<PAGE>
FILED PURSUANT TO RULE 424(b)(2)
REGISTRATION NO. 33-52763
PROSPECTUS SUPPLEMENT
(To Prospectus dated May 16, 1994)
$1,000,000,000
[LOGO OF INTERNATIONAL LEASE FINANCE CORPORATION]
MEDIUM-TERM NOTES, SERIES G
-----------------
Due Nine Months or More from Date of Issue
-----------------
International Lease Finance Corporation (the "Company") may offer from time
to time $1,000,000,000 aggregate initial offering price of its Medium-Term
Notes, Series G (the "Notes"), due nine months or more from date of issue. The
Notes will be unsecured obligations of the Company. As specified in a pricing
supplement (a "Pricing Supplement") to this Prospectus Supplement, the Notes
will mature on any day nine months or more from the date of issue (the "Stated
Maturity"), which maturity date may be subject to extension as agreed upon by
the Company and the purchaser. The Notes may also be subject to redemption
prior to maturity as agreed upon by the Company and the purchaser, or to
repayment at the option of the Holder, as specified in the applicable Pricing
Supplement. See "Description of Medium-Term Notes, Series G--Redemption and
Repayment." The authorized denominations of each Note will be $1,000 and
integral multiples thereof, unless otherwise specified in the applicable
Pricing Supplement.
The interest rate on, or interest formula for, the Notes will be established
by the Company from time to time and will be set forth therein and specified
in the applicable Pricing Supplement. Unless otherwise specified in the
applicable Pricing Supplement, the Notes will bear interest at fixed rates
(the "Fixed Rate Notes"), which may be zero in the case of certain Original
Issue Discount Notes, or at floating rates (the "Floating Rate Notes"). The
applicable Pricing Supplement will specify whether a Floating Rate Note is a
Regular Floating Rate Note, a Floating Rate/Fixed Rate Note or an Inverse
Floating Rate Note and the rate of interest thereon as determined by reference
to one or more of the CD Rate, the CMT Rate, the Commercial Paper Rate, the
Eleventh District Cost of Funds Rate, the Federal Funds Rate, LIBOR, the Prime
Rate, Treasury Rate (each, an "Interest Rate Basis") or any other interest
rate basis or formula as selected by the purchasers and agreed to by the
Company, and as adjusted by the Spread or Spread Multiplier, if any,
applicable to such Notes. Unless otherwise specified in the applicable Pricing
Supplement, interest on each Fixed Rate Note will accrue from its date of
issue and will be payable semiannually in arrears on April 15 and October 15
of each year and at maturity. Unless otherwise specified in the applicable
Pricing Supplement, interest on each Floating Rate Note will accrue from its
date of issue and will be payable in arrears as specified in the applicable
Pricing Supplement. A Note may be issued as an amortizing note (an "Amortizing
Note") on which a portion or all of the principal amount is payable prior to
the Stated Maturity in accordance with a schedule, by application of a formula
or by reference to an index. A Note may be issued as an indexed note (an
"Indexed Note") on which the amount of any interest payment, in the case of an
Indexed Rate Note, and/or the principal amount payable at maturity, in the
case of an Indexed Principal Note, will be determined by reference to the
level of prices, or changes in prices, or differences between prices, of
securities, currencies, intangibles, goods, articles or commodities or by
application of a formula. See "Description of Medium-Term Notes, Series G--
Indexed Notes."
Interest rates, interest rate formulae, the Spread or Spread Multiplier, if
any, applicable to such Notes, and such other variable terms are subject to
change by the Company, but no such change will affect any Note theretofore
issued or as to which an offer to purchase has been accepted by the Company.
Unless otherwise specified in the applicable Pricing Supplement, each Note
will be represented either by a global note ("Global Note") deposited with, or
on behalf of, The Depository Trust Company, New York, New York (the
"Depositary"), and registered in the name of a nominee of the Depositary (a
"Book-Entry Note"), or by a certificate issued in definitive form (a
"Certificated Note"), as set forth in the applicable Pricing Supplement.
Beneficial interests in Global Notes representing Book-Entry Notes will be
shown on, and transfers will be effected only through, records maintained by
the Depositary with respect to its participants' interests and by the
Depositary's participants. Book-Entry Notes will not be issuable as
Certificated Notes except under the circumstances described in the
accompanying Prospectus or as otherwise set forth on the applicable Pricing
Supplement.
-----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, ANY
PRICING SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
Price to Agents' Discounts Proceeds to
Public(1) and Commissions(2) Company(2)(3)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note................ 100% .125%-.750% 99.875%-99.250%
- ---------------------------------------------------------------------------------------------------
Total................... $1,000,000,000 $1,250,000-$7,500,000 $998,750,000-$992,500,000
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Unless otherwise specified in the applicable Pricing Supplement, the Notes
will be issued at 100% of their principal amount.
(2) The Company will pay a commission to Lehman Brothers, Lehman Brothers Inc.
(including its affiliate Lehman Government Securities Inc.), Merrill Lynch
& Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley
& Co. Incorporated, Salomon Brothers Inc or Goldman, Sachs & Co., each as
Agent (collectively, the "Agents"), in the form of a discount, ranging
from .125% to .750% of the principal amount of any Note, depending upon
maturity up to and including 30 years, and as agreed upon at the time of
sale for Notes with Stated Maturities greater than 30 years, sold through
such Agent, and may sell Notes to any Agent at a discount for resale to
investors or other purchasers at varying prices related to prevailing
market prices at the time of resale to be determined by such Agent or, if
so agreed, at a fixed public offering price. See "Plan of Distribution."
Unless otherwise indicated in the applicable Pricing Supplement, any Note
sold to an Agent as principal will be purchased by such Agent at a price
equal to 100% of the principal amount thereof less a percentage equal to
the commission applicable to an agency sale of a Note of identical
maturity and may be resold by such Agent. No commission will be payable on
any sales made directly by the Company.
(3) Before deducting other expenses payable by the Company estimated at up to
$600,000, including reimbursement of certain expenses of the Agents.
-----------------
The Notes are being offered on a continuous basis by the Company through the
Agents, each of whom has agreed to use its best efforts to solicit purchases
of the Notes. The Company has reserved the right to sell the Notes directly on
its own behalf or to or through others for resale to the public. The Notes may
also be sold to any of the Agents acting as principal for its own account or
for resale to investors or other purchasers. See "Plan of Distribution." The
Notes will not be listed on any securities exchange, and there can be no
assurance that the Notes offered by this Prospectus Supplement will be sold or
that there will be a secondary market for the Notes. The Company reserves the
right to withdraw, cancel or modify the offer made hereby without notice. The
Company or any of the Agents may reject any offer in whole or in part. See
"Plan of Distribution."
-----------------
LEHMAN BROTHERS
MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
Incorporated
SALOMON BROTHERS INC
GOLDMAN, SACHS & CO.
October 12, 1994
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IN CONNECTION WITH THE OFFERING OF THE NOTES, THE AGENTS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
DESCRIPTION OF MEDIUM-TERM NOTES, SERIES G
The information herein concerning the Notes should be read in conjunction
with the statements under "Description of Debt Securities" in the Prospectus,
to which description reference is hereby made. The particular terms of any
Note offered will be described in the applicable Pricing Supplement. The terms
and conditions set forth in this Prospectus Supplement will apply to each Note
unless otherwise specified in the applicable Pricing Supplement and such Note.
Capitalized terms used herein and not defined have the meanings given to them
in the Indenture.
GENERAL
The Notes issuable pursuant to this Prospectus Supplement constitute a
series of Debt Securities under an Indenture (the "Indenture"), dated as of
November 1, 1991, between the Company and Bank of America Illinois (formerly
Continental Bank, National Association), as trustee (the "Trustee"), which
series is currently limited to $1,000,000,000 aggregate principal amount. The
Indenture authorizes the Company to reopen a series of securities (including
the Notes) for issuance of additional securities of that series without the
consent of the holders of that series.
The Notes will be unsecured obligations of the Company. The authorized
denominations of each Note will be $1,000 and integral multiples thereof,
unless otherwise specified in the applicable Pricing Supplement and will be
issued in fully registered form only. The Notes will not be subject to any
sinking fund. Each Note will be issued initially as either a Book-Entry Note
or a Certificated Note as specified in the applicable Pricing Supplement. The
terms set forth under "Description of Debt Securities--Global Securities" are
applicable to the Notes.
The Notes will be offered on a continuous basis and will mature on any day
nine months or more from the date of issue, as selected by the purchaser and
agreed to by the Company. Floating Rate Notes will mature on an Interest
Payment Date (as defined below) unless otherwise specified in the applicable
Pricing Supplement.
"Business Day" means any day that is not a Saturday or Sunday and that, in
The City of New York (and, with respect to LIBOR Notes, the City of London),
is not a day on which banking institutions are generally authorized or
obligated by law to close. "London Business Day" means any day on which
dealings in deposits in U.S. Dollars are transacted in the London interbank
market. "Maturity" or "Maturity Date" means the date on which the principal of
a Note becomes due and payable as provided in the Indenture, whether at the
Stated Maturity or by declaration of acceleration, redemption, repayment or
otherwise. Unless otherwise specified in the applicable Pricing Supplement,
the Notes will be denominated in United States dollars and payments of
principal of, and premium, if any, and interest on, the Notes will be made in
United States dollars.
PAYMENT OF PRINCIPAL AND INTEREST
Principal and interest will be payable, and Certificated Notes will be
transferable, at the office of the Trustee in Chicago, Illinois, which on the
date hereof is located at 231 South La Salle, Chicago, Illinois, and at the
agency maintained by the Trustee for that purpose in the Borough of
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Manhattan, City of New York, State of New York, which on the date hereof is at
the office of Mellon Securities Trust Co., 120 Broadway, New York, New York,
or at such other place or places as may be designated pursuant to the
Indenture, provided that the Company, at its option, may pay interest other
than interest due at Maturity, by check mailed to registered holders.
Each Note will bear interest from its date of issue at either (a) a fixed
rate (a "Fixed Rate Note"), which may be zero in the case of certain Original
Issue Discount Notes or (b) rates determined by reference to the interest rate
formula specified in the applicable Pricing Supplement (a "Floating Rate
Note"), until the principal thereof is paid or duly made available for
payment. Interest will be payable in arrears on each Interest Payment Date (as
defined below). Unless otherwise specified in the applicable Pricing
Supplement, the first payment of interest on any Note originally issued
between a Record Date (as defined below) and the related Interest Payment Date
or on an Interest Payment Date will be made on the Interest Payment Date
immediately following the next succeeding Record Date to the Holder on such
next succeeding Record Date. "Interest Payment Date" means the date on which
interest on the Notes is due and payable, which is (i) in the case of Fixed
Rate Notes, April 15 and October 15 of each year, unless otherwise specified
in the applicable Pricing Supplement, and at Maturity, and (ii) in the case of
a Floating Rate Notes which reset: (i) daily, weekly or monthly, on the third
Wednesday of each month or on the third Wednesday of March, June, September
and December of each year, as specified in the applicable Pricing Supplement;
(ii) quarterly, on the third Wednesday of March, June, September and December
of each year; (iii) semiannually, on the third Wednesday of the two months of
each year specified in the applicable Pricing Supplement; and (iv) annually,
on the third Wednesday of the month specified in the applicable Pricing
Supplement; and, in each case, on the Maturity Date, except as otherwise
provided herein or in the applicable Pricing Supplement. Unless otherwise
specified in the applicable Pricing Supplement, a "Record Date" shall be the
fifteenth calendar day (whether or not a Business Day) immediately preceding
the related Interest Payment Date. Principal and interest due at Maturity will
be payable in immediately available funds upon presentation of the Notes.
Interest due other than at Maturity will be payable by check; provided,
however, that (i) the Depositary, as holder of Book-Entry Notes, shall be
entitled to receive payments of interest by wire transfer of immediately
available funds, and (ii) Holders of ten million dollars or more in aggregate
principal amount of Certificated Notes having identical Interest Payment Dates
will be entitled to receive payments of interest, other than at Maturity, by
wire transfer of immediately available funds to a designated account
maintained in the United States upon receipt by the Trustee of written
instructions from such holder not later than the Regular Record Date for the
related Interest Payment Date. Such instructions shall remain in effect with
respect to payments of interest made to such holder on subsequent Interest
Payment Dates unless revoked or changed by written instructions received by
the Trustee from such holder, provided that any such written revocation or
change which is received by the Trustee after a Regular Record Date and before
the related Interest Payment Date shall not be effective with respect to the
interest payable on such Interest Payment Date. Unless otherwise specified in
the applicable Pricing Supplement, Merrill Lynch, Pierce, Fenner & Smith
Incorporated shall be the calculation agent (the "Calculation Agent") with
respect to the Notes.
Unless otherwise specified in the applicable Pricing Supplement, if the
principal of any Original Issue Discount Note is declared to be due and
payable immediately as described under "Description of Debt Securities--Events
of Default" in the Prospectus, the amount of principal due and payable with
respect to such Note shall be limited to the aggregate principal amount (or
face amount, in the case of an Indexed Principal Note) of such Note multiplied
by the sum of its Issue Price (expressed as a percentage of the aggregate
principal amount) plus the original issue discount amortized from the date of
issue to the date of declaration, which amortization shall be calculated using
the "interest method" (computed in accordance with generally accepted
accounting principles in effect on the date of declaration).
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Fixed Rate Notes
Unless otherwise specified in the applicable Pricing Supplement, each Fixed
Rate Note will bear interest from, and including, the date of issue, or the
most recent date to which interest has been paid or duly provided for, to, but
excluding, the Interest Payment Date or Maturity, as the case may be, at the
rate per annum stated on the face thereof until the principal amount thereof
is paid or made available for payment. Unless otherwise specified in the
applicable Pricing Supplement, interest on Fixed Rate Notes will be computed
on the basis of a 360-day year of twelve 30-day months.
If any Interest Payment Date or the Maturity of a Fixed Rate Note falls on a
day that is not a Business Day, the related payment of principal, premium, if
any, or interest will be made on the next succeeding Business Day as if made
on the date such payment was due, and no interest will accrue on the amount so
payable for the period from and after such Interest Payment Date or Maturity,
as the case may be.
Floating Rate Notes
Unless otherwise specified in the applicable Pricing Supplement, Floating
Rate Notes will be issued as described below. The applicable Pricing
Supplement will specify certain terms with respect to which each Floating Rate
Note is being delivered, including: whether such Floating Rate Note is a
"Regular Floating Rate Note," a "Floating Rate/Fixed Rate Note" or an "Inverse
Floating Rate Note," Fixed Rate Commencement Date and Fixed Interest Rate, as
applicable, Interest Rate Basis or Bases, Initial Interest Rate, Interest
Reset Period and Dates, Record Dates, Interest Payment Period and Dates, Index
Maturity, maximum interest rate and minimum interest rate, if any, and Spread
and/or Spread Multiplier, if any, and if one or more of the applicable
Interest Rate Bases is LIBOR, the Designated LIBOR Page, all as defined below
and as described below.
The interest rate borne by the Floating Rate Notes will be determined as
follows:
(i) Unless such Floating Rate Note is designated as a "Floating
Rate/Fixed Rate Note," an "Inverse Floating Rate Note" or as having an
Addendum attached, such Floating Rate Note will be designated as a "Regular
Floating Rate Note" and, except as described below or in the applicable
Pricing Supplement, bear interest at the rate determined by reference to
the applicable Interest Rate Basis or Bases (a) plus or minus the
applicable Spread, if any, and/or (b) multiplied by the applicable Spread
Multiplier, if any. Commencing on the first Interest Reset Date, the rate
at which interest on such Regular Floating Rate Note shall be payable shall
be reset as of each Interest Reset Date; provided, however, that the
interest rate in effect for the period from the date of issue to the first
Interest Reset Date will be the Initial Interest Rate.
(ii) If such Floating Rate Note is designated as a "Floating Rate/Fixed
Rate Note," then, except as described below or in the applicable Pricing
Supplement, such Floating Rate/Fixed Rate Note will bear interest at the
rate determined by reference to the applicable Interest Rate Basis or Bases
(a) plus or minus the applicable Spread, if any, and/or (b) multiplied by
the applicable Spread Multiplier, if any. Commencing on the first Interest
Reset Date, the rate at which interest on such Floating Rate/Fixed Rate
Note shall be payable shall be reset as of each Interest Reset Date;
provided however, that the interest rate in effect for the period from the
date of issue to the first Interest Reset Date will be the Initial Interest
Rate and the interest rate in effect commencing on the Fixed Rate
Commencement Date to the Maturity Date shall be the Fixed Interest Rate, if
such rate is specified in the applicable Pricing Supplement or, if no such
Fixed Interest Rate is so specified, the interest rate in effect thereon on
the day immediately preceding the Fixed Rate Commencement Date.
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<PAGE>
(iii) If such Floating Rate Note is designated as an "Inverse Floating
Rate Note," then, except as described below or in the applicable Pricing
Supplement, such Inverse Floating Rate Note will bear interest equal to the
Fixed Interest Rate specified in the applicable Pricing Supplement minus
the rate determined by reference to the applicable Interest Rate Basis or
Bases (a) plus or minus the applicable Spread, if any and/or (b) multiplied
by the applicable Spread Multiplier, if any; provided, however that, unless
otherwise specified in the applicable Pricing Supplement, the interest rate
thereon during any Interest Reset Period (as defined below) will not be
less than zero. Commencing on the first Interest Reset Date, the rate at
which interest on such Inverse Floating Rate Note is payable shall be reset
as of each Interest Reset Date; provided, however, that the interest rate
in effect for the period from the date of issue to the first Interest Reset
Date will be the Initial Interest Rate.
The "Spread" is the number of basis points to be added to or subtracted from
the related Interest Rate Basis or Bases applicable to such Floating Rate
Note. The "Spread Multiplier" is the percentage of the related Interest Rate
Basis or Bases applicable to such Floating Rate Note by which such Interest
Rate Basis or Bases will be multiplied to determine the applicable interest
rate on such Floating Rate Note. The "Index Maturity" is the period to
maturity of the instrument or obligation with respect to which the related
Interest Rate Basis or Bases will be calculated.
Notwithstanding the foregoing, if such Floating Rate Note is designated as
having an Addendum attached as specified on the face thereof, such Floating
Rate Note shall bear interest in accordance with the terms described in such
Addendum and the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
interest rate with respect to each Interest Rate Basis will be determined in
accordance with the applicable provisions below. Except as set forth above or
in the applicable Pricing Supplement, the interest rate in effect on each day
shall be (i) if such day is an Interest Reset Date, the interest rate
determined as of the Interest Determination Date (as defined below)
immediately preceding such Interest Reset Date or (ii) if such day is not an
Interest Reset Date, the interest rate determined as of the Interest
Determination Date immediately preceding the most recent Interest Reset Date.
The applicable Pricing Supplement will designate one or more of the
following interest rate bases as applicable to each Floating Rate Note: (a)
the CD Rate (a "CD Rate Note"); (b) the CMT Rate (a "CMT Rate Note"); (c) the
Commercial Paper Rate (a "Commercial Paper Rate Note"); (d) the Eleventh
District Cost of Funds Rate (an "Eleventh District Cost of Funds Rate Note");
(e) the Federal Funds Rate (a "Federal Funds Rate Note"); (f) LIBOR (a "LIBOR
Note"); (g) the Prime Rate (a "Prime Rate Note"); (h) the Treasury Rate (a
"Treasury Rate Note"); or (i) such other interest rate basis as is set forth
in such Pricing Supplement; provided, however, that with respect to a Floating
Rate/Fixed Rate Note, the interest rate commencing on the Fixed Rate
Commencement Date to the Maturity Date shall be the Fixed Interest Rate, if
such rate is specified in the applicable Pricing Supplement or, if no such
Fixed Interest Rate is so specified, the interest rate in effect thereon on
the day immediately preceding the Fixed Rate Commencement Date.
As specified in the applicable Pricing Supplement, a Floating Rate Note may
also have either or both of the following (in each case expressed as a rate
per annum on a simple interest basis): (i) a maximum numerical interest rate
limitation, or ceiling, on the rate of interest which may accrue during any
interest period (a "Maximum Interest Rate"); and (ii) a minimum numerical
interest rate limitation, or floor, on the rate of interest which may accrue
during any interest period (a "Minimum Interest Rate"). The interest rate on
the Notes will in no event be higher than the maximum rate permitted by
applicable law as the same may be modified by United States law of general
application.
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The applicable Pricing Supplement will specify whether the rate of interest
on the related Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semiannually, annually or such other specified period (each, an
"Interest Reset Period") and the dates on which such rate of interest will be
reset (each, an "Interest Reset Date"). Unless otherwise specified in the
applicable Pricing Supplement, the Interest Reset Date will be, in the case of
Floating Rate Notes which reset: (i) daily, each Business Day; (ii) weekly,
the Wednesday of each week (with the exception of weekly reset Floating Rate
Notes as to which the Treasury Rate is an applicable Interest Rate Basis,
which will reset the Tuesday of each week, except as described below); (iii)
monthly, the third Wednesday of each month (with the exception of monthly
reset Floating Rate Notes as to which the Eleventh District Cost of Funds Rate
is an applicable Interest Rate Basis, which will reset on the first calendar
day of the month); (iv) quarterly, the third Wednesday of March, June,
September and December of each year, (v) semiannually, the third Wednesday of
the two months specified in the applicable Pricing Supplement; and (vi)
annually, the third Wednesday of the month specified in the applicable Pricing
Supplement; provided however, that, with respect to Floating Rate/Fixed Rate
Notes, the fixed rate of interest in effect for the period from the Fixed Rate
Commencement Date to the Maturity Date shall be the Fixed Interest Rate or, if
no such Fixed Interest Rate is specified, the interest rate in effect on the
day immediately preceding the Fixed Rate Commencement Date, as specified in
the applicable Pricing Supplement. If any Interest Reset Date for any Floating
Rate Note would otherwise be a day that is not a Business Day, such Interest
Reset Date will be postponed to the next succeeding day that is a Business
Day, except that in the case of a Floating Rate Note as to which LIBOR is an
applicable Interest Rate Basis, if such Business Day falls in the next
succeeding calendar month, such Interest Reset Date will be the immediately
preceding Business Day.
The interest rate applicable to each Interest Reset Period commencing on the
Interest Reset Date with respect to such Interest Reset Period will be the
rate determined as of the applicable Interest Determination Date on or prior
to the Calculation Date (as defined below). The "Interest Determination Date"
with respect to the CD Rate Notes, the CMT Rate Notes, the Commercial Paper
Rate Notes, the Federal Funds Rate Notes and the Prime Rate Notes will be the
second Business Day immediately preceding the applicable Interest Reset Date;
the "Interest Determination Date" with respect to the Eleventh District Cost
of Funds Rate Notes will be the last working day of the month immediately
preceding the applicable Interest Reset Date on which the Federal Home Loan
Bank of San Francisco publishes the Index (as defined below); and the
"Interest Determination Date" with respect to LIBOR Notes will be the second
London Business Day immediately preceding the applicable Interest Reset Date.
With respect to Treasury Rate Notes, the "Interest Determination Date" will be
the day in the week in which the applicable Interest Reset Date falls on which
day Treasury Bills (as defined below) are normally auctioned (Treasury Bills
are normally sold at an auction held on Monday of each week, unless that day
is a legal holiday, in which case the auction is normally held on the
following Tuesday, except that such auction may be held on the preceding
Friday); provided, however, that if an auction is held on the Friday of the
week preceding the applicable Interest Reset Date, the Interest Determination
Date will be such preceding Friday; and provided, further, that if an auction
falls on the applicable Interest Reset Date, then the Interest Reset Date will
instead be the first Business Day following such auction. The "Interest
Determination Date" pertaining to a Floating Rate Note, the interest rate of
which is determined by reference to two or more Interest Rate Bases, will be
the second Business Day prior to the applicable Interest Reset Date for such
Floating Rate Note on which each Interest Rate Basis is determinable. Each
Interest Rate Basis will be determined on such date, and the applicable
interest rate will take effect on the applicable Interest Reset Date.
If any Interest Payment Date for any Floating Rate Note (other than the
Maturity Date) would otherwise be a day that is not a Business Day, such
Interest Payment Date will be postponed
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to the next day that is a Business Day, except that in the case of a Floating
Rate Note which is a LIBOR Note, if such Business Day falls in the next
succeeding calendar month, such Interest Payment Date shall be the immediately
preceding Business Day. If a Maturity Date of a Floating Rate Note falls on a
date that is not a Business Day, the required payment of interest and
principal (and premium, if any) may be made on the next succeeding Business
Day, and no interest on such payment will accrue for the period from and after
the Maturity Date to the date of such payment on the next succeeding Business
Day.
Unless otherwise specified in the applicable Pricing Supplement, interest
payments for Floating Rate Notes (except Floating Rate Notes on which interest
is reset daily or weekly) shall be the amount of interest accrued from and
including the date of issue or from and including the last date to which
interest has been paid to, but, excluding, the Interest Payment Date or
Maturity Date. In the case of a Floating Rate Note on which interest is reset
daily or weekly, interest payments shall be, unless otherwise specified in the
Applicable Pricing Supplement, the amount of interest accrued from and
including the date of issue or from but excluding the last Record Date to
which interest has been paid, as the case may be, to and including the Record
Date immediately preceding such Interest Payment Date, except that at Maturity
or earlier redemption or repayment, the interest payable will include interest
accrued to, but excluding, the maturity, redemption or repayment date, as the
case may be. The interest rate in effect on any Interest Reset Date will be
the applicable rate as reset on such date. The interest rate applicable to any
other day is the interest rate from the immediately preceding Interest Reset
Date (or, if none, the Initial Interest Rate).
With respect to each Floating Rate Note, accrued interest is calculated by
multiplying its principal amount by an accrued interest factor. Such accrued
interest factor is computed by adding the interest factor calculated for each
day in the period for which accrued interest is being calculated. Unless
otherwise specified in the applicable Pricing Supplement, the interest factor
for each such day will be computed by dividing the interest rate applicable to
such day by 360, in the case of CD Rate Notes, Commercial Paper Rate Notes,
Eleventh District Cost of Funds Rate Notes, Federal Funds Rate Notes, LIBOR
Notes or Prime Rate Notes, or by the actual number of days in the year in the
case of CMT Rate Notes or the Treasury Rate Notes. Unless otherwise specified
in the applicable Pricing Supplement, the interest factor for Notes for which
the interest rate is calculated with reference to two or more Interest Rate
Bases will be calculated in each period in the same manner as if only one of
the applicable Interest Rate Bases applied as specified in the applicable
Pricing Supplement. All percentages resulting from any calculation on Floating
Rate Notes will be rounded to the nearest one hundred-thousandth of a
percentage point, with five one-millionths of a percentage point rounded
upwards (e.g. 9.876545% (or .09876545) would be rounded to 9.87655% (or
.0987655)), and all dollar amounts used in or resulting from such calculation
on Floating Rate Notes will be rounded to the nearest cent.
Upon request of the Holder of any Floating Rate Note, the Calculation Agent
will disclose the interest rate then in effect and, if determined, the
interest rate that will become effective as a result of a determination made
for the next succeeding Interest Reset Date with respect to such Floating Rate
Note. Unless otherwise specified in the applicable Pricing Supplement, the
"Calculation Date," if applicable, pertaining to any Interest Determination
Date will be the earlier of (i) the tenth calendar day after such Interest
Determination Date, or, if such day is not a Business Day, the next succeeding
Business Day or (ii) the Business Day immediately preceding the applicable
Interest Payment Date or the Maturity Date, as the case may be.
CD Rate Notes. CD Rate Notes will bear interest at the rates (calculated
with reference to the CD Rate and the Spread and/or Spread Multiplier, if any,
and subject to the Minimum Interest Rate and the Maximum Interest Rate, if
any) specified in such CD Rate Notes and in the applicable Pricing Supplement.
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Unless otherwise specified in the applicable Pricing Supplement, "CD Rate"
means, with respect to any Interest Determination Date relating to a CD Rate
Note or any Floating Rate Note for which the interest rate is determined with
reference to the CD Rate (a "CD Rate Interest Determination Date"), the rate
on such date for negotiable certificates of deposit having the Index Maturity
specified in the applicable Pricing Supplement as published by the Board of
Governors of the Federal Reserve System in "Statistical Release H.15(519),
Selected Interest Rates" or any successor publication ("H.15(519)") under the
heading "CDs (Secondary Market)," or, if not published by 3:00 P.M., New York
City time, on the related Calculation Date, the rate on such CD Rate Interest
Determination Date for negotiable certificates of deposit of the Index
Maturity specified in the applicable Pricing Supplement as published by the
Federal Reserve Bank of New York in its daily statistical release "Composite
3:30 P.M. Quotations for U.S. Government Securities" or any successor
publication ("Composite Quotations") under the heading "Certificates of
Deposit." If such rate is not yet published in either H.15(519) or Composite
Quotations by 3:00 P.M., New York City time, on the related Calculation Date,
then the CD Rate on such CD Rate Interest Determination Date will be
calculated by the Calculation Agent and will be the arithmetic mean of the
secondary market offered rates as of 10:00 A.M., New York City time, on such
CD Rate Interest Determination Date, of three leading nonbank dealers in
negotiable United States dollar certificates of deposit in The City of New
York (which may include one or more of the Agents or their affiliates)
selected by the Calculation Agent for negotiable certificates of deposit of
major United States money market banks for negotiable certificates of deposit
with a remaining maturity closest to the Index Maturity designated in the
applicable Pricing Supplement in an amount that is representative for a single
transaction in that market at that time; provided, however, that if the
dealers so selected by the Calculation Agent are not quoting as mentioned in
this sentence, the CD Rate determined as of such CD Rate Interest
Determination Date will be the CD Rate in effect on such CD Rate Interest
Determination Date.
CMT Rate Notes. CMT Rate Notes will bear interest at the rates (calculated
with reference to the CMT Rate and the Spread and/or Spread Multiplier, if
any, and subject to the Minimum Interest Rate and the Maximum Interest Rate,
if any) specified in such CMT Rate Notes and any applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CMT Rate"
means, with respect to any Interest Determination Date relating to a CMT Rate
Note or any Floating Rate Note for which the interest rate is determined with
reference to the CMT Rate (a "CMT Rate Interest Determination Date"), the rate
displayed on the Designated CMT Telerate Page (as defined below) under the
caption ". . . Treasury Constant Maturities . . . Federal Reserve Board
Release H.15 . . . Monday's Approximately 3:45 P.M.," under the column for the
Designated CMT Maturity Index (as defined below) for (i) if the Designated CMT
Telerate Page is 7055, the rate on such CMT Rate Interest Determination Date
and (ii) if the Designated CMT Telerate Page is 7052, the week, or the month,
as applicable, ended immediately preceding the week in which the related CMT
Rate Interest Determination Date occurs. If such rate is no longer displayed
on the relevant page, or if not displayed by 3:00 P.M., New York City time, on
the related Calculation Date, then the CMT Rate for such CMT Rate Interest
Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index as published in the relevant H.15(519). If such
rate is no longer published, or if not published by 3:00 P.M., New York City
time, on the related Calculation Date, then the CMT Rate for such CMT Rate
Interest Determination Date will be such treasury constant maturity rate for
the Designated CMT Maturity Index (or other United States Treasury rate for
the Designated CMT Maturity Index) for the CMT Rate Interest Determination
Date with respect to such Interest Reset Date as may then be published by
either the Board of Governors of the Federal Reserve System or the United
States Department of the Treasury that the Calculation Agent determines to be
comparable to the rate formerly displayed on the Designated CMT Telerate Page
and published in the relevant H.15(519). If such information
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is not provided by 3:00 P.M., New York City time, on the related Calculation
Date, then the CMT Rate for the CMT Rate Interest Determination Date will be
calculated by the Calculation Agent and will be a yield to maturity, based on
the arithmetic mean of the secondary market closing offer side prices as of
approximately 3:30 P.M., New York City time, on the CMT Rate Interest
Determination Date reported, according to their written records, by three
leading primary United States government securities dealers (each, a
"Reference Dealer") in The City of New York (which may include one or more of
the Agents or their affiliates) selected by the Calculation Agent (from five
such Reference Dealers selected by the Calculation Agent and eliminating the
highest quotation (or, in the event of equality, one of the highest) and the
lowest quotation (or, in the event of equality, one of the lowest)), for the
most recently issued direct noncallable fixed rate obligations of the United
States ("Treasury Notes") with an original maturity of approximately the
Designated CMT Maturity Index and a remaining term to maturity of not less
than such Designated CMT Maturity Index minus one year. If the Calculation
Agent cannot obtain three such Treasury Note quotations, the CMT Rate for such
CMT Rate Interest Determination Date will be calculated by the Calculation
Agent and will be a yield to maturity based on the arithmetic mean of the
secondary market offer side prices as of approximately 3:30 P.M., New York
City time, on the CMT Rate Interest Determination Date of three Reference
Dealers in The City of New York (from five such Reference Dealers selected by
the Calculation Agent and eliminating the highest quotation (or, in the event
of equality, one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for Treasury Notes with an original maturity of
the number of years that is the next highest to the Designated CMT Maturity
Index and a remaining term to maturity closest to the Designated CMT Maturity
Index and in an amount of at least $100 million. If three or four (and not
five) of such Reference Dealers are quoting as described above, then the CMT
Rate will be based on the arithmetic mean of the offer prices obtained and
neither the highest nor the lowest of such quotes will be eliminated;
provided, however, that if fewer than three Reference Dealers selected by the
Calculation Agent are quoting as described herein, the CMT Rate will be the
CMT Rate in effect on such CMT Rate Interest Determination Date. If two
Treasury Notes with an original maturity as described in the third preceding
sentence have remaining terms to maturity equally close to the Designated CMT
Maturity Index, the quotes for the Treasury Note with the shorter remaining
term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page designated in the applicable Pricing Supplement (or any
other page as may replace such page on that service) for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519). If no such
page is specified in the applicable Pricing Supplement, the Designated CMT
Telerate Page shall be 7052, for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of the
U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years) specified
in the applicable Pricing Supplement with respect to which the CMT Rate will
be calculated. If no such maturity is specified in the applicable Pricing
Supplement, the Designated CMT Maturity Index shall be 2 years.
Commercial Paper Rate Notes. Commercial Paper Rate Notes will bear interest
at the interest rates (calculated with reference to the Commercial Paper Rate
and the Spread and/or Spread Multiplier, if any, and subject to the Minimum
Interest Rate and the Maximum Interest Rate, if any) specified in the
Commercial Paper Rate Notes and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Commercial
Paper Rate" means with respect to any Interest Determination Date relating to
a Commercial Paper Rate Note or any Floating Rate Note for which the interest
rate is determined with reference to the Commercial Paper Rate (a "Commercial
Paper Rate Interest Determination Date"), the Money Market Yield (as defined
below) on such date of the rate for commercial paper having the Index Maturity
specified in the applicable Pricing Supplement as published in H.15(519) under
the
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heading "Commercial Paper." In the event that such rate is not published by
3:00 p.m., New York City time, on the related Calculation Date then the
Commercial Paper Rate will be the Money Market Yield (as defined below) on
such Commercial Paper Rate Interest Determination Date of the rate for
commercial paper having the Index Maturity specified in the applicable Pricing
Supplement as published in Composite Quotations under the heading "Commercial
Paper" (with an Index Maturity of one month or three months being deemed to be
equivalent to an Index Maturity of 30 days or 90 days, respectively). If by
3:00 p.m., New York City time, on the related Calculation Date such rate is
not yet published in H.15(519) or Composite Quotations, then the Commercial
Paper Rate on such Interest Determination Date will be calculated by the
Calculation Agent and will be the Money Market Yield of the arithmetic mean of
the offered rates at approximately 11:00 A.M., New York City time, on such
Commercial Paper Rate Interest Determination Date of three leading dealers of
commercial paper in The City of New York (which may include one or more of the
Agents or their affiliates) selected by the Calculation Agent for commercial
paper having the Index Maturity designated in the applicable Pricing
Supplement placed for an industrial issuer whose bond rating is "AA," or the
equivalent, from a nationally recognized rating agency; provided, however,
that if the dealers selected as aforesaid by the Calculation Agent are not
quoting as mentioned in this sentence, the Commercial Paper Rate will be the
Commercial Paper Rate in effect on such Commercial Paper Rate Interest
Determination Date.
"Money Market Yield" means a yield (expressed as a percentage rounded to the
nearest one-hundredth of a percent, with five one-thousandths of a percent
rounded upwards) calculated in accordance with the following formula:
D X 360
Money Market Yield =---------------- X 100
360 - (D X M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal and "M" refers to the
actual number of days in the interest period for which interest is being
calculated.
Eleventh District Cost of Funds Rate Notes. Eleventh District Cost of Funds
Rate Notes will bear interest at the rates (calculated with reference to the
Eleventh District Cost of Funds Rate and the Spread and/or Spread Multiplier,
if any, and subject to the Minimum Interest Rate and the Maximum Interest
Rate, if any) specified in such Eleventh District Cost of Funds Rate Notes and
in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Eleventh
District Cost of Funds Rate" means, with respect to any Interest Determination
Date relating to an Eleventh District Cost of Funds Rate Note or any Floating
Rate Note for which the interest rate is determined with reference to the
Eleventh District Cost of Funds Rate (an "Eleventh District Cost of Funds Rate
Interest Determination Date"), the rate equal to the monthly weighted average
cost of funds for the calendar month immediately preceding the month in which
such Eleventh District Cost of Funds Rate Interest Determination Date falls,
as set forth under the caption "11th District" on Telerate Page 7058 as of
11:00 A.M., San Francisco time, on such Eleventh District Cost of Funds Rate
Interest Determination Date. If such rate does not appear on Telerate Page
7058 on any related Eleventh District Cost of Funds Rate Interest
Determination Date, the Eleventh District Cost of Funds Rate for such Eleventh
District Cost of Funds Rate Interest Determination Date shall be the monthly
weighted average costs of funds paid by member institutions of the Eleventh
Federal Home Loan Bank District that was most recently announced (the "Index")
by the Federal Home Loan Bank of San Francisco as such cost of funds for the
calendar month immediately preceding the date of such announcement. If the
Federal Home Loan Bank of San
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Francisco fails to announce such rate for the calendar month immediately
preceding such Eleventh District Cost of Funds Rate Interest Determination
Date, then the Eleventh District Cost of Funds Rate determined as of such
Eleventh District Cost of Funds Rate Interest Determination Date will be the
Eleventh District Cost of Funds Rate in effect on such Eleventh District Cost
of Funds Rate Interest Determination Date.
Federal Funds Rate Notes. Federal Funds Rate Notes will bear interest at the
rates (calculated with reference to the Federal Funds Rate and the Spread
and/or Spread Multiplier, if any, and subject to the Minimum Interest Rate and
the Maximum Interest Rate, if any) specified in such Federal Funds Rate Notes
and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to any Interest Determination Date relating to
a Federal Funds Rate Note or any Floating Rate Note for which the interest
rate is determined with reference to the Federal Funds Rate (a "Federal Funds
Rate Interest Determination Date"), the rate on such date for federal funds as
published in H.15(519) under the heading "Federal Funds (Effective)" or, if
not published by 3:00 P.M., New York City time, on the related Calculation
Date, the rate on such Federal Funds Rate Interest Determination Date as
published in Composite Quotations under the column "Effective Rate" under the
heading "Federal Funds." If by 3:00 P.M., New York City time, on the related
Calculation Date such rate is not published in either H.15(519) or Composite
Quotations, then the Federal Funds Rate on such Federal Funds Rate Interest
Determination Date will be calculated by the Calculation Agent and will be the
arithmetic mean of the rates for the last transaction in overnight United
States dollar federal funds arranged by three leading brokers of federal funds
transactions in The City of New York (which may include one or more of the
Agents or their affiliates) selected by the Calculation Agent prior to 9:00
A.M., New York City time, on such Federal Funds Rate Interest Determination
Date; provided, however that if the brokers so selected by the Calculation
Agent are not quoting as mentioned in this sentence, the Federal Funds Rate
determined as of such Federal Funds Rate Interest Determination Date will be
the Federal Funds Rate in effect on such Federal Funds Rate Interest
Determination Date.
LIBOR Notes. LIBOR Notes will bear interest at the interest rates
(calculated with reference to LIBOR and the Spread and/or Spread Multiplier,
if any, and subject to the Minimum Interest Rate and the Maximum Interest
Rate, if any) specified in the LIBOR Notes and in the applicable Pricing
Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "LIBOR"
will be determined by the Calculation Agent in accordance with the following
provisions:
(i) With respect to a LIBOR Interest Determination Date relating to a
LIBOR Note or any Floating Rate Note for which the interest is determined
with reference to LIBOR (a "LIBOR Interest Determination Date"), LIBOR will
be, as specified in the applicable Pricing Supplement, either: (a) the
arithmetic mean of the offered rates for deposits in U.S. dollars having
the Index Maturity designated in the applicable Pricing Supplement,
commencing on the second London Business Day immediately following that
LIBOR Interest Determination Date, that appear on the Reuters Screen LIBO
Page as of 11:00 A.M., London time, on that LIBOR Interest Determination
Date, if at least two such offered rates appear on the Reuters Screen LIBO
Page ("LIBOR Reuters"), or (b) the rate for deposits in U.S. dollars having
the Index Maturity designated in the applicable Pricing Supplement,
commencing on the second London Business Day immediately following that
LIBOR Interest Determination Date, that appears on the Telerate Page 3750
as of 11:00 A.M., London time, on that LIBOR Interest Determination Date
("LIBOR Telerate"). "Reuters Screen LIBO Page" means the display designated
as page "LIBO" on the Reuters Monitor Money Rates Service (or such other
page as may replace the LIBO page on that service for the purpose of
displaying London interbank
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offered rates of major banks). "Telerate Page 3750" means the display
designated as page "3750" on the Telerate Service (or such other page as
may replace the 3750 page on that service or such other service or services
as may be nominated by the British Bankers' Association for the purpose of
displaying London interbank offered rates for U.S. dollar deposits). If
neither LIBOR Reuters nor LIBOR Telerate is specified in the applicable
Pricing Supplement, LIBOR will be determined as if LIBOR Telerate had been
specified. If fewer than two offered rates appear on the Reuters Screen
LIBO Page, or if no rate appears on the Telerate Page 3750, as applicable,
LIBOR in respect of that LIBOR Interest Determination Date will be
determined as if the parties had specified the rate described in (ii)
below.
(ii) With respect to a LIBOR Interest Determination Date on which fewer
than two offered rates appear on the Reuters Screen LIBO Page, as specified
in (i)(a) above, or on which no rate appears on Telerate Page 3750, as
specified in (i)(b) above, as applicable, LIBOR will be determined on the
basis of the rates at which deposits in U.S. dollars having the Index
Maturity designated in the applicable Pricing Supplement are offered at
approximately 11:00 A.M., London time, on that LIBOR Interest Determination
Date by four major banks in the London interbank market selected by the
Calculation Agent ("Reference Banks") to prime banks in the London
interbank market commencing on the second London Business Day immediately
following that LIBOR Interest Determination Date and in a principal amount
equal to an amount of not less than $1,000,000 that is representative for a
single transaction in such market at such time. The Calculation Agent will
request the principal London office of each of the Reference Banks to
provide a quotation of its rate. If at least two such quotations are
provided, LIBOR in respect of that LIBOR Interest Determination Date will
be the arithmetic mean of such quotations. If fewer than two quotations are
provided, LIBOR in respect of that LIBOR Interest Determination Date will
be the arithmetic mean of the rates quoted at approximately 11:00 A.M., New
York City time, on the LIBOR Interest Determination Date by three major
banks in The City of New York selected by the Calculation Agent for loans
in U.S. dollars to leading European banks having the Index Maturity
designated in the applicable Pricing Supplement commencing on the second
London Business Day immediately following that LIBOR Interest Determination
Date and in a principal amount equal to an amount of not less than
$1,000,000 that is representative for a single transaction in such market
at such time; provided, however, that if the banks selected as aforesaid by
the Calculation Agent are not quoting as mentioned in this sentence, LIBOR
with respect to such LIBOR Interest Determination Date will be the rate of
LIBOR in effect on such date.
Prime Rate Notes. Prime Rate Notes will bear interest at the rates
(calculated with reference to the Prime Rate and the Spread and/or Spread
Multiplier, if any, and subject to the Minimum Interest Rate and the Maximum
Interest Rate, if any) specified in such Prime Rate Notes and the applicable
Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Interest Determination Date relating to a
Prime Rate Note or any Floating Rate Note for which the interest rate is
determined with reference to the Prime Rate (a "Prime Rate Interest
Determination Date"), the rate on such date as such rate is published in
H.15(519) under the heading "Bank Prime Loan." If such rate is not published
prior to 3:00 P.M., New York City time, on the related Calculation Date, then
the Prime Rate shall be the arithmetic mean of the rates of interest publicly
announced by each bank that appears on the Reuters Screen NYMF Page (as
defined below) as such bank's prime rate or base lending rate as in effect for
such Prime Rate Interest Determination Date. If fewer than four such rates but
more than one such rate appear on the Reuters Screen NYMF Page for such Prime
Rate Interest Determination Date, the Prime Rate shall be the arithmetic mean
of the prime rates quoted on the basis of the actual number of days in the
year divided by a 360-day year as of the close of business on such Prime Rate
Interest
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Determination Date by four major money center banks in The City of New York
selected by the Calculation Agent. If fewer than two such rates appear on the
Reuters Screen NYMF Page, the Prime Rate will be determined by the Calculation
Agent on the basis of the rates furnished in The City of New York by three
substitute banks or trust companies organized and doing business under the
laws of the United States, or any State thereof, having total equity capital
of at least $500 million and being subject to supervision or examination by
Federal or State authority, selected by the Calculation Agent to provide such
rate or rates; provided, however, that if the banks or trust companies
selected as aforesaid are not quoting as mentioned in this sentence, the Prime
Rate determined as of such Prime Rate Interest Determination Date will be the
Prime Rate in effect on such Prime Rate Interest Determination Date.
"Reuters Screen NYMF Page" means the display designated as page "NYMF" on
the Reuters Monitor Money Rates Service (or such other page as may replace the
NYMF page on that service for the purpose of displaying prime rates or base
lending rates of major United States banks).
Treasury Rate Notes. Treasury Rate Notes will bear interest at the interest
rates (calculated with reference to the Treasury Rate and the Spread and/or
Spread Multiplier, if any, and subject to the Minimum Interest Rate and the
Maximum Interest Rate, if any) specified in the Treasury Rate Notes and in the
applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Interest Determination Date relating to a
Treasury Rate Note or any Floating Rate Note for which the interest rate is
determined by reference in the Treasury Rate (a "Treasury Rate Interest
Determination Date"), the rate applicable to the most recent auction of direct
obligations of the United States ("Treasury Bills") having the Index Maturity
designated in the applicable Pricing Supplement as published in H.15(519)
under the heading "Treasury Bills--auction average (investment)" or, if not so
published by 3:00 P.M., New York City time, on the related Calculation Date
pertaining to such Treasury Rate Interest Determination Date, the auction
average rate (expressed as a bond equivalent on the basis of a year of 365 or
366 days, as applicable, and applied on a daily basis) as otherwise announced
by the United States Department of the Treasury. In the event that the results
of the auction of Treasury Bills having the Index Maturity designated in the
applicable Pricing Supplement are not published or reported as provided above
by 3:00 P.M., New York City time, on such Calculation Date or if no such
auction is held on such Treasury Rate Interest Determination Date, then the
Treasury Rate shall be calculated by the Calculation Agent and shall be a
yield to maturity (expressed as a bond equivalent on the basis of a year of
365 or 366 days, as applicable, and applied on a daily basis) of the
arithmetic mean of the secondary market bid rates, as of approximately 3:30
P.M., New York City time, on such Treasury Rate Interest Determination Date,
of three leading primary United States government securities dealers (which
may include one or more of the Agents or their affiliates) selected by the
Calculation Agent for the issue of Treasury Bills with a remaining maturity
closest to the Index Maturity designated in the applicable Pricing Supplement;
provided, however, that if the dealers selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this sentence, the Treasury
Rate will be the Treasury Rate in effect on such Treasury Rate Interest
Determination Date.
SUBSEQUENT INTEREST PERIODS
The applicable Pricing Supplement relating to each Note will indicate
whether the Company has the option to reset the interest rate in the case of a
Fixed Rate Note, or the Spread or Spread Multiplier in the case of a Floating
Rate Note, and, if so, the date or dates on which such interest rate or such
Spread or Spread Multiplier, as the case may be, may be reset (each an
"Optional Reset Date").
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If the Company elects to reset the interest rate, Spread or Spread
Multiplier of a Note as described above, the Holder of such Note will have the
option to elect repayment of such Note by the Company on any Optional Reset
Date at a price equal to the aggregate principal amount thereof outstanding
on, plus any interest accrued to, such Optional Reset Date. In order for a
Note to be so repaid on an Optional Reset Date, the Holder thereof must follow
the procedures set forth below under "Redemption and Repayment" for optional
repayment, except that (i) the period for delivery of such Note or
notification to the Trustee will be at least 25 but not more than 35 days
prior to such Optional Reset Date and (ii) a holder who has tendered a Note
for repayment pursuant to a Reset Notice may, by written notice to the
Trustee, revoke any such tender until the close of business on the tenth day
prior to such Optional Reset Date.
The Company may exercise such option with respect to a Note by notifying the
Trustee of such exercise at least 45 but not more than 60 days prior to an
Optional Reset Date for such Note. Not later than 40 days prior to such
Optional Reset Date, the Trustee for such Note will mail to the Holder of such
Note a notice (the "Reset Notice"), first class, postage prepaid. The Reset
Notice will indicate whether the Company has elected to reset the interest
rate (in the case of a Fixed Rate Note) or the Spread or Spread Multiplier (in
the case of a Floating Rate Note) and if so, (i) such new interest rate or
such new Spread or Spread Multiplier, as the case may be; and (ii) the
provisions, if any, for redemption during the period from such Optional Reset
Date to the next Optional Reset Date or, if there is no such next Optional
Reset Date, to the Stated Maturity of such Note (each such period a
"Subsequent Interest Period"), including the date or dates on which or the
period or periods during which and the price or prices at which such
redemption may occur during such Subsequent Interest Period.
Notwithstanding the foregoing, the Company may, at its option, revoke the
interest rate (in the case of a Fixed Rate Note) or the Spread or Spread
Multiplier (in the case of a Floating Rate Note) as provided for in the Reset
Notice, and establish an interest rate, Spread or Spread Multiplier that is
higher (or lower if the Note is an Inverse Floating Rate Note) than the
interest rate, Spread or Spread Multiplier provided for in the relevant Reset
Notice for the Subsequent Interest Period commencing on such Optional Reset
Date, by causing the Trustee to mail, not later than 20 days prior to an
Optional Reset Date for a Note (or, if such day is not a Business Day, on the
immediately succeeding Business Day), notice of such higher interest rate, or
new Spread or Spread Multiplier to the Holder of such Note. Such notice will
be irrevocable. The Company must notify the Trustee of its intentions to
revoke such Reset Notice at least 25 days prior to such Optional Reset Date.
Each Note with respect to which the interest rate, Spread or Spread Multiplier
is reset on an Optional Reset Date and with respect to which the holder of
such Note has not tendered such Note for repayment (or has validly revoked any
such tender) pursuant to the next succeeding paragraph will bear such higher
interest rate, or new Spread or Spread Multiplier for the Subsequent Interest
Period.
EXTENSION OF MATURITY
Unless otherwise stated in the applicable Pricing Supplement, each Note will
finally mature at the Stated Maturity of such Note. The applicable Pricing
Supplement relating to any Note (other than an Amortizing Note) may indicate
whether the Company has the option to extend the Stated Maturity of such Note
for one or more periods of whole years from one to five (each an "Extension
Period") up to but not beyond the date (the "Final Maturity") set forth in
such Pricing Supplement.
The Company may exercise such option with respect to a Note by notifying the
Trustee of such exercise at least 45 but not more than 60 days prior to the
old Stated Maturity for such Note. Not later than 40 days prior to the old
Stated Maturity of such Note, the Trustee for such Note will mail to the
Holder of such Note a notice (the "Extension Notice"), first class, postage
prepaid. The Extension Notice will set forth (i) the election of the Company
to extend the Stated Maturity
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of such Note; (ii) the new Stated Maturity; (iii) in the case of a Fixed Rate
Note, the interest rate applicable to the Extension Period or, in the case of
a Floating Rate Note, the Spread or Spread Multiplier applicable to the
Extension Period; and (iv) the provisions, if any, for redemption during the
Extension Period, including the date or dates on which or the period or
periods during which and the price or prices at which such redemption may
occur during the Extension Period. Upon the mailing by such Trustee of an
Extension Notice to the Holder of a Note, the Stated Maturity of such Note
shall be extended automatically, and, except as modified by the Extension
Notice and as described in the next paragraph, such Note will have the same
terms as prior to the mailing of such Extension Notice.
Notwithstanding the foregoing, not later than 20 days prior to the old
Stated Maturity of such Note (or, if such day is not a Business Day, on the
immediately succeeding Business Day), the Company may, at its option, revoke
the interest rate (in the case of a Fixed Rate Note) or the Spread or Spread
Multiplier (in the case of a Floating Rate Note) provided for in the Extension
Notice for such Note and establish a higher interest rate (in the case of a
Fixed Rate Note) or a higher Spread or Spread Multiplier (in the case of a
Floating Rate Note, or a lower Spread or Spread Multiplier in the case of an
Inverse Floating Rate Note) for the Extension Period, by causing the Trustee
for such Note to mail notice of such higher interest rate or new Spread or
Spread Multiplier, as the case may be, first class, postage prepaid, to the
Holder of such Note. Such notice will be irrevocable. All Notes with respect
to which the Stated Maturity is extended will bear such higher interest rate
(in the case of Fixed Rate Notes) or new Spread or Spread Multiplier (in the
case of Floating Rate Notes) for the Extension Period, whether or not tendered
for repayment.
If the Company extends the Stated Maturity of a Note, the Holder of such
Note will have the option to elect repayment of such Note by the Company on
the old Stated Maturity at a price equal to the principal amount thereof, plus
interest accrued to such date. In order for a Note to be repaid on the old
Stated Maturity once the Company has extended the Stated Maturity thereof, the
Holder thereof must follow the procedures set forth below under "Redemption
and Repayment" for optional repayment, except that (i) the period for delivery
of such Note or notification to the Trustee for such Note will be at least 25
but not more than 35 days prior to the old Stated Maturity and (ii) a Holder
who has tendered a Note for repayment pursuant to an Extension Notice may, by
written notice to the Trustee, revoke any such tender for repayment until the
close of business on the tenth day before the old Stated Maturity.
AMORTIZING NOTES
The Company may from time to time offer Amortizing Notes. Unless otherwise
specified in the applicable Pricing Supplement, interest on each Amortizing
Note will be computed on the basis of a 360-day year of twelve 30-day months.
Payments with respect to Amortizing Notes will be applied first to interest
due and payable thereon and then to the reduction of the unpaid principal
amount thereof. Further information concerning additional terms and provisions
of Amortizing Notes will be specified in the applicable Pricing Supplement. A
table setting forth repayment information in respect of each Amortizing Note
will be included in the applicable Pricing Supplement and set forth in each
such Note.
ORIGINAL ISSUE DISCOUNT NOTES
The Company may offer Original Issue Discount Notes from time to time. Such
Original Issue Discount Notes may currently pay no interest or interest at a
rate which at the time of issuance is below market rates. In the event of
redemption, repayment or acceleration of maturity in respect of an Original
Issue Discount Note, the amount payable to the holder of such Original Issue
Discount Note will be equal to (i) the Amortized Face Amount (as defined
below) as of the date of such event, plus (ii) with respect to any redemption
of an Original Issue Discount Note, the Initial
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Redemption Percentage specified in the applicable Pricing Supplement (as
adjusted by the Annual Redemption Percentage Reduction, if applicable) minus
100% multiplied by the Issue Price specified in such Pricing Supplement (the
"Issue Price"), net of any portion of such Issue Price which has been paid
prior to the date of redemption, or the portion of the Issue Price (or the net
amount) proportionate to the portion of the unpaid principal amount to be
redeemed, plus (iii) any accrued interest to the date of such event the
payment of which would constitute qualified stated interest payments within
the meaning of Treasury Regulation Section 1.1273-1(c) under the Internal
Revenue Code of 1986, as amended (the "Code"). Such interest will be computed
on the basis of a 360-day year of twelve 30-day months, compounded
semiannually.
If any Maturity of an Original Issue Discount Note which bears no interest
falls on a day that is not a Business Day with respect to such Original Issue
Discount Note, the payment due at such Maturity will be made on the following
day that is a Business Day as if it were made on the date such payment was due
and no interest shall accrue on the amount so payable for the period from and
after such Maturity.
The "Amortized Face Amount" of an Original Issue Discount Note means an
amount equal to (i) the Issue Price thereof plus (ii) the aggregate portions
of the original issue discount (the excess of the amounts considered as part
of the "stated redemption price at maturity" of such Original Issue Discount
Note within the meaning of Section 1273(a)(2) of the Internal Revenue Code of
1986, as amended, (the "Code"), whether denominated as principal or interest,
over the Issue Price) which shall theretofore have accrued pursuant to Section
1272 of the Code (without regard to Section 1272(a)(7) of the Code) from the
date of issue of such Original Issue Discount Note to the date of
determination, minus (iii) any amount considered as part of the "stated
redemption price at maturity" of such Original Issue Discount Note which has
been paid from the date of issue to the date of determination. Certain
additional considerations relating to the offering of any Original Issue
Discount Notes may be set forth in the applicable Pricing Supplement.
If a bankruptcy case is commenced by or against the Company under the United
States Bankruptcy Code (the "Bankruptcy Code"), it is possible that a portion
of the face amount of an Original Issue Discount Note would be treated as
interest and the unamortized portion thereof would be treated as unmatured
interest under Section 502(b)(2) of the Bankruptcy Code. Unmatured interest is
not allowable as part of a claim under Section 502(b)(2) of the Bankruptcy
Code. Although it is impossible to predict what portion, if any, of the face
amount of a Discount Note would be treated as unmatured interest, one possible
result is that the bankruptcy court might determine the amount of unmatured
interest on such Note by reference to the amount of amortized original issue
discount of such Note for tax purposes or the unamortized debt discount of
such Note for financial accounting purposes. Each method may yield a
substantially different result.
Holders of Notes with original issue discount will be required to include
the amount of original issue discount in income in accordance with applicable
provisions of the Code, and the Treasury Regulations promulgated thereunder.
See "Certain United States Federal Income Tax Considerations--U.S. Holders--
Original Issue Discount."
INDEXED NOTES
Notes may be issued with the amount of principal, premium and/or interest
payable in respect thereof to be determined with reference to the price or
prices of specified commodities or stocks, the exchange rate of one or more
specified currencies (including a composite currency such as the European
Currency Unit ("ECU")) relative to an indexed currency or such other price or
exchange rate ("Indexed Notes"), as set forth in the applicable Pricing
Supplement. In certain cases, Holders of Indexed Notes may receive a principal
amount on the Maturity Date that is greater than or less than the face amount
of the Notes depending upon the relative value on the Maturity Date of the
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specified indexed item. Information as to the method for determining the
amount of principal, premium, if any, and/or interest payable in respect of
Indexed Notes, certain historical information with respect to the specified
indexed item and tax considerations associated with an investment in such
Indexed Notes will be set forth in the applicable Pricing Supplement.
OTHER PROVISIONS; ADDENDA
Any provisions with respect to the Notes, including the determination of an
Interest Rate Basis, the calculation of the interest rate applicable to a
Floating Rate Note, and the specification of one or more Interest Rate Bases,
the Interest Payment Dates, the Maturity Date or any other variable term
relating thereto, may be modified as specified under "Other Provisions" on the
face of the Note or in an Addendum relating thereto, if so specified on the
face thereof and in the applicable Pricing Supplement.
BOOK-ENTRY SYSTEM
Upon issuance, all Fixed Rate Book-Entry Notes having the same original
issue date, interest rate, if any, amortization schedule, if any, Stated
Maturity and other terms, if any, will be represented by a single Global Note
and all Floating Rate Book-Entry Notes having the same original issue date,
Initial Interest Rate, Base Rate, Interest Payment Period, Interest Payment
Dates, Index Maturity, Spread or Spread Multiplier, if any, Minimum Interest
Rate, if any, Maximum Interest Rate, if any, Stated Maturity and other terms,
if any, will be represented by a single Global Note. Each Global Note
representing Book-Entry Notes will be deposited with, or on behalf of, the
Depositary, and registered in the name of a nominee of the Depositary.
Certificated Notes will not be exchangeable for Book-Entry Notes and, except
under the circumstances described in the Prospectus under "Description of Debt
Securities--Global Securities," Book-Entry Notes will not be exchangeable for
Certificated Notes and will not otherwise be issuable as Certificated Notes.
A further description of the Depositary's procedures with respect to Global
Notes representing Book-Entry Notes is set forth in the Prospectus under
"Description of Debt Securities--Global Securities." The Depositary has
confirmed to the Company, the Agents and each Trustee that it intends to
follow such procedures.
The Depositary has advised the Company that the Depositary 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 under the Securities Exchange Act of 1934, as amended. The
Depositary was created to hold the securities of its participants and to
facilitate the clearance and settlement of securities transactions among its
participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical
movement of securities certificates. The Depositary's participants include
securities brokers and dealers (including the Agents), banks, trust companies,
clearing corporations, and certain other organizations some of whom (and/or
their representatives) own the Depositary. Access to the Depositary's book-
entry system is also available to others, such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
REDEMPTION AND REPAYMENT
The Notes are not subject to redemption by the Company prior to the
Redemption Dates fixed at the time of sale and set forth in Pricing
Supplements hereto. If no Redemption Date is indicated with respect to a Note,
such Note is not redeemable prior to the Stated Maturity. On and after the
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indicated Redemption Date, the related Note will be redeemable in whole or in
part in increments of $1,000 at the option of the Company at a redemption
price equal to 100% of the principal amount to be redeemed, together with
interest thereon payable to the date of redemption, on notice given not more
than 60 nor less than 30 days prior to the date of redemption. With respect to
the redemption of Global Notes, the Depositary advises that if less than all
of the Notes with like tenor and terms are to be redeemed, the particular
interests (in integral multiples of $1,000) in the Global Note representing
the Notes to be redeemed shall be selected by the Depositary's impartial
lottery procedures.
The Notes will be subject to repayment at the option of the holders thereof
in accordance with the terms of the Notes on their respective optional
repayment date or dates, if any, fixed at the time of sale and set forth in
the applicable Pricing Supplement and in the applicable Note (the "Optional
Repayment Date"). If no Optional Repayment Date is indicated in such Pricing
Supplement and such Note with respect to a Note, such Note will not be
repayable at the option of the holder prior to the Stated Maturity. Unless
otherwise specified in an applicable Pricing Supplement, on any Optional
Repayment Date with respect to any Note, such Note will be repayable in whole
or in part in increments of $1,000 at the option of the holder thereof at a
price equal to 100% of the principal amount to be repaid, together with
interest thereon payable to the Optional Repayment Date. In order for a Note
to be repaid, the Company must receive at its offices or agencies for that
purpose in Chicago, Illinois or New York, New York not more than 60 nor less
than 30 days prior to the Optional Repayment Date, (i) the Note with the form
entitled "Option to Elect Repayment" on the reverse of the Note duly
completed, or (ii) a telegram, telex, facsimile transmission or letter from a
member of a national securities exchange or the National Association of
Securities Dealers, Inc. or a commercial bank or a trust company in the United
States of America setting forth the name of the holder of the Note, the
principal amount of the Note, the amount of the Note to be repaid, a statement
that the option to elect repayment is being exercised thereby and a guarantee
that the Note to be repaid with the form entitled "Option to Elect Repayment"
on the reverse of the Note duly completed will be received by the Company not
later than five Business Days after the date of such telegram, telex,
facsimile transmission or letter and such Note and form duly completed are
received by the Company by such fifth Business Day. Any such notice received
by the Company during such period shall be irrevocable. All questions as to
the validity, eligibility (including time of receipt) and acceptance of any
Note for repayment will be determined by the Company, whose determination will
be final and binding.
CERTAIN INVESTMENT CONSIDERATIONS
An investment in Notes indexed, as to principal, premium and/or interest, to
one or more values of currencies (including exchange rates between
currencies), commodities or interest rate indices entails significant risks
that are not associated with similar investments in a conventional fixed-rate
debt security. If the interest rate of such a Note is so indexed, it may
result in an interest rate that is less than that payable on a conventional
fixed-rate debt security issued at the same time, including the possibility
that no interest will be paid, and, if the principal of and/or premium on such
a Note is so indexed, the amount of principal and/or premium payable in
respect thereof may be less than the original purchase price of such Note if
allowed pursuant to the terms thereof, including the possibility that no such
amount will be paid. The secondary market for such Notes will be affected by a
number of factors, independent of the creditworthiness of the Company and the
value of the applicable currency, commodity or interest rate index, including
the volatility of the applicable currency, commodity or interest rate index,
the time remaining to the maturity of such Notes, the amount outstanding of
such Notes and market interest rates. The value of the applicable currency,
commodity or interest rate index depends on a number of interrelated factors,
including economic, financial and political events, over which the Company has
no control.
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Additionally, if the formula used to determine the amount of principal,
premium and/or interest payable with respect to such Notes contains a multiple
or leverage factor, the effect of any change in the applicable currency,
commodity or interest rate index will be increased. The historical experience
of the relevant currencies, commodities or interest rate indices should not be
taken as an indication of future performance of such currencies, commodities
or interest rate indices during the term of any Note. The credit ratings
assigned to the Company's medium-term note program are a reflection of the
Company's credit status and, in no way, are a reflection of the potential
impact of the factors discussed above, or any other factors, on the market
value of the Notes. Accordingly, prospective investors should consult their
own financial and legal advisors as to the risks entailed by an investment in
Indexed Notes and the suitability of Indexed Notes in light of their
particular circumstances.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of the Notes is based
upon laws, regulations, rulings and decisions now in effect, all of which are
subject to change (including changes in effective dates) and possible
differing interpretations. This discussion deals only with Notes held as
capital assets and does not purport to deal with persons in special tax
situations, such as financial institutions, insurance companies, regulated
investment companies, dealers in securities or currencies, persons holding
Notes as a hedge against currency risks or as a position in a "straddle" for
tax purposes, or persons whose functional currency is not the United States
dollar. This discussion also does not deal with holders other than original
purchasers (except where otherwise specifically noted). Persons considering
the purchase of the Notes should consult their own tax advisors concerning the
application of United States Federal income tax laws to their particular
situations as well as any consequences of the purchase, ownership and
disposition of the Notes arising under the laws of any other taxing
jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner of a Note
that is for United States Federal income tax purposes (i) a citizen or
resident of the United States, (ii) a corporation, 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 or trust the income of which is
subject to United States Federal income taxation regardless of its source or
(iv) any other person whose income or gain in respect of a Note is effectively
connected with the conduct of a United States trade or business. As used
herein, the term "non-U.S. Holder" means a holder of a Note that is not a U.S.
Holder.
U.S. HOLDERS
Payments of Interest
Payments of interest on a Note generally will be taxable to a U.S. Holder as
ordinary interest income at the time such payments are accrued or are received
(in accordance with the U.S. Holder's regular method of tax accounting).
Original Issue Discount
The following summary is a general discussion of the United States Federal
income tax consequences to U.S. Holders of the purchase, ownership and
disposition of Notes issued with original issue discount ("OID"). The
following summary is based on the provisions of the Internal Revenue Code of
1986, as amended (the "Code"), and on certain final regulations (the "Final
OID Regulations") issued by the U.S. Department of Treasury on January 27,
1994, and certain proposed regulations of the U.S. Department of Treasury
issued in 1986 and modified in 1991 (the "Proposed OID Regulations") that
interpret the original issue discount provisions of the Code. The Final OID
Regulations generally apply to debt instruments issued on or after April 4,
1994.
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For United States Federal income tax purposes, a Note will have OID to the
extent that the Note's stated redemption price at maturity exceeds its issue
price, if such excess equals or exceeds a de minimis amount (generally 1/4 of
1% of the Note's stated redemption price at maturity multiplied by the number
of complete years to its maturity from its issue date). The issue price of an
issuance of Notes equals the first offering price at which a substantial
amount of such Notes has been sold (ignoring sales to bond houses, brokers, or
similar persons or organizations acting in the capacity of underwriters,
placement agents, or wholesalers). The stated redemption price at maturity of
a Note is the sum of all payments due on the Note other than qualified stated
interest payments. "Qualified stated interest" is stated interest that is
unconditionally payable in cash or property (other than debt instruments of
the issuer) at least annually at a single fixed rate that appropriately
accounts for the length of the interval between payments. In addition, under
the Final OID Regulations, if a Note bears interest for one or more accrual
periods at a rate below the rate applicable for the remaining term of such
Note (e.g., Notes with teaser rates or interest holidays), and if the greater
of either the resulting foregone interest on such Note or any "true" discount
on such Note (i.e., the excess of the Note's stated principal amount over its
issue price) equals or exceeds a specified de minimis amount, then the stated
interest on the Note would be treated as OID rather than qualified stated
interest.
Payments of qualified stated interest on a Note are taxable to a U.S. Holder
as ordinary interest income at the time such payments are accrued or are
received (in accordance with the U.S. Holder's regular method of tax
accounting). A U.S. Holder of a Note issued with OID and a maturity of more
than one year must include OID in income as ordinary income over the term of
the Note, regardless of such U.S. Holder's regular method of tax accounting.
In general, a U.S. Holder must include in gross income the sum of the daily
portions of OID that accrue on the Note for each day during the taxable year
(or portion of the taxable year) on which such U.S. Holder held the Note.
Accordingly, a U.S. Holder of a Note issued with OID will include in income
amounts attributable to OID before receiving cash attributable to that income.
To determine the "daily portion" of OID on any Note with OID, OID accruing
during an accrual period (generally, the period between dates on which
interest is paid) is divided by the number of days in the accrual period. An
"accrual period" may be of any length and the accrual periods may vary in
length over the term of the Note, provided that each accrual period is no
longer than one year and each scheduled payment of principal or interest
occurs either on the final day of an accrual period or on the first day of an
accrual period. The amount of OID accruing during an accrual period is
generally determined by using a constant yield to maturity method, and is
equal to the excess of (i) the product of the Note's adjusted issue price at
the beginning of the accrual period and its yield to maturity (determined on
the basis of compounding at the close of each accrual period and approximately
adjusted to take into account the length of the particular accrual period)
over (ii) the amount of any qualified stated interest payments allocable to
the accrual period. The Note's "adjusted issue price" at the beginning of any
accrual period generally equals the sum of the issue price of the Note plus
the aggregate amount of OID accrued on the Note in all prior accrual periods,
reduced by the amount of payments on the Note in prior accrual periods that
were not qualified stated interest payments. Under these rules, U.S. Holders
generally will have to include in income increasingly greater amounts of OID
in successive accrual periods.
A U.S. Holder of a Note with OID that purchases the Note for an amount that
is greater than the Note's adjusted issue price as of the purchase date but
less than or equal to the sum of all amounts payable on the Note after the
purchase date other than payments of qualified stated interest, will be
considered to have purchased the Note at an "acquisition premium." Under the
acquisition premium rules, the amount of OID which such U.S. Holder must
include in its gross income with respect to such Note for any taxable year (or
portion thereof in which the U.S. Holder holds the Note) will be reduced (but
not below zero) by the portion of the acquisition premium properly allocable
to the period.
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Under the Final OID Regulations, Floating Rate Notes are subject to special
rules. A Note is a "variable rate debt instrument" if (a) its issue price does
not exceed the total noncontingent principal payments due under the Note by
more than a specified de minimis amount and (b) it provides for stated
interest, paid or compounded at least annually, at current values of(i) one or
more qualified floating rates, (ii) a single fixed rate and one or more
qualified floating rates, (iii) a single objective rate, or (iv) a single
fixed rate and a single objective rate that is a qualified inverse floating
rate.
A "qualified floating rate" is any floating rate that can reasonably be
expected to measure contemporaneous variations in the cost of newly borrowed
funds in the currency in which the note is denominated (for example, LIBOR).
Although a multiple of a qualified floating rate will generally not constitute
a qualified floating rate, a variable rate equal to the product of a qualified
floating rate and a fixed multiple that is greater than zero but not more than
1.35 will constitute a qualified floating rate. A variable rate equal to the
product of a qualified floating rate and a fixed multiple that is greater than
zero but not more than 1.35, increased or decreased by a fixed rate, will also
constitute a qualified floating rate. In addition, under the Final OID
Regulations, two or more qualified floating rates that can reasonably be
expected to have approximately the same values throughout the term of the note
together will constitute a single qualified floating rate. Two or more
qualified floating rates will be conclusively presumed to meet the
requirements of the preceding sentence if the value of all rates on the issue
date are within 25 basis points of each other.
The Final OID Regulations provide that an otherwise qualified floating rate
that has restrictions will not be a qualified floating rate unless the
restrictions fall into one of the following categories: (a) a cap, a floor or
a periodic adjustment restriction (a "governor") that is fixed throughout the
term of the note, (b) a cap or similar restriction that is not reasonably
expected as of the issue date significantly to decrease the yield on the note,
(c) a floor or similar restriction that is not reasonably expected as of the
issue date to significantly increase the yield on the note, or (d) a governor
or similar restriction that is not reasonably expected as of the issue date
significantly to increase or decrease the yield on the note. Floating Rate
Notes subject to caps, floors, or governors that do not meet the above
requirements could be treated as debt instruments providing for contingent
payments.
An "objective rate" is a rate other than a qualified floating rate, that is
determined by a single fixed formula and is based on (i) one or more qualified
floating rates, (ii) one or more rates each of which would be a qualified
floating rate for a debt instrument denominated in a currency other than the
currency in which the Note is denominated, (iii) the yield or the changes in
the price of one or more items of actively traded personal property (other
than stock or debt of the issuer or a related party), (iv) a combination of
these objective rates, or (v) other rates designated from time to time by the
Internal Revenue Service (the "IRS"). Despite the foregoing, a variable rate
of interest on a Floating Rate Note will not constitute an objective rate if
it is reasonably expected that the average value of the rate during the first
half of the Floating Rate Note's term will be either significantly less than
or significantly greater than the average value of the rate during the final
half of the Note's term. A "qualified inverse floating rate" is any objective
rate that is equal to a fixed rate minus a qualified floating rate, and that
reasonably can be expected to inversely reflect contemporaneous variations in
the cost of newly borrowed funds disregarding permissible restrictions
discussed above in the definition of a qualified floating rate.
The Final OID Regulations also provide that if a variable rate debt
instrument provides for stated interest at a fixed rate for an initial period
of less than one year followed by a variable rate that is either a qualified
floating rate or an objective rate and if the variable rate on such
instrument's issue date is intended to approximate the fixed rate, then the
fixed rate and the variable rate together will constitute either a single
qualified floating rate or an objective rate, as the case may be. A fixed rate
and a variable rate will be conclusively presumed to meet the requirements of
the preceding
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sentence if the value of the variable rate on the issue date does not differ
from the value of the fixed rate by more than 25 basis points.
If a Floating Rate Note that provides for stated interest at either a single
qualified floating rate or a single objective rate throughout the term thereof
qualifies as a "variable rate debt instrument" under the Final OID
Regulations, then any stated interest on the Floating Rate Note which is
unconditionally payable in cash or property (other than debt instruments of
the issuer) at least annually will constitute qualified stated interest and
will be taxed accordingly. Thus, a Floating Rate Note that provides for stated
interest at either a single qualified floating rate or a single objective rate
throughout the term of the Floating Rate Note and that qualifies as a
"variable rate debt instrument" under the Final OID Regulations will generally
not be treated as having been issued with OID unless the Floating Rate Note is
issued at a "true" discount (i.e., at a price below the Floating Rate Note's
stated principal amount) in excess of a specified de minimis amount. OID on
such a Floating Rate Note arising from "true" discount is allocated to an
accrual period using the constant yield method described above by assuming
that the variable rate is a fixed rate equal to (i) in the case of a qualified
floating rate or qualified inverse floating rate, the value as of the issue
date, of the qualified floating rate or qualified inverse floating rate, or
(ii) in the case of an objective rate (other than a qualified inverse floating
rate), a fixed rate that reflects the yield that is reasonably expected for
the Floating Rate Note.
To determine the amount and accrual of OID and qualified stated interest on
any other Floating Rate Note that qualifies as a "variable rate debt
instrument," the Final OID Regulations provide that the Floating Rate Note is
to be converted into a hypothetical "equivalent" fixed rate debt instrument
that has terms identical to the Floating Rate Note, except that the
hypothetical Floating Rate Note has fixed rates substituted for the qualified
floating rates or objective rate provided under the Floating Rate Note. Any
objective rate (other than a qualified inverse floating rate) provided for
under the terms of the Floating Rate Note is converted into a fixed rate that
reflects the yield that is reasonably expected for the Floating Rate Note. In
the case of a Floating Rate Note that qualifies as a "variable rate debt
instrument" and provides for stated interest at a fixed rate in addition to
either one or more qualified floating rates or a qualified inverse floating
rate, the fixed rate is initially converted into a qualified floating rate (or
a qualified inverse floating rate, if the Floating Rate Note provides for a
qualified inverse floating rate). Under such circumstances, the qualified
floating rate or qualified inverse floating rate that replaces the fixed rate
must be such that the fair market value of the Floating Rate Note as of the
Floating Rate Note's issue date is approximately the same as the fair market
value of an otherwise identical debt instrument that provides for either the
qualified floating rate or qualified inverse floating rate rather than the
fixed rate. Subsequent to converting the fixed rate into either a qualified
floating rate or a qualified inverse floating rate, the Floating Rate Note is
then converted into an "equivalent" fixed rate debt instrument in the manner
described above.
Once the Floating Rate Note is converted into an "equivalent" fixed rate
debt instrument pursuant to the foregoing rules, the amount of OID and
qualified stated interest, if any, are determined for the "equivalent" fixed
rate debt instrument by applying the general OID rules to the "equivalent"
fixed rate debt instrument. A U.S. Holder of the Floating Rate Note will
account for such OID and qualified stated interest as if the U.S. Holder held
the "equivalent" fixed rate debt instrument. Appropriate adjustments will be
made in each accrual period in the amount of qualified stated interest or OID
assumed to have been accrued or paid with respect to the "equivalent" fixed
rate debt instrument in the event that such amounts differ from the actual
amount of interest accrued or paid on the Floating Rate Note during the
accrual period.
If a Floating Rate Note does not qualify as a "variable rate debt
instrument" under the Final OID Regulations, then the Floating Rate Note would
be treated as a contingent payment debt obligation. It is not entirely clear
under current law how a Floating Rate Note would be taxed if
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such Note were treated as a contingent payment debt obligation. The proper
United States Federal income tax treatment of Floating Rate Notes that are
treated as contingent payment debt obligations will be more fully described in
the applicable Pricing Supplement.
Certain of the Notes (i) may be redeemable at the option of the Company
prior to their stated maturity (a "call option") and/or (ii) may be repayable
at the option of the holder prior to their stated maturity (a "put option").
Notes containing such features may be subject to rules that differ from the
general rules discussed above. Investors intending to purchase Notes with such
features should consult their own tax advisors, since the OID consequences
will depend, in part, on the particular terms and features of the purchased
Notes.
U.S. Holders may generally, upon election, include in income all interest
(including stated interest, acquisition discount, OID, de minimis OID, market
discount, de minimis market discount, and unstated interest, as adjusted by
any amortizable bond premium or acquisition premium) that accrues on a debt
instrument by using the constant yield method applicable to OID, subject to
certain limitations and exceptions.
Under the Proposed OID Regulations, the IRS can apply or depart from the
Final OID Regulations or the Proposed OID Regulations as necessary or
appropriate to achieve a reasonable result where a principal purpose in
structuring a Note or applying the regulations described above is to achieve a
result that is unreasonable in light of the purpose of the applicable statutes
(which generally are intended to achieve the clear reflection of income for
both borrowers and lenders).
Subsequent Interest Periods and Extension of Maturity
If so specified in the Pricing Supplement relating to an issue of Notes, the
interest rate or Stated Maturity of such Notes may be reset or extended, at
the option of the Company. See "Medium-Term Notes, Series G--Subsequent
Interest Periods" and "Medium-Term Notes, Series G--Extension of Maturity."
The treatment of a holder of Notes with respect to which such an option has
been exercised and who does not elect to have the Company repay such Notes on
the applicable Optional Reset Date or "old" Stated Maturity Date will depend
on the terms established for such Notes by the Company pursuant to the
exercise of such option ("revised terms"). Depending on the particular
circumstances, such holder may be treated as having surrendered such Notes for
new Notes with the revised terms in either a taxable exchange or a
recapitalization qualifying for nonrecognition of gain or loss.
Short-Term Notes
Notes that have a fixed maturity of one year or less ("Short-Term Notes")
will be treated as having been issued with OID. U.S. Holders that do not use
the accrual method of accounting for tax purposes generally will not be
required to recognize OID on Short-Term Notes until they receive payment on
such Notes. U.S. Holders on the accrual method, regulated investment
companies, common trust funds, and certain others, however, must accrue OID on
Short-Term Notes on a straight-line basis unless they elect to accrue the OID
on a constant yield basis with daily compounding. For this purpose, OID on a
Short-Term Note is the amount by which the total principal and interest
payments on such Note exceed its issue price. U.S. Holders may elect to
include OID on Short-Term Notes into income based on acquisition discount
rather than OID. Acquisition discount is the excess of a Short-Term Note's
stated redemption price at maturity over the U.S. Holder's basis in the Note.
Gain recognized on the sale or exchange of a Short-Term Note by a U.S. Holder
that has not accrued OID or acquisition discount on the Short-Term Note to the
extent attributable to accrued interest and OID (or acquisition discount).
Such a U.S. Holder also must defer deductions for net interest expense on any
borrowing attributable to the Short-Term Note to the extent that the expense
does not exceed accrued but unrecognized interest and OID (or acquisition
discount) on the Note.
S-23
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Market Discount
If a U.S. Holder purchases a Note, other than a Note issued with OID, for an
amount that is less than its issue price (or, in the case of a subsequent
purchaser, its stated redemption price at maturity) or purchases a Note issued
with OID for an amount that is less than the Note's adjusted issue price as of
the purchase date, the amount of the difference will be treated as "market
discount." A Note is not treated as purchased at a market discount, however,
if the market discount is less than 1/4 of 1 percent of the stated redemption
price at maturity (or the revised issue price in the case of a Note issued
with OID) multiplied by the number of complete years remaining to maturity
("de minimis market discount"). The revised issue price of a Note issued with
OID is the Note's initial issue price increased by the amount of OID
includible in the gross income of previous holders.
A U.S. Holder of a Note purchased at a market discount (other than a de
minimis market discount) will be required to treat any partial principal
payment (or, in the case of a Note issued with OID, any payment that does not
constitute qualified stated interest) on, or any gain realized on the sale,
exchange, retirement or other disposition of, a Note as ordinary income to the
extent of the lesser of (i) the amount of such payment or realized gain or
(ii) the market discount which has not previously been included in income and
is treated as having accrued on such Note at the time of such payment or
disposition. Market discount will be considered to accrue ratably during the
period from the date of acquisition to the maturity date of the Note, unless
the U.S. Holder elects to accrue market discount on the basis of semiannual
compounding.
A U.S. Holder may be required to defer the deduction of all or a portion of
the interest paid or accrued on any indebtedness incurred or maintained to
purchase or carry a Note with market discount until the maturity of the Note
or its earlier disposition in a taxable transaction, because a current
deduction is only allowed to the extent the interest expense exceeds an
allocable portion of market discount. A U.S. Holder may elect to include
market discount in income currently as it accrues (on either a ratable or
semiannual compounding basis), in which case the rules described above
regarding the treatment as ordinary income of gain upon the disposition of the
Note and upon the receipt of certain cash payments and regarding the deferral
of interest deductions will not apply. Generally, such currently included
market discount is treated as ordinary interest for United States Federal
income tax purposes. This election to include market discount in income
currently, once made, applies to all market discount obligations acquired in
or after the first taxable year to which the election applies, and may not be
revoked without the consent of the IRS.
Amortizable Bond Premium
If a U.S. Holder purchases a Note for an amount that is greater than its
stated redemption price at maturity, such U.S. Holder will be considered to
have purchased the Note with "amortizable bond premium" equal in amount to
such excess. A U.S. Holder may elect to amortize such premium using a constant
yield method over the remaining term of the Note and may reduce interest on
the Note otherwise required to be included in income during any taxable year
by the amortizable premium allocable to the taxable year. However, if the Note
may be optionally redeemed after the U.S. Holder acquires it at a price in
excess of its stated redemption price at maturity, special rules would apply
which could result in a deferral of the amortization of some bond premium
until later in the term of the Note. Amortized bond premium will reduce the
U.S. Holder's basis in the Note. An election to amortize bond premium will
apply to certain other debt instruments that the U.S. Holder acquired at a
premium, and the election may have different tax consequences depending on
when the debt instruments were issued or acquired.
Disposition of a Note
Except as discussed above and except to the extent that gain or loss is
attributable to accrued but unpaid interest or accrued market discount, upon
the sale, exchange or retirement of a Note, a
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<PAGE>
U.S. Holder generally will recognize taxable gain or loss equal to the
difference between the amount realized on the sale, exchange or retirement of
the Note and such U.S. Holder's adjusted tax basis in the Note. A U.S.
Holder's adjusted tax basis in a Note generally will equal such U.S. Holder's
initial investment in the Note increased by any OID included in income (and
accrued market discount or acquisition discount, if any, if the U.S. Holder
has included such market discount or acquisition discount in income) and
decreased by the amount of any payments previously received, other than
qualified stated interest payments, and by any amortized bond premium with
respect to such Note. Such gain or loss generally will be long-term if the
Note were held for more than one year.
NON-U.S. HOLDERS
A non-U.S. Holder will not be subject to United States Federal income tax on
payment of principal, premium (if any) or interest (including OID, if any) on
a Note, unless such non-U.S. Holder directly or indirectly owns at least 10%
of the voting power in the Company's stock, or is a controlled foreign
corporation related to the Company or a bank receiving interest described in
section 881(c)(3)(A) of the Code, if the non-U.S. Holder certifies, on IRS
Form W-8 or other substantially similar form, that the Holder is not a U.S.
person. To qualify for the exemption from taxation, the last United States
payor in the chain of payment prior to payment to a non-U.S. Holder (the
"Withholding Agent") must have received in the year in which a payment of
interest or principal occurs, or in either of the two preceding calendar
years, a statement that (i) is signed by the beneficial owner of the Note
under penalties of perjury, (ii) certifies that such owner is not a U.S.
Holder and (iii) provides the name and address of the beneficial owner. The
statement may be made on an Internal Revenue Service ("IRS") Form W-8 or a
substantially similar form, and the beneficial owner must inform the
Withholding Agent of any change in the information on the statement within 30
days of such change. If a Note is held through a securities clearing
organization or certain other financial institutions, the organization or
institution may provide a signed statement to the Withholding Agent. However,
in such case, the signed statement must be accompanied by a copy of the IRS
Form W-8 or the substitute form provided by the beneficial owner to the
organization or institution. The Treasury Department is considering
implementation of further certification requirements aimed at determining
whether the issuer of a debt obligation is related to holders thereof.
Generally, a non-U.S. Holder will not be subject to United States Federal
income taxes on any amount which constitutes capital gain upon retirement or
disposition of a Note, provided the gain is not effectively connected with the
conduct of a trade or business in the United States by the non-U.S. Holder.
Additionally, a non-U.S. Holder who is a non-resident alien individual who is
present in the U.S. for 183 days or more during the taxable year when the sale
or exchange occurs may be subject to federal income taxation on the gain
realized on the disposition if certain other conditions are met. In that case,
the capital gain is generally subject to a 30% tax. Certain other exceptions
may be applicable, and a non-U.S. Holder should consult its tax advisor in
this regard.
A Note beneficially owned by an individual non-U.S. Holder (as defined for
United States Federal estate tax purposes) will not be includible in the gross
estate of a non-U.S. Holder for federal estate tax purposes unless the non-
U.S. Holder directly or indirectly owns at least 10% of the voting power of
the Company's stock or, at the time of such individual's death, payment in
respect of the Notes would have been effectively connected with the conduct by
such individual of a trade or business in the United States.
BACKUP WITHHOLDING
Backup withholding of the United States Federal income tax at a rate of 31%
may apply to payments made in respect of Notes to registered owners who are
not "exempt recipients" or who fail to comply with certain procedures for
providing certain identifying information (such as the registered owner's
taxpayer identification number) in the required manner.
S-25
<PAGE>
Upon the sale of a Note to (or through) certain brokers, the broker must
withhold 31% of the entire purchase price, unless either (i) the broker
determines that the seller is an exempt recipient or (ii) the seller provides,
in the required manner, certain identifying information and, in the case of a
non-U.S. Holder, certifies that such seller is a non-U.S. Holder (and certain
other conditions are met). Certification of the registered owner's non-U.S.
status would be made normally on an IRS Form W-8 under penalties of perjury,
although in certain cases it may be possible to submit other documentary
evidence.
Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuous basis by the Company through
Lehman Brothers, Lehman Brothers Inc. (including its affiliate Lehman
Government Securities Inc.), Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated, Salomon
Brothers Inc and Goldman, Sachs & Co., as Agents, each of whom has agreed to
use its best efforts to solicit purchases of the Notes. The Company will pay
each Agent a commission, in the form of a discount ranging from .125% to .750%
of the principal amount of any Note, depending upon maturity up to and
including 30 years, and as agreed upon at the time of sale for Notes with
Stated Maturities greater than 30 years, sold through such Agent. The Company
also may sell the Notes to one or more of the Agents as principal at a
discount for resale to investors or other purchasers at varying prices related
to prevailing market prices at the time of resale, to be determined by such
Agent or, if so agreed, at a fixed public offering price. In addition, the
Company has reserved the right to sell the Notes directly to investors on its
own behalf in those jurisdictions where it is authorized to do so or to or
through others for resale to the public. In the case of sales made directly by
the Company, no commission will be payable. The Company has agreed to
reimburse the Agents for certain expenses.
In addition, the Agents may offer the Notes they have purchased as principal
to other dealers. The Agents may sell Notes to any dealer at a discount and,
unless otherwise specified in the applicable Pricing Supplement, such discount
allowed to any dealer will not be in excess of the discount to be received by
such Agent from the Company. Unless otherwise indicated in the applicable
Pricing Supplement, any Note sold to an Agent as principal will be purchased
by such Agent at a price equal to 100% of the principal amount thereof less a
percentage equal to the commission applicable to any agency sale of a Note of
identical maturity, and may be resold by the Agent to investors and other
purchasers as described above. After the initial public offering of Notes to
be resold to investors and other purchasers on a fixed public offering price
basis, the public offering price (in the case of Notes to be sold at a fixed
public offering price), the concession and the discount may be changed.
The Company will have the sole right to accept offers to purchase Notes and
may reject any proposed purchase of Notes in whole or in part. Each Agent will
have the right, in its discretion reasonably exercised, to reject any offer to
purchase Notes received by it in whole or in part.
The Company has agreed to indemnify each Agent against certain liabilities,
including liabilities under the Securities Act of 1933, as amended (the
"Act"), or to contribute to payments such Agent may be required to make in
respect thereof. Each Agent may be deemed to be an underwriter within the
meaning of the Act.
Each Agent in the ordinary course of its business engages from time to time
in securities transactions with and performs investment banking services for
the Company.
S-26
<PAGE>
Payment of the purchase price of the Notes will be required to be made in
immediately available funds on the date of settlement.
No Note will have an established trading market when issued. The Notes will
not be listed on any securities exchange. Each of the Agents may from time to
time purchase and sell Notes in the secondary market, but it is not obligated
to do so, and there can be no assurance that there will be a secondary market
for the Notes or liquidity in the secondary market if one develops. From time
to time, each of the Agents may make a market in the Notes.
S-27
<PAGE>
PROSPECTUS
[LOGO of ILFC]
INTERNATIONAL LEASE FINANCE CORPORATION
DEBT SECURITIES
International Lease Finance Corporation (the "Company") intends to issue
from time to time debt securities (the "Debt Securities") with an aggregate
offering price of up to $2,449,080,000, which will be offered to the public on
terms determined by market conditions at the time of sale. The Debt Securities
shall be issued in U.S. dollar denominations or, at the option of the Company,
if so specified in the applicable Prospectus Supplement (the "Prospectus
Supplement"), in any other currency, including composite currencies such as
the European Currency Unit. The Debt Securities may be issued in one or more
series with the same or various maturities at par or with an original issue
discount. The specific designation, aggregate principal amount, purchase
price, maturity, interest rate (which may be fixed or variable), time of
payment of interest, any terms for redemption, any other specific terms, and
any listing on a securities exchange of Debt Securities in respect of which
this Prospectus is being delivered (the "Offered Debt Securities") are set
forth in the accompanying Prospectus Supplement together with the terms of
offering of the Offered Debt Securities. All or a portion of the Debt
Securities of a series may be issued in temporary or permanent global form.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
----------------
The Debt Securities will be sold directly through agents designated from
time to time or through underwriters or dealers. If any agents of the Company
or any underwriters are involved in the sale of the Offered Debt Securities,
the names of such agents or underwriters and any applicable commissions or
discounts are set forth in the accompanying Prospectus Supplement. The net
proceeds to the Company from such sale are also set forth in the accompanying
Prospectus Supplement.
----------------
The date of this Prospectus is May 16, 1994.
<PAGE>
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 can be inspected and copied at the Public Reference Room of the
Commission, Room 1024, at 450 Fifth Street, N.W., Washington, D.C., 20549 and
at the Commission's regional offices at 7 World Trade Center, New York, New
York 10048 and Suite 1400, Northwestern Atrium Center, 500 West Madison
Street, Chicago, Illinois 60661. Copies of such materials can be obtained at
prescribed rates from the Public Reference Room of the Commission, Room 1024,
at 450 Fifth Street, N.W., Washington, D.C. 20549.
The Company has filed with the Commission a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"). This Prospectus and the accompanying Prospectus Supplement do not
contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is made to
the Registration Statement, which may be examined without charge at the public
reference facilities maintained by the Commission at the Public Reference Room
of the Commission, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies thereof may be obtained from the Commission upon payment of the
prescribed fees.
DOCUMENTS INCORPORATED BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 31,
1993, its Quarterly Report on Form 10-Q for the quarter ended March 31, 1994
and its Current Reports on Form 8-K, event dates January 4, January 11,
February 23 and March 24, 1994 filed by the Company with the Commission are
incorporated herein by reference.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date hereof and prior to the termination
of the offering of the Offered Debt Securities shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of
filing of such documents. Any statement contained herein, in a Prospectus
Supplement or 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, in a
Prospectus Supplement or in any subsequently filed document which is
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 FURNISH WITHOUT CHARGE TO EACH PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL REQUEST, A COPY OF ANY OR ALL OF
THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE (NOT INCLUDING EXHIBITS TO SUCH
DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE IN
SUCH DOCUMENTS). REQUESTS SHOULD BE DIRECTED TO: ALAN H. LUND, SENIOR VICE
PRESIDENT, CHIEF FINANCIAL OFFICER AND TREASURER, INTERNATIONAL LEASE FINANCE
CORPORATION, 1999 AVENUE OF THE STARS, 39TH FLOOR, LOS ANGELES, CALIFORNIA
90067 (TELEPHONE: (310) 788-1999).
2
<PAGE>
THE COMPANY
The Company is primarily engaged in the acquisition of new and used
commercial jet aircraft and the leasing and sale of such aircraft to domestic
and foreign airlines. The Company, in terms of the number and value of
transactions concluded, is a major owner-lessor of commercial jet aircraft.
Since its formation in 1973, the Company has engaged in over 650 transactions
involving the lease or sale of commercial aircraft to more than 120 airlines.
In addition, the Company is engaged in the remarketing of commercial jets
principally for airlines and financial institutions. At December 31, 1993, the
Company had committed to purchase 227 aircraft deliverable through 1999 at an
estimated aggregate purchase price of $12.9 billion. It also had options to
purchase an additional 58 aircraft deliverable through 1999 at an estimated
aggregate purchase price of $3.4 billion.
The Company is a wholly owned subsidiary of American International Group,
Inc. ("AIG").
The Company is incorporated in the State of California and its principal
executive offices are located at 1999 Avenue of the Stars, 39th Floor, Los
Angeles, California 90067, with a telephone and telecopier number of (310)
788-1999 and (310) 788-1990, respectively.
AMERICAN INTERNATIONAL GROUP, INC.
AIG is a holding company which through its subsidiaries is primarily engaged
in a broad range of insurance and insurance-related activities in the United
States and abroad. AIG's primary activities include both general and life
insurance operations. The principal insurance company subsidiaries are
American Home Assurance Company, National Union Fire Insurance Company of
Pittsburgh, Pa., New Hampshire Insurance Company, Lexington Insurance Company,
American International Underwriters Overseas, Ltd., American Life Insurance
Company, American International Assurance Company, Limited, The Philippine
American Life Insurance Company, American International Reinsurance Company,
Ltd. and United Guaranty Residential Insurance Company. Other significant
activities are financial services and insurance agency and service fee
operations. The Common Stock of AIG is listed on, among others, the New York
Stock Exchange.
THE DEBT SECURITIES WILL NOT BE OBLIGATIONS OF, OR GUARANTEED BY, AIG.
USE OF PROCEEDS
Unless otherwise stated in the accompanying Prospectus Supplement, proceeds
to be received from the sale of the Debt Securities offered hereby will be
used, together with internally generated funds, for general corporate
purposes, including the acquisition of aircraft. Pending ultimate application,
the proceeds from the sale of the Debt Securities will be invested in
marketable securities.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be unsecured obligations issued under an indenture
dated as of November 1, 1991 (the "Indenture"), between the Company and
Continental Bank, National Association, as trustee (the "Trustee"). The
following summaries of certain provisions of the Debt Securities and the
Indenture do not purport to be complete and are subject to, and are qualified
in their entirety by reference to, all of the provisions of the Indenture (a
copy of which is filed as an exhibit to the Registration Statement), including
the definitions therein of certain terms and the provisions of certain terms
which are made part of the Indenture by reference to the Trust Indenture Act
of 1939, as amended. Capitalized terms used in the following summaries and not
otherwise defined herein shall have the meanings ascribed to them in the
Indenture.
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<PAGE>
The particular terms of the Offered Debt Securities and the extent, if any,
to which such general provisions may apply to the Offered Debt Securities will
be described in the Prospectus Supplement relating to such Offered Debt
Securities.
GENERAL
The Debt Securities will rank equally with all other unsecured and
unsubordinated debt of the Company. The Indenture does not limit the amount of
debt which may be issued by the Company under the Indenture or otherwise. The
Debt Securities may be issued in one or more series with the same or various
maturities, at par or with an original issue discount. Federal income tax
consequences and other special considerations applicable to any Debt
Securities issued with an original issue discount will be described in the
Prospectus Supplement relating thereto.
Reference is made to the accompanying Prospectus Supplement for the
following terms of the Offered Debt Securities: (i) the title of the Offered
Debt Securities; (ii) any limit upon the aggregate principal amount of the
Offered Debt Securities; (iii) the Person to whom any interest on an Offered
Debt Security shall be payable if other than the Person in whose name that
Offered Debt Security (or one or more Predecessor Securities) is registered at
the close of business on the relevant Regular Record Date; (iv) the date or
dates on which the principal of the Offered Debt Securities is payable; (v)
the rate or rates (which may be fixed or variable), or the formula pursuant to
which such rate or rates will be determined, at which the Offered Debt
Securities will bear interest, if any, and the date or dates from which such
interest will accrue, the Interest Payment Dates on which such interest, if
any, will be payable and the Regular Record Dates for such Interest Payment
Dates; (vi) the place or places where the principal of (and premium, if any)
and interest, if any, on the Offered Debt Securities will be payable; (vii)
any mandatory or optional sinking fund or analogous provisions, the periods
during which and the price or prices at which the Offered Debt Securities may,
pursuant to such funds, provisions or otherwise, be redeemed at the option of
the Company or of any Holder thereof and the other terms and provisions
thereof; (viii) the currency or currencies in which the Offered Debt
Securities are payable; (ix) if applicable, the manner of determining the
amount of principal of or premium or interest on the Offered Debt Securities
if such amount is determined with reference to an index; (x) the principal
amount of the Offered Debt Securities which will be payable upon declaration
of acceleration of the Maturity thereof; (xi) whether the Offered Debt
Securities which will be issued in whole or in part in the form of one or more
Global Securities; (xii) any additional Events of Default provided with
respect to the Offered Debt Securities; and (xiii) any other terms of the
Offered Debt Securities.
DENOMINATION AND EXCHANGE
Unless otherwise indicated in the accompanying Prospectus Supplement for a
particular issue, the Debt Securities will be issued in fully registered form
in denominations of $1,000 and integral multiples thereof and may be issued in
whole or in part in the form of one or more Global Securities. See "Global
Securities" below. Unless otherwise indicated in the accompanying Prospectus
Supplement for a particular issue, principal, premium, if any, and interest,
if any, is to be payable to registered Holders of the Debt Securities at the
office of the Trustee maintained for that purpose in the Borough of Manhattan,
City and State of New York, or at any paying agency maintained at the time by
the Company for such purpose. At the option of the Company, payment of
interest to registered Holders of the Debt Securities may be made by check
mailed to the address of the person entitled thereto as it appears on the
register for the Debt Securities. Unless otherwise indicated in the
accompanying Prospectus Supplement for a particular issue, certificated Debt
Securities may be presented for registration of transfer or exchange at such
office of the Trustee in New York, New York, or at such other location or
locations as may be established pursuant to the Indenture without any service
charge but subject to the limitations provided in the Indenture.
4
<PAGE>
CERTAIN COVENANTS OF THE COMPANY
Restrictions on Liens. The Company will not, and will not permit any
Restricted Subsidiary to, issue, assume or guarantee any indebtedness for
borrowed money secured by any mortgage, pledge, lien or other encumbrance of
any nature (herein collectively referred to as a "mortgage" or "mortgages")
upon any property of the Company or any Restricted Subsidiary, or on any
shares of stock of any Restricted Subsidiary, without in any such case
effectively providing that the Debt Securities (together with, if the Company
shall so determine, any other indebtedness of the Company or such Restricted
Subsidiary ranking equally with the Debt Securities) shall be secured equally
and ratably with such indebtedness for borrowed money, except that the
foregoing restrictions shall not apply to: (a) mortgages existing on November
1, 1991; (b) certain mortgages securing all or a part of the purchase price of
property (other than property acquired for lease to a Person other than the
Company or a Restricted Subsidiary); (c) mortgages on the property of a
Restricted Subsidiary existing at the time it became a Restricted Subsidiary;
(d) mortgages securing indebtedness for borrowed money of a Restricted
Subsidiary owing to the Company or another Restricted Subsidiary; (e)
mortgages on property of a corporation existing at the time such corporation
is merged into or consolidated with the Company or a Restricted Subsidiary or
at the time the Company or a Restricted Subsidiary purchases, leases or
otherwise acquires the properties of such other corporation as an entirety or
substantially as an entirety; (f) the replacement of any of the foregoing,
provided that the principal amount of the indebtedness for borrowed money
secured by the mortgage shall not be increased and the principal repayment
schedule and maturity of such indebtedness shall not be extended and the
mortgage shall be limited to the property or part thereof which secured the
mortgage so replaced or property substituted therefor as a result of the
destruction, condemnation or damage of such property; (g) liens in connection
with certain legal proceedings; (h) liens for certain taxes or assessments,
landlord's liens and charges incidental to the conduct of the business, or the
ownership of the property and assets, of the Company or a Restricted
Subsidiary, which are not incurred in connection with the borrowing of money
and which do not, in the opinion of the Company, materially impair the use of
such property in the operation of the business of the Company or a Restricted
Subsidiary or the value of such property for the purpose of such business; and
(i) mortgages which would otherwise be subject to the foregoing restrictions
which, when the indebtedness for borrowed money relating to those mortgages is
added to all other then outstanding indebtedness for borrowed money of the
Company and the Restricted Subsidiaries secured by mortgages and not listed in
clauses (a) through (h) above, does not exceed 12.5% of the Consolidated Net
Tangible Assets of the Company.
Restrictions as to Dividends and Certain Other Payments. No dividend shall
be paid or declared nor shall any distributions be made on any capital stock
of the Company (except in shares of, or warrants or rights to subscribe for or
purchase shares of, capital stock of the Company), nor shall any payment be
made by the Company or any Restricted Subsidiary to acquire or retire shares
of such stock, at a time when an Event of Default has occurred and is
continuing under the Indenture constituting a (i) default in the payment of
interest on the Debt Securities of that series when due, continued for 30
days; (ii) default in the payment of the principal and premium, if any, on the
Debt Securities of that series when due either at maturity, upon redemption,
by declaration or otherwise; or (iii) default in the deposit of any sinking
fund payment with respect to Debt Securities of that series when and as due.
Restrictions on Investments in Non-Restricted Subsidiaries. The Company will
not, nor will it permit any Restricted Subsidiary to, make any investment in,
or transfer any assets to, a Non-Restricted Subsidiary if immediately
thereafter the Company would be in breach of or in default in the performance
of any covenant or warranty of the Company contained in the Indenture.
Limited Covenants in the Event of a Highly Leveraged Transaction. Other than
the covenants of the Company included in the Indenture as described above and
as described under "Description of Debt Securities--Merger and Sale of
Assets", there are no covenants or provisions in the
5
<PAGE>
Indenture that may afford Holders protection in the event of a highly
leveraged transaction, leveraged buyout, reorganization, restructuring, merger
or similar transaction involving the Company.
CERTAIN DEFINITIONS
Set forth below are certain significant terms which are defined in the
Indenture:
"Consolidated Net Tangible Assets" means the total amount of assets (less
depreciation and valuation reserves and other reserves and items deductible
from gross book value of specific asset accounts under generally accepted
accounting principles) which under generally accepted accounting principles
would be included on a balance sheet of the Company and its Restricted
Subsidiaries, after deducting therefrom (a) all liability items except
indebtedness (whether incurred, assumed or guaranteed) for borrowed money
maturing by its terms more than one year from the date of creation thereof or
which is extendible or renewable at the sole option of the obligor in such
manner that it may become payable more than one year from the date of creation
thereof, shareholder's equity and reserves for deferred income taxes, (b) all
goodwill, trade names, trademarks, patents, unamortized debt discount and
expense and other like intangibles, which in each case would be so included on
such balance sheet, and (c) amounts invested in, or equity in the net assets
of, Non-Restricted Subsidiaries.
"Restricted Subsidiaries" means all Subsidiaries other than Non-Restricted
Subsidiaries. "Non-Restricted Subsidiaries" means (a) any Subsidiary so
designated by the Board of Directors of the Company in accordance with the
Indenture, and (b) any other Subsidiary of which the majority of the voting
stock is owned directly or indirectly by one or more Non-Restricted
Subsidiaries, if such other Subsidiary is a corporation, or in which the Non-
Restricted Subsidiary is a general partner, if such other Subsidiary is a
limited partnership. Pursuant to specified conditions in the Indenture, the
Company's Board of Directors may change the designations of Restricted
Subsidiaries and Non-Restricted Subsidiaries.
"Subsidiary" means any corporation, partnership, or trust more than 50% of
the Voting Stock of which is owned, directly or indirectly, by the Company or
by one or more other Subsidiaries, or by the Company and one or more other
Subsidiaries.
AMENDMENT, SUPPLEMENT AND WAIVER
The Indenture may be amended or supplemented with the consent of the Holders
of not less than a majority in principal amount of the Debt Securities at the
time outstanding of each series affected by such amendment or supplement, and
any past default and its consequences may be waived with the consent of the
Holders of a majority in principal amount of the Debt Securities at the time
outstanding of each series affected by such default; provided that, without
the consent of the Holders of all of the Debt Securities affected thereby, no
such amendment, supplement or waiver may change the Stated Maturity of the
principal of, or any installment of principal of or interest on, any Debt
Security, or reduce the principal amount thereof or the rate of interest
thereon or any premium payable upon the redemption thereof, or change the
stated maturity of any Debt Security (or reduce the amount payable upon a
declaration of acceleration of the Debt Security), or change the time for
payment of any interest on any Debt Securities, or make any Debt Security
payable in money other than that stated in the Debt Security, or reduce the
aforesaid percentage of principal amount of Debt Securities whose Holders must
consent to an amendment, supplement or waiver. Without the consent of any
Holder of Debt Securities, the Company may amend or supplement the Indenture
to, among other things, evidence succession of another corporation to the
Company, to add covenants or additional Events of Default for the benefit of
the Holders of all or any series of Debt Securities, to cure any ambiguity,
correct any provision of the Indenture inconsistent with other provisions
thereof or make any other provision which does not adversely affect the
interests of the Holders of Debt Securities in any material respect, or to
change or eliminate any provision of the Indenture if such change or
elimination is effective only when there are no Debt Securities outstanding
which were issued prior to such change or elimination and entitled to the
benefit of such provision.
6
<PAGE>
EVENTS OF DEFAULT
The Indenture defines an Event of Default as being any one of the following
events: (a) default in the payment of any interest on the Debt Securities of
that series when due, continued for 30 days; (b) default in the payment of the
principal and premium, if any, on the Debt Securities of that series when due
either at maturity, upon redemption, by declaration or otherwise; (c) default
in the deposit of any sinking fund payment of the Debt Securities of that
series when and as due; (d) default in the performance of any other of the
Company's covenants in the Indenture (other than a covenant included in the
Indenture solely for the benefit of a series of Debt Securities other than
that series) continued for 60 days after written notice; (e) default under any
mortgage, indenture (including the Indenture) or instrument under which is
issued or which secures or evidences indebtedness for borrowed money of the
Company or any Restricted Subsidiary which default constitutes a failure to
pay principal of such indebtedness in an amount exceeding $20,000,000 when due
and payable (other than as a result of acceleration) or results in
indebtedness for borrowed money in the aggregate of $20,000,000 or more
becoming or being declared due and payable before it would otherwise become
due and payable, and such acceleration is not rescinded or annulled, or such
indebtedness for borrowed money is not discharged, within 30 days after
written notice to the Company by the Trustee, or to the Company and the
Trustee by the Holders of at least 25% in principal amount of the Debt
Securities of that series at the time outstanding; (f) certain events in
bankruptcy, insolvency or reorganization; and (g) any other events of default
provided with respect to the Offered Debt Securities. If an Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the Debt Securities of each series affected thereby may
declare the Debt Securities of that series to be due and payable immediately,
but under certain conditions such acceleration may be rescinded by the Holders
of a majority in principal amount of the Debt Securities of each series
affected thereby.
No Holder of any Debt Security of a series will have any right to institute
any proceeding with respect to the Indenture or for any remedy thereunder,
unless such Holder previously shall have given to the Trustee written notice
of an Event of Default and unless also the holders of not less than 25% in
principal amount of the outstanding Debt Securities of that series shall have
made written request upon the Trustee, and have offered indemnity satisfactory
to the Trustee to institute such proceeding as Trustee, and the Trustee for 60
days shall have failed to institute such proceeding. However, the right of any
Holder of any Debt Security to institute suit for enforcement of any payment
of principal of, and premium, if any, and interest on, such Debt Security on
or after the due date expressed in such Debt Security, may not be impaired or
affected without such Holder's consent.
The Holders of a majority in principal amount of Debt Securities of any
series at the time outstanding may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee with respect to Debt
Securities of that series. However, the Trustee may refuse to follow any such
direction that conflicts with any rule of law or the Indenture. Before
proceeding to exercise any right or power under the Indenture at the direction
of such Holders, the Trustee shall be entitled to receive from such Holders
reasonable security or indemnity against the costs, expenses and liabilities
which might be incurred by it in compliance with any such direction. The
Trustee may withhold from Holders of Debt Securities notice of any continuing
default (except a default in payment of principal, premium, if any, or
interest) if it determines that withholding notice is in their interests.
The Company will be required to furnish to the Trustee within 120 days after
the end of each fiscal year, a statement as to whether any default under the
Indenture occurred during the fiscal year.
DEFEASANCE AND COVENANT DEFEASANCE
Unless otherwise indicated in the accompanying Prospectus Supplement, the
Company may discharge (a "defeasance") its obligations with respect to the
outstanding Debt Securities of such
7
<PAGE>
series (other than certain obligations to the Trustee and the Company's
obligations with respect to the registration, transfer and exchange of
certificated Debt Securities, mutilated, destroyed, lost and stolen certificated
Debt Securities, the maintenance of an office or agency in the Place of Payment
and the treatment of funds held by Paying Agents), or may be released from the
restrictions described under "Certain Covenants of the Company" above and any
other provisions identified in the accompanying Prospectus Supplement ("covenant
defeasance") if, among other things, (i) the Company has irrevocably deposited
or caused to be deposited with the Trustee (or other satisfactory trustee), as
trust funds for the payment of such Debt Securities, money, U.S. Government
Obligations (as defined below) which through the scheduled payment of principal
and interest will provide money, or a combination thereof, in an amount
sufficient, without reinvestment, to pay and discharge at maturity or redemption
the entire amount of principal of (and premium, if any) and interest on such
Debt Securities; (ii) no Event of Default or event which with notice or lapse of
time or both would become an Event of Default with respect to such Debt
Securities shall have occurred or be continuing on the date of such deposit and,
for certain purposes, at any time during the period ending on the 123rd day
after the date of deposit, or any longer preference period; (iii) such
defeasance or covenant defeasance shall not cause the Trustee to have a
conflicting interest as referred to in the Indenture; and (iv) such defeasance
or covenant defeasance will not result in a breach or violation of the Indenture
or other material agreements or instruments of the Company or cause the Debt
Securities, if listed on a national securities exchange, to be delisted.
In addition, in the case of defeasance, the Company is required to deliver
to the Trustee an opinion of counsel stating that (i) the Company has received
from, or there has been published by, the Internal Revenue Service a ruling,
or (ii) since the date of the Indenture there has been a change in the
applicable Federal income tax law, in either case to the effect that the
Holders of the outstanding Debt Securities of the series to be defeased will
not recognize income, gain or loss for Federal income tax purposes as a result
of such defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such defeasance had not occurred. In the case of a covenant defeasance, the
Company is required to deliver to the Trustee an opinion of counsel to the
effect that the Holders of the outstanding Debt Securities of the series for
which covenant defeasance is proposed will not recognize income, gain or loss
for Federal income tax purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if the covenant defeasance
had not occurred.
"U.S. Government Obligations" is defined in the Indenture as securities that
are (i) direct obligations of the United States of America for the payment of
which its full faith and credit is pledged or (ii) obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of the
United States of America the payment of which is unconditionally guaranteed as
a full faith and credit obligation by the United States of America, which, in
either case, are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a bank (as
defined in Section 3(a)(2) of the Securities Act) as custodian with respect to
any such U.S. Government Obligation or a specific payment of principal of or
interest on any such U.S. Government Obligation held by such custodian for the
account of the holder of such depository receipt.
MERGER AND SALE OF ASSETS
The Company may consolidate with or merge into any other Person or convey,
transfer or lease its properties and assets substantially as an entirety to
any Person, and another Person may consolidate with and merge into the Company
or convey, transfer or lease its properties and assets substantially as an
entirety to the Company only if (i) the Person formed by such consolidation or
surviving such merger or to which such assets or properties are conveyed,
transferred or leased is a corporation, partnership or trust organized and
validly existing under the laws of the United States,
8
<PAGE>
any State or the District of Columbia and such Person expressly assumes the
Company's obligations under the Indenture; (ii) immediately after giving
effect to such transaction, no Event of Default, and no event which, after
notice or lapse of time or both, would become an Event of Default, has
happened and is continuing; and (iii) if property or assets of the Company
have become subject to a mortgage, pledge, lien, security interest or other
encumbrance not permitted by the Indenture, the Company and such Person have
taken appropriate steps to secure any of the Debt Securities equally and
ratably with the securities secured thereby.
Upon such consolidation, merger or conveyance, transfer or lease, the
successor Person shall be substituted for the Company under the Indenture and,
except in the case of such a lease, the Company shall be relieved of all
obligations under the Indenture.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in the form of one or more
fully registered Global Securities that will be deposited with a depositary
(the "Depositary"), or with a nominee for a Depositary, identified in the
Prospectus Supplement relating to such series. In such case, one or more
Global Securities will be issued in a denomination or aggregate denominations
equal to the portion of the aggregate principal amount of outstanding Debt
Securities of the series to be represented by such Global Security or
Securities. Unless and until it is exchanged in whole or in part for Debt
Securities in definitive registered form, a Global Security may not be
transferred except as a whole by the Depositary for such Global Security to a
nominee of such Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary or by such Depositary or any
such nominee to a successor of such Depositary or a nominee of such successor.
The specific terms of the depositary arrangement with respect to any portion
of a series of Debt Securities to be represented by a Global Security will be
described in the Prospectus Supplement relating to such series. The Company
anticipates that the following provisions will apply to all depositary
arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security will credit, on its book-entry registration and transfer system, the
respective principal amounts of the Debt Securities represented by such Global
Security to the accounts of Persons that have accounts with such Depositary
("participants"). The accounts to be credited shall be designated by any
underwriters or agents participating in the distribution of such Debt
Securities. Ownership of beneficial interests in a Global Security will be
limited to participants or Persons that may hold interests through
participants. Ownership of beneficial interests in such Global Security will
be shown on, and the transfer of that ownership will be effected only through,
records maintained by the Depositary for such Global Security (with respect to
interests of participants) or by participants or Persons that hold through
participants (with respect to interests of Persons other than participants).
So long as the Depositary for a Global Security, or its nominees, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or Holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture. Except as set forth below, owners of beneficial interests in a
Global Security will not be entitled to have the Debt Securities represented
by such Global Security registered in their names, will not receive or be
entitled to receive physical delivery of such Debt Securities in definitive
form and will not be considered the owners or Holders thereof under the
Indenture.
Principal, premium, if any, and interest payments on Debt Securities
represented by a Global Security registered in the name of a Depositary or its
nominee will be made to such Depositary or its nominee, as the case may be, as
the registered owner of such Global Security. None of the
9
<PAGE>
Company, the Trustee or any paying agent for such Debt Securities will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in such Global
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
The Company expects that the Depositary for any Debt Securities represented
by a Global Security, upon receipt of any payment of principal, premium or
interest, will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the
principal amount of such Global Security as shown on the records of such
Depositary. The Company also expects that payments by participants to owners
of beneficial interest in such Global Security held through such participants
will be governed by standing instructions and customary practices, as is now
the case with the securities held for the accounts of customers registered in
"street names" and will be the responsibility of such participants.
If the Depositary for any Debt Securities represented by a Global Security
is at any time unwilling or unable to continue as Depositary and a successor
Depositary is not appointed by the Company within 90 days, the Company will
issue such Debt Securities in definitive form in exchange for such Global
Security. In addition, the Company may at any time and in its sole discretion
determine not to have any of the Debt Securities of a series represented by
one or more Global Securities and, in such event, will issue Debt Securities
of such series in definitive form in exchange for all of the Global Security
or Securities representing such Debt Securities.
The laws of some states require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in Debt Securities represented by
Global Securities.
THE TRUSTEE
The Trustee has been and from time to time is an unsecured lender to the
Company. The Company may maintain deposit accounts and conduct other banking
transactions with the Trustee in the ordinary course of business.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities in any of three ways: (i) through
underwriters or dealers; (ii) directly to purchasers or to a single purchaser;
or (iii) through agents. The accompanying Prospectus Supplement with respect
to the Offered Debt Securities sets forth the terms of the offering of the
Offered Debt Securities, including the name or names of any underwriters or
agents, the purchase price of the Offered Debt Securities and the proceeds to
the Company from such sale, any underwriting discounts, agents' commissions
and other items constituting underwriters' compensation, any initial public
offering price and any discounts or concessions allowed or reallowed or paid
to dealers and any securities exchanges on which the Offered Debt Securities
may be listed.
If underwriters are used in the sale, the Debt Securities will be acquired
by the underwriters for their own account and may be resold from time to time
in one or more transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the time of sale. The
Debt Securities may be offered to the public through underwriting syndicates
which may be represented by managing underwriters. Such firms may from time to
time purchase and sell Debt Securities in the secondary market, but they are
not obligated to do so. No assurance can be given that there will be a
secondary market for the Debt Securities. Unless otherwise set forth in the
accompanying Prospectus Supplement, the obligations of the underwriters to
purchase the Offered Debt Securities will be subject to certain conditions
precedent and the underwriters will be
10
<PAGE>
obligated to purchase all the Offered Debt Securities if any are purchased.
Any initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
Offered Debt Securities may be sold directly by the Company or through
agents designated by the Company from time to time. Any agent involved in the
offer or sale of the Offered Debt Securities in respect of which this
Prospectus is delivered will be named, and any commissions payable by the
Company to such agent will be set forth, in the accompanying Prospectus
Supplement. Unless otherwise indicated in the accompanying Prospectus
Supplement, any such agent will be acting on a best efforts basis for the
period of its appointment. Any such agent may be deemed to be an underwriter
as that term is defined in the Securities Act.
If so indicated in the accompanying Prospectus Supplement, the Company will
authorize agents, underwriters or dealers to solicit offers by certain
specified institutions to purchase Offered Debt Securities from the Company at
the public offering price set forth in the accompanying Prospectus Supplement
pursuant to delayed delivery contracts providing for payment and delivery on a
specified date in the future. Such contracts will be subject only to those
conditions set forth in the accompanying Prospectus Supplement and the
accompanying Prospectus Supplement will set forth the commission payable for
solicitation of such contracts.
Agents and underwriters may be entitled under agreements to be entered into
with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments which the agents or underwriters may be
required to make in respect thereof. Agents and underwriters may be customers
of, engage in transactions with, or perform services for the Company in the
ordinary course of business.
EXPERTS
The consolidated financial statements of International Lease Finance
Corporation and subsidiaries appearing in International Lease Finance
Corporation's Annual Report (Form 10-K) for the year ended December 31, 1993,
have been audited by Ernst & Young, independent auditors, as set forth in
their report thereon included therein and incorporated herein by reference.
Such consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
LEGAL MATTERS
The validity of the issuance of the Debt Securities offered hereby is being
passed upon for the Company by O'Melveny & Myers. Milbank, Tweed, Hadley &
McCloy, Los Angeles, California will pass upon certain legal matters for the
underwriters or agents.
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMA-
TION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY AGENT.
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE COMPANY SINCE SUCH DATE.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Description of Medium-Term Notes, Series G................................. S-2
Certain Investment Considerations.......................................... S-18
Certain United States Federal Income Tax
Considerations............................................................ S-19
Plan of Distribution....................................................... S-26
PROSPECTUS
<CAPTION>
PAGE
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<S> <C>
Available Information...................................................... 2
Documents Incorporated by Reference........................................ 2
The Company................................................................ 3
American International Group, Inc.......................................... 3
Use of Proceeds............................................................ 3
Description of Debt Securities............................................. 3
Plan of Distribution....................................................... 10
Experts.................................................................... 11
Legal Matters.............................................................. 11
</TABLE>
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$1,000,000,000
[LOGO OF INTERNATIONAL LEASE FINANCE CORPORATION]
MEDIUM-TERM NOTES, SERIES G
----------------
PROSPECTUS SUPPLEMENT
October 12, 1994
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LEHMAN BROTHERS
MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
SALOMON BROTHERS INC
GOLDMAN, SACHS & CO.
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