor
publication.  If such  information  is not provided by 3:00 P.M.,  New York City
time,  on the  related  Calculation  Date,  then  the CMT  Rate for 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
the CMT Rate Interest  Determination  Date reported,  according to their written
records,  by three leading primary United States government

S-5

securities  dealers (each, a "Reference  Dealer") in The City of New York (which
may include one or more of the Distributors or their 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 cannot obtain three such Treasury  Note  quotations,  the CMT
Rate for 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 the 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 selected by the Calculation Agent are
quoting as described herein, the CMT Rate 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 third  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.

COMMERCIAL  PAPER RATE  NOTES.  Each  Commercial  Paper Rate Note will bear
interest at the interest rate (calculated with reference to the Commercial Paper
Rate and the Spread and/or Spread  Multiplier,  if any) specified on the face of
such Commercial Paper Rate Note and in the applicable Pricing Supplement.

Unless   otherwise   indicated  in  the  applicable   Pricing   Supplement,
"Commercial  Paper Rate" means,  with respect to any  Commercial  Paper Interest
Determination  Date, the Money Market Yield  (calculated as described  below) of
the rate on such date for commercial  paper having the Index Maturity  specified
in the applicable Pricing Supplement as published in H.15(519) under the heading
"Commercial  Paper--Non-financial",  or any successor publication or heading. In
the event  that such rate is not  published  prior to 3:00  P.M.,  New York City
time, on the  Calculation  Date  pertaining to such  Commercial  Paper  Interest
Determination  Date,  then the  Commercial  Paper Rate shall be the Money Market
Yield of the  rate on such  Commercial  Paper  Interest  Determination  Date for
commercial paper having the Index Maturity  specified in the applicable  Pricing
Supplement  as  published  in H.15 Daily  Update  under the heading  "Commercial
Paper--Non-financial" (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) or any successor heading.  If by 3:00 P.M., New York City time, on
such Calculation Date such rate is not yet published in either H.15(519) or H.15
Daily Update,  the  Commercial  Paper Rate for that  Commercial  Paper  Interest
Determination  Date shall be the Money Market Yield of the  arithmetic  mean, as
calculated by the  Calculation  Agent on such  Calculation  Date, of the offered
rates, as of 11:00 A.M., New York City time, on that  Commercial  Paper Interest
Determination  Date, of three leading dealers of commercial paper in The City of
New York selected by the Calculation Agent (which may include one or more of the
Distributors or their affiliates) for commercial paper having the Index Maturity
specified in the applicable  Pricing  Supplement placed for an industrial issuer
whose bond  rating is "Aa",  or the  equivalent,  from a  nationally  recognized
statistical rating  organization;  PROVIDED,  HOWEVER,  that if fewer than three
dealers selected as aforesaid by the Calculation  Agent are quoting as mentioned
in this sentence, the Commercial Paper Rate will be the Commercial Paper Rate in
effect on such Commercial Paper Interest Determination Date.

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

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

where "D" refers to the 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 interest period for which interest is being calculated.

S-6

FEDERAL  FUNDS RATE NOTES.  Each Federal Funds Rate Note will bear interest
at the interest rate  (calculated  with  reference to the Federal Funds Rate and
the Spread  and/or  Spread  Multiplier,  if any)  specified  on the face of such
Federal Funds Rate Note and in the applicable Pricing Supplement.

Unless otherwise indicated in the applicable Pricing  Supplement,  "Federal
Funds Rate" means,  with  respect to any Federal  Funds  Interest  Determination
Date,  the rate on such date for Federal  Funds as published in H.15(519)  under
the  heading  "Federal  Funds  (Effective)",  or any  successor  publication  or
heading.  In the event that such rate is not published  prior to 3:00 P.M.,  New
York City  time,  on the  Calculation  Date  pertaining  to such  Federal  Funds
Interest  Determination  Date,  then the Federal  Funds Rate will be the rate on
such Federal Funds Interest Determination Date as published in H.15 Daily Update
under the heading "Federal funds  (effective)" or any successor  heading.  If by
3:00 P.M.,  New York City time,  on such  Calculation  Date such rate is not yet
published in either  H.15(519) or H.15 Daily Update,  the Federal Funds Rate for
that Federal Funds Interest  Determination Date shall be the arithmetic mean, as
calculated by the Calculation  Agent on such Calculation  Date, of the rates for
the last  transaction  in  overnight  Federal  Funds  arranged by three  leading
brokers of Federal Funds transactions in The City of New York (which may include
one or more of the Distributors or their affiliates) selected by the Calculation
Agent  prior to 9:00  a.m.,  New York City  time,  on such  Federal  Funds  Rate
Interest Determination Date; PROVIDED, HOWEVER, that if fewer than three brokers
selected as aforesaid by the Calculation  Agent are quoting as mentioned in this
sentence,  the Federal  Funds Rate will be the  Federal  Funds Rate in effect on
such Federal Funds Interest Determination Date.

LIBOR  NOTES.  Each  LIBOR Note will bear  interest  at the  interest  rate
(calculated with reference to LIBOR and the Spread and/or Spread Multiplier,  if
any)  specified  on the face of such  LIBOR Note and in the  applicable  Pricing
Supplement.

Unless otherwise  specified in the applicable Pricing  Supplement,  "LIBOR"
means the rate determined in accordance with the following provisions:

(i) With respect to any LIBOR Interest  Determination Date, LIBOR will
be either (a) if "LIBOR  Reuters" is  specified 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 office 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

S-7

sentence,  LIBOR  determined as of such LIBOR Interest  Determination  Date
will be LIBOR in effect on such LIBOR Interest Determination Date.

PRIME RATE NOTES.  Each Prime Rate Note will bear  interest at the interest
rate  (calculated  with reference to the Prime Rate and the Spread and/or Spread
Multiplier,  if any)  specified  on the face of such  Prime Rate Note and in the
applicable Pricing Supplement.

Unless otherwise  indicated in the applicable  Pricing  Supplement,  "Prime
Rate" means,  with respect to any Prime Rate Note as of any Prime Rate  Interest
Determination  Date,  the rate set  forth on such  date in  H.15(519)  under the
heading "Bank Prime Loan", or any successor publication or heading. In the event
that such rate is not published  prior to 3:00 P.M., New York City time, on such
Prime Rate Interest  Determination  Date, then the Prime Rate will be determined
by the  Calculation  Agent  and  will be the  arithmetic  mean of the  rates  of
interest  publicly  announced  by each bank that  appears on the Reuters  Screen
USPRIME1  Page,  or any  successor  screen or page, as such bank's prime rate or
base lending rate as in effect for that Prime Rate Interest  Determination Date.
If fewer than four such rates appear on the Reuters Screen USPRIME1 Page for the
Prime Rate Interest  Determination  Date,  the Prime Rate will be the arithmetic
mean of the  announced  prime rates quoted on the basis of the actual  number of
days in the year  divided by 360 as of the close of  business on such Prime Rate
Interest Determination Date by at least two of three major money center banks in
The City of New York selected by the  Calculation  Agent. If fewer than two such
quotations are provided,  the Prime Rate shall be determined on the basis of the
rates furnished in The City of New York by the appropriate  number of substitute
banks or trust  companies  organized  and doing  business  under the laws of the
United  States,  or any state  thereof,  having total equity capital of at least
$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  selected as aforesaid are not quoting as
mentioned in this sentence, the Prime Rate will be the Prime Rate then in effect
on such Prime Rate Interest Determination Date.

TREASURY  RATE NOTES.  Each  Treasury  Rate Note will bear  interest at the
interest  rate  (calculated  with  reference to the Treasury Rate and the Spread
and/or Spread  Multiplier,  if any)  specified on the face of such Treasury Rate
Note and in the applicable Pricing Supplement.

Unless otherwise indicated in the applicable Pricing Supplement,  "Treasury
Rate" means, with respect to any Treasury Interest  Determination Date, the rate
from  the most  recent  auction  of  direct  obligations  of the  United  States
("Treasury bills") having the Index Maturity specified in the applicable Pricing
Supplement  as  published  in  H.15(519)  under the  heading,  "U.S.  Government
Securities/Treasury  Bills--Auction  Average  (Investment)",  or  any  successor
publication  or heading,  or, if not so  published  by 3:00 P.M.,  New York City
time, on the Calculation Date pertaining to such Treasury Interest Determination
Date, the auction average rate (expressed as a bond equivalent on the basis of a
year of 365 or 366 days, as  applicable,  and applied on a daily basis) for such
auction 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 published or
reported as provided above by 3:00 P.M., New York City time, on such date, or if
no such auction is held in a particular  week,  then the Treasury  Rate shall be
the  rate  as  published  in  H.15(519)  under  the  heading  "U.S.   Government
Securities/Treasury  Bills/Secondary  Market",  or any successor  publication or
heading.  In the event that such rate is not so published by 3:00 P.M., New York
City time,  on the relevant  Calculation  Date,  then the Treasury Rate shall be
calculated by the Calculation Agent and shall be a yield to maturity  (expressed
as a bond  equivalent on the basis of a year of 365 or 366 days, as  applicable,
and applied on a daily  basis) of the  arithmetic  mean,  as  calculated  by the
Calculation Agent on such Calculation Date, of the secondary market bid rates as
of  approximately  3:30 P.M.,  New York City  time,  on such  Treasury  Interest
Determination Date, of three leading primary United States government securities
dealers in The City of New York  selected by the  Calculation  Agent  (which may
include one or more of the Distributors or their  affiliates),  for the issue of
Treasury  bills  with  a  remaining  maturity  closest  to the  specified  Index
Maturity; PROVIDED, HOWEVER, that if fewer than three of the dealers selected as
aforesaid by the  Calculation  Agent are quoting as mentioned in this  sentence,
the Treasury Rate will be the Treasury Rate in effect on such Treasury  Interest
Determination Date.

ORIGINAL ISSUE DISCOUNT NOTES

Notes may be issued as  Original  Issue  Discount  Notes  (including  Notes
("Zero  Coupon  Notes")  with  respect to which no interest is payable  prior to
Maturity).  An Original Issue Discount Note is a Note which is issued at a price
lower than the principal  amount thereof and which provides that upon redemption
or  acceleration  of the  Maturity

S-8

thereof an amount less than the principal  thereof shall become due and payable.
In the event of redemption or  acceleration of the Maturity of an Original Issue
Discount  Note,  the  amount  payable  to the  Holder  of such  Note  upon  such
redemption or  acceleration  will be determined in accordance  with the terms of
the Note,  but will be an amount  less than the  amount  payable  at the  Stated
Maturity of such Note. In addition,  a Note issued at a discount may, for United
States  federal  income tax purposes,  be considered an original  issue discount
note,  regardless  of the amount  payable upon  redemption  or  acceleration  of
Maturity   of   such   Note.   See   "United   States   Federal   Taxation--U.S.
Holders--Original Issue Discount".

FOREIGN CURRENCY NOTES

Notes may be issued as Foreign  Currency Notes,  with the principal and any
premium and interest  documented  and payable in a foreign  currency or currency
unit specified in the applicable pricing supplement (the "Specified  Currency").
Unless  otherwise  indicated in the  applicable  Pricing  Supplement,  a Foreign
Currency  Note will not be sold in, or to a  resident  of,  the  country  of the
Specified Currency in which such Note is denominated.

The Company is obligated  to make  payments of principal of and any premium
and interest on Foreign  Currency  Notes in the Specified  Currency (or, if such
Specified  Currency  is not at the  time of such  payment  legal  tender  in the
country  which  issued  such  Specified  Currency  for the payment of public and
private debts,  in such other coin or currency as at the time of such payment is
legal  tender for the payment of such debts in such  country).  Any such amounts
paid by the Company will, unless otherwise  specified in the applicable  Pricing
Supplement,  be converted by the Exchange Rate Agent to U.S. dollars for payment
to Holders.  Principal  of, and any premium and interest on, a Foreign  Currency
Note paid in U.S.  dollars will be paid in the manner described  herein,  in the
accompanying Prospectus and in the applicable Pricing Supplement with respect to
Notes denominated and payable in U.S. dollars.

Unless otherwise specified in the applicable Pricing  Supplement,  any U.S.
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 Market Day preceding the  applicable  payment date from three  recognized
foreign  exchange  dealers  (one of which may be the  Exchange  Rate  Agent or a
Distributor) selected by the Exchange Rate Agent and approved by the Company for
the purchase by the quoting  dealer of the Specified  Currency for U.S.  dollars
for  settlement  on such payment date in the  aggregate  amount of the Specified
Currency  payable to all Holders of Foreign  Currency Notes scheduled to receive
U.S.  dollar  payments and at which the  applicable  dealer commits to execute a
contract. If three such bid quotations are not available,  payments will be made
in the  Specified  Currency.  All currency  exchange  costs will be borne by the
Holder of the Foreign Currency Note by deductions from such payments.

Unless otherwise specified in the applicable Pricing  Supplement,  a Holder
of a Foreign Currency Note may elect to receive payments of principal of and any
premium  and  interest  on such Note in the  Specified  Currency  (a  "Specified
Currency  Payment  Election") by delivery of a written  request for such payment
(including,  in the case of an election  with  respect to payments at  Maturity,
appropriate wire transfer  instructions) to the Trustee at its Designated Office
in the Borough of  Manhattan,  The City of New York, on or prior to the relevant
Regular Record Date or the fifteenth day prior to Maturity,  as the case may be.
Such request may be in writing (mailed or hand delivered) or by cable,  telex or
other form of facsimile  transmission.  A Holder of a Foreign  Currency Note may
elect to receive payment in the Specified Currency for all payments of principal
and any  premium and  interest  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 relevant  Regular  Record Date or the  fifteenth  day
prior to Maturity, as the case may be.

Interest on a Foreign Currency Note paid in the Specified  Currency will be
paid by check  mailed to the  address  of the  Person  entitled  thereto as such
address shall appear in the Security Register. All checks payable in a Specified
Currency will be drawn on a bank located outside the United States.  Payments at
Maturity of principal of and any premium and interest on Foreign  Currency Notes
in the  Specified  Currency  will be made by wire  transfer to an account with a
bank  located  in the  country of the  Specified  Currency  (or,  in the case of
European  Currency  Units  ("ECUs",  which term shall be deemed a  reference  to
"Euros",  effective  January 1, 1999),  in the City of Brussels),  as shall have
been designated at least fifteen days prior to Maturity by the Holder,  PROVIDED
that the Note is  presented  at the  Designated  Office  of the  Trustee  in the
Borough of  Manhattan,  The City of New York,  in time for such Paying  Agent to
make such payments in such funds in accordance with its normal procedures.

S-9

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 to make a  Specified  Currency  Payment  Election.  In  general,  unless
otherwise specified in the applicable Pricing Supplement,  a beneficial owner of
Book-Entry  Notes  denominated  in a  Specified  Currency  electing  to  receive
payments of principal or any premium or interest in the Specified  Currency must
notify the  participant  through  which its  interest is held on or prior to the
applicable Regular Record Date, in the case of a payment of interest,  and on or
prior to the  fifteenth  day  prior to  Maturity,  in the case of a  payment  of
principal or premium,  of such beneficial  owner's  election to receive all or a
portion of such payment in a Specified  Currency.  Such  participant must notify
the Depositary of such election on or prior to the third Business Day after such
Regular Record Date.

If a Specified  Currency is not  available  for the payment of principal or
any  premium or  interest  with  respect to a Foreign  Currency  Note 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 Holders of
Foreign  Currency  Notes by making such payment in U.S.  dollars on the basis of
the Market  Exchange Rate on the second Market 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.  See "Foreign Currency  Risks--Exchange Rates and
Exchange  Controls".  Any payment made under such  circumstances in U.S. dollars
where the required  payment is in other than U.S. dollars will not constitute an
Event of Default under the Indenture.

If payment in respect of a Note is required to be made in any currency unit
(e.g.,  ECU),  and such currency unit is  unavailable  due to the  imposition of
exchange controls or other circumstances beyond the Company's control,  then the
Company will be entitled,  but not required,  to make any payments in respect of
such Note in U.S.  dollars  until such  currency  unit is again  available.  The
amount of each  payment in U.S.  dollars  shall be  computed on the basis of the
equivalent  of the currency unit in U.S.  dollars,  which shall be determined by
the Company or its agent on the following basis. The component currencies of the
currency unit for the purpose (the "Component  Currencies" or,  individually,  a
"Component  Currency") shall be the currency amounts that were components of the
currency  unit as of the last day on  which  the  currency  unit was  used.  The
equivalent  of the  currency  unit  in  U.S.  dollars  shall  be  calculated  by
aggregating the U.S. dollar  equivalents of the Component  Currencies.  The U.S.
dollar equivalent of each of the Component Currencies shall be determined by the
Company  or such  agent  on the  basis  of the most  recently  available  Market
Exchange Rate for each such Component Currency, or as otherwise indicated 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.

All  determinations  referred  to above  made by the  Company  or its agent
(including  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 Notes.

The authorized denominations of Foreign Currency Notes will be indicated in
the applicable Pricing Supplement.

Unless otherwise indicated in the applicable Pricing Supplement, purchasers
are required to pay for Foreign Currency Notes in the Specified Currency. At the
present  time  there  are  limited  facilities  in the  United  States  for  the
conversion of U.S.  dollars into foreign  currencies or currency  units and vice
versa,  and banks do not generally  offer  non-U.S.  dollar  checking or savings
account  facilities in the United States.  If requested on or prior to the fifth
Market Day preceding the date of delivery of the Notes,  or by such other day as
determined by the  Distributor who presented such offer to purchase Notes to the
Company,  such  Distributor  is prepared to arrange for the  conversion  of U.S.
dollars  into the  Specified  Currency to enable the  purchasers  to pay for the
Notes.  Each such conversion will be made by such  Distributor on such terms and
subject to such conditions, limitations and charges as such Distributor may from
time  to  time  establish  in  accordance  with  its  regular  foreign  exchange
practices.  All costs of exchange will be borne by the purchasers of the Foreign
Currency Notes.

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INDEXED NOTES

Notes may be issued as Indexed Notes,  with the amount payable at Maturity,
the amount of  interest  payable on an Interest  Payment  Date,  or both,  to be
determined  by  reference  to  currencies,  currency  units,  commodity  prices,
financial  or  non-financial  indices  or other  factors,  as  indicated  in the
applicable Pricing Supplement.  Holders of Indexed Notes may receive a principal
amount at  Maturity  that is greater  than or less than the face  amount of such
Notes depending upon the fluctuation of the relative value, rate or price of the
specified index.  Specific information  pertaining to the method for determining
the principal amount payable at Maturity, historical information with respect to
the specified  indexed item or items and the face amount of the Indexed Note and
any additional tax  considerations  will be described in the applicable  Pricing
Supplement.

AMORTIZING NOTES

The Company may from time to time offer Amortizing  Notes, with payments of
principal  and interest  made in equal  installments  over the life of the Note.
Payments of principal of and interest on Amortizing  Notes will be made in equal
installments  at such  periodic  intervals as are  specified  in the  applicable
Pricing Supplement and at Maturity. A table setting forth payment information in
respect of each  Amortizing  Note will be  included  in the  applicable  Pricing
Supplement  and set  forth in such  Notes.  Unless  otherwise  specified  in the
applicable Pricing Supplement, interest on each Amortizing Note will be computed
on the basis of a 360-day year of twelve 30-day months. Payments with respect to
Amortizing  Notes will be applied first to interest due and payable  thereon and
then  to  the  reduction  of  the  unpaid  principal  amount  thereof.   Further
information   concerning  additional  terms  and  conditions  of  any  issue  of
Amortizing Notes will be provided in the applicable Pricing Supplement.

EXTENSION OF MATURITY

An applicable  Pricing Supplement will indicate whether the Company has the
option to extend the Stated  Maturity  of such Note  (other  than an  Amortizing
Note)  for one or more  periods  up to but not  beyond a date set  forth in such
Pricing  Supplement.  If the Company  has such  option with  respect to any such
Note,  the  procedures  relating  thereto will be as set forth in the applicable
Pricing Supplement.

RENEWABLE NOTES

An applicable  Pricing  Supplement  will indicate  whether such Note (other
than an  Amortizing  Note) will mature  unless the term of all or any portion of
such Note is renewed in accordance with the procedures described in such Pricing
Supplement.

OTHER PROVISIONS; ADDENDA

Any provisions with respect to the Notes, including the determination of an
Interest  Rate Basis,  the  calculation  of the interest  rate  applicable  to a
Floating Rate Note,  and the  specification  of one or more Interest Rate Bases,
the  Interest  Payment  Dates,  the  Maturity  Date or any other  variable  term
relating thereto,  may be modified as specified under "Other  Provisions" on the
face  thereof or in an Addendum  relating  thereto,  if so specified on the face
thereof and in the applicable Pricing Supplement.

SINKING FUND

Unless otherwise specified in an applicable Pricing  Supplement,  the Notes
will not be subject to any sinking fund or analogous provisions.  If the Company
will be obligated to redeem or repurchase  Notes pursuant to any such provision,
the  applicable  Pricing  Supplement  will indicate the period or periods within
which and the price or prices at which the applicable  Notes will be redeemed or
repurchased,  in whole or in part,  pursuant  to such  obligation  and the other
detailed terms and provisions of such obligation.

REDEMPTION (OPTION OF COMPANY)

If one or more Redemption Dates (or range of Redemption Dates) is specified
in the  applicable  Pricing  Supplement,  the Notes  described  therein  will be
subject  to  redemption,  in whole  or in part,  as  specified  in such  Pricing
Supplement,  on any such date (or  during any such range of dates) at the option
of the Company upon not less than 30 days' or more than 60 days' notice,  at the
Redemption  Price or Prices  specified  in the  applicable  Pricing  Supplement,
together with interest accrued to the Redemption Date; PROVIDED,  HOWEVER,  that
installments  of interest whose Stated Maturity is on or prior to the date fixed
for  redemption  will be  payable  to the  Holder of such  Note,  or

S-11

one or more  predecessor  Notes,  registered as such at the close of business on
the relevant Record Date. If less than the entire  principal amount of a Note is
redeemed,  the principal amount of such Note that remains outstanding after such
redemption shall be an authorized denomination (which shall not be less than the
minimum  authorized  denomination) for the Notes. If less than all Notes of like
tenor are to be  redeemed,  the Notes to be  redeemed  shall be  selected by the
Trustee by such method as the Trustee shall deem fair and appropriate.

REPAYMENT (OPTION OF HOLDER)

Except in the case of Notes  which may be extended  by the  Company,  which
shall be  repayable  at the  option  of the  Holder  as  described  above  under
"--Extension  of  Maturity",  if one or more  Repayment  Dates (or range of such
dates) is specified in the applicable  Pricing  Supplement,  the Notes described
therein will be subject to repayment, in whole, or from time to time in part, as
specified  in such  Pricing  Supplement,  on any such date (or  during  any such
range) or, if such date is not a Market Day, on the first  Market Day  following
such date,  at the election of the Holder at the Repayment  Price  determined as
set forth in the applicable Pricing  Supplement,  together with interest accrued
to the Repayment Date; PROVIDED, HOWEVER, that interest installments of interest
whose  Stated  Maturity is on or prior to the date fixed for  repayment  will be
payable to the Holder of such Note, or one or more predecessor Notes, registered
as such at the close of business on the relevant Record Date.

Unless otherwise specified in the applicable Pricing  Supplement,  in order
to exercise such an election, a Holder must, unless a different notice period is
specified in the  applicable  Pricing  Supplement,  give to the Trustee not less
than 30 days' nor more than 60 days' notice.  Unless otherwise  specified in the
applicable Pricing  Supplement,  any such notice shall consist of either (i) the
Note with the form entitled "Option to Elect Repayment" duly completed,  or (ii)
a  telegram,  facsimile  transmission  or a letter  from a member of a  national
securities exchange,  or of the National Association of Securities Dealers, Inc.
(the "NASD") or a commercial bank or trust company in the United States, setting
forth the name of the Holder,  the principal  amount of the Note,  the principal
amount of the Note to be repaid,  the certificate number or a description of the
tenor and terms of the Note, a statement  that the option to elect  repayment is
being exercised  thereby and a guarantee that such Note,  together with the duly
completed  form entitled  "Option to Elect  Repayment",  will be received by the
Trustee not later than the fifth  Business Day after the date of such  telegram,
facsimile  transmission  or  letter;  PROVIDED,  HOWEVER,  that  such  telegram,
facsimile  transmission  or letter shall only be effective if such Note and such
form, duly completed, are received by the Trustee by such fifth Business Day.

Unless otherwise specified in the applicable Pricing  Supplement,  exercise
of a  repayment  option by a Holder  will be  irrevocable.  Such  option  may be
exercised  with  respect  to less than the  entire  principal  amount of a Note,
provided  that the portion  remaining  Outstanding  after such  repayment  is an
authorized denomination.

If a Note is represented by a Book-Entry Note the Depositary's nominee will
be the Holder  thereof  entitled to exercise a right to  repayment.  In order to
ensure that the  Depositary's  nominee will timely exercise a right to repayment
with respect to a particular  Note, the beneficial  owner of an interest in such
Note must  instruct the broker or other direct or indirect  participant  through
which it holds an interest in such Note to notify the  Depositary  of its desire
to exercise a right to repayment.  Different firms have different  cut-off times
for accepting  instructions  from their  customers and,  accordingly,  each such
beneficial  owner  should  consult  the  broker  or  other  direct  or  indirect
participant  through which it holds an interest in a Book-Entry Note in order to
ascertain the cut-off time by which such an  instruction  must be given in order
for timely notice to be delivered to the Depositary.

While the Book-Entry Notes are represented by the Global Securities held by
or on behalf of the Depositary,  and registered in the name of the Depositary or
the  Depositary's  nominee,  the option for  repayment  may be  exercised by the
applicable participant that has an account with the Depositary, on behalf of the
beneficial  owners  of the  Global  Security  or  Securities  representing  such
Book-Entry  Notes, by delivering a written notice  substantially  similar to the
above-mentioned  forms to the  Trustee at its  Designated  Office (or such other
address of which the Company  shall from time to time notify the  Holders),  not
more than 60 days nor less than 30 days prior to the date of repayment.  Notices
of elections  from  participants  on behalf of  beneficial  owners of the Global
Security or Securities  representing  such  Book-Entry  Notes to exercise  their
option to have such  Book-Entry  Notes repaid must be received by the Trustee by
5:00 P.M., New York City time, on the last day for giving such notice.  In order
to ensure  that a notice is received by the  Trustee on a  particular  day,  the
beneficial  owner  of  the  Global  Security  or  Securities  representing  such
Book-Entry  Notes  must  so  direct  the  applicable   participant  before  such
participant's  deadline for accepting instructions for that day. Different firms
may have  different  deadlines for accepting  instructions  from the  customers.
Accordingly, beneficial owners of the Global Security or Securities representing
Book-Entry  Notes should consult

S-12

the  participants  through  which  they  own  their  interest  therein  for  the
respective  deadlines for such participants.  All notices shall be executed by a
duly authorized  officer of such  participant  (with  signature  guaranteed) and
shall be irrevocable.  In addition,  beneficial owners of the Global Security or
Securities  representing Book-Entry Notes shall effect delivery at the time such
notices of election are given to the  Depositary by causing the  participant  to
transfer such beneficial  owner's  interest in the Global Security or Securities
representing such Book-Entry Notes, on the Depositary's records, to the Trustee.
See "-- Book-Entry Notes".

REPURCHASE

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

DETERMINATION OF AMOUNT OUTSTANDING

The  Indenture  provides  that in  determining  whether  the Holders of the
requisite principal amount of the Outstanding Securities have given any request,
demand,  authorization,  direction,  notice,  consent,  waiver  or other  action
hereunder as of any date, (A) the principal amount of an Original Issue Discount
Security  which  shall be deemed to be  Outstanding  shall be the  amount of the
principal  thereof  which  would  be  due  and  payable  as of  such  date  upon
acceleration  of the Maturity  thereof to such date  pursuant to Section 5.02 of
the  Indenture,  (B) if, as of such date,  the principal  amount  payable at the
Stated Maturity of a Security is not determinable,  the principal amount of such
Security  which  shall  be  deemed  to be  Outstanding  shall be the  amount  as
specified or determined as  contemplated  by Section 3.01 of the Indenture,  (C)
the principal amount of a Security denominated in one or more foreign currencies
or  currency  units which  shall be deemed to be  Outstanding  shall be the U.S.
dollar  equivalent,  determined  as of  such  date  in the  manner  provided  as
contemplated by Section 3.01 of the Indenture,  of the principal  amount of such
Security (or, in the case of a Security described in clause (A) or (B) above, of
the amount  determined as provided in such clause),  and (D) Securities owned by
the Company or any other  obligor upon the  Securities  or any  Affiliate of the
Company or of such other obligor shall not be deemed Outstanding.

BOOK-ENTRY NOTES

Upon issuance, all Book-Entry Notes of like tenor and having the same Issue
Date will be represented by one or more fully registered securities in permanent
global   form   (each   a   "Global   Note").    See    "Description   of   Debt
Securities--Book-Entry  System" in the accompanying Prospectus. Each Global Note
representing  Book-Entry  Notes  will be  deposited  with,  or on behalf of, The
Depository  Trust Company,  as Depositary,  located in the Borough of Manhattan,
The City of New York,  and will be registered in the name of the Depositary or a
nominee of the Depositary.

No Global Note may be exchanged  in whole or in part for Notes  registered,
and no transfer of a Global Note in whole or in part may be  registered,  in the
name of any Person other than the Depositary for such Global Note or any nominee
of such Depositary unless (i) the Depositary has notified the Company that it is
unwilling or unable to continue as Depositary for such Global Note or has ceased
to be a clearing agency registered under the Securities Exchange Act of 1934, as
amended  (the  "Exchange  Act"),  (ii) if the  Company  in its  sole  discretion
determines  pursuant  to  the  Indenture  that  such  Global  Note  shall  be so
exchangeable  or  transferrable,  (iii) any event  shall  have  occurred  and be
continuing which,  after notice or lapse of time, or both, would become an Event
of Default  with  respect to the  securities  of the series of which such Global
Note is a part,  or (iv)  there  shall  exist  such  circumstances,  if any,  in
addition  or in  lieu  of  those  described  above  as may be  described  in the
applicable Prospectus Supplement.

Any Global Note that is  exchangeable  pursuant to the  preceding  sentence
shall be  exchangeable  in whole for definitive  Notes in registered form of any
authorized  denomination and of like tenor and aggregate  principal amount. Such
Notes shall be  registered in the name or names of such person or persons as the
Depositary shall instruct the Trustee. It is expected that such instructions may
be based upon directions  received by the Depositary from its participants  with
respect to ownership of beneficial interests in such Global Note.

The  Depositary,  as a Holder,  may appoint agents and otherwise  authorize
participants  to give or take any  request,  demand,  authorization,  direction,
notice,  consent,  waiver, or other action which a Holder is entitled to give or
take under the Indenture.  The Company understands that, under existing industry
practices,  in the event that the Company  requests  any action of Holders or an
owner of a  beneficial  interest in such Global Note desires to give or take any
action  that a Holder  is  entitled  to give or take  under the  Indenture,  the
Depositary  would  authorize the  participants

S-13

holding the relevant beneficial  interests to give or take such action, and such
participants would authorize  beneficial owners owning through such participants
to give or take such  action or would  otherwise  act upon the  instructions  of
beneficial owners owning through them.

More  information  on  Book-Entry  Notes and related  matters are set forth
under the heading  "Description  of Debt  Securities--Book-Entry  System" in the
accompanying Prospectus.

FOREIGN CURRENCY RISKS

FOREIGN CURRENCY NOTES

THIS PROSPECTUS  SUPPLEMENT,  THE  ACCOMPANYING  PROSPECTUS AND ANY PRICING
SUPPLEMENT DO NOT DESCRIBE ALL RISKS OF AN INVESTMENT IN FOREIGN  CURRENCY NOTES
THAT RESULT FROM SUCH NOTES BEING  DENOMINATED IN A FOREIGN CURRENCY OR CURRENCY
UNIT EITHER AS SUCH RISKS EXIST AT THE DATE OF THIS PROSPECTUS  SUPPLEMENT OR AS
SUCH  RISKS  MAY  CHANGE  FROM TIME TO TIME.  ANY  ADDITIONAL  MATERIAL  FOREIGN
CURRENCY RISKS PERTAINING TO A PARTICULAR NOTE DENOMINATED IN A FOREIGN CURRENCY
WILL BE DISCLOSED IN THE PRICING  SUPPLEMENT  REGARDING  SUCH NOTE.  PROSPECTIVE
PURCHASERS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS
ENTAILED IN AN INVESTMENT IN FOREIGN  CURRENCY  NOTES AND AS TO ANY MATTERS THAT
MAY AFFECT THE PURCHASE OR HOLDING OF A FOREIGN  CURRENCY NOTE OR THE RECEIPT OF
PAYMENTS OF PRINCIPAL OF AND ANY PREMIUM AND INTEREST ON A FOREIGN CURRENCY NOTE
IN  A  SPECIFIED  CURRENCY.  FOREIGN  CURRENCY  NOTES  ARE  NOT  AN  APPROPRIATE
INVESTMENT  FOR  INVESTORS  WHO ARE  UNSOPHISTICATED  WITH  RESPECT  TO  FOREIGN
CURRENCY TRANSACTIONS.

Foreign Currency Notes will not be sold in, or to residents of, the country
of the  Specified  Currency  in which  particular  Notes  are  denominated.  The
information set forth in this  Prospectus  Supplement is directed to prospective
purchasers  who are  United  States  residents  and 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 interest of Foreign
Currency Notes. Such persons should consult their own legal advisors with regard
to such matters.

Specific information pertaining to the foreign currency or currency unit in
which a particular  Foreign Currency Note is denominated,  including  historical
exchange rates and a description of the currency and any exchange controls, will
be described in the applicable Pricing  Supplement.  Such information  contained
therein  shall be  furnished as a matter of  information  only and should not be
regarded as  indicative  of the range of or trends in  fluctuations  in currency
exchange rates that may occur in the future.  Any credit ratings assigned to the
Company's  medium-term  note program are a reflection  of the  Company's  credit
status and in no way are a  reflection  of the  potential  impact of the factors
discussed  below in this section,  or any other factors,  on the market value of
the Notes.

EXCHANGE RATES AND EXCHANGE CONTROLS

An investment in Foreign Currency Notes entails  significant risks that are
not  associated  with a similar  investment  in a security  denominated  in U.S.
dollars. Such risks include, without limitation,  the possibility of significant
changes  in the rate of  exchange  between  the U.S.  dollar  and the  Specified
Currency  and the  possibility  of the  imposition  or  modification  of foreign
exchange controls by either the United States or foreign governments. Such risks
generally  depend on economic and political  events and the supply of and demand
for the  relevant  currencies  over which the Company has no control.  In recent
years,  rates of exchange between the U.S. dollar and certain foreign currencies
have been highly  volatile  and such  volatility  may be expected in the future.
Fluctuations in any particular  exchange rate that have occurred in the past are
not necessarily indicative,  however, of fluctuations in the rate that may occur
during the term of any Foreign  Currency  Note.  Depreciation  of the  Specified
Currency  applicable to a Foreign  Currency  Note against the U.S.  dollar would
result in a decrease in the U.S.  dollar-equivalent  yield of such Security,  in
the U.S.  dollar-equivalent value of the principal repayable at Maturity of such
Security  and,  generally,  in the U.S.  dollar-equivalent  market value of such
Security.

Governments have imposed from time to time exchange controls and may in the
future  impose or revise  exchange  controls  at or prior to a Foreign  Currency
Note's Maturity.  Even if there are not exchange  controls,  it is pos-

S-14

sible that the Specified Currency for any particular Foreign Currency Note would
not be available at such Security's Maturity due to other  circumstances  beyond
the control of the Company.

JUDGMENTS

In the event an action based on Foreign  Currency Notes were commenced in a
court of the United  States,  it is likely that such court would grant  judgment
relating to such  Securities  only in U.S.  dollars.  It is not clear,  however,
whether,  in granting such judgment,  the rate of conversion  into U.S.  dollars
would be determined with reference to the date of default,  the date judgment is
rendered or some other date.  Holders of Foreign  Currency  Notes would bear the
risk of exchange rate  fluctuations  between the time the amount of the judgment
is calculated  and the time the Trustee  converts U.S.  dollars to the Specified
Currency for payment of the judgment.

SPECIAL CONSIDERATIONS RELATING TO INDEXED NOTES

THIS PROSPECTUS  SUPPLEMENT,  THE  ACCOMPANYING  PROSPECTUS AND ANY PRICING
SUPPLEMENT  DO NOT  DESCRIBE  ALL  RISKS  OF AN  INVESTMENT  IN  INDEXED  NOTES,
INCLUDING  RISKS WHICH MAY BE ASSOCIATED  WITH ECONOMIC,  FINANCIAL OR POLITICAL
EVENTS OVER WHICH  NEITHER THE COMPANY NOR THE  DISTRIBUTORS  HAVE ANY  CONTROL,
EITHER AS SUCH RISKS EXIST AT THE DATE OF THIS PROSPECTUS  SUPPLEMENT OR AS SUCH
RISKS MAY CHANGE FROM TIME TO TIME.

An  investment  in  Notes  indexed,  as to  principal  and any  premium  or
interest,  to one or more values of currencies (including exchange rates between
currencies), commodities or interest rate indices entails significant risks that
are not associated with investments in a conventional  fixed-rate debt security.
For example,  Indexed Notes that are indexed as to interest may bear interest at
a rate lower than the prevailing  market  interest rate for fixed-rate  Notes or
may not bear  interest,  and the principal  and any premium  payable at Maturity
with respect to Indexed Notes that are indexed with respect to principal and any
premium may be less than the face amount or initial  purchase  price  thereof or
may be zero. Special  considerations  independent of the creditworthiness of the
Company and the value of the  applicable  currency,  commodity or interest  rate
index, including economic, financial and political events over which the Company
has no  control  also  may  affect  the  secondary  market  for  Indexed  Notes.
Additionally,  if the formula used to determine  the amount of principal and any
premium or any interest  payable with respect to such Notes  contains a multiple
or  leverage  factor,  the  effect  of any  change in the  applicable  currency,
commodity or interest rate index will be increased. The historical experience of
the relevant  currencies,  commodities  or interest  rate indices  should not be
taken as an indication of future performance of such currencies,  commodities or
interest rate indices during the term of any Note.  Any credit ratings  assigned
to the  Company's  medium-term  note program are a reflection  of the  Company's
credit  status and in no way are a  reflection  of the  potential  impact of the
factors discussed above, or any other factors, on the market value of the Notes.
Prospective  purchasers should consult their own financial and legal advisors as
to the risks entailed in an investment in Indexed Notes,  the  suitability of an
investment in Indexed Notes in light of their particular circumstances,  and all
other matters that may affect the purchase or holding of an Indexed Note.

UNITED STATES FEDERAL TAXATION

In the opinion of Davis Polk & Wardwell,  tax counsel to the  Company,  the
following  summary  describes  the material  United  States  federal  income tax
consequences  of ownership  and  disposition  of the Notes to an initial  holder
purchasing a Note at its "Issue  Price",  that is, the first price to the public
at which a substantial  amount of the Notes in an issue is sold (excluding sales
to bond  houses,  brokers or  similar  persons  or  organizations  acting in the
capacity of  underwriters,  placement  agents or  wholesalers).  This summary is
based on the Internal  Revenue Code of 1986,  as amended to the date hereof (the
"Code"),   administrative   pronouncements,   judicial  decisions  and  Treasury
Regulations  in effect as of the date hereof,  including  regulations  (the "OID
Regulations")  concerning the treatment of debt instruments issued with original
issue discount ("OID"), and interpretations of the foregoing,  changes to any of
which  subsequent to the date of this  Prospectus  Supplement may affect the tax
consequences  described herein,  possibly with retroactive  effect. This summary
discusses  only Notes held as capital  assets within the meaning of Section 1221
of the  Code.  It does  not  discuss  all of the tax  consequences  that  may be
relevant  to holders in light of their  particular  circumstances  or to holders
subject to special  rules,  such as certain  financial  institutions,  insurance
companies,   tax-exempt   organizations,   dealers  in   securities  or  foreign
currencies,  U.S.  Holders (as defined  below)

S-15

whose  functional  currency  (as  defined in Code  Section  985) is not the U.S.
dollar,  persons  holding  Notes  in  connection  with  a  hedging  transaction,
"straddle",  conversion transaction or other integrated transaction,  traders in
securities that elect to mark to market,  holders liable for alternative minimum
tax or persons  who have ceased to be United  States  citizens or to be taxed as
resident  aliens.  Moreover,  the summary  deals only with Notes that are due to
mature  30 years or less  from the date on which  they are  issued.  The  United
States  federal  income tax  consequences  of ownership of Notes that are due to
mature  more than 30 years  from their  date of issue  will be  discussed  in an
applicable Pricing  Supplement.  Prospective  investors should consult their tax
advisers with regard to the  application  of United  States  federal tax laws to
their particular  situations,  as well as any tax consequences arising under the
laws of any state, local or foreign taxing jurisdiction.

"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, partnership or other entity created or organized in or under
the laws of the United States or of any political  subdivision  thereof or (iii)
an estate  or trust the  income of which is  subject  to United  States  federal
income taxation regardless of its source.

"Non-U.S.  Holder"  means a beneficial  owner of a Note that is, for United
States federal income tax purposes,  (i) a nonresident alien individual,  (ii) a
foreign corporation,  (iii) a nonresident alien fiduciary of a foreign estate or
trust or (iv) a foreign  partnership  one or more of the  members  of which is a
nonresident  alien  individual,  a foreign  corporation  or a nonresident  alien
fiduciary of a foreign estate or trust.

U.S. HOLDERS

PAYMENTS OF INTEREST.

Interest  paid on a Note will  generally  be  taxable  to a U.S.  Holder as
ordinary  interest  income at the time it accrues or is received  in  accordance
with the U.S.  Holder's  method of accounting  for federal  income tax purposes.
Under the OID  Regulations,  all payments of interest on a Note that matures one
year or less from its date of  issuance  will be taxed in the  manner  described
below under  "--Discount  Notes".  Special  rules  governing  the  treatment  of
interest  paid with  respect  to  Discount  Notes (as  defined  below),  certain
Floating  Rate Notes and Indexed  Notes and Foreign  Currency  Notes (as defined
below),  are described under "--Discount  Notes" and "--Foreign  Currency Notes"
below.

DISCOUNT NOTES.

A Note  that  has an  Issue  Price  that is less  than  the  Note's  stated
redemption price at maturity will generally be considered to have been issued at
an original issue discount for federal income tax purposes (a "Discount  Note").
The  stated  redemption  price at  maturity  of a Note will equal the sum of all
payments  required  under the Note  other than  payments  of  "qualified  stated
interest".  "Qualified  stated  interest"  is  stated  interest  unconditionally
payable as a series of payments in cash or property (other than debt instruments
of the Company) at least  annually  during the entire term of the Note and equal
to the  outstanding  principal  balance of the Note multiplied by a single fixed
rate of interest. In addition,  stated interest on Floating Rate Notes providing
for one or more qualified  floating  rates of interest,  a single fixed rate and
one or more qualified  floating rates, an objective rate, or a single fixed rate
and a single  objective  rate that is a  qualified  inverse  floating  rate will
generally  constitute  qualified  stated  interest  if such  stated  interest is
unconditionally  payable at least annually during the term of the Note at a rate
that is considered to be a single qualified  floating rate or a single objective
rate (provided  such rates are set at a "current  value" of that rate) under the
following rules.

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  borrowed  funds in the  currency in which a Floating
Rate Note is denominated.  Unless otherwise  indicated in the applicable Pricing
Supplement,  the CD Rate, CMT Rate,  Commercial Paper Rate,  Federal Funds Rate,
LIBOR, Prime Rate and Treasury Rate will constitute qualified floating rates. If
a Floating Rate Note provides for two or more qualified  floating rates that can
reasonably be expected to have approximately the same values throughout the term
of the Note, the qualified floating rates together constitute a single qualified
floating  rate. An "objective  rate" is generally a rate (other than a qualified
floating rate) that is determined using a single fixed formula and that is based
on  objective  financial  or  economic  information  but that is not  within the
control of or unique to the  circumstances  of the Company or a party related to
the Company (such as dividends, profits or the value of the Company's stock). If
interest on a debt instrument is stated at a fixed rate for an initial period of
one year or less followed by a variable rate that is either a qualified floating
rate or an objective rate

S-16

for a subsequent period, and the value of the variable rate on the issue date is
intended to  approximate  the fixed rate,  the fixed rate and the variable  rate
together  constitute a single qualified  floating rate or objective rate. Two or
more  rates  will be  conclusively  presumed  to meet  the  requirements  of the
preceding  sentences if the values of the applicable rates on the issue date are
within 1/4 of 1% of each other.

In  general,  if a Floating  Rate Note  provides  for stated  interest at a
single  qualified  floating rate or objective  rate, all stated  interest on the
Note is qualified  stated  interest and the amount of OID, if any, is determined
by using, 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, in the case of any other objective rate, a fixed rate
that  reflects  the  yield  reasonably   expected  for  the  Note.  Special  tax
considerations  (including possible OID) may arise with respect to Floating Rate
Notes providing for (i) one base rate followed by one or more base rates, (ii) a
single  fixed  rate  followed  by a  qualified  floating  rate or (iii) a Spread
Multiplier.  Prospective  U.S.  Holders of Floating  Rate Notes with any of such
features should carefully  examine the applicable  Pricing  Supplement since the
tax  consequences  will depend,  in part, on the  particular  terms of the Note.
Special rules may apply if a Floating  Rate Note bears  interest at an objective
rate and it is reasonably expected that the average value of the rate during the
first  half  of the  Note's  term  will be  either  significantly  less  than or
significantly  greater than the average  value of the rate during the final half
of the Note's  term.  Special  rules may also  apply if a Floating  Rate Note is
subject  to a cap,  floor,  governor  or similar  restriction  that is not fixed
throughout the term of the Note and is reasonably  expected as of the issue date
to  cause  the  yield  on the  Note to be  significantly  less or more  than the
expected yield determined without the restriction.

The OID Regulations address, among other things, the accrual of OID on, and
the  character of gain  realized on the sale,  exchange or  retirement  of, debt
instruments  providing for  contingent  payments.  Prospective  U.S.  Holders of
Indexed  Notes,  Amortizing  Notes,  Renewable  Notes  or  Floating  Rate  Notes
providing  for  contingent  payments  (including  Notes  providing  for optional
redemption  or repayment  or Notes whose Stated  Maturity may be extended at the
option of the Company) should refer to the discussion  regarding taxation in the
applicable Pricing Supplement which will describe additional tax considerations,
if any, relevant to the ownership and disposition of such Notes. U.S. Holders of
Indexed  Notes,  with  respect to which the indexed  item is one or more foreign
currencies,  currency units or composite currencies should carefully examine the
Applicable  Pricing  Supplement  and consult  with their tax  advisers as to the
federal income tax consequences of the ownership and disposition of such Notes.

If the difference  between a Note's stated redemption price at maturity and
its Issue Price is a DE MINIMIS amount,  i.e., less than 1/4 of 1% of the stated
redemption  price at  maturity  multiplied  by the number of  complete  years to
maturity,  then the Note will not be  considered  to have OID.  U.S.  Holders of
Notes with a DE MINIMIS  amount of OID will  generally  include  this  amount in
income,  as capital gain, on a pro rata basis as principal  payments are made on
the Notes.

A U.S.  Holder of Discount  Notes will be required to include any qualified
stated interest  payments in income in accordance with the U.S.  Holder's method
of accounting  for federal income tax purposes.  U.S.  Holders of Discount Notes
that mature  more than one year from their date of issuance  will be required to
include  OID in income  for  federal  income  tax  purposes  as it  accrues,  in
accordance with a constant yield method based on a compounding of interest.

Under the OID  Regulations,  a Note that  matures one year or less from its
date of issuance will be treated as a "short-term  Discount Note".  All payments
of  interest  on a  short-term  Discount  Note will be  included  in its  stated
redemption  price at  maturity.  In  general,  a cash  method  U.S.  Holder of a
short-term Discount Note is not required to accrue OID for United States federal
income tax  purposes  unless it elects to do so.  U.S.  Holders who make such an
election,  U.S. Holders who report income for federal income tax purposes on the
accrual  method and certain  other U.S.  Holders,  including  banks,  dealers in
securities,  regulated  investment  companies,  common trust funds,  and certain
pass-through  entities, are required to include OID in income on such short-term
Discount  Notes as it accrues on a  straight-line  basis,  unless an election is
made to accrue the OID  according  to a  constant  yield  method  based on daily
compounding. In the case of a U.S. Holder who is not required and does not elect
to include OID in income currently,  any gain realized on the sale,  exchange or
retirement of the short-term Discount Note will be ordinary income to the extent
of the OID accrued on a  straight-line  basis (or, if  elected,  according  to a
constant  yield  method  based on daily  compounding),  reduced by any  interest
received,  through the date of sale, exchange or retirement.  In addition,  such
Holders  will  be  required  to  defer  deductions  for  any  interest  paid  on
indebtedness  incurred  to  purchase or carry  short-term  Discount  Notes in an
amount not exceeding the deferred interest income,  until such deferred interest
income is recognized.

S-17

Under  the  OID  Regulations,  a U.S.  Holder  may  make an  election  (the
"Constant Yield  Election") to include in gross income all interest that accrues
on a Note (including stated interest,  acquisition discount, OID, DE MINIMIS OID
and unstated interest, as adjusted by any amortizable bond premium in accordance
with a constant yield method based on the compounding of interest).

PRE-ISSUANCE ACCRUED INTEREST.

If (i) a portion of the initial purchase price of a Note is attributable to
pre-issuance  accrued  interest,  (ii) the first stated interest  payment on the
Note is to be made  within  one year of the  Note's  issue  date and  (iii)  the
payment will equal or exceed the amount of pre-issuance  accrued interest,  then
the U.S.  Holder may elect to decrease the issue price of the Note by the amount
of pre-issuance  accrued interest.  In that event, a portion of the first stated
interest  payment  will be  treated  as a return  of the  excluded  pre-issuance
accrued interest and not as an amount payable on the Note.

REDEMPTION.

Certain of the Notes may be redeemed  prior to maturity.  Notes  containing
such a feature  may be subject  to rules  that  differ  from the  general  rules
discussed  above.  Purchasers  of Notes  with  such a feature  should  carefully
examine the applicable  Pricing Supplement to determine if the Notes are subject
to such different rules.

SALE, EXCHANGE OR RETIREMENT.

Upon the  sale,  exchange  or  retirement  of a Note,  a U.S.  Holder  will
recognize  taxable gain or loss equal to the  difference  between such  Holder's
adjusted tax basis in the Note and the amount  realized  (excluding  any amounts
attributable  to unpaid  qualified  stated  interest  accrued  between  interest
payment dates, which will be includible in income as interest in accordance with
the U.S. Holder's method of accounting) on the sale,  exchange or retirement.  A
U.S.  Holder's adjusted tax basis in a Note will generally equal the cost of the
Note  to such  Holder,  increased  by the  amounts  of any  OID (or  acquisition
discount  in the  case of a holder  of  short-term  Discount  Note  that  made a
Constant  Yield  Election)  and  any  income  attributable  to  de  minimis  OID
previously includible in income by the U.S. Holder with respect to such Note and
reduced by any principal  payments received by the U.S. Holder,  any amortizable
bond  premium used to offset  qualified  stated  interest  and, in the case of a
Discount  Note,  by the  amounts of any other  payments  that do not  constitute
qualified stated interest (as defined above).

Subject to the discussion under "--Foreign  Currency Notes" below,  gain or
loss  recognized  on the sale,  exchange or  retirement of a Note that is not an
Indexed Note or a Floating Rate Note that provides for contingent  payments will
be capital gain or loss (except,  in the case of a short-term  Discount Note, to
the  extent of any OID not  previously  included  in the U.S.  Holder's  taxable
income).  See "--Discount  Notes" above.  Prospective  investors  should consult
their tax advisers  regarding the treatment of capital gains (which may be taxed
at lower rates than ordinary income for certain  taxpayers who are  individuals)
and losses (the deductibility of which is subject to limitations).

AMORTIZABLE BOND PREMIUM.

If a U.S.  Holder  purchases a Note for an amount that is greater  than the
amount payable at maturity, the U.S. Holder will be considered to have purchased
the Note with "amortizable bond premium" equal in amount to such excess, and may
elect to amortize such premium over the remaining term of the Note, based on the
U.S. Holder's yield to maturity with respect to the Note as determined under the
bond premium rules. A U.S. Holder may generally use the amortizable bond premium
allocable to an accrual period to offset qualified  stated interest  required to
be included in the U.S. Holder's income with respect to the Note in that accrual
period.  Under the regulations,  if the amortizable bond premium allocable to an
accrual period exceeds the amount of qualified stated interest allocable to such
accrual  period,  such excess  would be allowed as a deduction  for such accrual
period, but only to the extent of the U.S. Holder's prior interest inclusions on
the Note.  Any excess is  generally  carried  forward and  allocable to the next
accrual period. A Holder who elects to amortize bond premium must reduce his tax
basis in the Note as described above under "Sale,  Exchange or  Retirement".  An
election to amortize bond premium applies to all taxable debt  obligations  held
by the U.S.  Holder  at the  beginning  of the first  taxable  year to which the
election applies or thereafter acquired and may be revoked only with the consent
of the Internal  Revenue Service (the "IRS").  The  regulations  provide limited
automatic  consent for a U.S. Holder to change its method of accounting for bond
premium to the constant yield method if the change is made for the first taxable
year (by a statement  on the  relevant  return)  for which the U.S.  Holder must
account for a bond under the regulations.

S-18

If a Holder makes a Constant  Yield  Election  for a Note with  amortizable
bond premium,  the Holder will be deemed to make the election described above to
amortize bond premium for all of the Holder's appertaining debt instruments with
amortizable  bond premium,  which may be revoked only with the permission of the
IRS.

FOREIGN CURRENCY NOTES.

A U.S.  Holder  that uses the cash  method of  accounting  and  receives  a
payment of interest  with respect to a Foreign  Currency  Note (as defined above
under  "Description  of  Notes--General")  in U.S.  dollars  will be required to
include the amount of such  payment in income upon  receipt.  A cash method U.S.
Holder  that  receives a payment of  interest  on a Foreign  Currency  Note in a
Specified  Currency  (other  than a  Discount  Note on which OID is accrued on a
current basis,  except to the extent any qualified stated interest is received),
pursuant to the election  described  under  "Description  of the  Notes--Foreign
Currency  Notes" will be required to include in income the U.S.  Dollar value of
the  Specified  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 the Specified Currency.

To the extent that the preceding paragraph is not applicable, a U.S. Holder
will be  required  to include in income the U.S.  dollar  value of the amount of
interest income  (including OID, but reduced by amortizable  bond premium to the
extent  applicable)  that is  required to be accrued  with  respect to a Foreign
Currency Note during an accrual  period.  The U.S.  dollar value of such accrued
income will be  determined  by  translating  such income at the average  rate of
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.  Such U.S.  Holder will recognize  ordinary income or loss with respect to
accrued interest income on the date such income is actually received. The amount
of ordinary income or loss recognized will equal the difference between the U.S.
dollar value of the Specified Currency payment received  (determined on the date
such payment is received)  in respect of such accrual  period (or,  where a U.S.
Holder  receives  U.S.  dollars,  the amount of such  payment in respect of such
accrual  period) and the U.S.  dollar value of interest  income that has accrued
during such accrual period (as determined above).

A U.S. Holder may,  regardless of its general accounting  method,  elect to
translate  interest income (including OID) into U.S. dollars at the spot rate on
the  last day of the  interest  accrual  period  (or,  in the case of a  partial
accrual  period,  the  spot  rate  on the  last  day of the  taxable  year)  or,
alternatively,  if the date of receipt is within five  business days of the last
day of the interest accrual period, the spot rate on the date of receipt. A U.S.
Holder  that  makes such an  election  must  apply it  consistently  to all debt
instruments from year to year and cannot change the election without the consent
of the IRS.

OID and  amortizable  bond  premium  on a Foreign  Currency  Note are to be
determined in the relevant Specified Currency.

Any loss realized on the sale, exchange or retirement of a Foreign Currency
Note with  amortizable  bond  premium by a U.S.  Holder  who has not  elected to
amortize such premium will be a capital loss to the extent of such bond premium.
If such an election is made,  amortizable  bond premium taken into account under
the applicable  rules  described above (see  "--Amortizable  Bond Premium") will
reduce interest  income in units of the relevant  Specified  Currency.  Exchange
gain or loss is realized on such  amortized  bond  premium  with  respect to any
period by  treating  the bond  premium  amortized  in such period as a return of
principal.

A U.S. Holder's tax basis in a Foreign Currency Note, and the amount of any
subsequent  adjustment to such Holder's tax basis, will be the U.S. dollar value
of the Specified  Currency amount paid for such Foreign Currency Note, or of the
Specified  Currency  amount of the  adjustment,  determined  on the date of such
purchase or adjustment. A U.S. Holder who purchases a Foreign Currency Note with
previously owned Specified 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  Specified  Currency  and the U.S.  dollar fair market  value of the Foreign
Currency Note on the date of purchase.

Gain or loss  realized  upon the sale,  exchange or retirement of a Foreign
Currency 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 (i) the U.S.  dollar  value of the  Specified  Currency
principal amount (as determined  pursuant to regulations under Code Section 988)
of such Note,  and, for accrual  method Holders or Holders of Discount Notes (to
the extent of accrued  OID),  any payment  with  respect to accrued  interest or
accrued  OID,  determined  on the date such  payment is received or such

S-19

Note is disposed of, and (ii) the U.S.  dollar value of the  Specified  Currency
principal amount of such Note,  determined on the date such U.S. Holder acquired
such Note,  and, for accrual method Holders or Holders of Discount Notes (to the
extent of accrued OID), the U.S. dollar value of the accrued interest or accrued
OID received,  determined by translating  such interest at the average  exchange
rate (or at a spot rate elected as described above) for the accrual period. Such
foreign currency gain or loss will be recognized only to the extent of the total
gain or loss  realized by a U.S.  Holder on the sale,  exchange or retirement of
the Foreign Currency Note. The source of such foreign currency gain or loss will
be determined by reference to the residence of the U.S. Holder or the "qualified
business unit" of the U.S. Holder on whose books the Note is properly reflected.
Any gain or loss realized by the U.S. Holder in excess of such foreign  currency
gain or loss will  generally be capital gain or loss  (except,  in the case of a
short-term  Discount Note, to the extent of any OID not  previously  included in
the U.S. Holder's income).

A U.S. Holder will have a tax basis in any Specified  Currency  received on
the sale,  exchange or retirement  of a Foreign  Currency Note equal to the U.S.
dollar value of such  Specified  Currency,  determined at the time of such sale,
exchange or retirement. Regulations issued under Section 988 of the Code provide
a special rule for purchases and sales of publicly traded Foreign Currency Notes
by a cash  method  taxpayer,  under which units of  Specified  Currency  paid or
received are  translated  into U.S.  dollars at the spot rate on the  settlement
date of the purchase or sale. Accordingly,  no exchange gain or loss will result
from currency  fluctuations  between the trade date and the settlement of such a
purchase  or sale.  An  accrual  method  taxpayer  may elect the same  treatment
required of  cash-method  taxpayers  with  respect to the  purchase  and sale of
publicly  traded  Foreign  Currency  Notes,  provided  the  election  is applied
consistently.  Such election  cannot be changed  without the consent of the IRS.
Any gain or loss  realized by a U.S.  Holder on a sale or other  disposition  of
Specified  Currency  (including  its  exchange  for U.S.  dollars  or its use to
purchase Foreign Currency Notes) will be ordinary income or loss.

Under recently  promulgated  temporary Treasury regulations (the "Temporary
Regs"), the introduction of the Euro at the start of the third stage of European
Economic and Monetary  Union and the subsequent use of Euros as the currency for
payment of amounts in respect of the Foreign Currency Notes generally should not
be treated as a taxable exchange of the Foreign Currency Notes for United States
federal income tax purposes.

BACKUP WITHHOLDING AND INFORMATION REPORTING.

Certain  noncorporate U.S. Holders may be subject to information  reporting
and backup  withholding  at a rate of 31% on payments of principal,  premium and
interest (including OID, if any) on, and the proceeds of disposition of, a Note.
Backup  withholding  will apply  only if the  holder  (i) fails to  furnish  its
Taxpayer Identification Number ("TIN"), which, for an individual,  is his Social
Security  number,  (ii) furnishes an incorrect TIN, (iii) is notified by the IRS
that it has failed to properly report payments of interest or dividends or (iv),
under certain circumstances,  fails to certify, under penalties of perjury, that
it has  furnished a correct TIN and has not been  notified by the IRS that it is
subject  to backup  withholding  for  failure  to report  interest  or  dividend
payments.  U.S.  Holders  should  consult  their tax  advisers  regarding  their
qualification  for  exemption  from backup  withholding  and the  procedure  for
obtaining such an exemption if applicable.

The amount of any backup  withholding  from a payment to a U.S. Holder will
be allowed as a credit  against such Holder's  United States  federal income tax
liability  and may entitle such Holder to a refund,  provided  that the required
information is furnished to the IRS.

NON-U.S. HOLDERS

Under present  United States federal tax law, and subject to the discussion
below concerning backup withholding:

(a)  payments  of  principal,  interest  (including  OID,  if any) and
premium on the Notes by the  Company or its  paying  agent to any  Non-U.S.
Holder will be exempt from the 30% United States federal  withholding  tax,
provided that (i) such Holder does not own, actually or constructively, 10%
or more of the total  combined  voting power of all classes of stock of the
Company entitled to vote, is not a controlled foreign corporation  related,
directly or indirectly,  to the Company through stock ownership, and is not
a bank receiving interest described in Section 881(c)(3)(A) of the Code and
(ii) the  statement  requirement  set forth in  Section  871(h) or  Section
881(c) of the Code has been fulfilled with respect to the beneficial owner,
as discussed below;

(b) a Non-U.S.  Holder of a Note will not be subject to United  States
federal  income  tax on  gain  realized  on the  sale,  exchange  or  other
disposition  of such Note,  unless (i) such Holder is an individual  who is
present

S-20

in the  United  States  for 183  days or  more in the  taxable  year of the
disposition,  and  either  the gain is  attributable  to an office or other
fixed place of business  maintained by such individual in the United States
or,  generally,  such  individual  has a "tax home" in the United States or
(ii) such gain is  effectively  connected  with the  Holder's  conduct of a
trade or business in the United States; and

(c) a Note held by an individual  who is not, for United States estate
tax purposes, a resident or citizen of the United States at the time of his
death  generally will not be subject to United States federal estate tax as
a result of such individual's death,  provided that the individual does not
own, actually or  constructively,  10% or more of the total combined voting
power of all classes of stock of the  Company  entitled to vote and, at the
time of such individual's  death,  payments with respect to such Note would
not have been effectively  connected to the conduct by such individual of a
trade or business in the United States.

The  rules  described  in  subparagraphs  (a) and (c)  above  will not  apply to
contingent  interest  if the  amount of such  interest  is  contingent  interest
described in Section 871(h)(4) of the Code (generally,  interest determined with
reference to the  profitability  or similar indicia of financial  performance of
the Company or a related  person or of the  property of the Company or a related
person).

The  certification  requirement  referred  to in  subparagraph  (a) will be
fulfilled if the  beneficial  owner of a Note  certifies on IRS Form W-8,  under
penalties  of perjury,  that it is not a United  States  person and provides its
name and  address,  and (i) such  beneficial  owner files such Form W-8 with the
withholding  agent or (ii) in the case of a Note held by a  securities  clearing
organization,  bank or other financial institution holding customers' securities
in the  ordinary  course of its trade or business  holding the Note on behalf of
the beneficial  owner,  such financial  institution  files with the  withholding
agent a statement  (signed under  penalties of perjury) that it has received the
Form W-8  from the  Holder  and  furnishes  the  withholding  agent  with a copy
thereof. With respect to Notes held by a foreign partnership, under current law,
the Form W-8 may be provided by the foreign  partnership.  However, for interest
(including OID) and disposition proceeds paid with respect to a Note, unless the
foreign  partnership  has entered into a withholding  agreement  with the IRS, a
foreign  partnership  will be  required  after  December  31,  1999  (and may be
permitted earlier), in addition to providing an intermediary Form W-8, to attach
an appropriate certification by each partner.  Prospective investors,  including
foreign  partnerships  and their  partners,  should  consult  their tax advisers
regarding possible additional reporting requirements.

If a Non-U.S.  Holder of a Note is engaged  in a trade or  business  in the
United States, and if interest  (including OID) on the Note (or gain realized on
its sale,  exchange or other  disposition)  is  effectively  connected  with the
conduct of such trade or business, the Non-U.S. Holder, although exempt from the
withholding tax discussed in the preceding paragraphs, will generally be subject
to regular United States income tax on such effectively  connected income in the
same manner as if it were a U.S. Holder. See "--U.S.  Holders" above. In lieu of
the  certificate  described in the  preceding  paragraph,  such a Holder will be
required to provide to the withholding  agent a properly  executed IRS Form 4224
(or, by January 1, 2000, a Form W-8) to claim an exemption from withholding tax.
In addition, if such Non-U.S. Holder is a foreign corporation, it may be subject
to a 30% branch  profits  tax (unless  reduced or  eliminated  by an  applicable
treaty) on its earnings and profits for the taxable  year  attributable  to such
effectively connected income, subject to certain adjustments.

BACKUP WITHHOLDING AND INFORMATION REPORTING.

Backup  withholding  will  not  apply  to  payments  made  on a Note if the
certifications  required by Sections  871(h) and 881(c) are  received,  provided
that the Company or its paying  agent,  as the case may be, does not have actual
knowledge that the payee is a United States person.

Under current Treasury Regulations, payments on the sale, exchange or other
disposition of a Note made to or through a foreign office of a broker  generally
will not be  subject to backup  withholding.  However,  if such  broker is (i) a
United States person,  (ii) a controlled  foreign  corporation for United States
federal income tax purposes,  (iii) a foreign person 50 percent or more of whose
gross income is effectively connected with a United States trade or business for
a  specified  three-year  period or (iv),  in the case of  payments  made  after
December 31, 1999, a foreign  partnership with certain connections to the United
States, then information reporting will be required unless the broker has in its
records  documentary  evidence that the beneficial  owner is not a United States
person and certain other  conditions are met or the beneficial  owner  otherwise
establishes an exemption.  Backup withholding may apply to any payment that such
broker is required to report if the broker has actual  knowledge  that the payee
is a United States

S-21

person.  Payments  to or through  the United  States  office of a broker will be
subject  to backup  withholding  and  information  reporting  unless  the Holder
certifies,  under penalties of perjury, that it is not a United States person or
otherwise establishes an exemption.

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

SUPPLEMENTAL PLAN OF DISTRIBUTION OF THE NOTES

Under the terms of a Distribution Agreement,  dated September 17, 1998 (the
"Distribution  Agreement"),  the Notes are offered on a continuing  basis by the
Company  through the  Distributors,  each of which has agreed to use  reasonable
best efforts to solicit  purchases of the Notes.  Unless otherwise  disclosed in
the applicable Pricing Supplement, the Company will pay a commission, or grant a
discount,  to the Distributors of .125% to .750% of the principal amount of each
Note, depending on its Stated Maturity, sold through such Distributor, as agent;
PROVIDED, HOWEVER, that commissions with respect to Notes with a Stated Maturity
of more than  thirty  years  will be  negotiated  between  the  Company  and the
applicable Distributor at the time of sale. The Company will have the sole right
to accept offers to purchase Notes and may reject any such offer, in whole or in
part.  Each  Distributor  shall have the  right,  in its  discretion  reasonably
exercised,  without notice to the Company, to reject any offer to purchase Notes
received by it, in whole or in part.

The Company also may sell Notes to any Distributor, acting as principal, at
a  discount  to be  agreed  upon at the time of sale  except  that,  if no other
discount  is agreed,  the  Company  may pay a  commission  (or grant a discount)
equivalent  to that set forth on the cover page of this  Prospectus  Supplement.
Such Notes may be resold at market prices  prevailing at the time of resale,  at
prices related to such prevailing market prices, at a fixed offering price or at
negotiated prices, as determined by such Distributor.  The Company also may sell
Notes to any  Distributor or to a group of  underwriters  for whom a Distributor
acts as  representative,  at a  discount  to be  agreed  at the time of sale for
resale to one or more  investors or purchasers at a fixed  offering  price or at
varying  prices  prevailing  at the time of  resale,  at prices  related to such
prevailing  market  prices at the time of such resale or at  negotiated  prices.
Notes purchased by a Distributor or by a group of underwriters  may be resold to
certain  securities dealers for resale to investors or to certain other dealers.
Dealers  may  receive  compensation  in the form of  discounts,  concessions  or
commissions  from the  Distributors  and/or  commissions from the purchasers for
whom  they may act as  agents.  Unless  otherwise  specified  in the  applicable
Pricing  Supplement,  any  concessions  allowed by any  Distributor  to any such
dealer  shall not be in excess of the  commission  or discount  received by such
Distributor  from the Company.  After the initial public offering of Notes to be
resold to investors and other purchasers on a fixed public offering price basis,
the public offering price, concession and discount may be changed.

The Company has reserved the right to sell Notes directly on its own behalf
and to accept  offers to  purchase  Notes  through  additional  distributors  on
substantially  the same terms and  conditions  (including  commission  rates) as
would apply to purchases of Notes  pursuant to the  Distribution  Agreement.  In
addition,  the Company has reserved the right to appoint  additional  agents for
the purpose of soliciting offers to purchase Notes. Such additional distributors
or  agents,  as the  case  may  be,  will be  named  in the  applicable  Pricing
Supplement.  No  commission  will be payable on any Notes sold  directly  by the
Company.

In the event that an amount in excess of 10% of the  aggregate net proceeds
from any offering of Notes is used to pay indebtedness owed to affiliates of any
Distributor,  any  such  sale of  Notes  will be made in  accordance  with  Rule
2710(c)(8) of the NASD Conduct Rules.

The  Distributors  and any dealers to whom the  Distributors may sell Notes
may be deemed to be  "underwriters"  within the meaning of the Securities Act of
1933 (the "Act").  The Company has agreed to indemnify the Distributors  against
certain liabilities, including civil liabilities under the Act, or contribute to
payments which the Distributors may be required to make in respect thereof.  The
Company has agreed to reimburse the Distributors for certain expenses.

S-22

Unless otherwise indicated in the applicable Pricing Supplement, payment of
the purchase price of Notes, other than Foreign Currency Notes, will be required
to be made in funds immediately  available in The City of New York. With respect
to payment of the purchase price of Foreign  Currency Notes, see "Description of
the Notes--Foreign Currency Notes" herein.

The Notes are a new issue of securities with no established  trading market
and will not be listed on any securities exchange.  No assurance can be given as
to the existence or liquidity of the secondary market for the Notes.

The Distributors may engage in over-allotment, stabilizing transactions and
syndicate  covering  transactions  in  accordance  with  Regulation  M under the
Exchange Act.  Over-allotment involves syndicate sales in excess of the offering
size, which creates a syndicate short position.  Stabilizing transactions permit
bids to purchase the underlying  security so long as the stabilizing bids do not
exceed a specified maximum. Syndicate covering transactions involve purchases of
the Notes in the open market after the  distribution has been completed in order
to cover  syndicate  short  positions.  Penalty bids permit the  Distributors to
reclaim a selling  concession from a syndicate  member when the Notes originally
sold by such syndicate member are purchased in a syndicate covering  transaction
to cover syndicate short  positions.  Such stabilizing  transactions,  syndicate
covering  transactions  and penalty  bids may cause the price of the Notes to be
higher than it would  otherwise  be in the absence of such  transactions.  These
transactions, if commenced, may be discontinued at any time.

In the ordinary course of their business,  the  Distributors and certain of
their  affiliates  have engaged in, and may in the future engage in,  investment
and commercial  banking  transactions and financial  advisory  services with the
Company and certain of its affiliates.

GLOSSARY

Set forth below are definitions, or the locations elsewhere of definitions,
of some of the terms used in this Prospectus Supplement.

"CALCULATION  AGENT" means the agent  appointed by the Company as set forth
in the applicable  Pricing  Supplement to calculate  interest rates for Floating
Rate Notes.

"CALCULATION  DATE"  pertaining to any Interest  Determination  Date means,
unless otherwise specified in the applicable pricing supplement,  the earlier of
(i) the tenth  calendar day after such Interest  Determination  Date or, if such
day is not a Market Day, the next  succeeding  Market Day or (ii) the Market Day
immediately preceding the applicable Interest Payment Date or the Maturity Date,
as the case may be.

"CD  RATE"  means  the rate  calculated  as set  forth  under  the  heading
"Description of the Notes--Floating Rate Notes--CD Rate Notes", unless otherwise
indicated in the applicable Pricing Supplement.

"CMT  RATE"  means  the rate  calculated  as set forth  under  the  heading
"Description  of  the  Notes--Floating   Rate  Notes--CMT  Rate  Notes,"  unless
otherwise indicated in an applicable Pricing Supplement.

"COMMERCIAL  PAPER RATE" means the rate  calculated  as set forth under the
heading  "Description of the Notes--Floating Rate  Notes--Commercial  Paper Rate
Notes", unless otherwise indicated in the applicable Pricing Supplement.

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

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

"DESIGNATED  LIBOR PAGE" means (a) if "LIBOR  Reuters" is  specified in the
applicable  Pricing  Supplement,  the display on the Reuter  Monitor Money Rates
Service  (or any  successor  service)  on the  page  specified  in such  Pricing
Supplement  (or any other page as may replace such page on such service) for the
purpose  of  displaying  the  London  interbank  rates  of major  banks  for the
applicable  Index  Currency,  or (b) if "LIBOR  Telerate"  is  specified  in the
appli-

S-23

cable Pricing Supplement as the method for calculating LIBOR, the display on the
Dow Jones Telerate  Service (or any successor  service) on the page specified in
such  Pricing  Supplement  (or any other page as may  replace  such page on such
service) for the purpose of displaying the London interbank rates of major banks
for the applicable Index Currency.

"DESIGNATED OFFICE" of the Trustee means the New York Window of the Trustee
at First National Bank of Chicago, Attn: Charlene Mullane, Corporate Trust - 8th
Floor, 14 Wall Street,  Suite 4607, New York, New York 10005,  unless  otherwise
provided in a Pricing Supplement.

"EXCHANGE RATE AGENT" means the agent appointed by the Company as set forth
in the applicable  Pricing  Supplement to convert  principal and any premium and
interest payments in respect of Foreign Currency Notes into U.S. dollars.

"FEDERAL  FUNDS  RATE"  means the rate  calculated  as set forth  under the
heading  "Description  of the  Notes--Floating  Rate  Notes--Federal  Funds Rate
Notes", unless otherwise indicated in the applicable Pricing Supplement.

"FIXED RATE NOTE" shall mean Notes bearing  interest as described under the
heading "Description of the Notes--Interest--Fixed Rate Notes".

"FLOATING RATE NOTES" shall mean Notes bearing  interest as described under
the heading "Description of the Notes--Interest--Floating Rate Notes".

"H.15(519)"  means the weekly  statistical  release  entitled  "Statistical
Release  H.15(519),  Selected  Interest  Rates",  or any successor  publication,
published by the Board of Governors of the Federal Reserve System.

"H.15 DAILY UPDATE" means the daily update of H.15(519)  available  through
the world-wide web site of the Board of Governors of the Federal  Reserve System
at  http://www.bog.frb.fed.us/releases/h.15/update,  or any  successor  site  or
publication of the Board of Governors of the Federal Reserve System.

"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.

"INDEX MATURITY" means, with respect to a Floating Rate Note, the period to
maturity of the  instrument  or obligation on which the interest rate formula is
based, as indicated in the applicable Pricing Supplement.

"INITIAL  INTEREST  RATE" means the rate at which  Floating  Rate Note will
bear interest from and including its Issue Date (or that of a predecessor  Note)
to but excluding the first  Interest  Reset Date, as indicated in the applicable
Pricing Supplement.

"INTEREST  DETERMINATION DATE" means the date as of which the interest rate
for a  Floating  Rate  Note  is to be  calculated,  to be  effective  as of  the
following  Interest  Reset Date and calculated on the related  Calculation  Date
(except in the case of LIBOR,  which is calculated on the related LIBOR Interest
Determination Date).

"INTEREST  RESET  DATE"  means the date on which a Floating  Rate Note will
begin to bear  interest  at the  variable  interest  rate  determined  as of any
Interest   Determination  Date.  See  the  third  paragraph  under  the  heading
"Description  of the  Notes--Floating  Rate Notes" for the  applicable  Interest
Reset Dates for such Notes.  The Reset Dates with respect to any  Floating  Rate
Note will also be set forth in the  applicable  Pricing  Supplement  and in such
Note.

"LIBOR"  means  the  rate   calculated  as  set  forth  under  the  heading
"Description of the Notes--Floating Rate Notes--LIBOR  Notes",  unless otherwise
indicated in the applicable Pricing Supplement.

"LONDON  BUSINESS DAY" means any day on which  dealings in deposits in U.S.
dollars are transacted in the London interbank market.

"MARKET DAY" means (a) with respect to any Note (unless otherwise  provided
in this definition), any day that is a Business Day in The City of New York, (b)
with  respect to LIBOR Notes only,  any  Business Day in New York that is also a
London  Market  Day,  (c) with  respect to Foreign  Currency  Notes  (other than
Foreign Currency Notes denominated in ECUs) only, any day that is a Business Day
both in New York and in the  principal  financial  center in the  country of the
Specified Currency and (d) with respect to Foreign Currency Notes denominated in
ECU, any date that is a Business Day in The City of New York that is  designated
as an ECU  settlement  day by the ECU Banking  Association in Paris or otherwise
generally regarded in the ECU interbank market as a day in which payments in ECU
are made.

S-24

"MARKET  EXCHANGE  RATE" for any Specified  Currency  means the noon buying
rate in The City of New York for cable transfers for such Specified  Currency as
certified  for  customs  purposes  by  (or  if not  so  certified  as  otherwise
determined by) the Federal Reserve Bank of New York.

"MATURITY", when used with respect to any Note, means the date on which the
principal of such Note or an installment of principal becomes due and payable as
therein or herein provided,  whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.

"PRIME  RATE"  means the rate  calculated  as set forth  under the  heading
"Description  of the  Notes--Floating  Rate  Notes--Prime  Rate  Notes",  unless
otherwise indicated in the applicable Pricing Supplement.

"PRINCIPAL  FINANCIAL CENTER" means the capital city of the country issuing
the  Index  Currency,  except  that  with  respect  to  United  States  dollars,
Australian dollars,  Deutsche marks, Dutch guilders,  Italian lire, Swiss francs
and ECUs, the Principal  Financial Center shall be The City of New York, Sydney,
Frankfurt, Amsterdam, Milan, Zurich and Luxembourg, respectively.

"REUTERS  SCREEN  USPRIME1  PAGE" means the  display on the Reuter  Monitor
Money Rates Service (or any successor  service) on the "USPRIME1"  page (or such
other page as may replace the USPRIME1  page on such service) for the purpose of
displaying prime rates or base lending rates of major United States banks.

"SPECIFIED  CURRENCY"  shall have the  meaning  set forth under the heading
"Description of the Notes--Foreign Currency Notes".

"SPREAD"  means the number of basis  points  specified  in the Note and the
applicable  Pricing  Supplement  as being  applicable to the interest rate for a
particular Floating Rate Note.

"SPREAD  MULTIPLIER"  means the  percentage  specified  in the Note and the
applicable  Pricing  Supplement  as being  applicable to the interest rate for a
particular Floating Rate Note.

"STATED MATURITY", when used with respect to any Note or any installment of
principal thereof or interest thereon,  means the date specified in such Note as
the  fixed  date on which the  principal  of such  Note or such  installment  of
principal or interest is due and payable.

"TREASURY  RATE" means the interest rate  calculated as set forth under the
heading  "Description of the Notes--Floating  Rate  Notes--Treasury Rate Notes",
unless otherwise indicated in the applicable Pricing Supplement.

S-25

[LOGO] PITNEY BOWES

PITNEY BOWES INC.
DEBT SECURITIES

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

Pitney  Bowes Inc.  (the  "Company")  from time to time may offer in one or
more series its unsecured debt securities consisting of notes or debentures (the
"Debt  Securities") for issuance and sale at an aggregate initial offering price
not to  exceed  $500,000,000  (or the  equivalent  at the  time of  offering  in
non-U.S.   dollar  denominated  currencies  or  units).  As  used  herein,  Debt
Securities shall include securities denominated,  or whose principal is payable,
in United  States  dollars,  or,  at the  option  of the  Company,  in any other
currency or in composite  currencies or in amounts determined by reference to an
index. Debt Securities will be offered in amounts, at prices and on the terms to
be  determined  at the time of sale and to be set forth in  supplements  to this
Prospectus. The Company may sell Debt Securities to underwriters,  to or through
dealers,  acting as  principals  for their own accounts or acting as agents,  or
directly to investors. See "Plan of Distribution".

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

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  terms  of  each  issue  of  the  Debt  Securities,   including,  where
applicable, the specific designation, aggregate principal amount, denominations,
maturity,  interest rate or rates (which may be fixed or variable),  if any, and
time of payment of any such interest,  terms for redemption at the option of the
Company or any holders,  if any,  terms for sinking fund  payments,  if any, the
initial  public  offering  price or  prices,  the names of any  underwriters  or
agents, the principal  amounts,  if any, to be purchased by underwriters and the
compensation  of such  underwriters  or agents and the other terms in connection
with the  offering  and sale of the Debt  Securities  in  respect  of which this
Prospectus is being delivered,  will be set forth in an accompanying  Prospectus
Supplement (the "Prospectus Supplement").

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

THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF DEBT SECURITIES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.

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

The date of this Prospectus is April 29, 1998.

NO DEALER,  SALESPERSON  OR OTHER  PERSON HAS BEEN  AUTHORIZED  TO GIVE ANY
INFORMATION  OR TO MAKE ANY  REPRESENTATIONS  NOT CONTAINED OR  INCORPORATED  BY
REFERENCE IN THIS  PROSPECTUS  OR THE  PROSPECTUS  SUPPLEMENT,  AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.  THIS PROSPECTUS AND THE PROSPECTUS  SUPPLEMENT DO NOT CONSTITUTE AN
OFFER TO SELL OR A  SOLICITATION  OF AN OFFER TO BUY ANY  SECURITIES  OTHER THAN
THOSE TO WHICH THEY RELATE OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO
BUY, SUCH  SECURITIES IN ANY  JURISDICTION  WHERE SUCH AN OFFER OR  SOLICITATION
WOULD BE UNLAWFUL.  NEITHER THE DELIVERY OF THIS  PROSPECTUS  OR ANY  PROSPECTUS
SUPPLEMENT  NOR  ANY  SALE  MADE  HEREUNDER  OR  THEREUNDER  SHALL,   UNDER  ANY
CIRCUMSTANCES,   CREATE  ANY  IMPLICATION  THAT  THE  INFORMATION  CONTAINED  OR
INCORPORATED BY REFERENCE HEREIN OR THEREIN IS cORRECT AS OF ANY TIME SUBSEQUENT
TO THEIR RESPECTIVE DATES.

ADDITIONAL INFORMATION

The Company is subject to the informational  requirements of the Securities
Exchange  Act of 1934,  as  amended  (the  "Exchange  Act") and,  in  accordance
therewith,  files  reports,  proxy  statements  and other  information  with the
Securities  and Exchange  Commission  (the  "Commission").  Such reports,  proxy
statements  and other  information  can be  inspected  and  copied at the public
reference  facilities  maintained  by the  Commission  at Room  1024,  450 Fifth
Street,  N.W.,  Washington,  D.C. 20549 and at the following Regional Offices of
the Commission:  New York Regional Office,  Seven World Trade Center,  New York,
New York 10048 and Chicago Regional Office, 500 West Madison Street, Suite 1400,
Chicago,  Illinois 60661.  Copies of such material can be obtained at prescribed
rates by writing to the Commission,  Public Reference Section, 450 Fifth Street,
NW, Washington,  D.C. 20549. Certain securities of the Company are listed on the
New  York  Stock  Exchange  (the  "NYSE")  and  reports  and  other  information
concerning  the Company may be  inspected  at the offices of the NYSE,  20 Broad
Street,  New York,  New York 10005.  In  addition,  the  Commission  maintains a
Website  that  contains  reports,  proxy and  information  statements  and other
materials  of  registrants  that file  electronically  (including  the  Company)
through the  Commission's  Electronic  Data  Gathering  Analysis  and  Retrieval
System. The Website can be accessed at http://www.sec.gov.

This Prospectus constitutes a part of a Registration Statement filed by the
Company with the Commission  under the Securities Act of 1933.  This  Prospectus
omits certain of the information  contained in the Registration  Statement,  and
reference  is hereby  made to the  Registration  Statement  and to the  exhibits
relating  thereto for further  information  with  respect to the Company and the
Debt Securities.  Any statements  contained herein  concerning the provisions of
any document are not necessarily  complete,  and in each instance,  reference is
made to the  copy of such  document  filed  as an  exhibit  to the  Registration
Statement  or  otherwise  filed  with the  Commission.  Each such  statement  is
qualified in its entirety by such reference.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

There is hereby  incorporated in this Prospectus by reference the following
document which has been filed with the Commission (File No. 001-03579):

(i) the Company's  Annual  Report on Form 10-K for the year ended  December
31, 1997 (which  incorporates  by  reference  portions  of the  Company's  Proxy
Statement on Schedule 14A filed March 31, 1998); and

(ii) the Company's Current Report on Form 8-K filed February 23, 1998.

All documents filed with the Commission  pursuant to sections 13(a), 13(c),
14 or 15(d) of the Exchange Act  subsequent to the date of this  Prospectus  and
prior to the termination of the offering of the Debt Securities  shall be deemed
to be  incorporated  by reference  into this  Prospectus and to be a part hereof
from the date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that any
statement  contained herein or in any subsequently  filed document which also is
or is deemed to be incorporated by reference  herein modifies or supersedes such
statement.  Any statement so modified or superseded shall not be deemed,  except
as so modified or superseded, to constitute a part of this Prospectus.

The Company  will provide  without  charge to each person to whom a copy of
this Prospectus is delivered,  on written or oral request of such person, a copy
of any or all of the foregoing  documents which have been or may be incorporated
in this Prospectus by reference,  other than exhibits to such documents,  unless
such exhibits shall have been  specifically  incorporated by reference into such
documents.  Requests  for  such  copies  should  be  directed  to the 

2

Corporate Secretary,  Pitney Bowes Inc., World Headquarters,  One Elmcroft Road,
Stamford, Connecticut 06926-0700, telephone (203) 356-5000.

THE COMPANY

The Company and its  subsidiaries  operate within three industry  segments:
business equipment,  business services, and commercial and industrial financing.
The Company operates in two geographic  areas: the United States and outside the
United States.  Together with its affiliates,  the Company employs approximately
30,000 people throughout the United States, Europe, Canada and other countries.

The Company,  a Delaware  corporation  organized in 1920,  is listed on the
NYSE.  The World  Headquarters  of the Company are located at One Elmcroft Road,
Stamford, Connecticut 06926-0700 (telephone 203-356-5000).

USE OF PROCEEDS

Except  as may be set  forth  in the  Prospectus  Supplement,  the  Company
intends to use the net proceeds  from the sales of the Debt  Securities to repay
short-term  debt, to repurchase the Company's  common stock, to reduce or retire
from time to time other  indebtedness and for other general  corporate  purposes
including possible  acquisitions.  The precise amount and timing of sales of the
Debt Securities will be dependent on market  conditions and the availability and
cost of other funds to the Company.

RATIOS OF EARNINGS TO FIXED CHARGES

The following table sets forth the ratio of the Company's earnings to fixed
charges excluding minority interest for the periods indicated:

YEARS ENDED DECEMBER 31,
------------------------
1997         1996         1995         1994          1993
----         ----         ----         ----          ----
4.23         3.79         3.28         3.39          3.24

For the  purpose  of  computing  the  ratio of  earnings  to fixed  charges
excluding minority  interest,  earnings have been calculated by adding to income
from  continuing  operations  before  income taxes the amount of fixed  charges.
Fixed  charges  consist of interest on debt and a portion of net rental  expense
deemed to represent interest.

DESCRIPTION OF DEBT SECURITIES

The following  description  sets forth certain general terms and provisions
of the  Indenture  under which the Debt  Securities  are to be issued.  The Debt
Securities may be issued from time to time in one or more series. The particular
terms of each  issue of the Debt  Securities  (the  "Offered  Debt  Securities")
offered  by any  Prospectus  Supplement  and the  extent,  if any,  to which the
general  provisions may apply to the Offered Debt  Securities so offered will be
described in the Prospectus Supplement relating to such Offered Debt Securities.

Offered  Debt   Securities  are  to  be  issued  under  an  Indenture  (the
"Indenture"), between the Company and SunTrust Bank, Atlanta, as Trustee. A copy
of the form of Indenture is filed as an exhibit to the Registration Statement of
which this Prospectus is a part. The statements  under this caption  relating to
the Debt  Securities  and the  Indenture  are summaries and do not purport to be
complete.  Such  summaries  make use of terms  defined in the  Indenture and are
qualified in their entirety by express  reference to provisions of the Indenture
(including  definitions  therein  of certain  terms)  which is  incorporated  by
reference herein.  The term  "Securities" as used under this caption,  refers to
all  Securities  which may be issued under the  Indenture  and includes the Debt
Securities.  All  section  references  appearing  herein are to  sections of the
Indenture.

GENERAL

The Debt Securities  will be unsecured  obligations of the Company and will
rank on a parity with all other  unsecured  unsubordinated  indebtedness  of the
Company. As of the date of this Prospectus, no Securities have been issued

3

under the Indenture. The Indenture does not limit the aggregate principal amount
of Securities which may be issued thereunder and provides that Securities may be
issued thereunder from time to time in one or more series.

Reference is made to the applicable Prospectus Supplement for the following
terms of and information relating to the Offered Debt Securities:  (i) the title
of the Offered Debt Securities; (ii) any limit on the aggregate principal amount
of the Offered Debt  Securities;  (iii) the price or prices at which the Offered
Debt  Securities  will be issued;  (iv) the date or dates on which principal of,
and any premium on, the Offered Debt Securities will be payable; (v) the rate or
rates  (which may be fixed or  variable)  at which the Offered  Debt  Securities
shall bear interest,  if any, or the method by which such rate or rates shall be
determined,  the basis on which such  interest,  if any,  shall be calculated if
other than a 360-day year consisting of twelve 30-day months,  the date or dates
from which such  interest,  if any, will accrue and on which such  interest,  if
any,  will be  payable  and the  related  record  dates;  (vi) if other than the
offices of the Trustee,  the place where the  principal  of, and any premium and
interest on, the Offered Debt Securities will be payable;  (vii) any redemption,
repayment  or sinking fund  provisions;  (viii) if other than  denominations  of
$1,000  or  multiples  thereof,  the  denominations  in which the  Offered  Debt
Securities  will be issuable;  (ix) if other than the principal  amount thereof,
the portion of the  principal  amount due upon  acceleration;  (x) if other than
U.S.  dollars,  the currency or currencies or currency unit or currency units in
which the Offered Debt Securities will be denominated and in which principal of,
and premium, if any, and interest,  if any, on, the Offered Debt Securities will
or may be payable;  (xi) any index or formula  used to  determine  the amount of
payments  of  principal  of and any premium  and  interest  on the Offered  Debt
Securities;  (xii) the  terms  and  conditions,  if any,  pursuant  to which the
Offered Debt  Securities  may be converted or exchanged for other  securities of
the Company or any other  person;  (xiii)  whether the Offered  Debt  Securities
shall be issued in the form of one or more  Global  Securities  (as  defined  in
"Book-Entry  System");  (xiv)  the  identity  of  any  trustees,   depositaries,
authenticating  or paying agents,  transfer agents or registrars with respect to
the Offered Debt  Securities  and (xv) any other  specific  terms of the Offered
Debt Securities not inconsistent with the Indenture. (Section 3.01)

Unless otherwise  indicated in the Prospectus  Supplement relating thereto,
the Offered Debt  Securities are to be issued as registered  securities  without
coupons in denominations of $1,000 and any integral multiple of $1,000. (Section
3.02) No  service  charge  will be made for any  transfer  or  exchange  of such
Offered 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 3.05)

Securities  may be issued under the  Indenture as Original  Issue  Discount
Securities to be sold at a  substantial  discount  below their stated  principal
amount.  Federal income tax consequences and other considerations  applicable to
Offered Debt Securities will be described in the Prospectus  Supplement relating
thereto. (Section 3.01)

CERTAIN DEFINITIONS

The  term  "Attributable  Debt"  in  respect  of any  Sale  and  Lease-Back
Transaction  means as of the time of the  determination,  the  lesser of (i) the
sale price of the Principal Domestic Manufacturing Plant so leased multiplied by
a fraction the numerator of which is the  remaining  portion of the base term of
the lease included in such  transaction and the denominator of which is the base
term of such lease, and (ii) the total  obligation  (discounted to present value
at the  implicit  interest  factor,  determined  in  accordance  with  generally
accepted  financial  practice,  included  in the  rental  payments,  or, if such
interest  factor cannot readily be determined,  at a rate of interest of 11% per
annum, compounded  semiannually) under the lease for rental payments (other than
amounts required to be paid on account of property taxes as well as maintenance,
repairs, insurance, water rates and other items which do not constitute payments
for  property  rights  (such as those based on real or energy  costs or savings)
during  the  remaining  portion of the base term of the lease  included  in such
transaction).

The term "Consolidated Net Tangible Assets" means as of any particular time
the  aggregate  amount of  assets  after  deducting  therefrom  (a) all  current
liabilities  (excluding  any such  liability  that by its terms is extendable or
renewable  at the  option of the  obligor  thereon to a time more than 12 months
after the time as of which the  amount  thereof is being  computed)  and (b) all
goodwill, excess of cost over assets acquired, patents, copyrights,  trademarks,
trade names,  unamortized debt discount and expense and other like  intangibles,
all as shown in the most recent consolidated financial statements of the Company
and its Subsidiaries  prepared in accordance with generally accepted  accounting
principles.

4

The term  "Consolidated  Net  Worth"  means the sum of (i) the par value or
stated value of the capital stock of the Company,  (ii) the capital in excess of
par  value  and (iii) the  retained  earnings,  all as shown on the most  recent
consolidated  balance  sheet of the  Company and its  Subsidiaries,  prepared in
accordance with generally accepted accounting principles.

The term "Principal Domestic  Manufacturing  Plant" means any manufacturing
or  processing  plant or  warehouse  (other  than  such  manufacturing  plant or
warehouse  which,  in the opinion of the Board of Directors,  is not of material
importance to the total business  conducted by the Company and its  Subsidiaries
taken as a whole)  together  with the land upon which it is erected and fixtures
comprising a part thereof owned by the Company or any  Subsidiary and located in
the  United  States,  if  the  gross  book  value  (without   deduction  of  any
depreciation  reserves) of all real  property and fixed assets  included in such
plant on the date as of which the  determination  is being  made  exceeds  1% of
Consolidated Net Worth.

The term  "Restricted  Subsidiary"  means any Subsidiary which is organized
under  the laws of the  United  States  or of any  State or of the  District  of
Columbia  and  transacts  all or a  substantial  portion of its  business in the
United States and which owns a Principal Domestic Manufacturing Plant; provided,
however,  that the term shall not include Pitney Bowes Credit Corporation or any
other  Subsidiary  (a) which is solely or  primarily  engaged in the business of
providing  or  obtaining  financing  for the sale or lease of  products  sold or
leased by the Company or any Subsidiary or which is otherwise  primarily engaged
in the business of a finance  company either on a secured or an unsecured  basis
or (b)  which  is  solely  or  primarily  engaged  in the  business  of  owning,
developing   or  leasing  real   property   other  than  a  Principal   Domestic
Manufacturing Plant.

The term  "Sale and  Lease-Back  Transaction"  of a  corporation  means any
arrangement  whereby  property has been or is to be sold or  transferred by such
corporation to any Person with the intention on the part of such  corporation of
taking back a lease of such property with a term of more than 36 months pursuant
to which the rental  payments are  calculated to amortize the purchase  price of
such  property  substantially  over the useful life of such  property,  and such
property is in fact so leased by such corporation.

The term  "Subsidiary"  means any corporation of which more than 50% of the
outstanding voting stock is owned, directly or indirectly,  by the Company or by
one or  more  other  Subsidiaries,  or by the  Company  and  one or  more  other
Subsidiaries.  For the purposes of such  definition,  "voting stock" means stock
which ordinarily has voting power for the election of directors,  whether at all
times  or only so long as no  senior  class of stock  has such  voting  power by
reason of any contingency.

The term  "U.S.  Government  Obligations"  means  securities  which are (i)
direct  obligations of the United States of America 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 the payment of which is  unconditionally  guaranteed as a full faith and
credit obligation by the United States of America, 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  U.S.  Government  Obligations  or a  specific  payment  of
interest on or principal  of any such U.S.  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  U.S.  Government
Obligation  or the  specific  payment of  interest on or  principal  of the U.S.
Government Obligation evidenced by such depository receipt.

The term "Wholly-Owned Restricted Subsidiary" means a Restricted Subsidiary
all of the outstanding voting stock of which,  other than directors'  qualifying
shares,  and all the Preferred  Stock (as defined) of which shall at the time be
owned  by  the  Company  or  by  one  or  more  other  Wholly-Owned   Restricted
Subsidiaries,  or by the Company and one or more other  Wholly-Owned  Restricted
Subsidiaries. (Section 1.01)

CERTAIN RESTRICTIONS

LIMITATIONS ON LIENS

The  Indenture  provides that if the Company or any  Restricted  Subsidiary
shall issue, assume, guarantee or become liable for any evidence of indebtedness
for money borrowed  ("Indebtedness")  secured by a mortgage,  security interest,
pledge or lien ("Mortgage") on any Principal  Domestic  Manufacturing  Plant, or
shares of  capital  stock

5

or Indebtedness of any Restricted  Subsidiary,  the Company will secure or cause
to be secured the Debt  Securities  equally and ratably  with (or prior to) such
secured   Indebtedness,   unless  the  aggregate  amount  of  all  such  secured
Indebtedness would not exceed 10% of Consolidated Net Tangible Assets.  (Section
10.06)

Such limitation will not apply to Indebtedness  secured by (a) Mortgages on
property  of any  corporation  existing at the time such  corporation  becomes a
Restricted Subsidiary, (b) Mortgages on any property existing at the date of the
initial  issuance  of  securities  pursuant to the  Indenture  or at the time of
acquisition  thereof, (c) Mortgages on property of a corporation existing at the
time such corporation is acquired  (including by way of merger or consolidation)
by the Company or a Restricted  Subsidiary or a Restricted  Subsidiary is merged
into such  corporation or at the time of a sale,  lease or other  disposition of
the  properties of such  corporation  (or a division  thereof) as an entirety or
substantially as an entirety to the Company or a Restricted Subsidiary, provided
that such  mortgage as a result of such merger,  consolidation,  sale,  lease or
other  disposition  is not  extended  to  property  owned by the Company or such
Restricted   Subsidiary   immediately  prior  thereto,  (d)  Mortgages  securing
Indebtedness  of a  Wholly-Owned  Restricted  Subsidiary  to the  Company  or to
another Wholly-Owned Restricted Subsidiary,  (e) purchase money and construction
Mortgages  entered into within specified time limits,  (f) mechanics' liens, tax
liens,  liens in favor of, and to secure progress,  advance or other payments or
the acquisition of real or personal property from any governmental body pursuant
to contract or provision of statute,  and other liens,  charges and encumbrances
incidental to construction,  conduct of business or ownership of property of the
Company or any Restricted  Subsidiary which were not incurred in connection with
borrowing  money,  obtaining  advances or credits or the acquisition of property
and in the aggregate do not materially impair the use of any Principal  Domestic
Manufacturing  Plant for which it is held or which are being  contested  in good
faith,  (g) liens arising by reason of any judgment,  decree or order of a court
so long as proceedings to review such judgments  shall not have been  terminated
or the period in which to initiate such proceedings  shall not have expired,  or
(h) any extension, renewal or replacement of any of the aforementioned Mortgages
not in excess of the principal amount of such Indebtedness plus the fee incurred
in connection with such transaction. (Section 10.06)

LIMITATIONS ON SALE AND LEASEBACK TRANSACTIONS

The  Indenture  provides  that  neither  the  Company  nor  any  Restricted
Subsidiary  may enter into any Sale and  Lease-Back  Transaction  involving  any
Principal  Domestic  Manufacturing  Plant  unless  the  aggregate  amount of all
Attributable  Debt  with  respect  to such  transactions  plus all  Indebtedness
secured by  Mortgages  on  Principal  Domestic  Manufacturing  Plants  (with the
exception of secured Indebtedness which is excluded as described in "Limitations
on Liens" above) would not exceed 10% of Consolidated Net Tangible Assets.

Such  limitation  will not apply to any Sale and Lease-Back  Transaction if
(a) the lease is for a period of not more than three years,  (b) the purchaser's
commitment is obtained  within 180 days after the  acquisition,  construction or
placing in service of the Principal Domestic  Manufacturing  Plant, (c) the rent
payable  pursuant to such lease is to be  reimbursed  under a contract  with the
United  States  Government or any  instrumentality  or agency  thereof,  (d) the
transaction is between the Company and a Wholly-Owned  Restricted  Subsidiary or
between Wholly-Owned Restricted Subsidiaries, (e) the Company or such Restricted
Subsidiary  would be entitled as described in  "Limitations  on Liens" above, to
mortgage such Principal Domestic Manufacturing Plant without equally and ratably
securing the Debt Securities,  or (f) the Company or such Restricted Subsidiary,
within  180 days after the  effective  date of the  transaction,  applies to the
retirement  of  Debt  Securities  or  other  Indebtedness  of the  Company  or a
Restricted  Subsidiary  an amount  equal to (A) either (i) the lesser of the net
proceeds  of the sale or  transfer or the book value at the date of such sale or
transfer  of  the  Principal  Domestic   Manufacturing   Plant  leased,  if  the
transaction  is for cash, or (ii) the lesser of the fair market value or the net
book  value at the  date of such  sale or  transfer  of the  Principal  Domestic
Manufacturing Plant leased, if the transaction is for other than cash, minus (B)
the amount equal to the  principal  amount of Debt  Securities  delivered to the
Trustee  within  such 180 days for  cancellation  and the  principal  amount  of
Indebtedness voluntarily retired within such 180 days. (Section 10.07)

RESTRICTION ON CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

The Indenture  provides that no consolidation or merger of the Company with
or into any other  Person and no  conveyance,  transfer or lease of its property
substantially  as an entirety  to another  Person may be made (1) unless (i) the
surviving  corporation or acquiring Person shall be a corporation  organized and
existing under the laws of the United States of America,  any State thereof,  or
the District of Columbia and shall expressly assume the payment of principal and
any premium and  interest on all the  Securities  and the  performance  of every
covenant  in the  Indenture;

6

(ii) immediately after giving effect to such  transaction,  no Event of Default,
and no event  which  after  notice  or lapse of time  would  become  an Event of
Default,  shall have happened and be continuing;  (iii) if, as a result thereof,
any  assets  of  the  Company  would  become  subject  to a  mortgage  or  other
encumbrance  which is not  expressly  permitted by the  Indenture  (see "Certain
Restrictions--Limitations  on Liens") unless all the outstanding  Securities are
secured  by a lien  upon  such  assets  equal  with  (or  prior  to) that of the
indebtedness  secured by such mortgage or encumbrance;  and (iv) the Company has
delivered  the  required  Officers'  Certificate  and  Opinion of Counsel to the
Trustee. (Section 8.01)

THE TRUSTEE

The Indenture contains certain  limitations on the right of the Trustee, as
a creditor of the Company,  to obtain payment or claims in certain cases,  or to
realize on certain property received in respect of any such claim as security or
otherwise. (Section 6.13)

SunTrust  Bank,  Atlanta,  the  Trustee  under the  Indenture,  maintains a
banking   relationship  with  Pitney  Bowes  Credit   Corporation,   a  Delaware
corporation and a subsidiary of the Company.

BOOK-ENTRY SYSTEM

If so specified in the applicable Prospectus  Supplement,  the Offered Debt
Securities may be represented by one or more certificates in global form (each a
"Global  Security").  Each Global  Security will be deposited with, or on behalf
of, a depositary, which, unless otherwise specified in the applicable Prospectus
Supplement,  will be The Depository  Trust Company  ("DTC"),  New York, New York
(including any successor depositary appointed by the Company, the "Depositary").
The Global  Securities  will be registered in the name of the  Depositary or its
nominee.

DTC has advised the Company  that DTC is a limited  purpose  trust  company
organized  under  the laws of the State of New York,  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.  DTC was created to hold  securities  of its
participants  and to  facilitate  the  clearance  and  settlement  of securities
transactions  among its participants  through  electronic  book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities  certificates.  The Depositary's  participants  include securities
brokers and dealers,  banks, trust companies,  clearing corporations and certain
other  organizations,  some of which (and/or  representatives  of which) own the
Depositary.  Access to the Depositary's  book-entry  system is also available to
others, such as banks,  brokers,  dealers and trust companies that clear through
or maintain a custodial  relationship  with a  participant,  either  directly or
indirectly.

Upon the issuance of a Global Security,  the Depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts of
the Debt  Securities  represented  by such Global  Security  to the  accounts of
participants.   The  accounts  to  be  credited   will  be   designated  by  the
underwriters,  dealers  or  agents,  if any,  or by the  Company,  if such  Debt
Securities are offered and sold directly by the Company. Ownership of beneficial
interests in a Global  Security will be limited to  participants or persons that
may hold interests through  participants.  Ownership of beneficial  interests by
participants  in a Global  Security  will be shown on, and the  transfer of that
ownership  interest  will be effected only  through,  records  maintained by the
Depositary or its nominee (with respect to interests of participants) and on the
records of  participants  (with  respect  to  interests  of  persons  other than
participants).   The  laws  of  some  jurisdictions  may  require  that  certain
purchasers  of  securities   take  physical   delivery  of  such  securities  in
certificated  form.  Such laws may impair the  ability  to  transfer  beneficial
interests in a Global Security.

So long as the  Depositary  or its  nominee  is the  registered  owner of a
Global  Security,  the  Depositary or such nominee,  as the case may be, will be
considered the sole owner or holder of the Debt  Securities  represented by such
Global Security for all purposes under the Indenture. Except as set forth below,
owners of beneficial  interests in such Global  Security will not be entitled to
have the Debt Securities represented thereby registered in their names, will not
receive or be entitled to receive physical delivery of certificates representing
the Debt  Securities  and will not be considered  the owners or holders  thereof
under the Indenture.  Accordingly,  each person owning a beneficial  interest in
such Global  Security must rely on the procedures of the Depositary and, if such
person is not a participant,  on the procedures of the participant through which
such person owns its  interest,  to  exercise  any rights of a holder  under the
Indenture.

7

Payment of principal  of, and any premium and interest on, Debt  Securities
represented by a Global Security will be made by the Company through the Trustee
or a paying  agent  (which may also be the  Trustee)  to the  Depositary  or its
nominee,  as the case may be, as the  registered  owner and holder of the Global
Security  representing  such Debt Securities.  Under the terms of the Indenture,
the  Company  and the  Trustee  may treat the persons in whose names the Offered
Debt  Securities  are  registered  as the  owners  thereof  for the  purpose  of
receiving such payments and for any and all other purposes.  Consequently,  none
of the  Company,  the  Trustee,  any  paying  agent or  registrar  for such Debt
Securities  will have any  responsibility  or  liability  for any  aspect of the
records  relating  to or  payments  made  on  account  of  beneficial  ownership
interests in a Global Security or for maintaining,  supervising or reviewing any
records relating to such beneficial ownership interests.

The Company expects that the Depositary or its nominee, as the case may be,
upon  receipt of any payment of  principal,  premium or interest in respect of a
Global Security, will immediately credit participants' accounts with payments in
amounts  proportionate to their respective beneficial interests in the principal
amount of such Global  Security as shown on the records of the Depositary or its
nominee.  The Company also expects that  payments by  participants  to owners of
beneficial interests in such Global Security held through such participants will
be governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers  registered in "street name,"
and will be the responsibility of such participants.

A  Global  Security  may  not  be  transferred  except  as a  whole  by the
Depositary to its nominee or by a nominee of the Depositary to the Depositary or
another  nominee of the  Depositary  or by the  Depositary  or its  nominee to a
successor of the  Depositary or a nominee of such  successor.  If the Depositary
for a  Global  Security  is at any time  unwilling  or  unable  to  continue  as
depositary and a successor  depositary is not appointed by the Company within 90
days, the Company will issue Debt  Securities in  certificated  form in exchange
for all of the Global Securities representing such Debt Securities. In addition,
the Company may at any time and in its sole discretion determine not to have any
Debt Securities represented by one or more Global Securities and, in such event,
will issue Debt  Securities  in  certificated  form in  exchange  for all of the
Global Securities representing such Debt Securities.  Further, if the Company so
specifies  with  respect  to the  Debt  Securities  of a  series,  an owner of a
beneficial  interest in a Global Security  representing  Debt Securities of such
series may on terms  acceptable to the Company and the  Depositary  receive Debt
Securities of such series in certificated  form. In any such instance,  an owner
of a  beneficial  interest  in a Global  Security  will be  entitled to physical
delivery in certificated  form of Debt  Securities of the series  represented by
such Global Security equal in principal  amount to such beneficial  interest and
to have such Debt Securities registered in its name (Section 3.05).

EVENTS OF DEFAULT AND NOTICES THEREOF

The  following  events are defined in the  Indenture as "Events of Default"
with respect to  Securities  of any series:  (a) failure to pay  principal of or
premium, if any, on any Security of that series when due; (b) failure to pay any
interest on any  Security of that series when due,  continued  for 30 days;  (c)
failure  to  deposit  any  sinking  fund  payment,  when due,  in respect of any
Security  of that  series;  (d)  failure to perform  any other  covenant  of the
Company in the Indenture (other than a covenant included in the Indenture solely
for the benefit of a series of Securities other than that series), continued for
90 days after  written  notice  given to the  Company  by the  Trustee or to the
Company and the Trustee by the  holders of at least 25% in  principal  amount of
the Outstanding  Securities of each series affected thereby;  (e) certain events
in bankruptcy,  insolvency or reorganization  of the Company;  and (f) any other
Event of Default  provided with respect to  Securities of such series.  (Section
5.01)

If an Event of Default  under clause (a),  (b),  (c), (d) or (f) above with
respect to Securities of any series at the time  Outstanding  shall occur and be
continuing,  either  the  Trustee or the  holders  of at least 25% in  principal
amount of the Outstanding  Securities of each such series voting separately,  in
the case of clause (a), (b), (c) or (f), or of all such series affected thereby,
voting as one class, in the case of (d) above,  may declare the principal amount
(or,  if  the  Securities  of  any  such  series  are  Original  Issue  Discount
Securities,  such  portion of the  principal  amount as may be  specified in the
terms of such  series) of all  Securities  of such  series to be due and payable
immediately.  If an Event of Default  under  clause (e) above shall occur and be
continuing,  either  the  Trustee or the  holders  of at least 25% in  principal
amount of all of the  Outstanding  Securities  may declare the principal  amount
(or, if the  Securities of any series are Original  Issue  Discount  Securities,
such  portion of the  principal  amount as may be specified in the terms of such
series) of all outstanding  Securities to be due and payable immediately.  Under
certain  circumstances  the  holders  of  a  majority  in  principal  amount  of
Outstanding  Securities of such series may rescind or annul such declaration

8

and its  consequences.  (Section  5.02)  In the  event  the  Company  takes  the
necessary  action to enable it to omit to comply with  certain  covenants of the
Indenture  as  described  under  "--Defeasance  of  Certain  Covenants"  and the
Securities are declared due and payable because of the occurrence of an Event of
Default, the amount of money and U.S. Government Obligations on deposit with the
Trustee will be sufficient  to pay amounts due on the  Securities at the time of
their  Stated  Maturity  but may not be  sufficient  to pay  amounts  due on the
Securities at the time of the acceleration resulting from such Event of Default.
(Section 10.08) However, the Company shall remain liable for such payments.

Reference is made to the  Prospectus  Supplement  relating to any series of
Offered Debt  Securities  which are Original Issue  Discount  Securities for the
particular  provisions  relating to the principal  amount of such Original Issue
Discount  Securities  due on  acceleration  upon the  occurrence  of an Event of
Default and the continuation thereof.

The  Indenture  provides  that  the  Trustee,  within  90  days  after  the
occurrence of a default with respect to any series of Securities,  shall give to
the holders of Securities of that series,  notice of all uncured  defaults known
to it (the term default to mean the Events of Default  specified  above  without
grace periods),  provided that,  except in the case of default in the payment of
principal of (or premium, if any) or any interest,  or sinking fund installment,
if any, on any  Security,  the Trustee  shall be protected in  withholding  such
notice if it in good faith  determines that the withholding of such notice is in
the interest of the Holders of Securities. (Section 6.02)

The  Company  will  be  required  to  furnish  to the  Trustee  annually  a
certificate by certain officers of the Company to the effect that to the best of
their  knowledge the Company is not in default in the  fulfillment of any of its
obligations  under  the  Indenture  or,  if  there  has  been a  default  in the
fulfillment  of any such  obligation,  specifying  each such  default.  (Section
10.09)

The Holders of a majority in principal amount of the outstanding Securities
of any series will have the right, subject to certain limitations, to direct the
time,  method and place of conducting any proceeding for any remedy available to
the Trustee or  exercising  any trust or power  conferred  on the  Trustee  with
respect to the  Securities of such series,  and, in certain  circumstances,  the
Holders  of  not  less  than a  majority  in  principal  amount  of  Outstanding
Securities of any series (voting as a separate class) or the holders of not less
than a majority in aggregate  principal amount of Outstanding  Securities of all
Series (voting as a class), may waive certain defaults. (Sections 5.12 and 5.13)

The Indenture provides that in case an Event of Default has occurred and is
continuing,  the Trustee shall  exercise such of its rights and powers under the
Indenture,  and use the same  degree of care and skill in their  exercise,  as a
prudent man would exercise or use under the  circumstances in the conduct of his
own affairs.  (Section  6.01)  Subject to such  provisions,  the Trustee will be
under no  obligation to exercise any of its rights or powers under the Indenture
at the  request  of any of the  holders  of  Securities  unless  they shall have
offered to the  Trustee  reasonable  security  or  indemnity  against the costs,
expenses and  liabilities  which might be incurred by it in compliance with such
request. (Section 6.03)

MODIFICATION OF THE INDENTURE

Modifications  and  amendments  of the Indenture may be made by the Company
and the Trustee,  with the consent of the holders of not less than a majority in
aggregate  principal  amount  of the  Outstanding  Securities  issued  under the
Indenture which are affected by the modification or amendment,  provided that no
such  modification or amendment may,  without the consent of each Holder of each
such Outstanding  Security affected thereby, (1) change the stated maturity date
of the principal of (or premium, if any) or any installment of interest, if any,
on any such Security; (2) reduce the principal amount of (or premium, if any) or
the  interest,  if any, on any such  Security or the  principal  amount due upon
acceleration  of an Original  Issue Discount  Security;  (3) change the place or
currency of payment of principal  (or premium,  if any) or interest,  if any, on
any such Security; (4) impair the right to institute suit for the enforcement of
any such  payment  on or with  respect  to any such  Security;  (5)  reduce  the
above-stated  percentage of holders of  Securities  necessary to modify or amend
the Indenture; or (6) modify the foregoing requirements or reduce the percentage
of holders of outstanding  Securities necessary to waive compliance with certain
provisions of the Indenture or for waiver of certain defaults. (Section 9.02)

9

DEFEASANCE AND DISCHARGE

The  Indenture  provides  that with respect to the  Securities of a certain
series, unless otherwise specified,  the Company will be discharged from any and
all obligations in respect of such Securities (except for certain obligations to
register  the transfer or exchange of  Securities,  to replace  stolen,  lost or
mutilated Securities, to maintain paying agencies and hold monies for payment in
trust)  upon the  deposit  with the  Trustee,  in trust,  of money  and/or  U.S.
Government  obligations  which  through the payment of  interest  and  principal
thereof  in  accordance  with  their  terms  will  provide  money  in an  amount
sufficient to pay any  installment  of principal  (and premium,  if any) and any
interest  on and  any  mandatory  sinking  fund  payments  in  respect  of  such
Securities on the Stated  Maturity of such payments in accordance with the terms
of the Indenture and such  Securities.  Such a trust may only be  established if
the Company has delivered to the Trustee an Opinion of Counsel acceptable to the
Trustee  (who may be counsel to the  Company)  to the effect  that,  among other
things,  establishment  of the trust would not cause the  Securities of any such
series listed on any nationally-recognized securities exchange to be delisted as
a result  thereof  and an Opinion of Counsel to the effect  that the Company has
received from or there has been published by the United States Internal  Revenue
Service a ruling to the effect that such a defeasance  and discharge will not be
deemed,  or  result  in,  a  taxable  event  with  respect  to  holders  of such
Securities.  (Section 4.02) The designation of such  provisions,  Federal income
tax consequences and other  considerations  applicable thereto will be described
in the Prospectus Supplement relating thereto.

DEFEASANCE OF CERTAIN COVENANTS

The  Indenture  provides  that with respect to the  Securities of a certain
series, unless otherwise specified,  the Company may omit to comply with certain
restrictive  covenants  described in Section  10.07  (Limitations  on Liens) and
Section 10.08 (Limitations on Sale and Leaseback  Transactions) of the Indenture
and with any additional  negative or restrictive  covenant of the Company (other
than those  contained in the  Indenture)  applicable  to the  Securities of such
series if the Company  deposits  with the Trustee  money and/or U.S.  Government
Obligations  (as defined)  which  through the payment of interest and  principal
thereof  in  accordance  with  their  terms  will  provide  money  in an  amount
sufficient  to pay  principal  and any premium and interest on and any mandatory
sinking fund payments in respect of such  Securities  on the Stated  Maturity of
such payments in accordance with the terms of the Indenture and such Securities.
The  obligations  of the Company under the Indenture  other than with respect to
the  covenants  referred  to above shall  remain in full force and  effect.  The
Company  will also be  required  to deliver to the Trustee an Opinion of Counsel
(who may be counsel to the  Company)  to the effect that the deposit and related
covenant  defeasance  will not be  deemed,  or result  in, a taxable  event with
respect to holders of the  Securities.  (Section  10.10) The designation of such
provisions,  Federal income tax consequences and other considerations applicable
thereto will be described in the Prospectus Supplement relating thereto.

CONCERNING THE TRUSTEE

Unless  otherwise  specified  in  the  applicable  Prospectus   Supplement,
SunTrust  Bank,  Atlanta is the Trustee,  paying agent and  registrar  under the
Indenture.

GOVERNING LAW

The Indenture and the Debt  Securities  will be governed by the laws of the
State of New York.

PLAN OF DISTRIBUTION

The Company may sell Debt Securities to one or more underwriters for public
offering and sale by them or may sell Debt  Securities to investors  directly or
through  agents.  The  Prospectus  Supplement  with  respect to any Offered Debt
Securities  will set  forth  the  terms of the  offering  of such  Offered  Debt
Securities,  including  the name or names of any  underwriters  or  agents,  the
purchase  price of the Offered Debt  Securities  and the proceeds to the Company
from  such  sale,  any  underwriting  discounts  and  other  items  constituting
underwriters' compensation,  any initial public offering price and any discounts
or  concessions  allowed  or  reallowed  or paid to dealers  and any  securities
exchanges on which the Offered Debt Securities may be listed.

If  underwriters  are  used in a sale of any  Debt  Securities,  such  Debt
Securities will be acquired by the underwriters for their own account and may be
resold  from  time to time in one or  more  transactions,  including  negotiated
transactions,  at a fixed public offering price or at varying prices  determined
at the time of sale.  The Debt  Securities

10

may be offered to the public  through  underwriting  syndicates  represented  by
managing underwriters.  Unless otherwise set forth in the Prospectus Supplement,
the  obligations of the  underwriters  to purchase the Debt  Securities  will be
subject to certain  conditions  precedent and the underwriters will be obligated
to purchase all the Debt  Securities if any are  purchased.  Any initial  public
offering price and any discounts or concessions  allowed or reallowed or paid to
dealers may be changed from time to time.

The Debt  Securities  may be sold directly by the Company or through agents
designated  by the  Company  from time to time.  Any such agent  involved in the
offer or sale of the Debt Securities will be named, and any commissions  payable
by the Company to such agent will be set forth,  in the  Prospectus  Supplement.
Unless otherwise indicated in the Prospectus Supplement,  any such agent will be
acting on a best efforts basis for the period of its appointment.

If so indicated in the  Prospectus  Supplement,  the Company will authorize
agents,   underwriters  or  dealers  to  solicit  offers  by  certain  specified
institutions to purchase  Offered Debt Securities from the Company at the public
offering  price set  forth in the  Prospectus  Supplement  pursuant  to  delayed
delivery contracts providing for payment and delivery on a specified date in the
future. Such contracts will be subject only to those conditions set forth in the
Prospectus   Supplement  and  the  Prospectus  Supplement  will  set  forth  the
commission payable for solicitation of such contracts.

Agents and underwriters may be entitled, under agreements entered into with
the  Company,   to   indemnification   by  the  Company  against  certain  civil
liabilities,  including  liabilities  under the  Securities  Act of 1933,  or to
contribution  with respect to payments which the agents or  underwriters  may be
required to make in respect  thereof.  Certain  agents and  underwriters  may be
customers of, engage in transactions  with, or perform services for, the Company
in the ordinary course of business.

Each issue of Offered  Debt  Securities  will be a new issue of  securities
with no  established  trading  market.  Any  underwriters  to whom  Offered Debt
Securities  are sold by the  Company  for  public  offering  and sale may make a
market  in such  Offered  Debt  Securities,  but such  underwriters  will not be
obligated  to do so and may  discontinue  any market  making at any time without
notice.  No assurance can be given as to the liquidity of the trading market for
any Offered Debt Securities.

VALIDITY OF DEBT SECURITIES

The validity of the Debt  Securities will be passed upon for the Company by
Sara E. Moss,  Esq.,  Vice  President and General  Counsel of the Company and by
Davis Polk & Wardwell,  450 Lexington  Avenue,  New York,  New York 10017,  and,
unless otherwise  indicated in a Prospectus  Supplement relating to Offered Debt
Securities,  for the  underwriters  or agents by Sullivan & Cromwell,  125 Broad
Street, New York, New York 10004.

EXPERTS

The financial  statements  incorporated  in this Prospectus by reference to
the Annual Report on Form 10-K of Pitney Bowes Inc. for the year ended  December
31, 1997 have been so incorporated in reliance on the report of Price Waterhouse
LLP, independent accountants,  given on the authority of said firm as experts in
auditing and accounting.

11

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NO DEALER,  AGENT,  SALESPERSON OR ANY OTHER PERSON HAS BEEN  AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY  REPRESENTATIONS  OTHER THAN THOSE CONTAINED
IN  THIS  PROSPECTUS,  PROSPECTUS  SUPPLEMENT  AND  ANY  PRICING  SUPPLEMENT  IN
CONNECTION  WITH THE  OFFER  CONTAINED  HEREIN  AND,  IF  GIVEN  OR  MADE,  SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR BY ANY DISTRIBUTOR. THIS PROSPECTUS, PROSPECTUS SUPPLEMENT AND
ANY PRICING SUPPLEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY ANY SECURITIES  OTHER THAN THE  SECURITIES  DESCRIBED IN THIS
PROSPECTUS,  PROSPECTUS SUPPLEMENT OR ANY PRICING SUPPLEMENT OR AN OFFER TO SELL
OR THE  SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES  OFFERED HEREBY IN
ANY  CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.  NEITHER THE
DELIVERY OF THIS PROSPECTUS, PROSPECTUS SUPPLEMENT OR ANY PRICING SUPPLEMENT NOR
ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION  THAT THE INFORMATION  CONTAINED  HEREIN OR THEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THEIR RESPECTIVE DATES.

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

TABLE OF CONTENTS

PAGE
----
PROSPECTUS SUPPLEMENT

Description of the Notes ................................................   S-1
Foreign Currency Risks ..................................................   S-14
Special Considerations Relating to
Indexed Notes ......................................................   S-15
United States Federal Taxation ..........................................   S-15
Supplemental Plan of Distribution of
the Notes ..........................................................   S-22
Glossary ................................................................   S-23

PROSPECTUS

Additional Information ..................................................    2
Incorporation of Certain Documents by
Reference ..........................................................    2
The Company .............................................................    3
Use of Proceeds .........................................................    3
Ratios of Earnings to Fixed Charges .....................................    3
Description of Debt Securities ..........................................    3
Plan of Distribution ....................................................   10
Validity of Debt Securities .............................................   11
Experts .................................................................   11

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U.S. $500,000,000

PITNEY BOWES INC.

Medium-Term Notes,
Series C

---------------------
PROSPECTUS SUPPLEMENT
---------------------

CREDIT SUISSE FIRST BOSTON
CHASE SECURITIES INC.
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
NATIONSBANC MONTGOMERY
SECURITIES LLC
SALOMON BROTHERS INC

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