<PAGE> 1
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED APRIL 3, 1998) FILED PURSUANT TO RULE 424(B)(2)
FILE NO. 333-48705
E750,000,000
GENERAL MOTORS ACCEPTANCE
CORPORATION
4% NOTES DUE FEBRUARY 9, 2006
------------------------
The notes will bear interest from February 9, 1999, at the rate of 4% per
annum, payable annually on February 9, commencing February 9, 2000. 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."
Application has been made to list the notes on the Luxembourg Stock
Exchange.
------------------------
<TABLE>
<CAPTION>
PER NOTE TOTAL
-------- -----
<S> <C> <C>
Public Offering Price(1).................................... 99.772% E748,290,000
Underwriting Discount....................................... .40% E 3,000,000
Proceeds, before expenses, to General Motors Acceptance
Corporation............................................... 99.372% E745,290,000
</TABLE>
(1) You will also pay accrued interest, if any, from February 9, 1999.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
We expect that the notes will be ready for delivery in book-entry form only
through the Depository Trust Company, Deutsche Borse Clearing AG, Cedelbank or
the Euroclear System, as the case may be, on or about February 9, 1999.
------------------------
DEUTSCHE BANK MERRILL LYNCH & CO.
ABN AMRO BARCLAYS CAPITAL
BANCA D'INTERMEDIAZIONE MOBILIARE IMI DRESDNER KLEINWORT BENSON
COMMERZBANK AKTIENGESELLSCHAFT HSBC MARKETS
J.P. MORGAN SECURITIES LTD. PARIBAS
SOCIETE GENERALE WARBURG DILLON READ
The activities of the underwriters are being lead jointly by Deutsche Bank
Aktiengesellschaft and Merrill Lynch International.
------------------------
The date of this prospectus supplement is January 26, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Incorporation of Certain Documents by Reference............. S-3
Description of General Motors Acceptance Corporation........ S-4
Directors of the Company.................................... S-4
Ratio of Earnings to Fixed Charges.......................... S-5
Recent Developments......................................... S-5
Consolidated Capitalization of the Company.................. S-5
Selected Consolidated Financial Data........................ S-6
Currency Conversions and Foreign Exchange Risks............. S-7
Use of Proceeds............................................. S-8
Description of Notes........................................ S-8
Clearing and Settlement..................................... S-13
United States Federal Taxation.............................. S-17
Underwriting................................................ S-23
General Information......................................... S-24
Legal Opinions.............................................. S-25
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
</TABLE>
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.
S-2
<PAGE> 3
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.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
General Motors Acceptance Corporation ("GMAC" or the "Company") is subject
to the information requirements of the Securities Exchange Act and files reports
and other information with the SEC. You may read and copy any reports or other
information General Motors Acceptance Corporation files at the SEC's public
reference rooms in Washington, D.C., New York, New York and Chicago, Illinois.
You may also request copies of these documents upon payment of a duplicating
fee, by writing to the SEC's Public Reference Section. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. GMAC's SEC
filings are also available to the public from commercial document retrieval
services and at the web site maintained by the SEC at http://www.sec.gov.
The SEC allows us to "incorporate by reference" information into this
document, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC, including the
Company's annual, quarterly and current reports. The information incorporated by
reference is deemed to be part of this document, except for any information
superseded by information in this document. The information incorporated by
reference is an important part of this prospectus supplement and accompanying
prospectus, and information that we file later with the SEC will automatically
update and supersede the information in this prospectus supplement and
accompanying prospectus.
This document incorporates by reference the documents set forth below that
GMAC previously filed with the SEC. These documents contain important
information about GMAC and its finances.
<TABLE>
<CAPTION>
SEC FILINGS PERIOD
- ----------- ------
<S> <C>
Annual Report on Form 10-K.......... Year ended December 31, 1997
Quarterly Reports on Form 10-Q...... Quarters ended March 31, 1998, June 30, 1998 and
September 30, 1998
Current Reports on Form 8-K......... Dated January 5, 1998, January 30, 1998, April
27, 1998, October 13, 1998 and January 21, 1999
</TABLE>
Other documents incorporated by reference may be obtained through the SEC
and are available from GMAC without charge. You may obtain documents
incorporated by reference in this document by making a request to GMAC by
telephone at (313) 556-1240 or in writing at the following address:
G.E. Gross, Comptroller
General Motors Acceptance Corporation
3044 West Grand Boulevard
Mail code 482-1x1-103
Detroit, Michigan 48202
Tel: (313) 556-1240
This prospectus supplement and accompanying prospectus, together with the
documents incorporated in them by reference, will be available free of charge at
the office of Banque Generale du Luxembourg S.A., 50 Avenue J. F. Kennedy,
L-2951, Luxembourg.
S-3
<PAGE> 4
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 its predecessor
which was originally incorporated in 1919 under the New York Banking Law
relating to investment companies, and thereupon assumed all of its predecessor's
assets, liabilities and obligations.
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.
DIRECTORS OF THE COMPANY
<TABLE>
<CAPTION>
NAME POSITION
---- --------
<S> <C>
John G. Blahnik.............................. Vice President and Treasurer, Delphi Automotive
Systems Corporation
Richard J.S. Clout........................... Executive Vice President
Eric A. Feldstein............................ Vice President and Treasurer, General Motors
Corporation
John D. Finnegan............................. President, 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 and Chief Financial Officer,
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 and Chief Investment Funds Officer,
General Motors Corporation
John F. Smith, Jr............................ Chairman and Chief Executive Officer, General Motors
Corporation
G. Richard Wagoner, Jr. ..................... President and Chief Operating Officer, General Motors
Corporation
Ronald L. Zarrella........................... Executive Vice President and President of GM North
America, General Motors Corporation
</TABLE>
The above Directors do not hold any significant position outside General
Motors Corporation, the Company and their respective subsidiaries.
S-4
<PAGE> 5
The business address of each Director is 3044 West Grand Boulevard,
Detroit, Michigan 48202, United States.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
- ----------------- -------------
1998 1997 1997 1996
---- ---- ---- ----
<S> <C> <C> <C>
1.34 1.45 1.42 1.41
</TABLE>
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.
RECENT DEVELOPMENTS
The Company reported 1998 consolidated net income of $1,325 million, up 2%
from the $1,301 million earned in 1997. Fourth quarter 1998 results totaled $298
million, up 7% from the $279 million earned in the final quarter of 1997.
CONSOLIDATED CAPITALIZATION OF THE COMPANY
(UNAUDITED)
(IN MILLIONS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
SEPTEMBER 30,
1998
-------------
<S> <C>
NOTES, LOANS AND DEBENTURES
Payable within one year................................... $50,959.6
Payable after one year.................................... 40,937.7
---------
Total notes, loans and debentures.................... $91,897.3
=========
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............... 7,128.4
Net unrealized gains on securities........................ 306.6
Unrealized accumulated foreign currency translation
adjustment............................................. (136.2)
---------
Accumulated other comprehensive income................. 170.4
---------
Total stockholder's equity............................. $ 9,498.8
=========
</TABLE>
There has been no material change in the consolidated capitalization of the
Company since September 30, 1998.
S-5
<PAGE> 6
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 nine
months ended September 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 September 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.
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEARS ENDED
SEPTEMBER 30, SEPTEMBER 31,
------------------------ -----------------------
1998 1997 1997 1996
---- ---- ---- ----
(IN MILLIONS OF U.S. DOLLARS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA(1):
Cash and Cash Equivalents...................... $ 614.2 $ 476.0 $ 759.2 $ 742.3
---------- ---------- ---------- ---------
Earning Assets
Investments in securities...................... 8,134.9 6,153.2 7,896.1 4,556.8
Finance receivables, net....................... 63,725.3 59,581.8 59,630.8 58,380.0
Investment in operating leases, net............ 28,400.1 26,384.5 25,849.1 24,909.5
Notes receivable from General Motors
Corporation.................................. 2,301.6 454.3 551.7 190.5
Real estate mortgages--held for sale........... 5,424.6 4,790.4 5,119.5 2,785.0
--held for investment... 789.5 774.0 713.0 611.2
--lending receivables... 1,783.3... 1,999.6 2,222.9 1,404.6
Due and deferred from receivable sales, net.... 186.1 660.9 690.5 1,214.5
Other.......................................... 2,558.1 1,499.4 1,807.6 1,617.6
---------- ---------- ---------- ---------
Total earning assets......................... 113,303.5 102,298.1 104,481.2 95,669.7
---------- ---------- ---------- ---------
Nonearning assets.............................. 4,705.1 2,444.4 4,078.9 2,166.0
---------- ---------- ---------- ---------
Total Assets................................... $118,622.8 $105,218.5 $109,319.3 $98,578.0
========== ========== ========== =========
Notes, loans and debentures payable within one
year......................................... $ 50,959.6 $ 48,112.1 $ 50,399.5 $45,809.9
---------- ---------- ---------- ---------
Accounts Payable and Other Liabilities
General Motors Corporation and affiliated
companies.................................... 1,898.8 1,477.5 698.9 646.6
Interest....................................... 1,394.3 1,366.2 1,101.8 1,065.2
Insurance losses and loss expenses............. 2,043.7 1,566.1 2,125.3 1,581.9
Unearned insurance premiums.................... 1,865.0 1,494.6 1,804.1 1,437.5
Deferred income taxes.......................... 2,796.6 2,323.5 2,577.1 2,215.8
United States and foreign income and other
taxes payable................................ 276.4 442.4 321.2 35.6
Other postretirement benefits.................. 690.9 652.5 652.6 627.0
Other.......................................... 6,261.0 4,290.7 4,607.5 4,012.0
---------- ---------- ---------- ---------
Total accounts payable and other
liabilities............................... 17,226.7 13,613.5 13,888.5 11,621.6
---------- ---------- ---------- ---------
Notes, loans and debentures payable after one
year......................................... 40,937.7 34,828.9 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.... 7,128.4 6,147.5 6,326.3 5,775.2
Net unrealized gains on securities............. 306.6 388.8 368.5 276.7
Unrealized accumulated foreign currency
translation adjustment....................... (136.2) (72.3) (138.7) 15.7
---------- ---------- ---------- ---------
Accumulated other comprehensive income....... 170.4 316.5 229.8 292.4
---------- ---------- ---------- ---------
Total stockholder's equity................... 9,498.8 8,664.0 8,756.1 8,267.6
---------- ---------- ---------- ---------
Total Liabilities and Stockholder's Equity..... $118,622.8 $105,218.5 $109,319.3 $98,578.0
========== ========== ========== =========
</TABLE>
- -------------------------
(1) Certain amounts for 1997 have been reclassified to conform with 1998
classifications.
S-6
<PAGE> 7
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- ---------------------
1998 1997 1997 1996
---- ---- ---- ----
(IN MILLIONS OF U.S. DOLLARS)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA(1):
Financing Revenue
Retail and lease financing........................... $2,834.4 $2,691.9 $3,570.5 $ 3,822.2
Operating leases..................................... 5,415.8 5,445.7 7,260.5 7,214.6
Wholesale and term loans............................. 1,211.5 1,320.3 1,745.6 1,607.0
-------- -------- -------- ---------
Total automotive financing revenue................. 9,461.7 9,457.9 12,576.6 12,643.8
Interest and discount................................ 4,316.7 3,885.6 5,255.5 4,937.5
Depreciation on operating leases..................... 3,488.2 3,475.4 4,677.5 4,627.0
-------- -------- -------- ---------
Net automotive financing revenue................... 1,656.8 2,096.9 2,643.6 3,079.3
Insurance premiums earned............................ 1,416.9 914.3 1,360.4 1,158.0
Mortgage revenue..................................... 1,455.6 1,090.7 1,498.7 943.7
Other income......................................... 960.2 843.2 1,159.7 1,228.2
-------- -------- -------- ---------
Net Financing Revenue and Other.................... 5,489.5 4,945.1 6,662.4 6,409.2
-------- -------- -------- ---------
Expenses
Salaries and benefits................................ 861.4 806.9 1,050.4 974.3
Other operating expenses............................. 1,703.9 1,256.5 1,801.8 1,716.0
Insurance losses and loss adjustment expenses........ 1,115.9 717.6 1,073.5 972.2
Provision for credit losses.......................... 322.6 395.9 522.7 669.0
-------- -------- -------- ---------
Total expenses..................................... 4,003.8 3,176.9 4,448.4 4,331.5
-------- -------- -------- ---------
Income before income taxes........................... 1,485.7 1,768.2 2,214.0 2,077.7
United States, foreign and other income taxes........ 458.6 745.9 912.9 837.2
-------- -------- -------- ---------
Net Income......................................... 1,027.1 1,022.3 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................................................ 7,353.4 6,797.5 7,076.3 6,975.2
Cash dividends....................................... 225.0 650.0 750.0 1,200.0
-------- -------- -------- ---------
Net Income Retained for use in the Business at end
of the Period................................... $7,128.4 $6,147.5 $6,326.3 $ 5,775.2
======== ======== ======== =========
</TABLE>
- -------------------------
(1) Certain amounts for 1997 have been reclassified to conform with 1998
classifications.
CURRENCY CONVERSIONS AND FOREIGN EXCHANGE RISKS
CURRENCY CONVERSIONS
Initial purchasers of the Notes are required to make payment in Euro. The
underwriters are prepared to arrange for the conversion of U.S. dollars into
Euro to enable investors in the United States to make payment in Euro. Each such
conversion will be made by such underwriter on such terms and subject to such
conditions, limitations and charges as such underwriter may from time to time
establish in accordance with its regular foreign exchange practices, and subject
to applicable United States laws and regulations. All costs of conversions will
be borne by such investors. See "Description of Notes--Payments" and "--Foreign
Exchange Risks".
Investors may be subject to foreign exchange risks as to payments of
principal and interest that may have important economic and tax consequences to
them. For further information as to such consequences, see "--Foreign Exchange
Risks" and "United States Federal Taxation".
S-7
<PAGE> 8
FOREIGN EXCHANGE RISKS
An investment in the Notes that are denominated in, and all payments in
respect of which are to be made in, a currency other than the currency of the
country in which the purchaser is resident or the currency in which the
purchaser conducts its business or activities (the "home currency") entails
significant risks not associated with a similar investment in a security
denominated in the home currency. Such risks include, without limitation, the
possibility of significant changes in rates of exchange between the home
currency and the Euro and the possibility of the imposition or modification of
foreign exchange controls with respect to the dollar or Euro. Such risks
generally depend on events over which the Company has no control, such as
economic and political events and the supply of and demand for the dollar or
Euro and the home currency. In recent years, rates of exchange for certain
currencies have been highly volatile and such volatility may be expected to
continue in the future. Fluctuations in any particular exchange rate that have
occurred in the past are not necessarily indicative, however, of fluctuations in
such rate that may occur during the term of the Notes. Depreciation of the Euro
against the relevant home currency could result in a decrease in the effective
yield of a particular note below its coupon rate and, in certain circumstances
could result in a loss to the investor on a home currency basis.
This description of foreign currency risks does not describe all of the
risks of an investment in notes denominated in a currency other than the home
currency. Prospective investors should consult their own financial and legal
advisers as to the risks involved in an investment in the Notes.
USE OF PROCEEDS
The net proceeds from the sale of the notes offered hereby will be, before
expenses, E745,290,000.
DESCRIPTION OF NOTES
GENERAL
The following description of the particular terms of the 4% Notes Due
February 9, 2006 (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
E750,000,000 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 dated February 10, 1998.
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 will be redeemed at par on February 9, 2006. The Notes are not
redeemable by the Company prior to maturity unless certain events occur
involving U.S. taxation. See "--Redemption for Tax Reasons."
INTEREST
The Notes bear interest from February 9, 1999 at the rate of 4% per annum.
Interest on the Notes will be payable annually in arrears on February 9,
commencing on February 9, 2000 unless any payment would otherwise fall on a day
which is not a Business Day (as defined below), in which case the payment shall
be made on the next Business Day and no further interest shall be paid in
respect of the delay in such payment.
Whenever it is necessary to compute any amount of accrued interest in
respect of the Notes for a period of less than a full year, such interest shall
be calculated on the basis of the actual number of days
S-8
<PAGE> 9
in the relevant interest period divided by 365 or (in the case of a leap year)
366 days, as the case may be.
FORM, DENOMINATION AND TRANSFER
The Notes will be represented by two permanent global Notes without
interest coupons which will not be exchangeable for definitive Notes. The DBC
Global Notes (the "DBC Global Note") will be kept in the custody of Deutsche
Borse Clearing AG (the "DBC"). The DBC Global Note will be issued in registered
form in the name of DBC and will represent the Notes held by owners of
beneficial interests through financial institutions that are accountholders in
DBC, including such Notes which are held through Cedelbank and Euroclear, each
of which has an account with DBC, and any other clearing system which maintains
an account with DBC. The DTC Global Notes (the "DTC" Global Note") will be kept
in custody by Deutsche Bank AG New York ("Deutsche Bank New York") or any
successor, as custodian for the Depository Trust Company (the "DTC"). The DTC
Global Note will be issued in registered form in the name of Cede & Co., as
nominee of DTC, and will represent the Notes held by owners of beneficial
interests through financial institutions that are participants in DTC. Together,
the Notes represented by the DBC Global Note and the DTC Global Note will equal
the aggregate principal amount of the Notes outstanding at any time. The amount
of Notes represented by each of the DBC Global Note and the DTC Global Note is
evidenced by the register (the "Register") maintained for that purpose by the
Registrar.
The Notes will be sold in minimum denominations of E 1,000 and integral
multiples thereof.
Transfers of Notes (a) between DBC Accountholders on the one hand and DTC
Participants (as defined under "Clearing and Settlement--Certification and
Custody") on the other hand shall be recorded in the Register and shall be
effected by an increase or a reduction in, the aggregate amount of Notes
represented by the DTC Global Note and the DBC Global Note, as the case may be;
(b) between DBC Accountholders shall be effected in accordance with procedures
established for this purpose by DBC; (c) between DTC Participants shall be
effected in accordance with procedures established for this purpose by DTC; (d)
between participants of another clearing system maintaining an account with DBC
or between participants of other clearing systems each of which maintains an
account with DBC shall be effected in accordance with procedures established for
such purposes by the relevant clearing system; and (e) transfers of Notes
between participants of other clearing systems maintaining an account with DBC
on the one hand and DBC Accountholders on the other hand shall be effected in
accordance with the procedures established for this purpose by DBC.
Transfers of Notes or exchanges of Notes in the manner set forth pursuant
to clause (a) in the preceding paragraph may not be effected during the period
commencing at the close of business on the Record Date as defined under
"Description of Notes--Payments" and ending on the related payment date (both
dates inclusive).
Owners of beneficial interests in the global Notes may incur fees payable
in respect of maintenance and operation of the book-entry accounts in which such
interests are held with the clearing systems.
TITLE
Subject to applicable law and the terms of the Indenture, GMAC, the
Registrar and any paying agent will treat the persons in whose names the DTC
Global Note and DBC Global Note (collectively, the "Global Notes") are
registered, initially Cede & Co., and DBC, (collectively, the "holders"), as
owners of such Notes for the purpose of receiving payments of principal and
interest on the Notes and for all other purposes whatsoever. Therefore, none of
GMAC, the Registrar or any paying agent has any direct responsibility or
liability for the payment of principal of or interest on the Notes to owners of
beneficial interests in the DTC Global Note and the DBC Global Note.
S-9
<PAGE> 10
PAYMENTS
Payments of principal of, and interest on, the Notes shall be made on the
relevant payment date to DBC and to the registered holders of the Global Notes
in Euro as set forth below. The amount of payments to DBC and to DTC, shall
correspond to the aggregate principal amount of Notes represented by the DBC
Global Note and the DTC Global Note, as established by the Registrar at the
close of business on the relevant Record Date. Payments of principal shall be
made upon surrender of the DBC Global Note and the DTC Global Note, as the case
may be, to the Registrar.
Any owner of beneficial interests in the DTC Global Note (a "DTC
Noteholder") shall receive payments of principal and interest in respect of the
Notes in U.S. dollars, unless such DTC Noteholder elects to receive payments in
Euro in accordance with the procedures set out below. To the extent that DTC
Noteholders shall not have made such election in respect of any payment of
principal or interest, the aggregate amount designated for all such DTC
Noteholders in respect of any such payment (the "Euro Conversion Amount") shall
be converted by the Registrar into U.S. dollars and paid by wire transfer of
same day funds to the registered holder of the DTC Global Note for payment
through DTC's settlement system to the relevant DTC Participants. All costs of
any such conversion shall be deducted from such payments. Any such conversion
shall be based on the Registrar's bid quotation, at or prior to 11:00 a.m. New
York time, on the second New York Business Day (As used herein, New York
Business Day refers to any day which is not a Saturday or Sunday or a day on
which banking institutions are authorized or required by law or regulation to be
closed in The City of New York.) preceding the relevant payment date, for the
purchase by the Registrar of U.S. dollars with Euro in an amount equal to the
Euro Conversion Amount for settlement on such payment date. If such bid
quotation is not available, the Registrar shall obtain a bid quotation from a
leading foreign exchange bank in New York City selected by the Registrar for
such purpose after consultation with GMAC. If no bid quotation from a leading
foreign exchange bank is available, payment of the Euro Conversion Amount will
be in Euro to the account or accounts specified by DTC to the Registrar. Until
such account or accounts are so specified, the funds still held by the Registrar
shall bear interest at the rate of interest quoted by the Registrar for deposits
with it on an overnight basis to the extent that the Registrar is reasonably
able to reinvest such funds.
Any DTC Noteholder may elect to receive payment of principal and interest
with respect to the Notes in Euro by causing DTC to notify the Registrar by the
time specified below of (i) such DTC Noteholder's election to receive all or a
portion of such payment in Euro and (ii) wire transfer instructions to an Euro
account in a principal financial center of a member state of the European Union
that participates in the European Economic and Monetary Union. Such election in
respect of any payment shall be made by the DTC Noteholder at the time and in
the manner required by the DTC procedures applicable from time to time and
shall, in accordance with such procedures, be irrevocable. DTC's notification of
such election and wire transfer instructions and of the amount payable in Euro
pursuant to this paragraph must be received by the Registrar prior to 5:00 p.m.
New York time on the fifth New York Business Day (as defined below) in the case
of interest and prior to 5:00 p.m. New York on the eighth New York Business Day
prior to the payment date for the payment of principal. Any payment under this
paragraph in Euro shall be made by wire transfer of same-day funds to the Euro
accounts designated by DTC.
All payments made by GMAC to the registered holders of the Global Notes,
shall discharge the liability of GMAC under the Notes to the extent of the sums
so paid.
The record date (the "Record Date") for purposes of blocking transfers,
between the DBC Global Note and DTC Global Note and payments of principal and
interest to the holder of the relevant global Note shall be, in respect of each
such payment, the earlier of the following dates: (a) the date determined in
accordance with the conventions observed by DBC from time to time for the
entitlement of DBC Accountholders (as defined herein) to payments in respect of
debt securities denominated in Euro and represented by permanent global
certificates (currently the relevant due date), and (b) the tenth New York
Business Day (as defined below) preceding the relevant due date. Transfers or
exchanges of Notes between the DBC Global Note and DTC Global Note may not be
effected during the period commencing
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at the close of business on the Record Date and ending on the related payment
date (both dates inclusive).
If any due date for payment of principal or interest in Euro in respect of
any Notes is not a Business Day, such payment will not be made until the next
following Business Day, and no further interest shall be paid in respect of the
delay in such payment. "Business Day" means any day, other than a Saturday or
Sunday, that meets each of the following applicable requirements: the day is (a)
not a day on which banking institutions are authorized or required by law or
regulation to be closed in The City of New York; (b) a day on which the
Trans-European Automated Real-Time Gross Settlement Express Transfer System
("TARGET") is operating.
REGISTRAR AND PAYING AGENT
GMAC may at any time vary or terminate the appointment of the Registrar or
any paying agent or approve any change in the office through which they act,
provided that there shall at all times be a Registrar, and provided further that
so long as the Notes are listed on any stock exchange (and the rules of such
stock exchange so require), GMAC will maintain a paying agent with offices in
the city in which such stock exchange is located.
The Registrar and any paying agent in such capacities are acting
exclusively as agents of GMAC and do not have any legal relationship of any
nature with or accountability to the holders of the Notes.
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
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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;
(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
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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
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, 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, 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 have been issued 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.
CLEARING AND SETTLEMENT
CERTIFICATION AND CUSTODY
Clearing and settlement arrangements, including the existing links between
DBC, Euroclear and Cedelbank and an especially created link between these
systems and DTC, will provide investors access to four major clearing systems.
The Notes will be represented by global Notes which will not be exchangeable for
definitive Notes representing individual Notes. The DBC Global Note, to be held
in DBC, will be issued in registered form in the name of DBC and will represent
the Notes held by owners of beneficial interests therein electing to hold Notes
through financial institutions that are DBC Accountholders. Cedelbank and
Euroclear participate in DBC, and, accordingly, Notes held by owners of
beneficial interests therein electing to hold Notes through financial
institutions that are participants in Cedelbank and Euroclear ("Cedelbank and
Euroclear Participants") are thus included in the DBC Global Note. The DTC
Global Note, which will be held by Deutsche Bank New York as custodian for DTC,
will be issued in registered form in the name of DTC's nominee Cede & Co. and
will represent The Notes held by owners of beneficial interests therein electing
to hold Notes through financial institutions that are participants in DTC ("DTC
Participants").
Together, the Notes represented by the DBC Global Note and the DTC Global
Note will equal the total aggregate principal amount of the Notes outstanding at
any time. When subsequent secondary market sales settle between the DBC and DTC
clearing systems, such sales shall be recorded in the Register and shall be
reflected by respective increases and decreases in the DBC Global Note and the
DTC Global Note.
Deutsche Bank Aktiengesellschaft, Frankfurt am Main, as the Registrar and
as a DBC Accountholder, provides the link between DBC and DTC through Deutsche
Bank New York.
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Owners of beneficial interests in the DBC Global Note or the DTC Global
Note will not be entitled to have Notes registered in their names, and will not
receive or be entitled to receive physical delivery of definitive Notes
representing individual Notes.
PAYMENTS
Principal and interest payments on the Notes will be made by GMAC through
the Registrar to DBC as the holder of the DBC Global Note and to Cede & Co. as
the holder of the DTC Global Note in Euro as set forth under "Description of the
Notes--Payments." Any DTC Noteholder shall receive payments of principal and
interest in respect of the Notes in U.S. dollars, unless such DTC Noteholder
elects to receive payments in Euro as set forth under "Description of the
Notes--Payments." All payments duly made by GMAC to DBC as the holder of the DBC
Global Note and to, or to the order of, Cede & Co. as the holder of the DTC
Global Note, shall discharge the liability of GMAC under the Notes to the extent
of the sum or sums so paid. Therefore, after such payments have been duly made,
none of GMAC, the Registrar or any paying agent has any direct responsibility or
liability for the payment of principal or interest on the Notes to owners of
beneficial interests in the DTC Global Note. Payments by DTC Participants and
Indirect DTC Participants (as defined under "--The Clearing Systems--DTC" below)
to owners of beneficial interests in the DTC Global Note will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in "street name", and
will be the responsibility of the DTC Participants or Indirect DTC Participants.
None of GMAC, the Registrar or any paying agent will have any responsibility or
liability for any aspect of the records of DTC relating to or payments made by
DTC on account of beneficial interests in the DTC Global Note or for
maintaining, supervising or reviewing any records of DTC relating to such
beneficial interests. Substantially similar principles will apply with regard to
the DBC Global Note and payments to owners of interests therein.
THE CLEARING SYSTEMS
The clearing systems have advised GMAC as follows:
DBC. DBC is incorporated under the laws of Germany and acts as a
specialized depositary and clearing organization. DBC is subject to regulation
and supervision by the Federal Banking Authority (Bundesaufsichtsamt fur das
Krediwasen).
DBC holds securities for its accountholders and facilitates the clearance
and settlement of securities transactions between its DBC Accountholders through
electronic book-entry changes in securities accounts with simultaneous payment
in Euro in same-day funds. Thus, the need for physical delivery of Notes is
eliminated.
DBC provides to the DBC Accountholders, among other things, services for
safekeeping, administration, clearance and settlement of domestic German and
internationally traded securities and securities lending and borrowing. DBC
Accountholders are banking institutions located in Germany, including German
branches of non-German financial institutions, and securities brokers or dealers
admitted to a German stock exchange that meet certain additional requirements.
Indirect access to DBC is available to others such as Euroclear and Cedelbank
and the underwriters, securities brokers and dealers, banks, trust companies,
clearing corporations and others, including individuals, that clear through or
maintain custodial relationships with DBC Accountholders either directly or
indirectly.
DTC. DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
U.S. Securities Exchange Act of 1934, as amended. DTC was created to hold
securities for DTC Participants and to facilitate the clearance and settlement
of transactions between DTC Participants through electronic book-entry changes
in accounts of DTC Participants, thereby eliminating the need for physical
movement of certificates. DTC Participants include certain of the underwriters,
securities brokers and dealers, banks, trust companies and clearing corporations
and may in the future include certain other
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organizations. Indirect access to the DTC system is also available to others
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a DTC Participant, either directly or
indirectly ("Indirect DTC Participants").
Transfers of ownership or other interests in Notes in DTC may be made only
through DTC Participants. Indirect DTC Participants are required to effect
transfers through a DTC Participant. In addition, beneficial owners of Notes in
DTC will receive all distributions of principal of and interest on the Notes
from the Registrar through such DTC Participant.
Because DTC can only act on behalf of DTC Participants, who in turn act on
behalf of Indirect DTC Participants, and, because owners of beneficial interests
in the Notes holding through DTC will hold interests in the Notes through DTC
Participants or Indirect DTC Participants, the ability of such owners of
beneficial interests to pledge Notes to persons or entities that do not
participate in DTC, or otherwise take actions with respect to such Notes, may be
limited.
Ownership of interests in the DTC Global Note will be shown on, and the
transfer of that ownership will be effected only through, records maintained by
DTC, the DTC Participants and the Indirect DTC Participants. The laws of some
jurisdictions require that certain persons take physical delivery in definitive
form of securities which they own. Consequently, the ability to transfer
beneficial interests in the DTC Global Note is limited to such context.
DTC's management is aware that some computer applications, systems, and the
like for processing data ("Systems") that are dependent upon calendar dates,
including dates before, on, and after January 1, 2000, may encounter "Year 2000
problems." DTC has informed Participants and other members of the financial
community that it has developed and is implementing a program so that its
Systems, as the same relate to the timely payment of distributions (including
principal and income payments) to securityholders, book-entry deliveries, and
settlement of trades within DTC ("DTC Services"), continue to function
appropriately. This program includes a technical assessment and a remediation
plan, each of which is complete. Additionally, DTC's plan includes a testing
phase, which is expected to be completed within appropriate time frames.
However, DTC's ability to properly perform its services is also dependent upon
other parties, including but not limited to issuers and their agents, as well as
third party vendors from whom DTC licenses software and hardware, and third
party vendors on whom DTC relies for information or the provision of services,
including telecommunication and electrical utility service providers, among
others.
Cedelbank. Cedelbank is incorporated under the laws of Luxembourg as a
professional depository Cedelbank holds securities for Cedelbank Participants
and facilitates the clearance and settlement of securities transactions between
Cedelbank Participants through electronic book-entry changes in accounts of
Cedelbank Participants, thereby eliminating the need for physical movement of
certificates. Cedelbank provides to Cedelbank Participants, among other things,
services for safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing.
Cedelbank interfaces with domestic markets in several countries. As a
professional depositary, Cedelbank is subject to regulation by the Luxembourg
Monetary Institute. Cedelbank 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 Cedelbank is also available to
others, such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a Cedelbank Participant either
directly or indirectly.
Distributions with respect to Notes held beneficially through Cedelbank
will be credited to cash accounts of Cedelbank Participants in accordance with
its rules and procedures, to the extent received by Cedelbank.
Euroclear. Euroclear was created in 1968 to hold securities for 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 certificates and any risk from
lack
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of simultaneous transfers of securities and cash. Euroclear includes 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 "Euroclear Terms and Conditions"). The Euroclear 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 Euroclear 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 Euroclear Terms and Conditions, to the extent received by the Euroclear
Operator, to the extent received by Euroclear.
GLOBAL CLEARANCE AND SETTLEMENT PROCEDURES
Primary Market. The DBC Global Note and the DTC Global Note, respectively,
will be delivered at initial settlement to DBC and Deutsche Bank New York (as
custodian for DTC), respectively. Customary settlement procedures will be
followed for participants of each system at initial settlement Primary market
purchasers are required to pay for the Notes in Euro unless otherwise arranged.
See "Currency Conversion and Foreign Exchange Risks--Conversion".
Settlement procedures applicable to the domestic Euro-denominated bond
market will be followed for primary market purchasers which are DBC
Accountholders. Notes will be credited to their securities accounts on the
settlement date against payment in Euro in same-day funds. Settlement procedures
applicable to Euro-denominated Notes will be followed for primary market
purchasers which are Euroclear or Cedelbank Participants. Notes will be credited
to their securities accounts on the settlement date against payment in same-day
funds.
Primary market purchasers, which are DTC Participants can have their
securities accounts with DTC credited with Notes (i) "free of payment" if they
have arranged for payment in Euro outside DTC or (ii) against payment in U.S.
dollars in same day funds on the settlement date through DTC's Funds Settlement
System.
Secondary Market. The following paragraphs set forth the procedures
governing settlement of secondary market sales of securities such as the Notes
in effect on the date hereof.
(a) Secondary market sales of Notes for settlement within each
clearing system and between Cedelbank and Euroclear Participants. These
sales will be settled in accordance with the rules and procedures
established by that system. Settlement within DBC will generally be made on
a two
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business-day basis. Sales to be settled within Euroclear or Cedelbank and
between Cedelbank and Euroclear will normally settle on a three-day basis
unless parties specify a different period (which may be as short as two
days). DTC is a U.S. dollar-based system but sales may be settled in other
currencies on a free-delivery basis. Sales to be settled within DTC will
normally settle on a three-day basis, unless parties specify a different
period.
(b) Secondary market sales between DBC Accountholders and Euroclear or
Cedelbank Participants. These trades normally settle on a three-day basis
(unless parties specify a different period, which may be as short as two
days).
(c) Secondary market sales from a DTC Participant to a DBC
Accountholder or a Euroclear or Cedelbank Participant. Two days prior to a
settlement, a DTC Participant selling Notes to a DBC Accountholder or a
Euroclear or Cedelbank Participant will notify Deutsche Bank New York of
the settlement instructions and will deliver the Notes to Deutsche Bank New
York by means of DTC's Deliver Order procedures. Deutsche Bank New York
will send the settlement instructions to the Registrar. One day prior to
settlement, the Registrar will enter delivery-versus-payment instructions
into DBC for settlement through its DBC transfer account; if the purchaser
holds through Euroclear or Cedelbank, the Euroclear or Cedelbank
Participant will instruct its clearing system to transmit
receipt-versus-payment instructions to DBC, and the DBC Accountholder will
transmit such instructions directly to DBC, with Deutsche Bank New York as
counterparty. On the settlement date, the DTC Participant will input a
Deposit/Withdrawal at Custodian ("DWAC") transaction to remove the Notes to
be sold from its DTC securities account; matched and pre-checked trades are
settled versus payment--the DBC Accountholder's or Cedelbank Participant's
securities account is credited same day value, the Euroclear Participant's
securities account is credited not later than the next business day for the
value settlement date, and the Registrar causes the DTC Participant's pre-
specified Euro account at the Registrar to be credited for same-day value,
or any other Euro account pre-specified by such DTC Participant for value
the next business day.
(d) Secondary market sales from a DBC Accountholder or a Cedelbank or
Euroclear Participant to a DTC Participant. Two days prior to settlement, a
DTC Participant will send Deutsche Bank New York, the details of the
transaction for transmittal to the Registrar and instruct its bank to fund
the Registrar's Euro account one business day prior to settlement.
A Cedelbank or Euroclear Participant will instruct its clearing system
no later than one business day prior to settlement to transmit
delivery-versus-payment instructions to DBC, and a DBC Accountholder will
transmit one business day prior to settlement such instructions directly to
DBC, naming the Registrar as counterparty with further credit to DTC. At
the same time (i.e., one business day prior to settlement), the Registrar
will transmit settlement instructions to DBC.
On the settlement day, upon settlement of the trade in DBC, the
Registrar will inform Deutsche Bank New York of such settlement; the DTC
Participant will initiate a DWAC deposit transaction for Deutsche Bank New
York to approve, resulting in a deposit of Notes in the DTC Participant's
securities account for same-day value. The DBC Accountholder or a Cedelbank
or Euroclear Participant's accounts are credited with the sales proceeds
for same-day value.
Settlement in other currencies between the DTC and DBC systems is
possible using free-of-payment transfers to move the Notes, but funds
movements will take place separately.
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 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
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"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, persons who have ceased to be
United States citizens or to be taxed as resident aliens or United States person
whose functional currency, as defined in Section 985 of the Code, is not the
U.S. dollar. 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.
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.
A United States person that uses the cash method of accounting and receives
a payment of interest with respect to a Note in U.S. dollars will be required to
include the amount of such payment in income upon receipt. A cash method United
States person that receives a payment of interest on a Note in Euro, pursuant to
the election described under "Description of Notes--Payments", will be required
to include in income the U.S. dollar value of the foreign currency payment
(determined on the date such payment is received) regardless of whether the
payment is in fact converted to U.S. dollars at that time, and such U.S. dollar
value will be the United States person's tax basis in the foreign currency.
A United States person that uses the accrual method of accounting will be
required to include in income the U.S. dollar value of the amount of interest
income that has accrued with respect to a Note during an accrual period. The
U.S. dollar value of such accrued income will be determined by translating such
income at the average rate of exchange for the accrual period or, with respect
to an accrual period that spans two taxable years, at the average rate for the
partial period within the taxable year. Such United States person will recognize
ordinary income or loss with respect to accrued interest income on the date such
income is actually received. The amount of ordinary income or loss recognized
will equal the difference between the U.S. dollar value of the foreign currency
payment received (determined on the date such payment is received) in respect of
such accrual period (or, where a holder receives U.S. dollars, the amount of
such payment in respect of such accrual period) and the U.S. dollar value of
interest income that has accrued during such accrual period (as determined
above). A United States person may elect to translate interest income into U.S.
dollars at the spot rate on the last day of the interest accrual period (or, in
the case of a partial accrual period, the spot rate on the last day of the
taxable year) or, alternatively, if the date of receipt of payment is within
five business days of the last day of the interest accrual period, the spot rate
on the date of receipt. A United States person that makes such an election must
apply it consistently to all debt instruments from year to year and cannot
change the election without the consent of the Internal Revenue Service.
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<PAGE> 19
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).
A United States person's tax basis in a Note, and the amount of any
subsequent adjustment to such holder's tax basis, will be the U.S. dollar value
of the foreign currency amount paid for such Note, or of the foreign currency
amount of the adjustment, determined on the date of such purchase or adjustment.
A United States person who purchases a Note with previously owned foreign
currency will recognize ordinary income or loss in an amount equal to the
difference, if any, between such United States person's tax basis in the foreign
currency and the U.S. dollar fair market value of the Note on the date of
purchase.
Gain or loss realized upon the sale, exchange or retirement of a Note that
is attributable to fluctuations in currency exchange rates will be ordinary
income or loss, which will not be treated as interest income or expense. Gain or
loss attributable to fluctuations in exchange rates will equal the difference
between (i) the U.S. dollar value of the foreign currency principal amount of
such Note, and any payment with respect to accrued interest, determined on the
date such payment is received or such Note is disposed of, and (ii) the U.S.
dollar value of the foreign currency principal amount of such Note, determined
on the date such United States person acquired such Note, and the U.S. dollar
value of the accrued interest received, determined by translating such interest
at the average exchange rate for the accrual period or at a spot rate elected as
described above. Such foreign currency gain or loss will be recognized only to
the extent of the total gain or loss realized by a United States person on the
sale, exchange or retirement of the Note. The source of such foreign currency
gain or loss will be determined by reference to the residence of the United
States person or the "qualified business unit" of the United States person on
whose books the Note is properly reflected. Any gain or loss realized by a
United States person in excess of such foreign currency gain or loss will be
capital gain or loss.
A United States person will have a tax basis in any foreign currency
received on the sale, exchange or retirement of a Note equal to the U.S. dollar
value of such foreign currency, determined at the time of such sale, exchange or
retirement. Regulations issued under Section 988 of the Code provide a special
rule for purchases and sales of publicly traded Notes by a cash method taxpayer
under which units of foreign currency paid or received are translated into U.S.
dollars at the spot rate on the settlement date of the purchase or sale.
Accordingly, no exchange gain or loss will result from currency fluctuations
between the trade date and the settlement of such a purchase or sale. An accrual
method taxpayer may elect the same treatment required of cash-method taxpayers
with respect to the purchase and sale of publicly traded Notes provided the
election is applied consistently. Such election cannot be changed without the
consent of the Internal Revenue Service. Any gain or loss realized by a United
States person on a sale or other disposition of foreign currency (including its
exchange for U.S. dollars or its use to purchase Securities) will be ordinary
income or loss.
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
S-19
<PAGE> 20
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
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 (generally on an
IRS form W-8) 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; 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.
After December 31, 1999 and, in certain circumstances, after December 31,
1998, a new IRS Form W-8 will replace current IRS Forms W-8, 1001 and 4224;
(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
S-20
<PAGE> 21
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, 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 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
S-21
<PAGE> 22
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.
S-22
<PAGE> 23
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
dated January 26, 1999 (the "Underwriting Agreement"), the Company has agreed to
sell to each of the underwriters named below, and each of the underwriters, for
whom Deutsche Bank Aktiengesellschaft and Merrill Lynch International are acting
as representatives (the "Representatives"), has severally agreed to purchase the
principal amount of the Notes set forth opposite its name below. In the
Underwriting Agreement, the several underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all the Notes offered hereby
if any of the Notes are purchased. In the event of default by an underwriter,
the Underwriting Agreement provides that, in certain circumstances, purchase
commitments of the nondefaulting underwriters may be increased or the
Underwriting Agreement may be terminated.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
IN EURO
UNDERWRITERS (E)
------------ ---------
<S> <C>
Deutsche Bank Aktiengesellschaft............................ 318,750,000
Merrill Lynch International................................. 318,750,000
ABN AMRO Bank N.V. ......................................... 11,250,000
Barclays Bank PLC........................................... 11,250,000
Commerzbank Aktiengesellschaft.............................. 11,250,000
Dresdner Bank Aktiengesellschaft............................ 11,250,000
Banca d'Intermediazione Mobiliare IMI....................... 11,250,000
Midland Bank plc............................................ 11,250,000
J.P. Morgan Securities Ltd. ................................ 11,250,000
Paribas..................................................... 11,250,000
Societe Generale............................................ 11,250,000
UBS AG, acting through its division Warburg Dillon Read..... 11,250,000
-----------
Total........................................... 750,000,000
===========
</TABLE>
The Representatives of the underwriters have advised the Company that they
propose initially to offer the Notes to the public 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 .150% of the principal amount of
the Notes. After the initial public offering, the public offering price and
concession may be changed.
The Company has agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
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
S-23
<PAGE> 24
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;
(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 Services Act 1986 with respect to anything done by it in
relation to any Notes in, from or otherwise involving the United Kingdom.
Although application has been 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, certain of 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. 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 Inc. is an indirect wholly-owned subsidiary, is a
director of General Motors Corporation. In the ordinary course of their
respective businesses, certain of the underwriters or their affiliates have
engaged, and will in the future engage, in commercial banking and investment
banking transactions with the Company and certain of its affiliates.
GENERAL INFORMATION
Application has been made to list the Notes on the Luxembourg Stock
Exchange. In connection with the listing application, the Certificate of
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, June 30,
1998 and September 30, 1998), as well as all future Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, 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. 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 December 31, 1997.
S-24
<PAGE> 25
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 a German Securities Code (WKN) No. 219815,
Euroclear and Cedelbank Common Code No. 9449965, International Security
Identification Number (ISIN) DE0002198158 and CUSIP No. 370425RE2.
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.
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.
S-25
<PAGE> 26
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)
MARTIN I. DARVICK, ESQ.
3031 West Grand Boulevard
Detroit, Michigan 48202
United States
(As to United States Law)
PETER F. HILTZ, ESQ.
3044 West Grand Boulevard
Detroit, Michigan 48202
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 AGENT AND REGISTRAR
DEUTSHE BANK AKTIENGESELLSCHAFT
Grosse Gallusstrasse 10-14
D-60272 Frankfurt am Main
Germany
PAYING AGENT IN LUXEMBOURG
BANQUE GENERALE DU LUXEMBOURG S.A.
50 Avenue J. F. Kennedy
L-2951 Luxembourg
<PAGE> 27
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> 28
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
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
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<PAGE> 29
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
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
- --------------------------------
1997 1996 1995 1994 1993
- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
1.42 1.41 1.36 1.33 1.33
</TABLE>
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
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.)
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<PAGE> 30
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
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
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<PAGE> 31
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."
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
5
<PAGE> 32
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 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), (b) or (c) 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 (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,
the amount specified in the terms thereof) of all
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<PAGE> 33
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
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
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<PAGE> 34
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
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
8
<PAGE> 35
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
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.
------------------------
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(GMAC FINANCIAL SERVICES LOGO)
