PROSPECTUS SUPPLEMENT
(To Prospectus dated April 3, 1998)
$1,000,000,000
GENERAL MOTORS ACCEPTANCE CORPORATION
Floating Rate Notes Due August 18, 2003
---------------
Interest payable February 18, May 18, August 18 and November 18
---------------
The Floating Rate Notes Due August 18, 2003 will bear interest from
August 17, 1998, payable quarterly on February 18, May 18, August 18 and
November 18, commencing November 18, 1998. The per annum rate of interest will
be reset quarterly to equal LIBOR (as defined herein) plus .100%. See
"Description of Notes - Interest." The Notes will not be redeemable prior to
maturity unless certain events occur involving U.S. taxation. See "Description
of Notes - Redemption for Tax Reasons."
THE NOTES WILL BE REPRESENTED BY ONE OR MORE GLOBAL NOTES (THE "GLOBAL
NOTES") REGISTERED IN THE NAME OF THE DEPOSITORY'S NOMINEE. BENEFICIAL INTERESTS
IN THE GLOBAL NOTES WILL BE SHOWN ON, AND TRANSFERS THEREOF WILL BE EFFECTED
ONLY THROUGH, RECORDS MAINTAINED BY THE DEPOSITORY AND, WITH RESPECT TO THE
BENEFICIAL OWNERS' INTERESTS, BY THE DEPOSITORY'S PARTICIPANTS, INCLUDING THE
U.S. DEPOSITARIES FOR CEDEL BANK AND EUROCLEAR. EXCEPT AS DESCRIBED IN THE
PROSPECTUS, NOTES IN DEFINITIVE FORM WILL NOT BE ISSUED. SEE "BOOK-ENTRY,
DELIVERY AND FORM."
Application has been made to the Luxembourg Stock Exchange for
permission to deal in, and for listing of, the Notes on such Exchange.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
===============================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT COMPANY(1)(2)
- -------------------------------------------------------------------------------
Per Note 99.738% 0.225% 99.513%
- ------------------------------------------------------------------------------
Total $997,380,000 $2,250,000 $995,130,000
===============================================================================
(1) Plus accrued interest, if any, from August 17, 1998.
(2) Before deduction of expenses payable by the Company estimated at $250,000.
---------------
The Notes are offered, subject to prior sale, when, as and if accepted
by the Underwriters, and subject to approval of certain legal matters by Davis
Polk & Wardwell, counsel for the Underwriters. It is expected that delivery of
the Global Note in book-entry form will be made on or about August 17, 1998,
through the facilities of the Depository, Cedel Bank and Euroclear, against
payment therefor in same-day funds.
<PAGE>
---------------
HSBC MARKETS LEHMAN BROTHERS
BARCLAYS CAPITAL DEUTSCHE BANK
MERRILL LYNCH INTERNATIONAL MORGAN STANLEY DEAN WITTER
SALOMON SMITH BARNEY
ABN AMRO BEAR, STEARNS INTERNATIONAL LIMITED
CAIXA GERAL DE DEPOSITOS, S.A. CHASE MANHATTAN INTERNATIONAL LIMITED
CIBC WOOD GUNDY OPPENHEIMER CREDIT SUISSE FIRST BOSTON
J.P. MORGAN SECURITIES LTD. NATIONSBANC MONTGOMERY SECURITIES LLC
NOMURA SECURITIES PARIBAS
SOCIETE GENERALE WARBURG DILLON READ
TOKYO-MITSUBISHI INTERNATIONAL PLC
August 10, 1998
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND
THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR BY ANY UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THE NOTES.
THE PROSPECTUS SUPPLEMENT IS PART OF AND MUST BE READ IN CONJUNCTION WITH THE
ACCOMPANYING PROSPECTUS DATED APRIL 3, 1998. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR ITS SUBSIDIARIES SINCE THE DATE
HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
THE DISTRIBUTION OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS AND
THE OFFERING OF THE NOTES IN CERTAIN JURISDICTIONS MAY BE RESTRICTED BY LAW.
PERSONS INTO WHOSE POSSESSION THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS COME
SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH RESTRICTIONS. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE, AND MAY NOT BE USED
IN CONNECTION WITH, AN OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING
SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT
IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. SEE "UNDERWRITING."
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS INCLUDE
PARTICULARS GIVEN IN COMPLIANCE WITH THE RULES GOVERNING THE LISTING OF
SECURITIES ON THE LUXEMBOURG STOCK EXCHANGE FOR THE PURPOSE OF GIVING
INFORMATION WITH REGARD TO THE COMPANY. THE COMPANY ACCEPTS FULL RESPONSIBILITY
FOR THE ACCURACY OF THE INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND
THE ACCOMPANYING PROSPECTUS AND CONFIRMS, HAVING MADE ALL REASONABLE ENQUIRIES,
THAT TO THE BEST OF ITS KNOWLEDGE AND BELIEF THERE ARE NO OTHER FACTS THE
OMISSION OF WHICH WOULD MAKE ANY STATEMENT HEREIN MISLEADING IN ANY MATERIAL
RESPECT.
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING (AND IN THE UNITED
KINGDOM, LEHMAN BROTHERS INTERNATIONAL (EUROPE)) MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE MARKET PRICES OF THE OFFERED
SECURITIES. SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH THE
OFFERING, MAY BID FOR, AND PURCHASE THE OFFERED SECURITIES IN THE OPEN MARKET
AND MAY IMPOSE PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
In this Prospectus Supplement and accompanying Prospectus, unless
otherwise specified or the context otherwise requires, references to "dollars",
"$" and "U.S.$" are to United States dollars.
This Prospectus Supplement and accompanying Prospectus, together with
the documents incorporated by reference herein and the Company's financial
statements for the years ended December 31, 1997 and December 31, 1996 and the
six-months ended June 30, 1998, will be available free of charge at the office
of Banque Generale du Luxembourg S.A., 50 Avenue J. F. Kennedy, L-2951,
Luxembourg.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT PAGE
----
Description of General Motors Acceptance Corporation....................S-
Ratio of Earnings to Fixed Charges......................................S-
Consolidated Capitalization of the Company..............................S-
Selected Consolidated Financial Data....................................S-
Directors of the Company................................................S-
Description of Notes....................................................S-
United States Federal Taxation..........................................S-
Underwriting............................................................S-
General Information.....................................................S-
Legal Opinions..........................................................S-
PROSPECTUS
Available Information................................................... 2
Incorporation of Certain Documents by Reference......................... 2
Principal Executive Offices ............................................ 3
Ratio of Earnings to Fixed Charges...................................... 3
Use of Proceeds......................................................... 3
Description of Debt Securities.......................................... 3
Description of Warrants................................................. 7
Plan of Distribution.................................................... 8
Experts................................................................. 9
DESCRIPTION OF GENERAL MOTORS ACCEPTANCE CORPORATION
General Motors Acceptance Corporation, a wholly-owned subsidiary of
General Motors Corporation, was incorporated in 1997 under the Delaware General
Corporation Law. On January 1, 1998, the Company merged with General Motors
Acceptance Corporation ("GMAC"), a wholly-owned subsidiary of General Motors
Corporation, originally incorporated in 1919 under the New York Banking Law
relating to investment companies. The Company was the surviving entity of such
merger and assumed all of the assets, liabilities and obligations of GMAC on
January 1, 1998.
<PAGE>
Operating directly and through subsidiaries and associated companies in
which it has equity investments, the Company offers a wide variety of automotive
financial services to and through franchised General Motors dealers in many
countries throughout the world. Financial services also are offered to other
automobile dealerships and to the customers of those dealerships. Other
financial services offered by the Company or its subsidiaries include insurance
and mortgage banking.
The principal business of the Company and its subsidiaries is to
finance the acquisition by franchised General Motors dealers for resale of
various new automotive and nonautomotive products manufactured by General Motors
Corporation or certain of its subsidiaries and associates, and to acquire from
such dealers, either directly or indirectly, installment obligations covering
retail sales and leases of new General Motors products as well as used units of
any make. In addition, new products of other manufacturers are financed. The
Company also leases motor vehicles and certain types of capital equipment to
others.
The automotive financing industry is highly competitive. The Company's
principal competitors are affiliated finance subsidiaries of other major
manufacturers as well as a large number of banks, commercial finance companies,
savings and loan associations and credit unions. The business of the Company is
influenced by its ability to offer competitive financing rates which in turn is
directly affected by its access to capital markets.
The Company has its principal executive offices at 3044 West Grand
Boulevard, Detroit, Michigan 48202, United States.
RATIO OF EARNINGS TO FIXED CHARGES
Six Months Ended Years Ended
June 30, December 31,
---------------- ------------
1998 1997 1997 1996
---- ---- ---- ----
1.36 1.47 1.42 1.41
The ratio of earnings to fixed charges has been computed by dividing
earnings before income taxes and fixed charges by the fixed charges.
See "Ratio of Earnings to Fixed Charges" in the accompanying Prospectus
for additional information.
CONSOLIDATED CAPITALIZATION OF THE COMPANY
(unaudited)
(in millions of U.S. dollars)
June 30,
1998
----------
NOTES, LOANS AND DEBENTURES
Payable within one year......................................... $50,967.6
Payable after one year.......................................... 37,322.3
---------
Total notes, loans and debentures............................. $88,289.9
=========
<PAGE>
STOCKHOLDER'S EQUITY
Common stock, $.10 par value (authorized 10,000
shares, outstanding 10 shares) and paid-in capital.............. $2,200.0
Net income retained for use in the business..................... 6,890.3
Net unrealized gains on securities.............................. 408.2
Unrealized accumulated foreign currency translation adjustment.. (168.7)
--------
Accumulated other comprehensive income........................ 239.5
--------
Total stockholder's equity.................................... $9,329.8
========
There has been no material change in the consolidated capitalization of the
Company since June 30, 1998.
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected financial data derived from the
audited consolidated financial statements of the Company for the two years ended
December 31, 1997 and 1996 and from unaudited financial statements for the six
months ended June 30, 1998 and 1997. The Company believes that all adjustments
necessary for the fair presentation thereof have been made to the unaudited
financial data. The results for the interim period ended June 30, 1998 are not
necessarily indicative of the results for the full year. The following
information should be read in conjunction with the consolidated financial
statements and related notes incorporated by reference in the accompanying
Prospectus. See "Incorporation of Certain Documents by Reference" in the
accompanying Prospectus.
Six Months Ended Years Ended
June 30, December 31,
----------------- -----------------
1998 1997 1997 1996
---- ---- ---- ----
(in millions of U.S. dollars)
BALANCE SHEET DATA (1):
Cash and Cash Equivalents........... $ 873.0 $ 814.3 $ 759.2 $ 742.3
-------- -------- -------- --------
EARNING ASSETS
Investments in securities........... 7,855.4 5,542.4 7,896.1 4,556.8
Finance receivables, net............ 61,445.5 61,292.7 59,630.8 58,380.0
Investment in operating leases, net. 27,551.4 25,819.9 25,849.1 24,909.5
Notes receivable from General
Motors Corporation ............ 2,718.5 469.8 551.7 190.5
Real estate mortgages-held for sale 3,938.0 3,759.0 5,119.5 2,785.0
-held for investment 793.0 610.0 713.0 611.2
-lending receivables 1,825.8 1,448.8 2,222.9 1,404.6
Due and deferred from receivable
sales, net...................... 240.0 635.4 690.5 1,214.5
Other............................. 2,450.3 1,314.1 1,807.6 1,617.6
--------- --------- --------- --------
Total earning assets............ 108,817.9 100,892.1 104,481.2 95,669.7
--------- -------- --------- --------
Nonearning assets................. 4,647.5 2,266.6 4,078.9 2,166.0
---------- ---------- ---------- --------
TOTAL ASSETS...................... $114,338.4 $103,973.0 $109,319.3 $98,578.0
========== ========== ========== =========
Notes, loans and debentures payable
within one year................. $ 50,967.6 $ 48,095.6 $ 50,399.5 $45,809.9
---------- ---------- ---------- ---------
<PAGE>
ACCOUNTS PAYABLE AND OTHER LIABILITIES
General Motors Corporation and
affiliated companies............ 1,738.6 1,302.0 698.9 646.6
Interest.......................... 1,225.1 1,150.0 1,101.8 1,065.2
Insurance losses and loss expenses 2,044.1 1,587.6 2,125.3 1,581.9
Unearned insurance premiums....... 1,858.0 1,450.3 1,804.1 1,437.5
Deferred income taxes............. 2,656.4 2,120.8 2,577.1 2,215.8
United States and foreign income
and other taxes payable......... 155.7 458.5 321.2 35.6
Other postretirement benefits..... 676.5 647.4 652.6 627.0
Other............................. 6,364.3 4,301.6 4,607.5 4,012.0
------- ------- ------- -------
Total accounts payable and
other liabilities............. 16,718.7 13,018.2 13,888.5 11,621.6
-------- -------- -------- --------
Notes, loans and debentures payable
after one year.................. 37,322.3 34,368.4 36,275.2 32,878.9
-------- -------- -------- --------
Common stock, $.10 par value
(authorized 10,000 shares,
outstanding 10 shares) and
paid-in capital................. 2,200.0 2,200.0 2,200.0 2,200.0
Net income retained for use in the
business........................ 6,890.3 6,034.9 6,326.3 5,775.2
Net unrealized gains on securities 408.2 327.8 368.5 276.7
Unrealized accumulated foreign
currency translation adjustment (168.7) (71.9) (138.7) 15.7
------- ------- ------- -------
Accumulated other comprehensive
income......................... 239.5 255.9 229.8 292.4
------- ------- ------- -------
Total stockholder's equity...... 9,329.8 8,490.8 8,756.1 8,267.6
------- ------- ------- -------
TOTAL LIABILITIES AND STOCKHOLDER'S
EQUITY.......................... $114,338.4 $103,973.0 $109,319.3 $98,578.0
========== ========== ========== =========
- --------------
(1) Certain amounts for 1997 have been reclassified to conform with 1998
classifications.
Six Months Ended Years Ended
June 30, December 31,
------------------ -----------------
1998 1997 1997 1996
---- ---- ---- ----
(in millions of U.S. dollars)
INCOME STATEMENT DATA (1):
FINANCING REVENUE
Retail and lease financing........ $1,852.3 $1,830.2 $3,570.5 $3,822.2
Operating leases.................. 3,593.6 3,618.5 7,260.5 7,214.6
Wholesale and term loans.......... 865.6 903.4 1,745.6 1,607.0
-------- -------- -------- --------
<PAGE>
Total automotive financing
revenue..................... 6,311.5 6,352.1 12,576.6 12,643.8
Interest and discount............. 2,839.2 2,577.7 5,255.5 4,937.5
Depreciation on operating leases.. 2,339.1 2,312.4 4,677.5 4,627.0
-------- -------- -------- --------
Net automotive financing
revenue..................... 1,133.2 1,462.0 2,643.6 3,079.3
Insurance premiums earned......... 950.8 611.8 1,360.4 1,158.0
Mortgage revenue.................. 917.9 673.0 1,498.7 943.7
Other income...................... 667.7 562.1 1,159.7 1,228.2
-------- -------- -------- --------
NET FINANCING REVENUE AND OTHER 3,669.6 3,308.9 6,662.4 6,409.2
-------- -------- -------- --------
EXPENSES
Salaries and benefits............. 578.4 524.1 1,050.4 974.3
Other operating expenses.......... 1,064.8 844.9 1,801.8 1,716.0
Insurance losses and loss adjustment
expenses...................... 755.1 469.6 1,073.5 972.2
Provision for credit losses....... 228.7 257.2 522.7 669.0
-------- -------- -------- --------
Total expenses................ 2,627.0 2,095.8 4,448.4 4,331.5
-------- -------- -------- --------
Income before income taxes........ 1,042.6 1,213.1 2,214.0 2,077.7
United States, foreign and other
income taxes.................. 328.6 503.4 912.9 837.2
-------- -------- -------- --------
NET INCOME.................... 714.0 709.7 1,301.1 1,240.5
Net income retained for use in the
business at beginning of the
period........................ 6,326.3 5,775.2 5,775.2 5,734.7
-------- -------- -------- --------
Total............................. 7,040.3 6,484.9 7,076.3 6,975.2
Cash dividends.................... 150.0 450.0 750.0 1,200.0
-------- -------- -------- --------
NET INCOME RETAINED FOR USE
IN THE BUSINESS AT END OF
THE PERIOD................... $6,890.3 $6,034.9 $6,326.3 $5,775.2
======== ======== ======== ========
- --------------
(1) Certain amounts for 1997 have been reclassified to conform with 1998
classifications.
DIRECTORS OF THE COMPANY
Richard J.S. Clout, Executive Vice President; Eric A. Feldstein, Vice
President and Treasurer, General Motors Corporation; John D. Finnegan, President
and Chief Executive Officer, General Motors Acceptance Corporation and Vice
President and Group Executive, General Motors Corporation; John E. Gibson,
Executive Vice President; J. Michael Losh, Chairman, General Motors Acceptance
Corporation and Executive Vice President, General Motors Corporation; William F.
Muir, Executive Vice President and Chief Financial Officer; Harry J. Pearce,
Vice Chairman, General Motors Corporation; W. Allen Reed, Vice President,
General Motors Corporation; John F. Smith, Jr., Chairman, President and Chief
Executive Officer, General Motors Corporation; and Ronald L. Zarrella, Vice
President and Group Executive, General Motors Corporation.
<PAGE>
The above Directors do not hold any significant position outside
General Motors Corporation, the Company and their respective subsidiaries.
The business address of each Director is 3044 West Grand Boulevard,
Detroit, Michigan 48202, United States.
DESCRIPTION OF NOTES
GENERAL
The following description of the particular terms of the Notes offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of Debt Securities set forth in
the Prospectus. The Notes are part of the Debt Securities registered by the
Company in March 1998 to be issued on terms to be determined at the time of
sale.
The Notes offered hereby will be issued in an aggregate principal
amount of $1,000,000,000 due August 18, 2003 pursuant to an Indenture dated as
of July 1, 1982, as amended, which is more fully described in the accompanying
Prospectus and the Notes have been authorized and approved by resolution of the
Board of Directors of the Company.
The Indenture and the Notes provide that they are governed by, and
construed in accordance with, the laws of the State of New York, United States.
The Notes are not redeemable by the Company prior to maturity unless
certain events occur involving U.S. taxation. See "--Redemption for Tax
Reasons."
So long as the Notes are listed on the Luxembourg Stock Exchange, as
soon as possible after 11:00 A.M. (London time) on each Interest Determination
Date but in no event later than the first day of such Interest Period, the
Company shall notify the Luxembourg Stock Exchange by telex or cable of the
rates of interest, interest amount and the Interest Payment Date for the next
Interest Period. The Company shall notify the holders of the Notes of such rates
of interest, interest amount and Interest Payment Date as set forth under "--
Notices" as soon as possible after their determination but in no event later
than the fourth Business Day following the applicable Interest Determination
Date (except that no such notification or publication shall need to be given or
made, as the case may be, after the Notes have been declared due and payable
upon the occurrence of an event described under "Events of Default" (as defined
in the Prospectus)). The interest amounts and Interest Payment Date so notified
or published may subsequently be amended (or appropriate alternative
arrangements made by way of adjustment) without notice in the event of an
extension or shortening of the Interest Period.
INTEREST
The Notes will bear interest from August 17, 1998, payable quarterly on
each February 18, May 18, August 18 and November 18, the first such payment to
be made on November 18, 1998 in respect of the period from August 17, 1998 to
November 18, 1998, to the persons in whose names the Notes are registered at the
close of business on the last day of the calendar month next preceding such
February, May, August and November.
The Notes will bear interest at a rate per annum, reset quarterly,
equal to LIBOR (as defined below) plus .100%, as determined by the Company
acting as Calculation Agent (the "Calculation Agent").
"LIBOR", with respect to an Interest Period, shall be the rate
(expressed as a percentage per annum) for deposits in United States Dollars for
a three-month period beginning on the second London Banking Day (as defined
below) after the Determination Date (as defined below) that appears on Telerate
Page 3750 (as defined below) as of 11:00 a.m., London time on the Determination
Date. If Telerate Page 3750 does not include such a rate or is unavailable on a
Determination Date, LIBOR for the Interest Period shall be the arithmetic mean
of the rates (expressed as a percentage per annum) for deposits in a
Representative Amount (as defined below) in United States Dollars for a
three-month period beginning on the second London Banking Day after the
Determination Date that appears on Reuters Screen LIBO Page (as defined below)
as of 11:00 a.m., London time on the Determination Date. If Reuters Screen LIBO
Page does not include two or more rates or is unavailable on a Determination
Date, the Calculation Agent will request the principal London office of each of
four major banks in the London interbank market, as selected by the Calculation
<PAGE>
Agent, to provide such bank's offered quotation (expressed as a percentage per
annum), as of approximately 11:00 a.m., London time on such Determination Date,
to prime banks in the London interbank market for deposits in a Representative
Amount in United States Dollars for a three-month period beginning on the second
London Banking Day after the Determination Date. If at least two such offered
quotations are so provided, LIBOR for the Interest Period will be the arithmetic
mean of such quotations. If fewer than two such quotations are so provided, the
Calculation Agent will request each of three major banks in New York City, as
selected by the Calculation Agent, to provide such bank's rate (expressed as a
percentage per annum), as of approximately 11:00 a.m., New York City time on
such Determination Date, for loans in a Representative Amount in United States
Dollars to leading European banks for a three-month period beginning on the
second London Banking Day after the Determination Date. If at least two such
rates are so provided, LIBOR for the Interest Period will be the arithmetic mean
of such rates. If fewer than two such rates are so provided, then LIBOR for the
Interest Period will be LIBOR in effect with respect to the immediately
preceding Interest Period.
"Determination Date" with respect to an Interest Period will be the
second London Banking Day preceding the first day of the Interest Period.
"London Banking Day" is any day in which dealings in United States
Dollars are transacted or, with respect to any future date, are expected to be
transacted in the London interbank market.
"Representative Amount" means a principal amount of not less than
U.S. $1,000,000 for a single transaction in the relevant market at the relevant
time.
"Telerate Page 3750" means the display designated as "Page 3750" on the
Dow Jones Telerate Service (or such other page as may replace Page 3750 on that
service).
"Reuters Screen LIBO Page" means the display designated as page "LIBO"
on The Reuters Monitor Money Rates Service (or such other page as may replace
the LIBO page on that service).
The amount of interest for each day that the Notes are outstanding (the
"Daily Interest Amount") will be calculated by dividing the interest rate in
effect for such day by 360 and multiplying the result by the principal amount of
the Notes. The amount of interest to be paid on the Notes for each Interest
Period will be calculated by adding the Daily Interest Amounts for each day in
the Interest Period.
All percentages resulting from any of the above calculations 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 all dollar
amounts used in or resulting from such calculations will be rounded to the
nearest cent (with one-half cent being rounded upwards).
The interest rate on the Notes will in no event be higher than the
maximum rate permitted by New York law as the same may be modified by United
States law of general application. Under present New York law, the maximum rate
of interest is 25% per annum on a simple interest basis. This limit may not
apply to Notes in which $2,500,000 or more has been invested.
<PAGE>
The Calculation Agent will, upon the request of the holder of any Note,
provide the interest rate then in effect. All calculations made by the
Calculation Agent in the absence of manifest error shall be conclusive for all
purposes and binding on the Company and the holders of the Notes. The Company
may appoint a successor Calculation Agent with the written consent of the
Trustee, which consent shall not be unreasonably withheld.
BOOK-ENTRY, DELIVERY AND FORM
The Notes will be issued in the form of one or more fully registered
Global Notes (the "Global Notes") which will be deposited with, or on behalf of,
The Depository Trust Company, New York, New York (the "Depository") and
registered in the name of Cede & Co., the Depository's nominee. Beneficial
interests in the Global Notes will be represented through book-entry accounts of
financial institutions acting on behalf of beneficial owners as direct and
indirect participants in the Depository. Investors may elect to hold interests
in the Global Notes through either the Depository or Cedel Bank, societe anonyme
("Cedel Bank") or Morgan Guaranty Trust Company of New York, Brussels Office, as
operator of the Euroclear System ("Euroclear") if they are participants of such
systems, or indirectly through organizations which are participants in such
systems. Cedel Bank and Euroclear will hold interests on behalf of their
participants through customers' securities accounts in Cedel Bank's and
Euroclear's names on the books of their respective depositaries, which in turn
will hold such interests in customers' securities accounts in the depositaries'
names on the books of the Depository. Citibank, N.A. will act as depositary for
Cedel Bank and The Chase Manhattan Bank will act as depositary for Euroclear (in
such capacities, the "U.S. Depositaries"). Except as set forth below, the Global
Notes may be transferred, in whole and not in part, only to another nominee of
the Depository or to a successor of the Depository or its nominee.
Cedel Bank advises that it is incorporated under the laws of Luxembourg
as a professional depositary. Cedel Bank holds securities for its participating
organizations ("Cedel Bank Participants") and facilitates the clearance and
settlement of securities transactions between Cedel Bank Participants through
electronic book-entry changes in accounts of Cedel Bank Participants, thereby
eliminating the need for physical movement of certificates. Cedel Bank provides
to Cedel Bank Participants, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Cedel Bank interfaces with domestic
markets in several countries. As a professional depositary, Cedel Bank is
subject to regulation by the Luxembourg Monetary Institute. Cedel Bank
Participants are recognized financial institutions around the world, including
underwriters, securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations and may include the Underwriters.
Indirect access to Cedel Bank is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Cedel Bank Participant, either directly or indirectly.
Distributions with respect to the Notes held beneficially through Cedel
Bank will be credited to cash accounts of Cedel Bank Participants in accordance
with its rules and procedures, to the extent received by the U.S. Depositary for
Cedel Bank.
Euroclear advises that it was created in 1968 to hold securities for
its participants ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement of
<PAGE>
certificates and any risk from lack of simultaneous transfers of securities and
cash. Euroclear provides various other services, including securities lending
and borrowing and interfaces with domestic markets in several countries.
Euroclear is operated by the Brussels, Belgium office of Morgan Guaranty Trust
Company of New York (the "Euroclear Operator"), under contract with Euroclear
Clearance Systems S.C., a Belgian cooperative corporation (the "Cooperative").
All operations are conducted by the Euroclear Operator, and all Euroclear
securities clearance accounts and Euroclear cash accounts are accounts with the
Euroclear Operator, not the Cooperative. The Cooperative establishes policy for
Euroclear on behalf of Euroclear Participants. Euroclear Participants include
banks (including central banks), securities brokers and dealers and other
professional financial intermediaries and may include the Underwriters. Indirect
access to Euroclear is also available to other firms that clear through or
maintain a custodial relationship with a Euroclear Participant, either directly
or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System, and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions with respect to Notes held beneficially through Euroclear
will be credited to the cash accounts of Euroclear Participants in accordance
with the Terms and Conditions, to the extent received by the U.S. Depositary for
Euroclear.
In the event definitive Notes are issued, the Company will appoint a
paying agent and transfer agent in Luxembourg (the "Luxembourg Paying and
Transfer Agent"). In the event definitive Notes are issued, the holders thereof
will be able to receive payments thereon and effect transfers thereof at the
offices of the Luxembourg Paying and Transfer Agent.
INDIVIDUAL CERTIFICATES IN RESPECT OF NOTES WILL NOT BE ISSUED IN
EXCHANGE FOR THE GLOBAL NOTES, EXCEPT IN VERY LIMITED CIRCUMSTANCES. IF
EUROCLEAR, CEDEL BANK OR DTC NOTIFIES THE COMPANY THAT IT IS UNWILLING OR UNABLE
TO CONTINUE AS A CLEARING SYSTEM IN CONNECTION WITH A GLOBAL NOTE OR, IN THE
CASE OF DTC ONLY, DTC CEASES TO BE A CLEARING AGENCY REGISTERED UNDER THE
EXCHANGE ACT, AND IN EACH CASE A SUCCESSOR CLEARING SYSTEM IS NOT APPOINTED BY
THE COMPANY WITHIN 90 DAYS AFTER RECEIVING SUCH NOTICE FROM EUROCLEAR, CEDEL
BANK OR DTC OR ON BECOMING AWARE THAT DTC IS NO LONGER SO REGISTERED, THE
COMPANY WILL ISSUE OR CAUSE TO BE ISSUED INDIVIDUAL CERTIFICATES IN REGISTERED
FORM ON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR, BOOK-ENTRY INTERESTS IN
THE NOTES REPRESENTED BY SUCH GLOBAL NOTE UPON DELIVERY OF SUCH GLOBAL NOTE FOR
CANCELLATION.
<PAGE>
TITLE TO BOOK-ENTRY INTERESTS IN THE NOTES WILL PASS BY BOOK-ENTRY
REGISTRATION OF THE TRANSFER WITHIN THE RECORDS OF EUROCLEAR, CEDEL BANK OR DTC,
AS THE CASE MAY BE, IN ACCORDANCE WITH THEIR RESPECTIVE PROCEDURES. BOOK-ENTRY
INTERESTS IN THE NOTES MAY BE TRANSFERRED WITHIN EUROCLEAR AND WITHIN CEDEL BANK
AND BETWEEN EUROCLEAR AND CEDEL BANK IN ACCORDANCE WITH PROCEDURES ESTABLISHED
FOR THESE PURPOSES BY EUROCLEAR AND CEDEL BANK. BOOK-ENTRY INTERESTS IN THE
NOTES MAY BE TRANSFERRED WITHIN DTC IN ACCORDANCE WITH PROCEDURES ESTABLISHED
FOR THIS PURPOSE BY DTC. TRANSFERS OF BOOK-ENTRY INTERESTS IN THE NOTES BETWEEN
EUROCLEAR AND CEDEL BANK AND DTC MAY BE EFFECTED IN ACCORDANCE WITH PROCEDURES
ESTABLISHED FOR THIS PURPOSE BY EUROCLEAR, CEDEL BANK AND DTC.
GLOBAL CLEARENCE AND SETTLEMENT PROCEDURES
Initial settlement for the Notes will be made in immediately available
funds. Secondary market trading between DTC Participants will occur in the
ordinary way in accordance with Depository rules and will be settled in
immediately available funds using the Depository's Same-Day Funds Settlement
System. Secondary market trading between Cedel Bank Participants and/or
Euroclear Participants will occur in the ordinary way in accordance with the
applicable rules and operating procedures of Cedel Bank and Euroclear and will
be settled using the procedures applicable to conventional Eurobonds in
immediately available funds.
Cross-market transfers between persons holding directly or indirectly
through the Depository on the one hand, and directly or indirectly through Cedel
Bank or Euroclear Participants, on the other, will be effected in the Depository
in accordance with the Depository rules on behalf of the relevant European
international clearing system by its U.S. Depositary; however, such cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in such system in accordance
with its rules and procedures and within its established deadlines (European
time). The relevant European international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to its U.S.
Depositary to take action to effect final settlement on its behalf by delivering
or receiving Notes in the Depository, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
the Depository. Cedel Bank Participants and Euroclear Participants may not
deliver instructions directly to their respective U.S. Depositaries.
Because of time-zone differences, credits of Notes received in Cedel
Bank or Euroclear as a result of a transaction with a DTC Participant will be
made during subsequent securities settlement processing and dated the business
day following the Depository settlement date. Such credits or any transactions
in such Notes settled during such processing will be reported to the relevant
Euroclear or Cedel Bank Participants on such business day. Cash received in
Cedel Bank or Euroclear as a result of sales of Notes by or through a Cedel Bank
Participant or a Euroclear Participant to a DTC Participant will be received
with value on the Depository settlement date but will be available in the
relevant Cedel Bank or Euroclear cash account only as of the business day
following settlement in the Depository.
Although the Depository, Cedel Bank and Euroclear have agreed to the
foregoing procedures in order to facilitate transfers of Notes among
participants of the Depository, Cedel Bank and Euroclear, they are under no
obligation to perform or continue to perform such procedures and such procedures
may be changed or discontinued at any time.
<PAGE>
FURTHER ISSUES
The Company may from time to time, without notice to or the consent of
the registered holders of the Notes, create and issue further Notes ranking PARI
PASSU with the Notes in all respects (or in all respects except for the payment
of interest accruing prior to the issue date of such further Notes or except for
the first payment of interest following the issue date of such further Notes)
and so that such further Notes may be consolidated and form a single series with
the Notes and have the same term as to status, redemption or otherwise as the
Notes.
PAYMENT OF ADDITIONAL AMOUNTS
The Company will pay to the holder of any Note who is a non-United
States person (as defined below) such additional amounts as may be necessary in
order that every net payment in respect of the principal, premium, if any, or
interest, if any, on such Note, after deduction or withholding by the Company or
any paying agent for or on account of any present or future tax, assessment or
governmental charge imposed upon or as a result of such payment by the United
States or any political subdivision or taxing authority thereof or therein, will
not be less than the amount provided for in such Note to be then due and payable
before any such deduction or withholding for or on account of any such tax,
assessment or governmental charge; provided, however, that the foregoing
obligation to pay such additional amounts shall not apply to:
(a) any tax, assessment or other governmental charge which would not
have been so imposed but for (i) the existence of any present or former
connection between such holder (or a fiduciary, settlor, beneficiary, member or
shareholder of, or holder of a power over, such holder, if such holder is an
estate, trust, partnership or corporation) and the United States, including,
without limitation, such holder (or such fiduciary, settlor, beneficiary,
member, shareholder of, or holder of a power) being or having been a citizen or
resident or treated as a resident thereof or being or having been engaged in a
trade or business therein or being or having been present therein or having or
having had a permanent establishment therein, or (ii) such holder's present or
former status as a personal holding company or foreign personal holding company
or controlled foreign corporation for United States federal income tax purposes
or corporation which accumulates earnings to avoid United States federal income
tax;
(b) any tax, assessment or other governmental charge which would not
have been so imposed but for the presentation by the holder of such Note for
payment on a date more than 10 days after the date on which such payment became
due and payable or the date on which payment thereof is duly provided for,
whichever occurs later;
(c) any estate, inheritance, gift, sales, transfer, personal property
or excise tax or any similar tax, assessment or governmental charge;
(d) any tax, assessment or other governmental charge which is payable
otherwise than by withholding from payments in respect of principal of, premium,
if any, or interest, if any, on any Note;
(e) any tax, assessment or other governmental charge imposed on
interest received by a holder or beneficial owner of a Note who actually or
constructively owns 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote within the meaning of Section
871(h)(3) of the United States Internal Revenue Code of 1986, as amended;
<PAGE>
(f) any tax, assessment or other governmental charge imposed as a
result of the failure to comply with (i) certification, information,
documentation, reporting or other similar requirements concerning the
nationality, residence, identity or connection with the United States of the
holder or beneficial owner of the Note, if such compliance is required by
statute, or by regulation of the United States Treasury Department, as a
precondition to relief or exemption from such tax, assessment or other
governmental charge (including backup withholding) or (ii) any other
certification, information, documentation, reporting or other similar
requirements under United States income tax laws or regulations that would
establish entitlement to otherwise applicable relief or exemption from such tax,
assessment or other governmental charge;
(g) any tax, assessment or other governmental charge required to be
withheld by any paying agent from any payment of the principal of, premium, if
any, or interest, if any, on any Note, if such payment can be made without such
withholding by at least one other paying agent; or
(h) any combination of items (a), (b), (c), (d), (e), (f) or (g);
nor will such additional amounts be paid to any holder who is a fiduciary or
partnership or other than the sole beneficial owner of the Note to the extent a
settlor or beneficiary with respect to such fiduciary or a member of such
partnership or a beneficial owner of the Note would not have been entitled to
payment of such additional amounts had such beneficiary, settlor, member or
beneficial owner been the holder of the Note.
The Notes are subject in all cases to any tax, fiscal or other law or
regulation or administrative or judicial interpretation applicable thereto.
Except as specifically provided under this heading "Payment of Additional
Amounts" and under the heading "Description of Notes--Redemption for Tax
Reasons", the Company shall not be required to make any payment with respect to
any tax, assessment or governmental charge imposed by any government or a
political subdivision or taxing authority thereof or therein.
As used under this heading "Payment of Additional Amounts" and under
the headings "Description of Notes--Redemption for Tax Reasons" and "United
States Federal Taxation - Tax Consequences to Non-United States Persons" the
term "United States" means the United States of America (including the States
and the District of Columbia) and its territories, its possessions and other
areas subject to its jurisdiction. "United States person" means any individual
who is a citizen or resident of the United States, a corporation, partnership or
other entity created or organized in or under the laws of the United States or
any political subdivision thereof or any estate or trust the income of which is
subject to United States federal income taxation regardless of its source and
"non-United States person" has the meaning set forth in "United States Federal
Taxation - Tax Consequences to Non-United States Persons" below.
REDEMPTION FOR TAX REASONS
If, as a result of any change in or amendment to the laws (including
any regulations or rulings promulgated thereunder) of the United States or any
political subdivision thereof or therein affecting taxation, or any change in
the official application or interpretation of such laws, including any official
proposal for such a change, amendment or change in the application or
interpretation of such laws, which change, amendment, application or
interpretation is announced or becomes effective after the date of this
Prospectus Supplement or which proposal is made after such date, or as a result
<PAGE>
of any action taken by any taxing authority of the United States which action is
taken or becomes generally known after such date, or any commencement of a
proceeding in a court of competent jurisdiction in the United States after such
date, whether or not such action was taken or such proceeding was brought with
respect to the Company, there is, in such case, in the written opinion of
independent legal counsel of recognized standing to the Company, a material
increase in the probability that the Company has or may become obligated to pay
Additional Amounts (as described above under "Payment of Additional Amounts"),
and the Company in its business judgment, determines that such obligation cannot
be avoided by the use of reasonable measures available to the Company, not
including assignment of the Notes, the Notes may be redeemed, as a whole but not
in part, at the option of the Company at any time thereafter, upon notice to the
Trustee and the holders of the Notes in accordance with the provisions of the
Indenture at a redemption price equal to 100% of the principal amount of the
Notes to be redeemed together with accrued interest thereon to the date fixed
for redemption.
NOTICES
Notices to holders of the Notes will be published in authorized daily
newspapers in The City of New York, in London, and, so long as the Notes are
listed on the Luxembourg Stock Exchange, in Luxembourg. It is expected that
publication will be made in The City of New York in The Wall Street Journal, in
London in the Financial Times, and in Luxembourg in the Luxemburger Wort. Any
such notice shall be deemed to have been given on the date of such publication
or, if published more than once, on the date of the first such publication.
So long as no Notes in definitive form are in issue and a Global Note
is held on behalf of the relevant clearing systems and the rules of any stock
exchange on which the Notes are listed so permit, notices to Noteholders may be
given by delivery of the relevant notice to the relevant clearing systems for
communication to entitled Noteholders rather than by publication.
UNITED STATES FEDERAL TAXATION
The following summary describes the material United States federal
income and certain estate tax consequences of ownership and disposition of the
Notes. This summary provides general information only and is directed solely to
original holders purchasing Notes at the "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"), existing administrative pronouncements and judicial
decisions, existing and proposed Treasury Regulations currently in effect, 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. This summary does
not discuss all of the tax consequences that may be relevant to a holder in
light of his particular circumstances or to holders subject to special rules,
such as certain financial institutions, insurance companies, dealers in
securities, persons holding Notes in connection with a hedging transaction,
"straddle," conversion transaction or other integrated transaction or persons
who have ceased to be United States citizens or to be taxed as resident aliens.
Persons considering the purchase of Notes should consult their tax advisors with
regard to the application of the United States federal income and estate tax
laws to their particular situations as well as any tax consequences arising
under the laws of any state, local or foreign taxing jurisdiction.
<PAGE>
TAX CONSEQUENCES TO UNITED STATES PERSONS
For purposes of the following discussion, "United States person" 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, (iii) an estate the
income of which is subject to United States federal income taxation regardless
of its source, or (iv) a trust if (a) a court within the United States is able
to exercise primary supervision over the administration of the trust and (b) one
or more United States persons have the authority to control all substantial
decisions of the trust.
PAYMENTS OF INTEREST
Interest on a Note will generally be taxable to a United States person
as ordinary interest income at the time it is accrued or is received in
accordance with the United States person's method of accounting for tax
purposes.
SALE, EXCHANGE OR RETIREMENT OF THE NOTES
Upon the sale, exchange or retirement of a Note, a United States person
will recognize taxable gain or loss equal to the difference between the amount
realized on the sale, exchange or retirement and the United States person's
adjusted tax basis in the Note. For these purposes, the amount realized does not
include any amount attributable to accrued interest on the Note. Amounts
attributable to accrued interest are treated as interest as described under
"Payments of Interest" above. A United States person's adjusted tax basis in a
Note generally will equal the cost of the Note to the United States person.
In general, gain or loss realized on the sale, exchange or redemption
of a Note will be capital gain or loss. Prospective investors should consult
their tax advisors regarding the treatment of capital gains (which may be taxed
at lower rates than ordinary income for taxpayers who are individuals, trusts or
estates) and losses (the deductibility of which is subject to limitations).
BACKUP WITHHOLDING AND INFORMATION REPORTING
Backup withholding and information reporting requirements may apply to
certain payments of principal, premium and interest on a Note, and to payments
of proceeds of the sale or redemption of a Note, to certain non-corporate United
States persons. The Company, its agent, a broker, or any paying agent, as the
case may be, will be required to withhold from any payment a tax equal to 31
percent of such payment if the United States person fails to furnish or certify
his correct taxpayer identification number to the payor in the manner required,
fails to certify that such United States person is not subject to backup
withholding, or otherwise fails to comply with the applicable requirements of
the backup withholding rules. Any amounts withheld under the backup withholding
rules from a payment to a United States person may be credited against such
United States person's United States federal income tax and may entitle such
United States person to a refund, provided that the required information is
furnished to the United States Internal Revenue Service.
TAX CONSEQUENCES TO NON-UNITED STATES PERSONS
As used herein, the term "non-United States person" means an 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
<PAGE>
fiduciary of a foreign estate or trust or (iv) a foreign partnership one or more
of the members of which is, for United States federal income tax purposes, a
nonresident alien individual, a foreign corporation or a nonresident alien
fiduciary of a foreign estate or trust.
INCOME AND WITHHOLDING TAX
Subject to the discussion of backup withholding below:
(a) payments of principal and interest on a Note that is beneficially
owned by a non-United States person will not be subject to United States federal
withholding tax; provided, that in the case of interest, (1) (i) the beneficial
owner does not actually or constructively own 10% or more of the total combined
voting power of all classes of stock of the Company entitled to vote, (ii) the
beneficial owner is not a controlled foreign corporation that is related,
directly or indirectly, to the Company through stock ownership, and (iii) either
(A) the beneficial owner of the Note certifies to the person otherwise required
to withhold United States federal income tax from such interest, under penalties
of perjury, that it is not a United States person and provides its name and
address or (B) a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business (a "financial institution") and holds the Note certifies to the
person otherwise required to withhold United States federal income tax from such
interest, under penalties of perjury, that such statement has been received from
the beneficial owner by it or by a financial institution between it and the
beneficial owner and furnishes the payor with a copy thereof; (2) the beneficial
owner is entitled to the benefits of an income tax treaty under which the
interest is exempt from United States federal withholding tax and the beneficial
owner of the Note or such owner's agent provides an IRS Form 1001 claiming the
exemption; or (3) the beneficial owner conducts a trade or business in the
United States to which the interest is effectively connected and the beneficial
owner of the Note or such owner's agent provides an IRS Form 4224 (or, after
December 31, 1999 and, in certain circumstances, after December 31, 1998, a Form
W-8); provided that in each such case, the relevant certification or IRS Form is
delivered pursuant to applicable procedures and is properly transmitted to the
person otherwise required to withhold United States federal income tax, and none
of the persons receiving the relevant certification or IRS Form has actual
knowledge that the certification or any statement on the IRS Form is false;
(b) a non-United States person will not be subject to United States
federal withholding tax on any gain realized on the sale, exchange or other
disposition of a Note unless the gain is effectively connected with the
beneficial owner's trade or business in the United States or, in the case of an
individual, the holder is present in the United States for 183 days or more in
the taxable year in which the sale, exchange or other disposition occurs and
certain other conditions are met; and
(c) a Note owned by an individual who at the time of death is not, for
United States estate tax purposes, a citizen or resident of the United States
generally will not be subject to United States federal estate tax as a result of
such individual's death if the individual does not actually or constructively
own 10% or more of the total combined voting power or all classes of stock of
the Company entitled to vote and, at the time of such individual's death the
income on the Note would not have been effectively connected with a United
States trade or business of the individual.
With respect to the certification requirement referred to in
subparagraph (a), for Notes held by a foreign partnership, under current law,
<PAGE>
the Form W-8 may be provided by the foreign partnership. However, for interest
and disposition proceeds paid with respect to a Note after December 31, 1999
and, in certain circumstances, after December 31, 1998, unless the foreign
partnership has entered into a withholding agreement with the IRS, a foreign
partnership will be required, 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
advisors regarding possible additional reporting requirements.
If a Non-United States person holding a Note is engaged in a trade or
business in the United States, and if interest on the Note (or gain realized on
its sale, exchange or other disposition) is effectively connected with the
conduct of such trade or business, such 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 United States person. Such a holder may also need to
provide a United States taxpayer identification number on the forms referred to
in paragraph (a) above in order to meet the requirements set forth above. In
addition, if such holder is a foreign corporation, it may be subject to a 30%
branch profits tax (unless reduced or eliminated by an applicable treaty) of its
effectively connected earnings and profits for the taxable year, subject to
certain adjustments. For purposes of the branch profits tax, interest on, and
any gain recognized on the sale, exchange or other disposition of, a Note will
be included in the effectively connected earnings and profits of such holder if
such interest or gain, as the case may be, is effectively connected with the
conduct by such holder of a trade or business in the United States.
EACH HOLDER OF A NOTE SHOULD BE AWARE THAT IF IT DOES NOT PROPERLY
PROVIDE THE REQUIRED IRS FORM, OR IF THE IRS FORM (OR, IF PERMISSIBLE, A COPY OF
SUCH FORM) IS NOT PROPERLY TRANSMITTED TO AND RECEIVED BY THE UNITED STATES
PERSON OTHERWISE REQUIRED TO WITHHOLD UNITED STATES FEDERAL INCOME TAX, INTEREST
ON THE NOTE MAY BE SUBJECT TO UNITED STATES WITHHOLDING TAX AT A 30% RATE AND
THE HOLDER (INCLUDING THE BENEFICIAL OWNER) WILL NOT BE ENTITLED TO ANY
ADDITIONAL AMOUNTS FROM THE COMPANY DESCRIBED UNDER THE HEADING "DESCRIPTION OF
NOTES -- PAYMENT OF ADDITIONAL AMOUNTS" WITH RESPECT TO SUCH TAX. SUCH TAX,
HOWEVER, MAY IN CERTAIN CIRCUMSTANCES BE ALLOWED AS A REFUND OR AS A CREDIT
AGAINST SUCH HOLDER'S UNITED STATES FEDERAL INCOME TAX. THE FOREGOING DOES NOT
DEAL WITH ALL ASPECTS OF FEDERAL INCOME TAX WITHHOLDING THAT MAY BE RELEVANT TO
FOREIGN HOLDERS OF THE NOTES. INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX
ADVISORS FOR SPECIFIC ADVICE CONCERNING THE OWNERSHIP AND DISPOSITION OF NOTES.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Under current Treasury Regulations, backup withholding (imposed at the
rate of 31%) will not apply to payments made by the Company or a paying agent to
a holder in respect of a Note if the certifications required by Sections 871(h)
and 881(c) of the Code, which are described above, are received, provided in
each case that the Company or the 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 of the proceeds from the
sale, exchange or other disposition of a Note made to or through a foreign
office of a broker (including a custodian, nominee or other agent acting on
behalf of the beneficial owner of a Note) generally will not be subject to
information reporting or backup withholding. However, if such broker is a United
States person, a controlled foreign corporation for United States federal tax
purposes, a foreign person 50% or more of whose gross income is effectively
<PAGE>
connected with a United States trade or business for a specified three-year
period, or in the case of payments made after December 31, 1999 and, in certain
circumstances, payments made after December 31, 1998, a foreign partnership with
certain connections with 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
such broker has actual knowledge that the payee is a United States person.
Payments to or through the United States office of a broker are subject to
information reporting and backup withholding unless the holder or beneficial
owner certifies, under penalties of perjury that it is a non-United States
person and that it satisfies certain other conditions or otherwise establishes
an exemption from information reporting and backup withholding.
Non-United States persons holding Notes should consult their tax
advisors regarding the application of information reporting and backup
withholding in their particular situations, the availability of an exemption
therefrom, and the procedure for obtaining such an exemption, if available.
Backup withholding is not a separate tax, but is allowed as a refund or credit
against the holder's United States federal income tax, provided the necessary
information is furnished to the Internal Revenue Service.
Interest on a Note that is beneficially owned by a non-United States
person will be reported annually on IRS Form 1042S, which must be filed with the
Internal Revenue Service and furnished to such beneficial owner.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS
INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A
HOLDER'S PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS
WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE OWNERSHIP AND DISPOSITION OF
THE NOTES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER
TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
UNDERWRITING
Under the terms and subject to the conditions contained in an
Underwriting Agreement dated August 10, 1998, the Underwriters named below,
acting through their representatives, Lehman Brothers International (Europe) and
Midland Bank plc (the "Representatives"), have severally agreed to purchase and
the Company has agreed to sell to them, severally, the respective principal
amounts of Notes set forth below.
Principal
Amount
--------------
Lehman Brothers International (Europe) ............$ 405,000,000
Midland Bank plc .................................. 405,000,000
Barclays Bank PLC ................................. 25,000,000
Deutsche Bank AG London ........................... 25,000,000
Merrill Lynch International ....................... 25,000,000
Morgan Stanley & Co. International Limited ........ 25,000,000
Salomon Brothers Inc .............................. 25,000,000
ABN AMRO Bank N.V.-London Branch .................. 5,000,000
Bear, Stearns International Limited ............... 5,000,000
Caixa Geral de Depositos, S.A. .................... 5,000,000
Chase Manhattan International Limited ............. 5,000,000
<PAGE>
CIBC Wood Gundy plc ............................... 5,000,000
Credit Suisse First Boston Corporation ............ 5,000,000
J.P. Morgan Securities Ltd. ....................... 5,000,000
Nationsbanc Montgomery Securities LLC ............. 5,000,000
Nomura International plc .......................... 5,000,000
Paribas ........................................... 5,000,000
Societe Generale .................................. 5,000,000
UBS AG ......................................... 5,000,000
Tokyo-Mitsubishi International plc ................ 5,000,000
--------------
Total..........................................$1,000,000,000
==============
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
The Company has been advised by the Representatives that the
Underwriters propose to offer the Notes to the public initially at the offering
price set forth on the cover page of this Prospectus Supplement and to certain
dealers at such price less a concession not in excess of .15% of the principal
amount of the Notes. The Underwriters may allow, and such dealers may reallow, a
discount not in excess of .075% of such principal amount on sales to certain
other dealers. After the initial public offering, the public offering price and
concession and discount to dealers may be changed by the Underwriters.
The Notes are offered for sale in the United States, Europe and Asia.
The Notes are offered for sale in those jurisdictions in the United
States, Europe and Asia where it is legal to make such offers. Only offers and
sales of the Notes in the United States, as part of the initial distribution
thereof or in connection with resales thereof under circumstances where this
Prospectus Supplement and the accompanying Prospectus must be delivered, are
made pursuant to the Registration Statement of which the Prospectus, as
supplemented by this Prospectus Supplement, is a part.
Each Underwriter has represented and agreed that it will comply with
all applicable laws and regulations in force in any jurisdiction in which it
purchases, offers, sells or delivers the Notes or possesses or distributes this
Prospectus Supplement or the accompanying Prospectus and will obtain any
consent, approval or permission required by it for the purchase, offer or sale
by it of the Notes under the laws and regulations in force in any jurisdiction
to which it is subject or in which it makes such purchases, offers or sales and
neither the Company nor any other Underwriter shall have responsibility
therefor.
Each Underwriter, severally and not jointly, represents and agrees
that:
(i) it has not offered or sold and will not offer or sell any Notes to
persons in the United Kingdom prior to the expiry of the period of six months
from the issue date of the Notes except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995;
<PAGE>
(ii) it has only issued or passed on and will only issue or pass on in
the United Kingdom any document received by it in connection with the issue of
the Notes to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996,
as amended, or is a person to whom such document may otherwise lawfully be
issued or passed on; and
(iii) it has complied and will comply with all applicable provisions of
the Financial Service Act 1986 with respect to anything done by it in relation
to any Notes in, from or otherwise involving the United Kingdom.
Although application will be made to list the Notes on the Luxembourg
Stock Exchange, the Notes are a new issue of securities with no established
trading market. No assurance can be given as to the liquidity of, or the trading
markets for, the Notes. The Company has been advised by the Underwriters that
they intend to make a market in the Notes, but they are not obligated to do so
and may discontinue such market-making at any time without notice.
Purchasers of the Notes may be required to pay stamp taxes and other
charges in accordance with the laws and practices of the country of purchase in
addition to the issue price set forth on the cover page hereof.
In connection with the sale of the Notes, the Underwriters may engage
in transactions that stabilize, maintain or otherwise affect the price of the
Notes. Specifically, the Underwriters may overallot the offering, creating a
short position. In addition, the Underwriters may bid for, and purchase, the
Notes in the open market to cover short positions or to stabilize the price of
the Notes, and in connection therewith the Representatives may impose a penalty
bid on certain Underwriters. This means that if the Representatives purchase
Notes in the open market to reduce any short position or to stabilize the price
of the Notes, they may reclaim the amount of the selling concession from the
Underwriter or Underwriters who sold those Notes as part of the offering. Any of
these activities may stabilize or maintain the market price of the Notes above
independent market levels. The Underwriters will not be required to engage in
these activities, and may end any of these activities at any time.
Dennis Weatherstone, a director of J.P. Morgan & Co. Incorporated, of
which J.P. Morgan Securities Ltd. is an indirect wholly-owned subsidiary, is a
director of General Motors Corporation. In the ordinary course of their
respective businesses, affiliates of the Underwriters have engaged, and will in
the future engage, in commercial banking and investment banking transactions
with the Company and certain of its affiliates.
It is expected that delivery of the Notes will be made against payment
therefore on or about August 17, 1998.
Lehman Brothers International (Europe) and Midland Bank plc have agreed
to reimburse the Company for certain of its expenses in connection with the
offering of the Notes.
GENERAL INFORMATION
Application has been made to list the Notes on the Luxembourg Stock
Exchange. In connection with the listing application, the Certificate of
<PAGE>
Incorporation and the By-Laws of the Company and a legal notice relating to the
issuance of the Notes have been deposited prior to listing with the Greffier en
Chef du Tribunal d'Arrondissement de et a Luxembourg, where copies thereof may
be obtained upon request. Copies of the above documents together with this
Prospectus Supplement, the accompanying Prospectus, the Indenture and the
Company's Annual Report on Form 10-K for the year ended December 31, 1997 (and
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998 and June
30, 1998), as well as all future Annual Reports on Form 10-K and Quarterly
Reports on Form 10-Q, so long as any of the Notes are outstanding, will be made
available for inspection at the main office of Banque Generale du Luxembourg
S.A. Banque Generale du Luxembourg S.A. will act as a contact between the
Luxembourg Stock Exchange and the Company or the holders of the Notes. In
addition, copies of the Annual Reports and Quarterly Reports of the Company may
be obtained free of charge at such office.
Except as may be disclosed herein, there has been no material change in
the financial or trading position of the Company since June 30, 1998.
The Company is not a party to any legal or arbitration proceedings
(including any that are pending or threatened) which may have or have had during
the previous 12 months a significant effect on the Company's consolidated
financial position.
The Notes have been assigned Euroclear and Cedel Bank Common Code No
9012559, International Security Identification Number (ISIN) US-370425QV58 and
CUSIP No. 370425QV5.
LEGAL OPINIONS
The validity of the Notes offered hereby will be passed on for the
Company by Martin I. Darvick, Esq., Assistant General Counsel of the Company,
and for the Underwriters by Davis Polk & Wardwell. Mr. Darvick owns shares, and
has options to purchase shares, of General Motors Corporation common stock, $1
2/3 par value and owns shares of General Motors Corporation Class H common stock
$0.10 par value.
The firm of Davis Polk & Wardwell acts as counsel to the Executive
Compensation Committee of the Board of Directors of General Motors Corporation
and has acted as counsel for General Motors Corporation and the Company in
various matters.
<PAGE>
REGISTERED OFFICES OF THE COMPANY
3044 West Grand Boulevard
Detroit, Michigan 48202
United States
LEGAL AND TAX ADVISORS
TO THE COMPANY
(As to United States Law) (As to United States Law)
MARTIN I. DARVICK, ESQ. PETER F. HILTZ, ESQ.
3031 West Grand Boulevard 3044 West Grand Boulevard
Detroit, Michigan 48202 Detroit, Michigan 48202
United States United States
AUDITORS
Independent Auditors
of the Company
DELOITTE & TOUCHE LLP
600 Renaissance Center
Detroit, Michigan 48243-1274
United States
LEGAL ADVISORS TO THE UNDERWRITERS
(As to United States Law)
DAVIS POLK & WARDWELL
450 Lexington Avenue
New York, New York 10017
United States
LISTING AGENT
BANQUE GENERALE DU LUXEMBOURG S.A.
50 Avenue J. F. Kennedy
L-2951 Luxembourg
TRUSTEE
The Bank of New York
101 Barclay Street
Floor 7E
New York, New York 10286
United States
PAYING AND TRANSFER AGENT IN LUXEMBOURG
BANQUE GENERALE DU LUXEMBOURG S.A.
50 Avenue J. F. Kennedy
L-2951 Luxembourg
<PAGE>
PROSPECTUS
GENERAL MOTORS ACCEPTANCE CORPORATION
DEBT SECURITIES
WARRANTS TO PURCHASE DEBT SECURITIES
General Motors Acceptance Corporation (the "Company"), directly, through
agents designated from time to time, or through dealers or underwriters also to
be designated, may offer from time to time its debt securities (the "Debt
Securities") and its warrants (the "Warrants") to purchase any of the Debt
Securities, for issuance and sale, at an aggregate initial offering price not to
exceed $10,000,000,000, on terms to be determined at the time of sale. The Debt
Securities and the Warrants are herein collectively called the "Securities." The
terms of the Debt Securities including, where applicable, the specific
designation, aggregate principal amount, maturity, rate and time of payment of
interest, purchase price, any terms for redemption and the agent, dealer or
underwriter, if any, in connection with the sale of the Debt Securities in
respect of which this Prospectus is being delivered are set forth in the
accompanying Prospectus Supplement ("Prospectus Supplement"). Where Warrants are
to be offered, a Prospectus Supplement shall set forth the offering price or
terms, a description of the Debt Securities for which each Warrant is
exercisable, the aggregate number, exercise price or prices, exercise period or
periods, the expiration date or dates of the Warrants, the currency or
currencies in which such Warrants are exercisable, the price or prices, if any,
at which the Warrants may be redeemed at the option of the holder or will be
redeemed upon expiration, and the Warrant Agent acting under the Warrant
Agreement pursuant to which the Warrants are to be issued. The Company reserves
the sole right to accept and, together with its agents from time to time, to
reject in whole or in part any proposed purchase of Securities to be made
directly or through agents.
----------------------------
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.
----------------------------
If an agent of the Company or a dealer or underwriter is involved in the
sale of the Securities in respect of which this Prospectus is being delivered,
the agent's commission or dealer's or underwriter's discount is set forth in, or
may be calculated from, the Prospectus Supplement and the net proceeds to the
Company from such sale will be the purchase price of such Securities less such
commission in the case of an agent, the purchase price of such Securities in the
case of a dealer or the public offering price less such discount in the case of
an underwriter, and less, in each case, the other attributable issuance
expenses. The aggregate proceeds to the Company from all the Securities will be
the purchase price of Securities sold less the aggregate of agents' commissions
and underwriter discounts and other expenses, if any, of issuance and
distribution. See "Plan of Distribution" for possible indemnification
arrangements for the agents, dealers and underwriters.
APRIL 3, 1998
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES.
SPECIFICALLY, THE UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH OFFERINGS, AND
MAY BID FOR, AND PURCHASE, SECURITIES IN THE OPEN MARKET. FOR A DESCRIPTION OF
THESE ACTIVITIES, SEE "PLAN OF DISTRIBUTION."
------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, THE ACCOMPANYING PROSPECTUS
SUPPLEMENT OR THE DOCUMENTS INCORPORATED OR DEEMED INCORPORATED BY REFERENCE
HEREIN, AND ANY INFORMATION OR REPRESENTATIONS NOT CONTAINED HEREIN OR THEREIN
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY
AGENT, DEALER OR UNDERWRITER.
------------------------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and in
accordance therewith files reports and other information with the Securities and
Exchange Commission (the "Commission"). Such reports and other information filed
by the Company with the Commission can be inspected, and copies may be obtained
at prescribed rates, at the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, as well as at the following Regional
Offices of the Commission at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511 and Seven World Trade Center, Suite 1300, New
York, New York 10048. Such material may also be accessed electronically by means
of the Commission's home page on the Internet at http://www.sec.gov. Reports and
other information concerning the Company can also be inspected at the offices of
the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a Registration Statement on
Form S-3 (including all amendments thereto, the "Registration Statement") under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the Securities. As permitted by the rules and regulations of the Commission,
this Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits thereto and to which reference is hereby
made.
-------------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December
31, 1997 filed with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act is incorporated by reference in this Prospectus.
All documents filed by the Company 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 Notes shall
be deemed to be incorporated by reference in this Prospectus and to be a part
thereof 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 a statement contained herein or in any other subsequently filed
<PAGE>
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
------------------------------
THE COMPANY WILL PROVIDE WITHOUT CHARGE UPON WRITTEN OR ORAL REQUEST, TO
EACH PERSON TO WHOM THIS PROSPECTUS IS DELIVERED, A COPY OF ANY OR ALL OF THE
DOCUMENTS DESCRIBED ABOVE WHICH HAVE BEEN INCORPORATED BY REFERENCE IN THIS
PROSPECTUS, OTHER THAN EXHIBITS TO SUCH DOCUMENTS. SUCH REQUEST SHOULD BE
DIRECTED TO:
G. E. GROSS, COMPTROLLER
GENERAL MOTORS ACCEPTANCE CORPORATION
3044 WEST GRAND BOULEVARD
MAIL CODE 482-1X1-103
DETROIT, MICHIGAN 48202
(313) 556-1240
<PAGE>
PRINCIPAL EXECUTIVE OFFICES
General Motors Acceptance Corporation has its principal executive offices
at 3044 West Grand Boulevard, Detroit, Michigan 48202 (Tel. No. 313-556-5000).
RATIO OF EARNINGS TO FIXED CHARGES
Years Ended December 31,
------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
1.42 1.41 1.36 1.33 1.33
The ratio of earnings to fixed charges has been computed by dividing
earnings before income taxes and fixed charges by the fixed charges. This ratio
includes the earnings and fixed charges of the Company and its consolidated
subsidiaries; fixed charges consist of interest and discount and the portion of
rentals for real and personal properties in an amount deemed to be
representative of the interest factor.
USE OF PROCEEDS
The net proceeds from the sale of the Securities will be added to the
general funds of the Company and will be available for the purchase of
receivables, the making of loans or the repayment of debt. Such proceeds
initially may be used to reduce short-term borrowings or invested in short-term
securities.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities offered hereby are to be issued under an Indenture
dated as of July 1, 1982, as amended by a First Supplemental Indenture dated as
of April 1, 1986, a Second Supplemental Indenture dated as of June 15, 1987, a
Third Supplemental Indenture dated as of September 30, 1996, a Fourth
Supplemental Indenture dated as of January 1, 1998 and as further amended by the
Trust Indenture Reform Act of 1990 (together, the "Indenture"), between the
Company and The Bank of New York, Successor Trustee (the "Trustee"), copies of
which are filed as exhibits to the Registration Statement. The following
summaries of certain provisions of the Indenture do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all
provisions of the Indenture, including the definition therein of certain terms.
The Indenture provides that, in addition to the Debt Securities offered
hereby, additional Debt Securities may be issued thereunder without limitation
as to aggregate principal amount, except as authorized from time to time by the
Company's Board of Directors. (Section 2.01 of the Indenture.)
GENERAL
Reference is made to the Prospectus Supplement for the following terms of
the Debt Securities being offered thereby: (1) the designation of such Debt
Securities; (2) the aggregate principal amount of such Debt Securities; (3) the
percentage of their principal amount at which such Debt Securities will be
issued; (4) the date or dates on which such Debt Securities will mature; (5) the
rate or rates per annum, if any, at which such Debt Securities will bear
<PAGE>
interest; (6) the times at which such interest, if any, will be payable; (7) the
date, if any, after which such Debt Securities may be redeemed and the
redemption price; (8) the currency or currencies in which such Debt Securities
are issuable or payable; (9) the exchanges, if any, on which such Debt
Securities may be listed and (10) whether such Debt Securities shall be issued
in book-entry form. Principal and interest, if any, will be payable, and, unless
the Debt Securities are issued in book-entry form, the Debt Securities offered
hereby will be transferable, at the office of the Trustee, 101 Barclay Street,
New York, New York 10286, provided that payment of interest may be made at the
option of the Company by check mailed to the address of the person entitled
thereto. (Sections 2.04 and 4.02 of the Indenture.)
The Debt Securities will be unsecured and unsubordinated and will rank PARI
PASSU with all other unsecured and unsubordinated obligations of the Company
(other than obligations preferred by mandatory provisions of law).
Some of the Debt Securities may be issued as discounted Debt Securities
(bearing no interest or interest at a rate which at the time of issuance is
below market rates) to be sold as a substantial discount below their stated
principal amount. Federal income tax consequences and other special
considerations applicable to any such discounted Debt Securities will be
described in the accompanying Prospectus Supplement relating thereto.
As used herein, Debt Securities shall include Debt Securities denominated
in United States dollars or, at the option of the Company if so specified in the
applicable Prospectus Supplement, in any other freely transferable currency or
in European Currency Units.
If a Prospectus Supplement specifies that Debt Securities are denominated
in a currency other than United States dollars, such Prospectus Supplement shall
also specify the denomination in which such Debt Securities will be issued and
the coin or currency in which the principal, premium, if any, and interest on
such Debt Securities, where applicable, will be payable, which may be United
States dollars based upon the exchange rate for such other currency existing on
or about the time a payment is due.
If a Prospectus Supplement specifies that the Debt Securities will have a
redemption option, the "Option to Elect Repurchase" constitutes an issuer tender
offer under the Exchange Act. The Company will comply with all issuer tender
offer rules and regulations under the Exchange Act, including Rule 14e-1, if
such redemption option is elected, including making any required filings with
the Commission and the furnishing of certain information to the holders of the
Debt Securities.
BOOK-ENTRY, DELIVERY AND FORM
Unless otherwise indicated in the Prospectus Supplement, the Debt
Securities will be issued in the form of one or more fully registered global
securities (collectively, the "Global Debt Security") which will be deposited
with, or on behalf of, The Depository Trust Company, New York, New York (the
"Depositary") and registered in the name of the Depositary's nominee. Except as
set forth below, the Global Debt Security may be transferred, in whole and not
in part, only to another nominee of the Depositary or to a successor of the
Depositary or its nominee.
The Depositary has advised as follows: It is a limited-purpose trust
company which was created to hold securities for its participating organizations
(the "Participants") and to facilitate the clearance and settlement of
<PAGE>
securities transactions between Participants in such securities through
electronic book-entry changes in accounts of its Participants. Participants
include securities brokers and dealers (including the underwriters named in the
Prospectus Supplement), banks and trust companies, clearing corporations and
certain other organizations. Access to the Depositary's 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 ("indirect participants"). Persons who are not Participants may
beneficially own securities held by the Depositary only through Participants or
indirect participants.
The Depositary advises that pursuant to procedures established by it (i)
upon issuance of the Debt Securities by the Company, the Depositary will credit
the account of Participants designated by the underwriters with the principal
amounts of the Debt Securities purchased by the underwriters, and (ii) ownership
of beneficial interests in the Global Debt Security will be shown on, and the
transfer of that ownership will be effected only through, records maintained by
the Depositary (with respect to Participants' interests), the Participants and
the indirect participants (with respect to the owners of beneficial interests in
the Global Debt Security). The laws of some states require that certain persons
take physical delivery in definitive form of securities which they own.
Consequently, the ability to transfer beneficial interests in the Global Debt
Security is limited to such extent.
As long as the Depositary's nominee is the registered owner of the Global
Debt Security, such nominee for all purposes will be considered the sole owner
or holder of the Debt Securities under the Indenture. Except as provided below,
owners of beneficial interests in the Global Debt Security will not be entitled
to have any of the Debt Securities registered in their names, will not receive
or be entitled to receive physical delivery of the Debt Securities in definitive
form, and will not be considered the owners or holders thereof under the
Indenture.
Neither the Company, the Trustee, any Paying Agent nor the Depositary will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests of the Global Debt
Security, or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
Principal and interest payments on the Debt Securities registered in the
name of the Depositary's nominee will be made by the Trustee to the Depositary's
nominee as the registered owner of the Global Debt Security. Under the terms of
the Indenture, the Company and the Trustee will treat the persons in whose names
the Debt Securities are registered as the owners of such Debt Securities for the
purpose of receiving payment of principal and interest on the Debt Securities
and for all other purposes whatsoever. Therefore, neither the Company, the
Trustee nor any Paying Agent has any direct responsibility or liability for the
payment of principal or interest on the Debt Securities to owners of beneficial
interests in the Global Debt Security. The Depositary has advised the Company
and the Trustee that its present practice is, upon receipt of any payment of
principal or interest, to immediately credit the accounts of the Participants
with such payment in amounts proportionate to their respective holdings in
principal amount of beneficial interests in the Global Debt Security as shown on
the records of the Depositary. Payments by Participants and indirect
participants to owners of beneficial interests in the Global Debt Security will
be the responsibility of such Participants and indirect participants and will be
governed by their standing instructions and customary practices, as is now the
case with securities held for the accounts of customers in bearer form or
registered in "street name."
<PAGE>
If the Depositary 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 definitive form in exchange for
the Global Debt Security. In addition, the Company may at any time determine not
to have the Debt Securities represented by the Global Debt Security and, in such
event, will issue Debt Securities in definitive form in exchange for the Global
Debt Security. In either instance, an owner of a beneficial interest in a Global
Debt Security will be entitled to have Debt Securities equal in principal amount
to such beneficial interest registered in its name and will be entitled to
physical delivery of such Debt Securities in definitive form. Debt Securities so
issued in definitive form will be issued in denominations of $1,000 and integral
multiples thereof and will be issued in registered form only, without coupons.
No service charge will be made for any transfer or exchange of such 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 2.06
of the Indenture.)
CERTAIN COVENANTS AS TO LIENS
The only financial covenant applicable to the Debt Securities is that
described below. That covenant requires that the Debt Securities be equally and
ratably secured in the circumstances described therein but has no special
application merely by virtue of the occurrence of any transaction or series of
transactions resulting in material changes in the Company's debt-to-equity
ratio.
The Debt Securities are not secured by mortgage, pledge or other lien. The
Company will covenant in the Debt Securities that so long as any of the Debt
Securities remain outstanding, it will not pledge or otherwise subject to any
lien any of its property or assets unless the Debt Securities are secured by
such pledge or lien equally and ratably with any and all other obligations and
indebtedness secured thereby so long as any such other obligations and
indebtedness shall be so secured. Such covenant does not apply to:
(a) the pledge of any assets to secure any financing by the Company of the
exporting of goods to or between, or the marketing thereof in, foreign countries
(other than Canada), in connection with which the Company reserves the right, in
accordance with customary and established banking practice, to deposit, or
otherwise subject to a lien, cash, securities or receivables, for the purpose of
securing banking accommodations or as the basis for the issuance of bankers'
acceptances or in aid of other similar borrowing arrangements;
(b) the pledge of receivables payable in foreign currencies (other than
Canadian dollars) to secure borrowings in foreign countries (other than Canada);
(c) any deposit of assets of the Company with any surety company or clerk
of any court, or in escrow, as collateral in connection with, or in lieu of, any
bond on appeal by the Company from any judgment or decree against it, or in
connection with other proceedings in actions at law or in equity by or against
the Company;
(d) any lien or charge on any property, tangible or intangible, real or
personal, existing at the time of acquisition of such property (including
acquisition through merger or consolidation) or given to secure the payment of
<PAGE>
all or any part of the purchase price thereof or to secure any indebtedness
incurred prior to, at the time of, or within 60 days after, the acquisition
thereof for the purpose of financing all or any part of the purchase price
thereof; and
(e) any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any lien, charge or pledge
referred to in the foregoing clauses (a) to (d) inclusive of this paragraph;
provided, however, that the amount of any and all obligations and indebtedness
secured thereby shall not exceed the amount thereof so secured immediately prior
to the time of such extension, renewal or replacement and that such extension,
renewal or replacement shall be limited to all or a part of the property which
secured the charge or lien so extended, renewed or replaced (plus improvements
on such property). (Section 4.03 of the Indenture.)
Similar covenants are applicable to the Company's other term indebtedness,
but not all contain the exceptions set forth in clauses (d) and (e) above.
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Trustee to
modify or amend the Indenture or any supplemental indenture or the rights of the
holders of the Debt Securities issued thereunder, with the consent of the
holders of not less than 66 2/3% in aggregate principal amount of the Debt
Securities of all series at the time outstanding under such Indenture which are
affected by such modification or amendment (voting as one class), provided that
no such modification shall (a) extend the fixed maturity of any Debt Securities,
or reduce the principal amount thereof, or premium, if any, or reduce the rate
or extend the time of payment of interest thereon, without the consent of the
holder of each Debt Security so affected, or (b) reduce the aforesaid percentage
of Debt Securities, the consent of the holders of which is required for any such
modification, without the consent of the holders of all Debt Securities then
outstanding under the Indenture.
(Section 10.02 of the Indenture.)
EVENTS OF DEFAULT
An Event of Default with respect to any series of Debt Securities is
defined in the Indenture as being (a) default in payment of any principal or
premium, if any, on such series; (b) default for 30 days in payment of any
interest on such series; (c) default for 30 days after notice in performance of
any other covenant in the Indenture; or (d) certain events of bankruptcy,
insolvency or reorganization. (Section 6.01 of the Indenture.)
No Event of Default with respect to a particular series of Debt
Securities issued under the Indenture necessarily constitutes an Event of
Default with respect to any other series of Debt Securities issued thereunder.
In case an Event of Default under clause (a) or (b) shall occur and be
continuing with respect to any series, the Trustee or the holders of not less
than 25% in aggregate principal amount of Debt Securities of each such series
then outstanding may declare the principal (or, in the case of discounted Debt
Securities, the amount specified in the terms thereof) of such series to be due
and payable. In case an Event of Default under clause (c) or (d) shall occur and
be continuing, the Trustee or the holders of not less than 25% in aggregate
principal amount of all the Debt Securities then outstanding (voting as one
class) may declare the principal (or, in the case of discounted Debt Securities,
<PAGE>
the amount specified in the terms thereof) of all outstanding Debt Securities to
be due and payable. Any Event of Default with respect to a particular series of
Debt Securities may be waived by the holders of a majority in aggregate
principal amount of the outstanding Debt Securities of such series (or of all
the outstanding Debt Securities, as the case may be), except in a case of
failure to pay principal or premium, if any, or interest on such Debt Security
for which payment had not been subsequently made. (Section 6.01 of the
Indenture.) The Company is required to file with the Trustee annually an
Officers' Certificate as to the absence of certain defaults under the terms of
the Indenture. (Section 4.05 of the Indenture.) The Indenture provides that the
Trustee may withhold notice to the securityholders of any default (except in
payment of principal, premium, if any, or interest) if it considers it in the
interest of the securityholders to do so.
(Section 6.07 of the Indenture.)
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
shall be under no obligation to exercise any of its rights or powers under the
Indenture at the request, order or direction of any of the Securityholders,
unless such Securityholders shall have offered to the Trustee reasonable
indemnity or security. (Sections 7.01 and 7.02 of the Indenture.)
Subject to such provisions for the indemnification of the Trustee and to
certain other limitations, the holders of a majority in principal amount of the
Debt Securities of each series affected (with each series voting as a separate
class) at the time outstanding shall have the right 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. (Section 6.06 of the
Indenture.)
CONCERNING THE TRUSTEE
The Bank of New York is the Successor Trustee under the Indenture. It is
also Successor Trustee under various other indentures covering outstanding Notes
and Debentures of the Company. The Bank of New York and its affiliates act as
depository for funds of, make loans to, act as trustee and perform certain other
services for, the Company and certain of its affiliates in the normal course of
its business. As trustee of various trusts, it has purchased securities of the
Company and certain of its affiliates.
DESCRIPTION OF WARRANTS
GENERAL
The following statements with respect to the Warrants are summaries of the
detailed provisions of one or more separate Warrant Agreements (each a "Warrant
Agreement") between the Company and a banking institution organized under the
laws of the United States or one of the states thereof (each a "Warrant Agent"),
a form of which is filed as an exhibit to the Registration Statement. Wherever
particular provisions of the Warrant Agreement or terms defined therein are
referred to, such provisions or definitions are incorporated by reference as a
part of the statements made, and the statements are qualified in their entirety
by such reference.
The Warrants will be evidenced by Warrant Certificates (the "Warrant
Certificates") and, except as otherwise specified in the Prospectus Supplement
<PAGE>
accompanying this Prospectus, may be traded separately from any Debt Securities
with which they may be issued. Warrant Certificates may be exchanged for new
Warrant Certificates of different denominations at the office of the Warrant
Agent. The holder of a Warrant does not have any of the rights of a holder of a
Debt Security in respect of, and is not entitled to any payments on, any Debt
Securities issuable (but not yet issued) upon exercise of the Warrants.
The Warrants may be issued in one or more series, and reference is made to
the Prospectus Supplement accompanying this Prospectus relating to the
particular series of Warrants, if any, offered thereby for the terms of, and
other information with respect to, such Warrants, including: (1) the title and
the aggregate number of Warrants; (2) the Debt Securities for which each Warrant
is exercisable; (3) the date or dates on which such Warrants will expire; (4)
the price or prices at which such Warrants are exercisable; (5) the currency or
currencies in which such Warrants are exercisable; (6) the periods during which
and places at which such Warrants are exercisable; (7) the terms of any
mandatory or optional call provisions; (8) the price or prices, if any, at which
the Warrants may be redeemed at the option of the holder or will be redeemed
upon expiration; (9) the identity of the Warrant Agent; (10) the exchanges, if
any, on which such Warrants may be listed and (11) whether such Warrants shall
be issued in book-entry form.
EXERCISE OF WARRANTS
Warrants may be exercised by payment to the Warrant Agent of the exercise
price, in each case in such currency or currencies as are specified in the
Warrant, and by communicating to the Warrant Agent the identity of the
Warrantholder and the number of Warrants to be exercised. Upon receipt of
payment and the Warrant Certificate properly completed and duly executed, at the
office of the Warrant Agent, the Warrant Agent will, as soon as practicable,
arrange for the issuance of the applicable Debt Securities, the form of which
shall be set forth in the Prospectus Supplement. If less than all of the
Warrants evidenced by a Warrant Certificate are exercised, a new Warrant
Certificate will be issued for the remaining amounts of Warrants.
PLAN OF DISTRIBUTION
The Company may sell the Securities being offered hereby in four ways: (i)
directly to purchasers, (ii) through agents, (iii) through underwriters, and
(iv) through dealers.
Offers to purchase Securities may be solicited directly by the Company or
by agents designated by the Company from time to time. Any such agent, who may
be deemed to be an underwriter as that term is defined in the Securities Act, as
amended, involved in the offer or sale of the Securities in respect of which
this Prospectus is delivered will be named, and any commissions payable by the
Company to such agent 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 (ordinarily five business days
or less). Agents may be entitled under agreements which may be entered into with
the Company to indemnification by the Company against certain civil liabilities,
including liabilities under the Securities Act, and may be customers of, engage
in transactions with or perform services for the Company in the ordinary course
of business.
If an underwriter or underwriters are utilized in the sale, the Company
will enter into an underwriting agreement with such underwriters at the time of
sale to them and the names of the underwriters and the terms of the transaction
<PAGE>
will be set forth in the Prospectus Supplement, which will be used by the
underwriters to make resales of the Securities in respect of which this
Prospectus is delivered to the public. The underwriters may be entitled, under
the relevant underwriting agreement, to indemnification by the Company against
certain liabilities, including liabilities under the Securities Act of 1933.
Among others, one or more of the following firms may act as managing
underwriter(s) with respect to the offering of the Securities: Bear Stearns &
Co. Inc., Lehman Brothers, Lehman Brothers Inc., Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan & Co., J.P. Morgan
Securities Inc., Morgan Stanley Dean Witter, Morgan Stanley & Co.
Incorporated, Salomon Smith Barney, Salomon Brothers Inc and UBS Securities LLC.
If a dealer is utilized in the sale of the Securities in respect of which
this Prospectus is delivered, the Company will sell such Securities to the
dealer as principal. The dealer may then resell such Securities to the public at
varying prices to be determined by such dealer at the time of resale. Dealers
may be entitled to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act.
If so indicated in the Prospectus Supplement, the Company will authorize
agents and underwriters to solicit offers by certain institutions to purchase
Securities from the Company at the public offering price set forth in the
Prospectus Supplement pursuant to Delayed Delivery Contracts ("Contracts")
providing for payment and delivery on the date stated in the Prospectus
Supplement. Each Contract will be for an amount not less than, and unless the
Company otherwise agrees the aggregate principal amount of Securities sold
pursuant to Contracts shall be not less nor more than, the respective amounts
stated in the Prospectus Supplement. Institutions with whom Contracts, when
authorized, may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions, and other institutions but shall in all cases be subject to the
approval of the Company. Contracts will not be subject to any conditions except
that the purchase by an institution of the Securities covered by its Contract
shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject. A
commission indicated in the Prospectus Supplement will be paid to underwriters
and agents soliciting purchases of Securities pursuant to Contracts accepted by
the Company.
The place and time of delivery for the Securities in respect of which this
Prospectus is delivered are set forth in the accompanying Prospectus Supplement.
In connection with the offering of the Securities, the Underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price of
the Securities during and after the offering. Specifically, the Underwriters may
over-allot or otherwise create a short position in the Securities for their own
account by selling more Securities than have been sold to them by the Company.
The Underwriters may elect to cover any such short position by purchasing
Securities in the open market. In addition, the Underwriters may stabilize or
maintain the price of the Securities by bidding for or purchasing Securities in
the open market and may impose penalty bids, under which selling concessions
allowed to syndicate members or other broker-dealers participating in the
offering are reclaimed if Securities previously distributed in the offering are
repurchased in connection with stabilization transactions or otherwise. The
effect of these transactions may be to stabilize or maintain the market price of
the Securities at a level above that which might otherwise prevail in the open
<PAGE>
market. The imposition of a penalty bid may also affect the price of the
Securities to the extent that it discourages resales thereof. No representation
is made as to the magnitude or effect of any stabilization or other
transactions. Such transactions, if commenced, may be discontinued at any time.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference from the Company's Annual Report on Form 10-K have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
-----------------------------
LOGO
