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REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PACCAR FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
WASHINGTON 91-6029712
(State of (I.R.S. employer identification
Incorporation) no.)
</TABLE>
777 106TH AVENUE N.E., BELLEVUE, WASHINGTON 98004, (206) 462-4100
(Address and telephone number of registrant's principal executive offices)
--------------------------
G. GLEN MORIE
PACCAR FINANCIAL CORP.
777 106TH AVENUE N.E.
BELLEVUE, WASHINGTON 98004
(206) 455-7400
(Name, address and telephone number of agent for service)
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COPIES TO:
<TABLE>
<S> <C>
LINDA SCHOEMAKER NORMAN D. SLONAKER
Perkins Coie Brown & Wood
1201 Third Avenue, 40th Floor One World Trade Center
Seattle, Washington 98101 New York, New York 10048
</TABLE>
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME
TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT AS DETERMINED IN
LIGHT OF MARKET CONDITIONS AND OTHER FACTORS.
--------------------------
If the only securities being registered on this Form are being offered
pursuant to a dividend or interest reinvestment plan, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. /X/
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED * PER UNIT ** PRICE ** REGISTRATION FEE
<S> <C> <C> <C> <C>
Senior Debt Securities............ $1,000,000,000 100% $1,000,000,000 $344,828
</TABLE>
* Or an equivalent amount in another currency or currencies or, if the
securities are to be offered at a discount, the approximate proceeds to the
registrant.
** Estimated solely for purposes of calculating the registration fee.
--------------------------
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MARCH 11, 1996)
[PACCAR LOGO]
$1,000,000,000
PACCAR FINANCIAL CORP.
MEDIUM-TERM NOTES, SERIES H
DUE FROM 9 MONTHS TO 10 YEARS FROM DATE OF ISSUE
----------------
PACCAR Financial Corp. (the "Company") may offer from time to time its
Medium-Term Notes, Series H (the "Notes"), in an aggregate principal amount of
up to $1,000,000,000, or the equivalent thereof in one or more foreign
currencies or composite currency units. The Notes will be offered at varying
maturities from nine months to ten years from date of issue and may be subject
to redemption at the option of the Company or repayment at the option of the
holder prior to maturity, as set forth therein and specified in a pricing
supplement to this Prospectus Supplement ("Pricing Supplement"). The interest
rate, if any, or manner of determining the interest rate on the Notes and other
variable terms of the Notes as described herein will be established by the
Company from time to time and will be set forth therein and specified in the
applicable Pricing Supplement.
Interest rates and the manner of determining interest rates 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 stated in the applicable Pricing Supplement, the Notes will
bear interest at a fixed rate ("Fixed Rate Notes"), or at a floating rate
("Floating Rate Notes") determined by reference to one or more of the CD Rate,
the CMT Rate, the Commercial Paper Rate, the Federal Funds Rate, LIBOR, the
Prime Rate, the Treasury Rate, or such other interest rate basis or interest
rate formula, as adjusted by the Spread and/or Spread Multiplier, if any,
applicable to such Notes. Notes may pay both interest and principal over the
life of the Note (an "Amortizing Note"). Unless otherwise stated in the
applicable Pricing Supplement, the interest payment dates for each Fixed Rate
Note will be March 15 and September 15 of each year and for each Floating Rate
Note will be established by the Company on the date of issue and will be set
forth therein and in the applicable Pricing Supplement. See "Description of
Notes -- Interest Rate." Notes may also be issued with original issue discount,
and such Notes may or may not pay interest.
Each Note will be represented by either a global Note registered in the name
of a nominee of The Depository Trust Company, as Depositary, or other depositary
(a "Book-Entry Note"), or a certificate issued in definitive form (a
"Certificated Note"), as set forth in the applicable Pricing Supplement.
Beneficial interests in Book-Entry Notes will be shown on, and transfers thereof
will be effected only through, records maintained by the Depositary and its
participants. Book-Entry Notes will not be issuable as Certificated Notes except
under the limited circumstances described in the accompanying Prospectus.
Notes are issuable in denominations of $1,000 or in any integral multiple of
$1,000, unless otherwise stated in the applicable Pricing Supplement. See
"Description of Notes."
SEE "RISK FACTORS" BEGINNING ON PAGE S-2 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE NOTES OFFERED HEREBY.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, ANY
PRICING SUPPLEMENT HERETO OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
AGENTS' DISCOUNTS AND
PRICE TO PUBLIC (1) COMMISSIONS (2)
<S> <C> <C>
Per Note............................................ 100% .125%-.600%
Total (4)........................................... $1,000,000,000 $1,250,000-$6,000,000
<CAPTION>
PROCEEDS TO COMPANY (2)(3)
<S> <C>
Per Note............................................ 99.875%-99.400%
Total (4)........................................... $988,750,000-$994,000,000
</TABLE>
(1) Notes will be issued at 100% of their principal amount except as may be
provided in the applicable Pricing Supplement.
(2) The Company will pay a commission to Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated,
Lehman Brothers, Lehman Brothers Inc. or Salomon Brothers Inc, each as agent
("Agent"), ranging from .125% to .600% of the principal amount, depending
upon maturity, of any Note sold through such firm as agent. The Company also
may sell the Notes to an Agent, as principal, for resale to investors at
varying prices relating to market prices at the time of resale or, if so
agreed, at a fixed offering price. Unless otherwise indicated in the
applicable Pricing Supplement, any Notes sold to any 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.
(3) Before deducting other expenses payable by the Company, estimated at
$624,778, including reimbursement of certain of the Agents' expenses.
(4) Or the equivalent thereof in one or more foreign currencies or composite
currency units.
--------------------------------
The Notes are being offered on a continuing basis by the Company through the
Agents, who have agreed to use their reasonable efforts to solicit offers to
purchase the Notes. The Company may also sell Notes to an Agent, as principal,
for resale to investors and other purchasers and has reserved the right to sell
Notes to or through additional agents, directly to investors on its own behalf,
or to underwriters for resale to the public. Unless otherwise stated in an
applicable Pricing Supplement, 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 an Agent, if it solicits the offer, may
reject any offer to purchase Notes in whole or in part. See "Plan of
Distribution."
------------------------
MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
LEHMAN BROTHERS
SALOMON BROTHERS INC
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The date of this Prospectus Supplement is March 11, 1996
<PAGE>
IN CONNECTION WITH THE OFFERING OF 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.
------------------------
RISK FACTORS
THIS PROSPECTUS SUPPLEMENT DOES NOT DESCRIBE ALL RISKS OF AN INVESTMENT IN
NOTES THAT RESULT FROM SUCH NOTES BEING DENOMINATED OR PAYABLE IN OR DETERMINED
BY REFERENCE TO A CURRENCY OR COMPOSITE CURRENCY UNIT OTHER THAN UNITED STATES
DOLLARS OR TO ONE OR MORE INTEREST RATES, CURRENCIES OR OTHER INDICES OR
FORMULAS. THE COMPANY AND THE AGENTS DISCLAIM ANY RESPONSIBILITY TO ADVISE
PROSPECTIVE INVESTORS OF SUCH RISKS AS THEY EXIST AT THE DATE OF THIS PROSPECTUS
SUPPLEMENT OR AS SUCH RISKS MAY CHANGE FROM TIME TO TIME. PROSPECTIVE PURCHASERS
SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED
BY AN INVESTMENT IN SUCH NOTES. SUCH NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR
INVESTORS WHO ARE UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS
OR TRANSACTIONS INVOLVING THE APPLICABLE INTEREST RATE, CURRENCY OR OTHER
INDICES OR FORMULAS.
STRUCTURE RISKS
INDEXED NOTES
An investment in Notes indexed, as to principal, premium, if any, and/or
interest, to one or more currencies or composite currencies (including exchange
rates and swap indices between currencies or composite currencies), stocks,
commodities, interest rates, or other indices or formulas either directly or
inversely ("Indexed Notes"), entails significant risks that are not associated
with similar investments in a conventional fixed rate or floating rate debt
security. These risks include, without limitation, the possibility that such
indices or formulas may be subject to significant changes, that the resulting
interest rate will be less than that payable on a conventional fixed rate or
floating rate debt security issued by the Company at the same time, that the
repayment of principal and/or premium, if any, can occur at times other than
those expected by the investor and that the investor could lose all or a
substantial portion of principal and/or premium, if any, payable at maturity.
Such risks depend on a number of interrelated factors, including economic,
financial, and political events, over which the Company has no control.
Additionally, if the formula used to determine the amount of principal, premium,
if any, and/or interest payable with respect to Indexed Notes contains a
multiplier or leverage factor, the effect of any change in the applicable index
or indices or formula or formulas will be magnified. In recent years, values of
certain indices and formulas have been highly volatile and such volatility may
be expected to continue in the future. Fluctuations in the value of any
particular index or formula that have occurred in the past are not necessarily
indicative, however, of fluctuations that may occur in the future.
REDEMPTION
Any optional redemption feature of Notes might affect the market value of
such Notes. Since the Company may be expected to redeem such Notes when
prevailing interest rates are relatively low, an investor might not be able to
reinvest the redemption proceeds at an effective interest rate as high as the
interest rate on such Notes.
SECONDARY MARKET
The Notes will not have an established trading market when issued, and there
can be no assurance of a secondary market for the Notes or the continued
liquidity of such market if one develops. See "Plan of Distribution." Any
secondary market for Indexed Notes and the market value of such notes will be
affected by a number of factors independent of the creditworthiness of the
Company and the value of the applicable index or indices or formula or formulas,
including the complexity or volatility of each such index, the method
S-2
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of calculating the principal, premium, if any, and/or interest in respect of the
Indexed Notes, the time remaining to maturity of such Notes, the outstanding
amount of such Notes, any redemption features of such Notes, the amount of other
debt securities linked to such index or formula, and the level, direction, and
volatility of market interest rates generally. In addition, certain Indexed
Notes may be designed for specific investment objectives or strategies and,
therefore, may have a more limited secondary market and experience more price
volatility than conventional debt securities. Investors may not be able to sell
such Notes readily or at prices that will enable investors to realize their
anticipated yield. No investor should purchase Indexed Notes unless such
investor understands and is able to bear the risk that such Notes may not be
readily saleable, that the value of such Notes will fluctuate over time, and
that such fluctuations may be significant.
FOREIGN CURRENCY RISKS
EXCHANGE RATES
An investment in Notes that are denominated or provide for payments in a
currency or currency unit ("Specified Currency") other than United States
dollars ("Foreign Currency Notes") entails significant risks that are not
associated with a similar investment in a security denominated in United States
dollars. Such risks include, without limitation, the possibility of significant
changes in the rate of exchange between the United States dollar and the
Specified Currency and the possibility of the imposition or modification of
foreign exchange controls by either the United States or foreign governments.
Such risks generally depend on events over which the Company has no control,
such as economic and political events and the supply and demand for the relevant
currencies. In addition, if the formula used to determine the amount of
principal, premium, if any, and/or interest, if any, payable with respect to
Foreign Currency Notes contains a multiplier or leverage factor, the effect of
any change in the relevant currencies will be magnified. In recent years, rates
of exchange between the United States dollar and certain foreign currencies have
been highly volatile and such volatility may be expected in the future. The
exchange rate between the United States dollar and a foreign currency or
currency unit is at any moment a result of the supply of and demand for such
currencies, and changes in the rate result over time from the interaction of
many factors, among which are rates of inflation, interest rate levels, balances
of payments, and the extent of governmental surpluses or deficits in the
countries of such currencies. These factors are in turn sensitive to the
monetary, fiscal and trade policies pursued by such governments and those of
other countries important to international trade and finance. Fluctuations in
any particular exchange rate that have occurred in the past are not necessarily
indicative of fluctuations in the rate that may occur during the term of any
Foreign Currency Note. Depreciation of the Specified Currency applicable to a
Foreign Currency Note against the United States dollar would result in a
decrease in the United States dollar-equivalent yield of such Note, in the
United States dollar-equivalent value of the principal and premium, if any,
payable at the Maturity Date of such Note, and, generally, in the United States
dollar-equivalent market value of such Note.
Foreign exchange rates can either be fixed by sovereign governments or
float. Sovereign governments may use a variety of techniques, such as
intervention by a country's central bank or imposition of regulatory controls or
taxes, to affect the exchange rate of their currencies. Governments may also
issue a new currency to replace an existing currency or alter the exchange rate
or relative exchange characteristics by devaluation or revaluation of a
currency. Thus, a special risk in purchasing Foreign Currency Notes is that
their United States dollar-equivalent yields could be affected by governmental
actions which could change or interfere with a theretofore freely determined
currency valuation, by fluctuations in response to other market forces, and by
the movement of currencies across borders. There will be no adjustment or change
in the terms of the Foreign Currency Notes in the event that exchange rates
should become fixed, or in the event of any devaluation or revaluation or
imposition of exchange or other regulatory controls or taxes, or in the event of
other developments, affecting the United States dollar or any applicable
currency or currency unit.
AVAILABILITY OF SPECIFIED CURRENCY
Governments have imposed from time to time exchange controls and may in the
future impose or revise exchange controls which could affect the availability of
the Specified Currency at the Maturity Date of a Foreign Currency Note. Even if
there are no exchange controls, it is possible that the Specified Currency for
S-3
<PAGE>
any particular Foreign Currency Note would not be available at such Note's
Maturity due to other circumstances beyond the control of the Company. In that
event, the Company will repay in United States dollars on the basis of the most
recently available exchange rate.
JUDGMENTS
The Notes will be governed by and construed in accordance with the laws of
the State of New York. If an action based on Foreign Currency Notes were
commenced in a court of the United States, it is likely that such court would
grant judgment relating to such Notes only in United States dollars. It is not
clear, however, whether, in granting such judgment, the rate of conversion into
United States dollars would be determined with reference to the date of default,
the date judgment is rendered or some other date. Under current New York law, a
state court in the State of New York rendering a judgment on a Foreign Currency
Note would be required to render such judgment in the Specified Currency in
which such Foreign Currency Note is denominated, and such judgment would be
converted into United States dollars at the exchange rate prevailing on the date
of entry of the judgment. Holders of Foreign Currency Notes would bear the risk
of exchange rate fluctuations between the time the amount of the judgment is
calculated and the time the Paying Agent converts United States dollars to the
Specified Currency for payment of the judgment.
S-4
<PAGE>
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the Securities set forth in
the accompanying Prospectus, to which reference is hereby made. The particular
terms of the Notes sold pursuant to any Pricing Supplement will be described
therein. The terms and conditions set forth herein will apply to each Note
unless otherwise stated in the applicable Pricing Supplement and such Note.
GENERAL
The Notes will be offered on a continuing basis and will mature on any day
from nine months to ten years from the date of issue, as selected by the
purchaser and agreed to by the Company. The Notes may be subject to redemption
at the option of the Company or repayment at the option of the holder prior to
maturity as set forth under "Redemption" and "Repayment at the Option of the
Holder." The Notes will be unsecured senior debt of the Company.
Each Note will be issued initially as either a Book-Entry Note or a
Certificated Note in fully registered form without coupons. Except as set forth
in the accompanying Prospectus under "Description of Securities -- Global
Securities," Book-Entry Notes will not be issuable in certificated form. See
"Book-Entry System" below.
Unless otherwise stated in the applicable Pricing Supplement, the Notes are
issuable in denominations of $1,000 or any integral multiple of $1,000. The
authorized denominations of Foreign Currency Notes will be indicated in the
applicable Pricing Supplement.
Interest rates offered by the Company with respect to the Notes may differ
depending upon, among other things, the aggregate principal amount of the Notes
purchased in any single transaction.
The Notes constitute a single series to be issued under the Indenture (as
defined in the accompanying Prospectus) and are limited to an aggregate
principal amount of $1,000,000,000 or the equivalent thereof in one or more
foreign currencies or composite currency units. See "Description of Securities"
in the accompanying Prospectus for a description of the rights of the holders of
the Notes under the Indenture.
The terms of the Notes as established by the Company provide that the
Company may at any time (including more than one year prior to the stated
maturity of the Notes) be discharged from its obligations thereon by providing
for payment when due of the principal of, and interest on, the Notes and by
satisfying certain other conditions, all as described under "Description of
Securities -- Satisfaction and Discharge" in the accompanying Prospectus.
Until the Notes are paid or payment thereof is provided for, the Company
will, at all times, maintain a paying agent (the "Paying Agent") in The City of
New York capable of performing the duties described herein to be performed by
the Paying Agent. The Company has initially appointed Citibank, N.A., as Paying
Agent, acting through its Corporate Trust Office at 111 Wall Street, New York,
New York 10043. The Notes may be presented for registration of transfer or
exchange at the Corporate Trust Office of the Paying Agent provided that
Book-Entry Notes will be exchangeable only in the manner and to the extent set
forth in "Description of Securities -- Global Securities" in the accompanying
Prospectus. The Company will notify the holders of the Notes in accordance with
the Indenture of any change in the Paying Agent or its address.
In the case of Certificated Notes, United States dollar payments of interest
(other than interest payable at maturity or upon earlier redemption or
repayment) will be made by check mailed to the address of the person entitled
thereto as shown on the Note register. In the case of Book-Entry Notes, United
States dollar payments of principal, premium and interest, if any, will be made
to the Depositary, as holder of Book-Entry Notes, in immediately available
funds. United States dollar payments of principal and interest at maturity or
upon earlier redemption or repayment will be made in immediately available funds
against presentation and surrender of the Note at the office or agency of the
Paying Agent designated for such purpose, provided the Note is presented in time
for the Paying Agent to make such payment in such funds in accordance with its
normal procedures.
S-5
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The applicable Pricing Supplement for each Note will specify the date on
which such Note will mature (such date or an earlier date of repayment or
redemption being referred to as the "Maturity Date"); the provisions relating to
redemption or repayment, if applicable; whether such Note is a Fixed Rate Note
or a Floating Rate Note; if such Note is a Fixed Rate Note, the rate per annum
at which such Note will bear interest; and if such Note is a Floating Rate Note,
the interest rate basis or interest rate formula and the Spread, if any, and/or
the Spread Multiplier, if any, and the Maximum Interest Rate, if any, and the
Minimum Interest Rate, if any, applicable to such Note and any other terms and
conditions consistent with the Indenture. A Floating Rate Note may also bear
interest determined by reference to two or more interest rate bases. In
addition, such Pricing Supplement will define or particularize for each Floating
Rate Note the following terms, if applicable: Index Maturity; Initial Interest
Rate; Interest Payment Dates; Interest Reset Period; Interest Reset Dates;
Designated CMT Telerate Page; Designated CMT Maturity Index; Designated LIBOR
Page and Index Currency.
Each Note will be denominated in a currency or currency unit as specified on
the face thereof and in the applicable Pricing Supplement. Unless otherwise
indicated in a Note and 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. Unless
otherwise specified in the applicable Pricing Supplement, purchasers are
required to pay for Foreign Currency Notes in the Specified Currency. At the
present time, there are limited facilities in the United States for the
conversion of United States dollars into foreign currencies or currency units
and vice versa, and commercial banks do not generally offer non-United States
dollar checking or savings account facilities in the United States. If requested
on or prior to the third Business Day (as defined below) preceding the date of
delivery of the Notes, or by such other day as determined by the Agent who
presented such offer to purchase Notes to the Company, such Agent may be
prepared to arrange for the conversion of United States dollars into the
Specified Currency to enable the purchasers to pay for the Notes. If agreed to
by such Agent, each such conversion will be made by such Agent on such terms and
subject to such conditions, limitations and charges as such Agent may from time
to time establish in accordance with its regular foreign exchange practices. All
costs of exchange will be borne by the purchasers of Foreign Currency Notes.
Provisions with respect to Foreign Currency Notes will be set forth in such
Notes and in the applicable Pricing Supplement. For special payment terms
applicable to Foreign Currency Notes, see "Special Provisions Relating to
Foreign Currency Denominated Notes" below.
REDEMPTION AT THE OPTION OF THE COMPANY
The Notes will be redeemable at the option of the Company prior to their
Maturity Date only if an initial redemption date ("Initial Redemption Date") is
specified therein and in the applicable Pricing Supplement. If so indicated in
the applicable Pricing Supplement, Notes will be subject to redemption at the
option of the Company on any date on and after the applicable Initial Redemption
Date specified in such Pricing Supplement. On and after the Initial Redemption
Date, if any, the related Note may be redeemed at any time in whole or from time
to time in part (in increments of $1,000) at the option of the Company at the
applicable Redemption Price (as defined below) together with interest thereon
payable to the Redemption Date, on notice given not more than 60 nor less than
30 days prior to the Redemption Date. The "Redemption Price" with respect to a
Note will initially mean a percentage (the "Initial Redemption Percentage") of
the principal amount of such Note to be redeemed specified in the applicable
Pricing Supplement and shall decline at each anniversary of the Initial
Redemption Date by a percentage (the "Annual Redemption Percentage Reduction")
if any, specified in the applicable Pricing Supplement, of the principal amount
to be redeemed until the Redemption Price is 100% of such principal amount.
REPAYMENT AT THE OPTION OF THE HOLDER
If so indicated in the applicable Pricing Supplement, Notes will be
repayable by the Company in whole or in part at the option of the Holders
thereof on their respective optional repayment dates specified in such Pricing
Supplement ("Optional Repayment Dates"). If no Optional Repayment Date is
indicated with respect to a Note, such Note will not be repayable at the option
of the Holder prior to its Maturity Date. Unless otherwise indicated in the
applicable Pricing Supplement, Notes will be repayable in whole or in part
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in increments of $1,000 or integral multiples thereof. The repurchase price for
any Note so repurchased will be 100% of the principal amount to be repaid,
together with interest thereon payable to the date of repayment.
While the Book-Entry Notes are represented by Global Notes (as defined
below) held by or on behalf of the Depositary (as defined below under
"Book-Entry Notes"), and registered in the name of the Depositary or the
Depositary's nominee, the option for repayment may be exercised by the
applicable Participant (as defined below under "Book-Entry Notes") on behalf of
the Beneficial Owners (as defined below under "Book-Entry Notes") of such
Book-Entry Notes by delivering a written notice to the Trustee at the Corporate
Trust Office, not more than 60 nor less than 30 days prior to the Optional
Repayment Date. Notices of elections from Participants on behalf of Beneficial
Owners of the Book-Entry Notes to exercise their option to have the Book-Entry
Notes repaid must be received by the Trustee by 5:00 p.m., New York City Time,
on the last day for giving such notice. In order to ensure that a notice is
received by the Trustee on a particular day, the Beneficial Owner of Book-Entry
Notes must so direct the applicable Participant before such Participant's
cut-off time for accepting instructions for that day. Different firms may have
different cut-off times for accepting instructions from their customers.
Accordingly, Beneficial Owners of Book-Entry Notes should consult the
Participants through which they own their interest in the Book-Entry Notes for
the cut-off times for such Participants. All notices shall be executed by a duly
authorized officer of such Participant (with signature guaranteed) and shall be
irrevocable. In addition, such Beneficial Owners of Book-Entry Notes shall
effect delivery of such Book-Entry Notes at the time such notices of election
are given to the Depositary by causing the Participant to transfer such
Beneficial Owner's interest in the Book-Entry Notes, on the Depositary's
records, to the Trustee. Conveyance of notices and other communications by the
Depositary to Participants, by Participants to Indirect Participants (as defined
below under "Book-Entry Notes") and by Participants and Indirect Participants to
Beneficial Owners of the Book-Entry Notes will be governed by agreements among
them, subject to any statutory or regulatory requirements as may be in effect
from time to time.
INTEREST RATE
Unless otherwise stated in the applicable Pricing Supplement, each Note will
bear interest from the date of issue at the rate per annum stated therein, or
calculated pursuant to the interest rate formula set forth therein and in the
applicable Pricing Supplement, until the principal thereof is paid or made
available for payment. Interest will be payable on each date specified in the
applicable Pricing Supplement on which an installment of interest is due and
payable (an "Interest Payment Date") and on the Maturity Date. Unless otherwise
provided in the applicable Pricing Supplement, Merrill Lynch, Pierce, Fenner &
Smith Incorporated will be the calculation agent (the "Calculation Agent") with
respect to the Floating Rate Notes.
Each Note will bear interest at either (a) a fixed rate or (b) rates
determined by reference to the interest rate basis specified in the applicable
Pricing Supplement (i) plus or minus (as specified in the applicable Pricing
Supplement) the Spread, if any, and/or (ii) multiplied by the Spread Multiplier,
if any. The "Spread" is the number of basis points specified in the applicable
Pricing Supplement as being applicable to such Note, and the "Spread Multiplier"
is the percentage specified in the applicable Pricing Supplement as being
applicable to such Note. 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 Federal
Funds Rate (a "Federal Funds Rate Note"), (e) LIBOR (a "LIBOR Note"), (f) the
Prime Rate (a "Prime Rate Note"), (g) the Treasury Rate (a "Treasury Rate
Note"), or (h) such other interest rate basis or interest rate formula as is set
forth in such Pricing Supplement. Alternatively, a Floating Rate Note may bear
interest at rates determined by reference to two or more interest rate bases, as
specified in the applicable Pricing Supplement.
Any Floating Rate Note also may have either or both of the following: (i) a
maximum interest rate limitation ("Maximum Interest Rate"), or ceiling, on the
rate of interest which may accrue during any interest period; and (ii) a minimum
interest rate limitation ("Minimum Interest Rate"), or floor, on the rate of
interest which may accrue during any interest period. In addition to any Maximum
Interest Rate which
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may be applicable to any Floating Rate Note pursuant to the above provisions,
the interest rate on a Floating Rate Note will in no event be higher than the
maximum rate permitted by New York law, as the same may be modified by United
States law of general application. Under present New York law, the maximum rate
of interest, with certain exceptions, is 25% per annum on a simple interest
basis. This limit may not apply to Notes in which $2,500,000 or more has been
invested.
Unless otherwise stated in the applicable Pricing Supplement, interest
payable on any Interest Payment Date will be payable to the person in whose name
such Note is registered at the close of business on (a) the March 1 or September
1 (whether or not a Business Day, as defined below) next preceding such Interest
Payment Date in the case of a Fixed Rate Note, or (b) the fifteenth calendar day
(whether or not a Business Day) next preceding such Interest Payment Date in the
case of a Floating Rate Note (in each case, the "Record Date"); provided,
however, that interest payable on the Maturity Date will be payable to the
person to whom principal shall be payable. Notwithstanding the foregoing, the
first payment of interest on any Note originally issued between a Record Date
and an Interest Payment Date will be made on the Interest Payment Date following
the next succeeding Record Date to the registered owner on such next Record
Date.
Unless otherwise stated in the applicable Pricing Supplement, interest
payments on each Interest Payment Date for Notes will include accrued interest
from and including the date of issue or from and including the next preceding
Interest Payment Date in respect of which interest has been paid, as the case
may be, to, but excluding, the Interest Payment Date or Maturity Date, as the
case may be.
"Business Day" means, unless otherwise stated in the applicable Pricing
Supplement, any day other than a Saturday or Sunday that is not a legal holiday
or a day on which banking institutions are authorized or obligated by law,
regulation or executive order to close in The City of New York and, with respect
to LIBOR Notes, is also a London Business Day. As used herein, "London Business
Day" means any day (a) if the Index Currency (as defined below) is other than
the European Currency Unit ("ECU"), on which dealings in deposits in such Index
Currency are transacted in the London interbank market or (b) if the Index
Currency is the ECU, that is not designated as an ECU Non-Settlement Day by the
ECU Banking Association in Paris or otherwise generally regarded in the ECU
interbank market as a day in which payments on ECUs shall not be made.
FIXED RATE NOTES
Fixed Rate Notes will bear interest from the date of issue at the annual
interest rate or rates specified on the face thereof and in the applicable
Pricing Supplement. Unless otherwise stated 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.
Unless otherwise stated in the applicable Pricing Supplement, interest
payments on Fixed Rate Notes will be made on March 15 and September 15 of each
year and on the Maturity Date. If any Interest Payment Date or Maturity Date for
any Fixed Rate Note falls on a day that is not a Business Day, the payment of
principal, premium, if any, or interest shall be made on the next day that is a
Business Day, and no interest on such payment shall accrue for the period from
and after the Interest Payment Date or the Maturity Date, as the case may be.
FLOATING RATE NOTES
The rate of interest on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semiannually or annually (the "Interest Reset Period"), as
specified in the applicable Pricing Supplement. Unless otherwise stated in the
applicable Pricing Supplement, the date or dates on which interest will be reset
(each an "Interest Reset Date") will be, in the case of Floating Rate Notes
which reset daily, each Business Day; in the case of Floating Rate Notes (other
than Treasury Rate Notes) that reset weekly, the Wednesday of each week; in the
case of Treasury Rate Notes that reset weekly, the Tuesday of each week (except
as specified below); in the case of Floating Rate Notes that reset monthly, the
third Wednesday of each month; in the case of Floating Rate Notes that reset
quarterly, the third Wednesday of March, June, September and December; in the
case of Floating Rate Notes that reset semiannually, the third Wednesday of the
two months specified in the applicable Pricing Supplement; and in the case of
Floating Rate Notes that
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reset annually, the third Wednesday of the month specified in the applicable
Pricing Supplement. If any Interest Reset Date for any Floating Rate Note is not
a Business Day, such Interest Reset Date shall be postponed to the next day that
is a Business Day, except, in the case of a LIBOR Note, if such Business Day is
in the next succeeding calendar month, such Interest Reset Date shall be the
immediately preceding Business Day. If an Interest Reset Date for Treasury Rate
Notes would otherwise be a day on which Treasury Bills (as defined below) are
auctioned, then such Interest Reset Date shall be the first Business Day
immediately following such auction day.
Except as provided below, interest payments on Floating Rate Notes will be
made, in the case of Floating Rate Notes which reset (a) 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; (b) quarterly, on the third Wednesday of March, June,
September and December of each year; (c) semiannually, on the third Wednesday of
each of the two months of each year specified in the applicable Pricing
Supplement; and (d) annually, on the third Wednesday of the month specified in
the applicable Pricing Supplement and, in each case, on the Maturity Date. If
any Interest Payment Date for any Floating Rate Note, other than an Interest
Payment Date falling on the Maturity Date, would otherwise be a day that is not
a Business Day, such Interest Payment Date shall be postponed to the next day
that is a Business Day, except that in the case of an Interest Payment Date for
a LIBOR Note, if such Business Day is in the next succeeding calendar month,
such Interest Payment Date shall be the immediately preceding Business Day. If
the Maturity Date of a Floating Rate Note falls on a day that is not a Business
Day, the payment of principal, premium, if any, and interest will be made on the
next succeeding Business Day, and no interest on such payment shall accrue for
the period from and after such Maturity Date.
With respect to a Floating Rate Note, accrued interest will be calculated by
multiplying the principal amount of such Note by an accrued interest factor. The
accrued interest factor will be computed by adding the interest factors
calculated for each day in the period for which accrued interest is being
calculated. Unless otherwise stated in the applicable Pricing Supplement, the
interest factor (expressed as a decimal) 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, Federal Funds Rate Notes, LIBOR Notes and
Prime Rate Notes, or by the actual number of days in the year, in the case of
Treasury Rate Notes or CMT Rate Notes. Subject to any Maximum Interest Rate or
Minimum Interest Rate limitation referred to above and to any adjustment by a
Spread and/or a Spread Multiplier referred to above, the interest rate in effect
on each day will be, (a) if such day is an Interest Reset Date, the interest
rate with respect to the Interest Determination Date (as defined below)
pertaining to such Interest Reset Date or, (b) if such day is not an Interest
Reset Date, the interest rate with respect to the Interest Determination Date
pertaining to the next preceding 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 set forth in the Pricing Supplement with respect to a
Floating Rate Note will be the "Initial Interest Rate" specified in the
applicable Pricing Supplement.
Unless otherwise stated in the applicable Pricing Supplement, the "Interest
Determination Date" pertaining to an Interest Reset Date for CD Rate Notes, CMT
Rate Notes and Commercial Paper Rate Notes will be the second Business Day
preceding such Interest Reset Date. The Interest Determination Date pertaining
to an Interest Reset Date for Federal Funds Rate Notes and Prime Rate Notes will
be the Business Day immediately preceding such Interest Reset Date. The Interest
Determination Date pertaining to an Interest Reset Date for a LIBOR Note will be
the second London Business Day next preceding such Interest Reset Date. The
Interest Determination Date pertaining to an Interest Reset Date for a Treasury
Rate Note will be the day of the week in which such Interest Reset Date falls on
which Treasury Bills of the Index Maturity specified on the face of the Treasury
Rate Note are auctioned. Treasury Bills are normally sold at auction 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. If, as the result of a legal holiday, an auction is so
held on the preceding Friday, such Friday will be the Interest Determination
Date pertaining to the Interest Reset Date occurring in the next succeeding
week. Unless otherwise specified in the applicable Pricing Supplement, the
Interest Determination Date pertaining to a Floating Rate Note, the interest
rate of which is determined with reference to two or more interest rate
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bases, will be the latest Business Day which is at least two Business Days prior
to such 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 related Interest
Reset Date.
Unless otherwise stated in the applicable Pricing Supplement, the
"Calculation Date," where applicable, pertaining to an Interest Determination
Date will be the earlier of (i) the tenth calendar day after such Interest
Determination Date or if any such day is not a Business Day, the next succeeding
Business Day or (ii) the Business Day preceding the applicable Interest Payment
Date or Maturity Date, as the case may be.
The Calculation Agent will notify the Company and, in turn, the Company will
notify the Paying Agent of each determination of the interest rate applicable to
any Floating Rate Note promptly after such determination is made. The Paying
Agent will, upon the request of the holder of any Floating Rate Note, provide
the interest rate then in effect and, if determined and notified to the Paying
Agent, the interest rate which will become effective as a result of a
determination made with respect to the most recent Interest Determination Date
with respect to such Note. The Paying Agent will not be responsible for
determining the interest rate applicable to any Floating Rate Note.
All percentages resulting from any calculations will be rounded, if
necessary, to the nearest one hundred-thousandth of a percentage point, with
five one-millionths of a percentage point being rounded upwards; and all dollar
amounts used in or resulting from such calculations on Floating Rate Notes will
be rounded to the nearest cent with one-half cent being rounded upwards.
CD RATE NOTES
The interest rate for CD Rate Notes will be calculated with reference to the
CD Rate as specified in the CD Rate Notes and in the applicable Pricing
Supplement.
Unless otherwise stated in the applicable Pricing Supplement, "CD Rate"
means, with respect to any Interest Determination Date, the rate on such date
for negotiable United States dollar certificates of deposit having the Index
Maturity designated 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 of the Board
of Governors of the Federal Reserve System ("H.15(519)") under the heading "CDs
(Secondary Market)" or, if not so published by 3:00 P.M., New York City time, on
the Calculation Date pertaining to such Interest Determination Date, the CD Rate
will be the rate on such Interest Determination Date for negotiable United
States dollar certificates of deposit of the Index Maturity designated 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
United States 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 Calculation Date pertaining to such Interest Determination
Date, then the CD Rate on such 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 Interest
Determination Date, of three leading nonbank dealers in negotiable United States
dollar certificates of deposit in The City of New York selected by the
Calculation Agent for negotiable certificates of deposit of major United States
money market banks for negotiable United States dollar certificates of deposit
with a remaining maturity closest to the Index Maturity designated in the
Pricing Supplement in an amount that is representative for a single transaction
in that market at that time; provided, however, that if the dealers selected as
aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, the CD Rate will be the CD Rate in effect on such Interest
Determination Date.
CMT RATE NOTES
The interest rate for CMT Rate Notes will be calculated with reference to
the CMT Rate as specified in the CMT Rate Note and in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CMT Rate"
means, with respect to any Interest Determination Date, the rate displayed on
the Designated CMT Telerate Page under the
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caption ". . . Treasury Constant Maturities. . . Federal Reserve Board Release
H.15. . . Mondays Approximately 3:45 P.M.," under the column for the Designated
CMT Maturity Index for (i) if the Designated CMT Telerate Page is 7055, the rate
on such Interest Determination Date and (ii) if the Designated CMT Telerate Page
is 7052, the weekly or monthly averages as specified in the applicable Pricing
Supplement for the week or the month, as applicable, ended immediately preceding
the week in which the related Interest Determination Date occurs. If such rate
is no longer displayed on the relevant page or is not displayed by 3:00 P.M.,
New York City time, on the related Calculation Date, then the CMT Rate for such
Interest Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index as published in H.15(519). If such rate is no
longer published or is not published by 3:00 P.M., New York City time, on the
related Calculation Date, then the CMT Rate on such 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 Interest Determination Date with respect to such Interest Reset
Date as may then be published by either the Board of Governors of the Federal
Reserve System or the United States Department of the Treasury that the
Calculation Agent determines to be comparable to the rate formerly displayed on
the Designated CMT Telerate Page and published in H.15(519). If such information
is not provided by 3:00 P.M., New York City time, on the related Calculation
Date, then the CMT Rate on the Interest Determination Date will be calculated by
the Calculation Agent and will be a yield to maturity, based on the arithmetic
mean of the secondary market closing offer side prices as of approximately 3:30
P.M., New York City time, on such Interest Determination Date reported,
according to their written records, by three leading primary United States
government securities dealers (each, a "Reference Dealer") in The City of New
York (which may include the 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 is unable to obtain three such Treasury Note quotations, the
CMT Rate on such Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity based on the arithmetic mean
of the secondary market offer side prices as of approximately 3:30 P.M., New
York City time, on such 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 $100,000,000. If three or four (and not five)
of such Reference Dealers are quoting as described above, then the CMT Rate will
be based on the arithmetic mean of the offer prices obtained and neither the
highest nor the lowest of such quotes will be eliminated; provided, however,
that if fewer than three Reference Dealers so selected by the Calculation Agent
are quoting as mentioned herein, the CMT Rate determined as of such Interest
Determination Date will be the CMT Rate in effect on such Interest Determination
Date. If two Treasury Notes with an original maturity as described in the second
preceding sentence have remaining terms to maturity equally close to the
Designated CMT Maturity Index, the Calculation Agent will obtain from five
Reference Dealers quotations for the Treasury Note with the shorter remaining
term to maturity.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page specified in the applicable Pricing Supplement (or any other
page as may replace such page on that service for the purpose of displaying
Treasury Constant Maturities as reported in H.15(519)) 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
Treasury Notes (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.
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COMMERCIAL PAPER RATE NOTES
The interest rate for Commercial Paper Rate Notes will be calculated with
reference to the Commercial Paper Rate as specified in the Commercial Paper Rate
Notes and in the applicable Pricing Supplement.
Unless otherwise stated in the applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any Interest Determination Date, the Money
Market Yield (as defined below) of the rate on such date for commercial paper
having the Index Maturity designated in the applicable Pricing Supplement as
published in H.15(519), under the heading "Commercial Paper." In the event that
such rate is not published by 3:00 P.M., New York City time, on the Calculation
Date pertaining to such Interest Determination Date, then the Commercial Paper
Rate shall be the Money Market Yield of the rate on that Interest Determination
Date for commercial paper having the Index Maturity designated 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 such Calculation Date
such rate is not yet published in either H.15(519) or Composite Quotations, the
Commercial Paper Rate for that Interest Determination Date shall be calculated
by the Calculation Agent and shall be the Money Market Yield of the arithmetic
mean of the offered rates, as of 11:00 A.M., New York City time, on that
Interest Determination Date, of three leading dealers of commercial paper in The
City of New York 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 Interest Determination Date.
"Money Market Yield" shall be a yield 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.
FEDERAL FUNDS RATE NOTES
The interest rate for Federal Funds Rate Notes will be calculated with
reference to the Federal Funds Rate as specified in the Federal Funds Rate Notes
and in the applicable Pricing Supplement.
Unless otherwise stated in the applicable Pricing Supplement, "Federal Funds
Rate" means, with respect to any Interest Determination Date, the rate on that
day for United States Federal Funds as published in H.15(519) under the heading
"Federal Funds (Effective)" or, if not so published by 3:00 P.M., New York City
time, on the Calculation Date pertaining to such Interest Determination Date,
the Federal Funds Rate will be the rate on such Interest Determination Date as
published in Composite Quotations under the heading "Federal Funds/Effective
Rate." If such rate is not yet published by 3:00 P.M., New York City time, on
the Calculation Date pertaining to such Interest Determination Date, the Federal
Funds Rate for such 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 Federal Funds arranged by three leading brokers of
Federal Funds transactions in The City of New York selected by the Calculation
Agent prior to 9:00 A.M., New York City time, on such Interest Determination
Date; provided, however, that if the brokers selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this sentence, the Federal
Funds Rate will be the Federal Funds Rate in effect on such Interest
Determination Date.
LIBOR NOTES
The interest rate for LIBOR Notes will be calculated with reference to LIBOR
as specified in the LIBOR Notes and in the applicable Pricing Supplement.
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Unless otherwise stated in the applicable Pricing Supplement, "LIBOR" will
be determined by the Calculation Agent in accordance with the following
provisions:
(i) With respect to an Interest Determination Date, LIBOR will be
either: (a) if "LIBOR Reuters" is specified in the applicable Pricing
Supplement, the arithmetic mean of the offered rates (unless the specified
Designated LIBOR Page (as defined below) by its terms provides only for a
single rate, in which case such single rate shall be used) for deposits in
the Index Currency having the Index Maturity designated in the applicable
Pricing Supplement, commencing on the second London Business Day immediately
following such Interest Determination Date, that appear (or, if only a
single rate is required as aforesaid, appears) on the Designated LIBOR Page
specified in the applicable Pricing Supplement as of 11:00 A.M., London
time, on that Interest Determination Date, if at least two such offered
rates appear (unless, as aforesaid, only a single rate is required) on such
Designated LIBOR Page, or (b) if "LIBOR Telerate" is specified in the
applicable Pricing Supplement, the rate for deposits in the Index Currency
having the Index Maturity designated in the applicable Pricing Supplement
commencing on the second London Business Day immediately following that
Interest Determination Date that appears on the Designated LIBOR Page
specified in the applicable Pricing Supplement as of 11:00 A.M., London
time, on that Interest Determination Date. If fewer than two offered rates
appear, or no rate appears, as applicable, LIBOR in respect of the related
Interest Determination Date will be determined as if the parties had
specified the rate described in clause (ii) below.
(ii) With respect to an Interest Determination Date on which fewer than
two offered rates appear, or no rate appears, as the case may be, on the
applicable Designated LIBOR Page as specified in clause (i) above, the
Calculation Agent will request the principal London offices of each of four
major reference banks in the London interbank market, as selected by the
Calculation Agent, to provide the Calculation Agent with its offered
quotation for deposits in the Index Currency for the period of the Index
Maturity designated in the applicable Pricing Supplement, commencing on the
second London Business Day immediately following such Interest Determination
Date, to prime banks in the London interbank market at approximately 11:00
A.M., London time, on such Interest Determination Date and in a principal
amount that is representative for a single transaction in such Index
Currency in such market at such time. If at least two such quotations are
provided, LIBOR determined on such Interest Determination Date will be the
arithmetic mean of such quotations. If fewer than two quotations are
provided, LIBOR determined on such Interest Determination Date will be the
arithmetic mean of the rates quoted at approximately 11:00 A.M., in the
applicable Principal Financial Center (as defined below), on such Interest
Determination Date by three major banks in such Principal Financial Center
selected by the Calculation Agent for loans in the Index Currency to leading
European banks, having the Index Maturity designated in the applicable
Pricing Supplement and in a principal amount that is representative for a
single transaction in such Index Currency in such market at such time;
provided, however, that if the banks so selected by the Calculation Agent
are not quoting as mentioned in this sentence, LIBOR determined on such
Interest Determination Date will be LIBOR in effect on such Interest
Determination Date.
"Index Currency" means the currency (including composite currencies)
specified in the applicable Pricing Supplement as the currency for which LIBOR
shall be calculated. If no such currency is specified in the applicable Pricing
Supplement, the Index Currency shall be United States dollars.
"Designated LIBOR Page" means either (a) if "LIBOR Reuters" is designated in
the applicable Pricing Supplement, the display on the Reuter Money Rates Service
(or any successor service) for the purpose of displaying the London interbank
rates of major banks for the applicable Index Currency, or (b) if "LIBOR
Telerate" is designated in the applicable Pricing Supplement, the display on the
Dow Jones Telerate Service (or any successor service) for the purpose of
displaying the London interbank rates of major banks for the applicable Index
Currency. If neither LIBOR Reuters nor LIBOR Telerate is specified in the
applicable Pricing Supplement, LIBOR for the applicable Index Currency will be
determined as if LIBOR Telerate (and, if the United States dollar is the Index
Currency, Page 3750) had been specified.
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"Principal Financial Center" will generally be the capital city of the
country of the specified Index Currency, except that with respect to United
States dollars and ECUs, the Principal Financial Center shall be The City of New
York and Luxembourg, respectively.
PRIME RATE NOTES
The interest rate for Prime Rate Notes will be calculated with reference to
the Prime Rate as specified in the Prime Rate Notes and in the applicable
Pricing Supplement.
Unless otherwise stated in the applicable Pricing Supplement, "Prime Rate"
means, with respect to any Interest Determination Date, the rate set forth in
H.15(519) for such date opposite the caption "Bank Prime Loan." If such rate is
not yet published by 3:00 P.M., New York City time, on the Calculation Date, the
Prime Rate for such Interest Determination Date will be the arithmetic mean of
the rates of interest publicly announced by each bank named on the Reuters
Screen USPRIME1 (as defined below) as such bank's prime rate or base lending
rate as in effect for such Interest Determination Date as quoted on the Reuters
Screen USPRIME1 on such Interest Determination Date, or, if fewer than four such
rates appear on the Reuters Screen USPRIME1 for such Interest Determination
Date, the 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 360 as of the close of
business on such Interest Determination Date by four major money center banks in
The City of New York selected by the Calculation Agent from which quotations are
requested. If fewer than two quotations are provided, the Prime Rate shall be
calculated by the Calculation Agent and shall be determined as the arithmetic
mean on the basis of the prime rates 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, in each case having total equity capital of
at least $500,000,000 and being subject to supervision or examination by federal
or state authority, selected by the Calculation Agent to quote such rate or
rates; provided, however, that if the banks or trust companies so selected by
the Calculation Agent are not quoting as mentioned in this sentence, the Prime
Rate with respect to such Interest Determination Date will be the Prime Rate in
effect on such Interest Determination Date.
"Reuters Screen USPRIME1" means the display designated as page "USPRIME1" on
the Reuter Money Rates Service (or such other page as may replace the USPRIME1
page on that service for the purpose of displaying prime rates or base lending
rates of major United States banks).
TREASURY RATE NOTES
The interest rate for Treasury Rate Notes will be calculated with reference
to the Treasury Rate as specified in the Treasury Rate Notes and in the
applicable Pricing Supplement.
Unless otherwise stated in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Interest Determination Date, the rate from the
auction held on such Interest Determination Date of direct obligations of the
United States ("Treasury Bills") having the Index Maturity designated in the
applicable Pricing Supplement as such rate is published in H.15(519) under the
heading "Treasury Bills -- auction average (investment)" or, if not so published
by 9:00 A.M., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, the auction average rate of such Treasury Bills
(expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) as otherwise announced by the United
States Department of the Treasury. In the event that the results of the auction
of Treasury Bills having the Index Maturity 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
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 Interest
Determination Date, of three leading primary United States government securities
dealers 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 Interest Determination
Date.
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OTHER PROVISIONS
Any provisions with respect to the determination and/or specification of an
interest rate basis or the calculation of the interest rate applicable to a
Floating Rate Note, its Interest Payment Dates or any other matter relating to
such Floating Rate Note or to any other Note, may be modified by the terms
specified under "Other Provisions" on the face of the Note or in an addendum
relating thereto, if so specified on the face of the Note and in the applicable
Pricing Supplement.
ORIGINAL ISSUE DISCOUNT NOTES
Notes may be issued at a price less than their redemption price at the
Maturity Date, resulting, in certain cases, in such Notes being treated as if
they were issued with original issue discount for federal income tax purposes
("Original Issue Discount Notes"). Such Original Issue Discount Notes may
currently pay no interest or pay interest at a rate which at the time of
issuance is below market rates. Certain additional considerations relating to
any Original Issue Discount Notes may be described in the Pricing Supplement
relating thereto.
INDEXED NOTES
Indexed Notes may be issued with the principal amount payable on the
Maturity Date and/or interest to be paid thereon to be determined with reference
to the price or prices of specified commodities or stocks, the exchange rate of
one or more specified currencies or composite currency units related to an index
currency, or such other price, interest, exchange rate or other index as may be
specified in such Note and in the applicable Pricing Supplement. Holders of such
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 specified indexed item. Information
as to the method for determining the principal amount payable on the Maturity
Date, certain historical information with respect to the specified indexed item
and tax considerations associated with investment in Indexed Notes will be set
forth in the applicable Pricing Supplement.
AMORTIZING NOTES
Amortizing Notes may be issued which specify the payment of both interest
and principal over the life of the Note. Payments of principal and interest on
Amortizing Notes will be made either quarterly or semiannually, except as
otherwise set forth in the applicable Pricing Supplement, and on the Maturity
Date or upon any earlier redemption or repayment. Unless otherwise stated in the
applicable Pricing Supplement, payments with respect to Amortizing Notes will be
applied first to interest due and payable thereon and then to the reduction of
the unpaid principal amount thereof. Further information concerning additional
terms and conditions of any issue of Amortizing Notes will be provided in the
applicable Pricing Supplement. A table setting forth repayment information in
respect of each Amortizing Note will be provided to the original purchaser and
will be available, upon request, to subsequent holders.
EXTENSION OF STATED MATURITY
The Pricing Supplement relating to each Note will indicate whether the
Holder of such Notes has the option to extend the maturity of such Note to one
or more dates (each an "Extended Maturity Date") indicated in the applicable
Pricing Supplement. If the Holder has such option with respect to any such Note
(an "Extendible Maturity Note"), the procedures related thereto will be
specified in the applicable Pricing Supplement.
BOOK-ENTRY SYSTEM
The Company has established a depositary arrangement with The Depository
Trust Company with respect to the Book-Entry Notes, the terms of which are
summarized below. Any additional or differing terms of the depositary
arrangement with respect to the Book-Entry Notes will be described in the
applicable Pricing Supplement.
Upon issuance, all Book-Entry Notes up to $200,000,000 aggregate principal
amount bearing interest (if any) at the same rate or pursuant to the same
formula and having the same date of issue, currency of denomination and payment,
Interest Payment Dates (if any), Stated Maturity Date, redemption provisions (if
any), repayment provisions (if any) and other terms will be represented by a
single Global Security. Each
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Global Security representing Book-Entry Notes will be deposited with, or on
behalf of, the Depositary and will be registered in the name of the Depositary
or a nominee of the Depositary. No Global Security may be transferred except as
a whole by a nominee of the Depositary to the Depositary or to another nominee
of the Depositary, or by the Depositary or such nominee to a successor of the
Depositary or a nominee of such successor.
So long as the Depositary or its nominee is the registered owner of a Global
Security, the Depositary or its nominee, as the case may be, will be the sole
Holder of the Book-Entry Notes represented thereby for all purposes under the
Indenture. Except as otherwise provided in this section, the Beneficial Owners
of the Global Security or Securities representing Book-Entry Notes will not be
entitled to receive physical delivery of Certificated Notes and will not be
considered the Holders thereof for any purpose under the Indenture, and no
Global Security representing Book-Entry Notes shall be exchangeable or
transferrable. Accordingly, each Beneficial Owner must rely on the procedures of
the Depositary and, if such Beneficial Owner is not a Participant, on the
procedures of the Participant through which such Beneficial Owner owns its
interest in order to exercise any rights of a Holder under such Global Security
or the Indenture. The laws of some jurisdictions require that certain purchasers
of securities take physical delivery of such securities in certificated form.
Such limits and such laws may impair the ability to transfer beneficial
interests in a Global Security representing Book-Entry Notes.
Unless otherwise specified in the applicable Pricing Supplement, each Global
Security representing Book-Entry Notes will be exchangeable for Certificated
Notes of like tenor and terms and of differing authorized denominations
aggregating a like principal amount, only if (i) the Depositary notifies the
Company that it is unwilling or unable to continue as Depositary for the Global
Securities, (ii) the Depositary ceases to be a clearing agency registered under
the Exchange Act, (iii) the Company in its sole discretion determines that the
Global Securities shall be exchangeable for Certificated Notes or (iv) there
shall have occurred and be continuing an Event of Default under the Indenture
with respect to the Notes. Upon any such exchange, the Certificated Notes shall
be registered in the names of the Beneficial Owners of the Global Security or
Securities representing Book-Entry Notes, which names shall be provided by the
Depositary's relevant Participants (as identified by the Depositary) to the
Trustee.
The following is based on information furnished by the Depositary:
The Depositary will act as securities depository for the Book-Entry
Notes. The Book-Entry Notes will be issued as fully registered securities
registered in the name of Cede & Co. (the Depositary's partnership nominee).
One fully registered Global Security will be issued for each issue of
Book-Entry Notes, each in the aggregate principal amount of such issue, and
will be deposited with the Depositary. If, however, the aggregate principal
amount of any issue exceeds $200,000,000, one Global Security will be issued
with respect to each $200,000,000 of principal amount and an additional
Global Security will be issued with respect to any remaining principal
amount of such issue.
The Depositary is a limited-purpose trust company organized under the
New York Banking Law, a "banking organization" within the meaning of the New
York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and
a "clearing agency" registered pursuant to the provisions of Section 17A of
the Exchange Act. The Depositary holds securities that its participants
("Participants") deposit with the Depositary. The Depositary also
facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates.
Direct Participants of the Depositary ("Direct Participants"), include
securities brokers and dealers (including the Agents), banks, trust
companies, clearing corporations and certain other organizations. The
Depositary is owned by a number of its Direct Participants and by the New
York Stock Exchange, Inc., the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the Depositary's
system is also available to others such as securities broker and dealers,
banks
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and trust companies that clear through or maintain a custodial relationship
with a Direct Participant, either directly or indirectly ("Indirect
Participants"). The rules applicable to the Depositary and its Participants
are on file with the Securities and Exchange Commission.
Purchases of Book-Entry Notes under the Depositary's system must be made
by or through Direct Participants, which will receive a credit for such
Book-Entry Notes on the Depositary's records. The ownership interest of each
actual purchaser of each Book-Entry Note represented by a Global Security
("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written
confirmation from the Depositary of their purchase, but Beneficial Owners
are expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from the
Direct or Indirect Participants through which such Beneficial Owner entered
into the transaction. Transfers of ownership interests in a Global Security
representing Book-Entry Notes are to be accomplished by entries made on the
books of Participants acting on behalf of Beneficial Owners, Beneficial
Owners of a Global Security representing Book-Entry Notes will not receive
Certificated Notes representing their ownership interests therein, except in
the event that use of the book-entry system for such Book-Entry Notes is
discontinued.
To facilitate subsequent transfers, all Global Securities representing
Book-Entry Notes which are deposited with, or on behalf of, the Depositary
are registered in the name of the Depositary's nominee, Cede & Co. The
deposit of Global Securities with, or on behalf of, the Depositary and their
registration in the name of Cede & Co effect no change in beneficial
ownership. The Depositary has no knowledge of the actual Beneficial Owners
of the Global Securities representing the Book-Entry Notes; the Depositary's
records reflect only the identity of the Direct Participants to whose
accounts such Book-Entry Notes are credited, which may or may not be the
Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by the Depositary to
Direct Participants, by Direct Participants to Indirect Participants, and by
Direct and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements
as may be in effect from time to time.
Neither the Depositary nor Cede & Co. will consent or vote with respect
to the Global Securities representing the Book-Entry Notes. Under its usual
procedure, the Depositary mails an Omnibus Proxy to the Company as soon as
possible after the applicable record date. The Omnibus Proxy assigns Cede &
Co.'s consenting or voting rights to those Direct Participants to whose
accounts the Book-Entry Notes are credited on the applicable record date
(identified in a listing attached to the Omnibus Proxy).
Principal, premium, if any, and/or interest, if any, payments on the
Global Securities representing the Book-Entry Notes will be made to the
Depositary. The Depositary's practice is to credit Direct Participants'
accounts on the applicable payment date in accordance with their respective
holdings shown on the Depositary's records unless the Depositary has reason
to believe that it will not receive payment on such date. Payments by
Participants to Beneficial Owners will be governed by standing instructions
and customary practices, as is the case with securities held for the
accounts of customers in bearer form or registered in "street name", and
will be the responsibility of such Participant and not of the Depositary,
the Trustee or the Company, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of principal,
premium, if any, and/or interest, if any, to the Depositary is the
responsibility of the Company or the Trustee, disbursement of such payments
to Direct Participants shall be the responsibility of the Depositary, and
disbursement of such payments to the Beneficial Owners shall be the
responsibility of Direct and Indirect Participants.
If applicable, redemption notices shall be sent to Cede & Co. If less
than all of the Book-Entry Notes within an issue are being redeemed, the
Depositary's practice is to determine by lot the amount of the interest of
each Direct Participant in such issue to be redeemed.
A Beneficial Owner shall give notice of any option to elect to have its
Book-Entry Notes repaid by the Company, through its Participant, to the
Trustee, and shall effect delivery of such Book-Entry Notes
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by causing the Direct Participant to transfer the Participant's interest in
the Global Security or Securities representing such Book-Entry Notes, on the
Depositary's records, to the Trustee. The requirement for physical delivery
of Book-Entry Notes in connection with a demand for repayment will be deemed
satisfied when the ownership rights in the Global Security or Securities
representing such Book-Entry Notes are transferred by Direct Participants on
the Depositary's records.
The Depositary may discontinue providing its services as securities
depository with respect to the Book-Entry Notes at any time by giving
reasonable notice to the Company or the Trustee. Under such circumstances,
in the event that a successor securities depository is not obtained,
Certificated Notes are required to be printed and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through the Depositary (or a successor securities depository). In
that event, Certificated Notes will be printed and delivered.
The information in this section concerning the Depositary and the
Depositary's system has been obtained from sources that the Company believes to
be reliable, but the Company takes no responsibility for the accuracy thereof.
A further description of the Depositary's procedures with respect to Global
Notes representing Book-Entry Notes is set forth in the accompanying Prospectus
under "Description of Securities -- Global Securities." The Depositary has
confirmed to the Company that it intends to follow such procedures.
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SPECIAL PROVISIONS RELATING TO FOREIGN CURRENCY NOTES
GENERAL
Unless otherwise specified in the applicable Pricing Supplement, Notes
denominated in other than United States dollars or ECUs will not be sold in or
to residents of the country issuing the Specified Currency in which particular
Notes are denominated. The information set forth in this Prospectus Supplement
is directed to prospective purchasers who are United States residents, and the
Company disclaims any responsibility to advise prospective purchasers who are
residents of countries other than the United States with respect to any matters
that may affect the purchase, holding or receipt of payments of principal of and
premium, if any, and any interest on the Notes. Such persons should consult
their own financial and legal advisors with regard to such matters.
The information set forth below is only a summary and does not purport to
address all issues relating to investment in Foreign Currency Notes and
prospective purchasers of the Foreign Currency Notes should consult their own
financial and legal advisors with respect to any matters that may affect the
purchase or holding of a Note or the receipt of payments of principal of and any
premium and interest on a Foreign Currency Note in a Specified Currency.
PAYMENT OF PRINCIPAL AND ANY PREMIUM AND INTEREST
The Company is obligated to make payments of principal of and any premium
and interest on Foreign Currency Notes in the Specified Currency (or, if such
Specified Currency is not at the time of such payment legal tender for the
payment of public and private debts, in such other coin or currency of the
country which issued such Specified Currency as at the time of such payment is
legal tender for the payment of such debts). Any such amounts paid by the
Company will, unless otherwise specified in the applicable Pricing Supplement,
be converted by the Exchange Rate Agent named in the applicable Pricing
Supplement to United States dollars for payment to Holders. However, unless
otherwise indicated in the applicable Pricing Supplement, the Holder of a
Foreign Currency Note may elect to receive such payments in the Specified
Currency as hereinafter described.
Any United States dollar amount to be received by a Holder of a Foreign
Currency Note will be based on the highest bid quotation in The City of New York
received by the Exchange Rate Agent at approximately 11:00 a.m., New York City
time, on the second Business Day preceding the applicable payment date from
three recognized foreign exchange dealers (one of which may be the Exchange Rate
Agent) selected by the Exchange Rate Agent and approved by the Company for the
purchase by the quoting dealer of the Specified Currency for United States
dollars for settlement on such payment date in the aggregate amount of the
Specified Currency payable to all Holders of Foreign Currency Notes scheduled to
receive United States dollar payments and at which the applicable dealer commits
to execute a contract. If such bid quotations are not available, payments will
be made in the Specified Currency. All currency exchange costs will be borne by
the Holder of the Foreign Currency Note by deductions from such payments.
Unless otherwise specified in the applicable Pricing Supplement, a Holder of
a Foreign Currency Note may elect to receive payment of the principal of and any
premium and interest on such Note in the Specified Currency by submitting a
written request for such payment to the Paying Agent at its corporate trust
office in The City of New York, New York on or prior to the Record Date or at
least sixteen days prior to the Maturity Date, as the case may be. Such written
request may be mailed or hand delivered or sent by cable, telex or other form of
facsimile transmission. A Holder of a Foreign Currency Note may elect to receive
payment in the Specified Currency for all principal and any premium and interest
payments and need not file a separate election for each payment. Such election
will remain in effect until revoked by written notice to the Paying Agent, but
written notice of any such revocation must be received by the Paying Agent on or
prior to the relevant Record Date or at least the sixteenth calendar day prior
to the Maturity Date, as the case may be. Holders of Foreign Currency Notes
whose Notes are to be held in the name of a broker or nominee should contact
such broker or nominee to determine whether and how an election to receive
payments in the Specified Currency may be made.
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Principal of and any premium and interest on a Foreign Currency Note paid in
United States dollars will be paid in the manner specified in the Prospectus and
this Prospectus Supplement for Notes denominated in United States dollars.
Interest on a Foreign Currency Note paid in the Specified Currency will be paid
by check mailed to the address of the Holder entitled thereto as shown on the
Note Register. All checks payable in a Specified Currency will be drawn on a
bank office located outside the United States. Payments of principal of and any
premium and interest on Foreign Currency Notes paid in the Specified Currency at
the Maturity Date will be made by wire transfer of immediately available funds
to an account with a bank located in the country of the Specified Currency, as
shall have been designated at least sixteen days prior to the Maturity Date by
the Holder, provided that such bank has appropriate facilities therefor and that
the Note is presented and surrendered at the principal corporate trust office of
the Trustee or the Paying Agent in time for the Paying Agent to make such
payments in such funds in accordance with its normal procedures.
Unless otherwise specified in the applicable Pricing Supplement, a
Beneficial Owner of Book-Entry Notes denominated in a Specified Currency
electing to receive payments of principal or any premium or interest in a
currency other than United States dollars must notify the Participant through
which its interest is held on or prior to the applicable Record Date, in the
case of a payment of interest, and on or prior to the sixteenth day prior to the
Maturity Date, in the case of principal or premium, of such Beneficial Owner's
election to receive all or a portion of such payment in a Specified Currency.
Such Participant must notify the Depositary of such election on or prior to the
third Business Day after such Record Date. The Depositary will notify the Paying
Agent of such election on or prior to the fifth Business Day after such Record
Date. If complete instructions are received by the Participant and forwarded by
the Participant to the Depositary, and by the Depositary to the Paying Agent, on
or prior to such dates, the Beneficial Owner will receive payments in the
Specified Currency.
PAYMENT CURRENCY
If a Specified Currency is not available for the payment of principal or any
premium or interest with respect to a Foreign Currency Note due to the
imposition of exchange controls or other circumstances beyond the control of the
Company, the Company will be entitled to satisfy its obligations to Holders of
Foreign Currency Notes by making such payment in United States dollars on the
basis of the Market Exchange Rate (as defined below) on the second Business Day
prior to such payment, or if such Market Exchange Rate is not then available, on
the basis of the most recently available Market Exchange Rate or as otherwise
indicated in the applicable Pricing Supplement. The "Market Exchange Rate" for
any Specified Currency means the noon dollar buying rate in The City of New York
for cable transfer for such Specified Currency as certified for customs purposes
by (or if not so certified, as otherwise determined by) the Federal Reserve Bank
of New York. Any payment made under such circumstances in United States dollars
where the required payment is in other than United States dollars will not
constitute an Event of Default under the Indenture.
If payment in respect of a Note is required to be made in any currency unit,
such as ECU, and such currency unit is unavailable due to the imposition of
exchange controls or other circumstances beyond the Company's control, then the
Company will be entitled, but not required, to make any payments in respect of
such Note in United States dollars, until such currency unit is again available.
The amount of each payment in United States dollars shall be computed on the
basis of the equivalent of the currency unit in United States dollars, which
shall be determined by the Company or its agent on the following basis. The
component currencies of the currency unit for this purpose (the "Component
Currencies" or, individually, a "Component Currency") shall be the currency
amounts that were components of the currency unit as of the last day on which
the currency unit was used. The equivalent of the currency unit in United States
dollars shall be calculated by aggregating the United States dollar equivalents
of the Component Currencies. The United States dollar equivalent of each of the
Component Currencies shall be determined by the Company or such agent on the
basis of the most recently available Market Exchange Rate for each such
Component Currency, or as otherwise indicated in the applicable Pricing
Supplement.
If the official unit of any Component Currency is altered by way of
combination or subdivision, the number of units of the currency as a Component
Currency shall be divided or multiplied in the same
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proportion. If two or more Component Currencies are consolidated into a single
currency, the amounts of those currencies as Component Currencies shall be
replaced by an amount in such single currency equal to the sum of the amounts of
the consolidated Component Currencies expressed in such single currency. If any
Component Currency is divided into two or more currencies, the amount of the
original Component Currency shall be replaced by the amounts of such two or more
currencies, the sum of which shall be equal to the amount of the original
Component Currency.
All determinations referred to above made by the Company or its Agent
(including the Exchange Rate Agent) shall be at its sole discretion and shall,
in the absence of manifest error, be conclusive for all purposes and binding on
the Holders of the Notes.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of the Notes is based
upon laws, regulations, rulings and decisions now in effect, all of which are
subject to change (including changes in effective dates) or possible differing
interpretations. It deals only with Notes held as capital assets and does not
purport to deal with persons in special tax situations, such as financial
institutions, insurance companies, regulated investment companies, dealers in
securities or currencies, persons holding Notes as a hedge against currency
risks or as a position in a "straddle" for tax purposes, or persons whose
functional currency is not the United States dollar. It also does not deal with
holders other than original purchasers (except where otherwise specifically
noted). 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 beneficial owner of a Note that is not a U.S. Holder.
U.S. HOLDERS
PAYMENTS OF INTEREST. Payments of interest on a Note generally will be
taxable to a U.S. Holder as ordinary interest income at the time such payments
are accrued or are received (in accordance with the U.S. Holder's regular method
of tax accounting).
ORIGINAL ISSUE DISCOUNT. The following summary is a general discussion of
the United States Federal income tax consequences to U.S. Holders of the
purchase, ownership and disposition of Notes issued with original issue
discount. The following summary is based in part upon final Treasury regulations
(the "OID Regulations") released by the Internal Revenue Service ("IRS") on
January 27, 1994 under the original issue discount provisions of the Internal
Revenue Code of 1986, as amended (the "Code").
In general, a U.S. Holder is required to report as ordinary interest income
original issue discount as it accrues under a constant yield method regardless
of the U.S. Holder's regular method of tax accounting. Under these rules, U.S.
Holders generally will have to include in income increasingly greater amounts of
original issue discount in successive accrual periods.
In general, original issue discount is the excess of what a borrower is
obligated to repay when the loan becomes due over the amount borrowed. The
clearest example of original issue discount is a situation in which a debt
instrument is issued for a cash amount that is less than its stated principal
amount. However, there are a variety of other situations in which original issue
discount can exist and certain exemptions that can apply under which original
issue discount can be avoided. This discussion describes in general terms
certain of the situations that can give rise to original issue discount with
respect to the Original Issue Discount Notes. Because the original issue
discount analysis will vary depending on the terms of the Notes, U.S. Holders
should refer to the applicable Pricing Supplement to obtain more detailed
information regarding the original issue discount analysis for a particular
Note.
In determining whether there is original issue discount, a U.S. Holder must
first determine if the stated redemption price at maturity of a Note exceeds the
issue price of the Note. Stated more technically, original issue discount is the
excess of the stated redemption price at maturity of a Note over its issue
price. Original issue discount can exist only if any 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 issued date or, in the case of a Note providing for the payment of any
amount other than qualified stated interest (as hereinafter defined) prior to
maturity, multiplied by the weighted average of maturity of such Note).
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For this purpose, the issue price is the first 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 is
the sum of all payments provided by the Note other than "Qualified Stated
Interest" payments. In general, "Qualified Stated Interest" is interest that is
unconditionally payable in cash or property (other than debt instruments of the
issuer) at least annually at a single fixed rate, single qualified floating
rate, or a single "objective rate," provided that the single rate appropriately
takes into account the length of interval between payments. Each Pricing
Supplement will indicate whether the Original Issue Discount Notes issued
thereunder will be issued with Qualified Stated Interest or not.
Payments for 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).
U.S. Holders should be aware that on December 15, 1994, the IRS released
proposed amendments to the OID Regulations that would broaden the definition of
an objective rate and would further clarify certain other provisions contained
in the OID Regulations. If ultimately adopted, these amendments to the OID
Regulations would be effective for debt instruments issued 60 days or more after
the date on which such proposed amendments are finalized.
A U.S. Holder who purchases an Original Issue Discount Note for an amount
that is greater than its adjusted issue price as of the purchase date and less
than or equal to the sum of all amounts payable on the Original Issue Discount
Note after the purchase date other than payments of Qualified Stated Interest,
will be considered to have purchased the Original Issue Discount Note at an
"acquisition premium." Under the acquisition premium rules, the amount of
original issue discount which such U.S. Holder must include in its gross income
with respect to such Original Issue Discount Note for any taxable year (or
portion thereof in which the U.S. Holder holds the Original Issue Discount Note)
will be reduced (but not below zero) by the portion of the acquisition premium
properly allocable to the period.
Under the OID Regulations, Floating Rate Notes and Indexed Notes ("Variable
Notes") are subject to special rules whereby a Variable Note will qualify as a
"variable rate debt instrument" if (a) its issue price does not exceed the total
noncontingent principal payments due under the Variable Note by more than a
specified de minimis amount and (b) it provides for stated interest, paid or
compounded at least annually, at current values of (i) one or more Qualified
Floating Rates (as defined below), (ii) a single fixed rate and one or more
Qualified Floating Rates, (iii) a Single Objective Rate (as defined below), or
(iv) a single fixed rate and a Single Objective Rate that is a Qualified Inverse
Floating Rate (as defined below). The applicable Pricing Supplement will
indicate whether a Variable Note is a "variable rate debt instrument."
If a Variable Note that provides for stated interest at either a single
Qualified Floating Rate or a single Objective Rate throughout the term thereof
qualifies as a "variable rate debt instrument" under the OID Regulations, then
any stated interest on such Note which is unconditionally payable in cash or
property (other than debt instruments of the issuer) at least annually will
constitute Qualified Stated Interest and will be taxed accordingly. Thus, a
Variable Note that provides for stated interest at either a single Qualified
Floating Rate or a single Objective Rate throughout the term thereof and that
qualifies as a "variable rate debt instrument" under the OID Regulations will
generally not be treated as having been issued with original issue discount
unless the Variable Note is issued at a "true" discount (i.e., at a price below
the Note's stated principal amount) in excess of a specified de minimis amount.
Original issue discount on such a Variable Note arising from "true" discount is
allocated to an accrual period using the constant yield method described above
by assuming that the variable rate is a fixed rate equal to (i) in the case of a
Qualified Floating Rate or Qualified Inverse Floating Rate, the value as of the
issue date, of the Qualified Floating Rate or Qualified Inverse Floating Rate,
or (ii) in the case of an Objective Rate (other than a Qualified Inverse
Floating Rate), a fixed rate that reflects the yield that is reasonably expected
for the Variable Note.
In general, any other Variable Note that qualifies as a "variable rate debt
instrument" will be converted into an "equivalent" fixed rate debt instrument
for purposes of determining the amount and accrual of original issue discount
and Qualified Stated Interest on the Variable Note. The OID Regulations
generally
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require that such a Variable Note be converted into an "equivalent" fixed rate
debt instrument by substituting any Qualified Floating Rate or Qualified Inverse
Floating Rate provided for under the terms of the Variable Note with a fixed
rate equal to the value of the Qualified Floating Rate or Qualified Inverse
Floating Rate, as the case may be, as of the Variable Note's issue date. Any
Objective Rate (other than a Qualified Inverse Floating Rate) provided for under
the terms of the Variable Note is converted into a fixed rate that reflects the
yield that is reasonably expected for the Variable Note. In the case of a
Variable Note that qualifies as a "variable rate debt instrument" and provides
for stated interest at a fixed rate in addition to either one or more Qualified
Floating Rates or a Qualified Inverse Floating Rate, the fixed rate is initially
converted into a Qualified Floating Rate (or a Qualified Inverse Floating Rate,
if the Variable Note provides for a Qualified Inverse Floating Rate). Under such
circumstances, the Qualified Floating Rate or Qualified Inverse Floating Rate
that replaces the fixed rate must be such that the fair market value of the
Variable Note as of the Variable Note's issue date is approximately the same as
the fair market value of an otherwise identical debt instrument that provides
for either the Qualified Floating Rate or Qualified Inverse Floating Rate rather
than the fixed rate. Subsequent to converting the fixed rate into either a
Qualified Floating Rate or a Qualified Inverse Floating Rate, the Variable Note
is then converted into an "equivalent" fixed rate debt instrument in the manner
described above.
Once the Variable Note is converted into an "equivalent" fixed rate debt
instrument pursuant to the foregoing rules, the amount of original issue
discount and Qualified Stated Interest, if any, are determined for the
"equivalent" fixed rate debt instrument by applying the general original issue
discount rules to the "equivalent" fixed rate debt instrument and a U.S. Holder
of the Variable Note will account for such original issue discount and Qualified
Stated Interest as if the U.S. Holder held the "equivalent" fixed rate debt
instrument. For each accrual period appropriate adjustments will be made to the
amount of Qualified Stated Interest or original issue discount assumed to have
been accrued or paid with respect to the "equivalent" fixed rate debt instrument
in the event that such amounts differ from the actual amount of interest accrued
or paid on the Variable Note during the accrual period.
If a Variable Note does not qualify as a "variable rate debt instrument"
under the OID Regulations, then the Variable Note would be treated as a
contingent payment debt obligation. On December 15, 1994, the IRS released
proposed Treasury regulations dealing with the treatment of contingent payment
obligations (the "Proposed Regulations"). The Proposed Regulations supersede
certain previously proposed Treasury regulations originally published on April
8, 1986 dealing with contingent payment obligations, and are not proposed to be
effective for debt instruments issued prior to the date that is 60 days after
the date on which the Proposed Regulations are finalized.
Generally, if a Variable Note is treated as a contingent payment obligation,
interest payments thereon will be treated as "contingent interest" payments.
Under the Proposed Regulations, any contingent interest payments on a Variable
Note would be includible in income in a taxable year whether or not the amount
of any payment is fixed or determinable in that year. The amount of interest
included in income in any particular accrual period would be determined by
estimating a projected payment schedule (as determined under the Proposed
Regulations) for the Variable Note and applying daily accrual rules similar to
those for accruing original issue discount on Notes issued with original issue
discount (as discussed above). If the actual amount of contingent interest
payments is not equal to the projected amount, an adjustment to income at the
time of payment must be made to reflect the difference. There can be no
assurance, however, that the final Treasury regulations regarding contingent
payment obligations will not differ materially from the Proposed Regulations.
Accordingly, the ultimate Federal income tax treatment of any Variable Note that
is treated as a contingent payment obligation may differ from that described
herein. The proper United States Federal income tax treatment of Variable Notes
that are treated as contingent payment debt obligations will be more fully
described in the applicable Pricing Supplement. Furthermore, any other special
United States Federal income tax considerations, not otherwise discussed herein,
which are applicable to any particular issue of Notes will be discussed 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
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above. Investors intending to purchase Notes with such features should consult
their own tax advisors, since the original issue discount consequences will
depend, in part, on the particular terms and features of the purchased Notes.
U.S. Holders may generally, upon election, include in income all interest
(including stated interest, acquisition discount, original issue discount, de
minimis original issue discount, market discount, de minimis market discount,
and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium) that accrues on a debt instrument by using the constant
yield method applicable to original issue discount, subject to certain
limitations and exceptions.
SHORT-TERM NOTES. Notes that have a fixed maturity of one year or less
("Short-Term Notes") will be treated as having been issued with original issue
discount. In general, an individual or other cash method U.S. Holder is not
required to accrue such original issue discount unless the U.S. Holder elects to
do so. If such an election is not made, any gain recognized by the U.S. Holder
on the sale, exchange or maturity of the Short-Term Note will be ordinary income
to the extent of the original issue discount accrued on a straight-line basis,
or upon election under the constant yield method (based on daily compounding),
through the date of sale or maturity, and a portion of the deductions otherwise
allowable to the U.S. Holder for interest on borrowings allocable to the
Short-Term Note will be deferred until a corresponding amount of income is
realized. U.S. Holders who report income for United States Federal income tax
purposes under the accrual method, and certain other holders including banks and
dealers in securities, are required to accrue original issue discount on a
Short-Term Note on a straight-line basis unless an election is made to accrue
the original issue discount under a constant yield method (based on daily
compounding).
MARKET DISCOUNT. If a U.S. Holder purchases a Note, other than an Original
Issue Discount Note, for an amount that is less than its issue price (or, in the
case of a subsequent purchaser, its stated redemption price at maturity) or, in
the case of an Original Issue Discount Note, for an amount that is less than its
adjusted issue price as of the purchase date, such U.S. Holder will be treated
as having purchased such Note at a "Market Discount," unless such Market
Discount is less than a specified de minimis amount.
Under the market discount rules, a U.S. Holder will be required to treat any
partial principal payment (or, in the case of an Original Issue Discount Note,
any payment that does not constitute Qualified Stated Interest) on, or any gain
realized on the sale, exchange, retirement or other disposition of, a Note as
ordinary income to the extent of the lesser of (i) the amount of such payment or
realized gain or (ii) the Market Discount which has not previously been included
in income and is treated as having accrued on such Note at the time of such
payment or disposition. Market Discount will be considered to accrue ratably
during the period from the date of acquisition to the Maturity Date of the Note,
unless the U.S. Holder elects to accrue Market Discount on the basis of
semiannual compounding.
A U.S. Holder may be required to defer the deduction of all or a portion of
the interest paid or accrued on any indebtedness incurred or maintained to
purchase or carry a Note with Market Discount until the maturity of the Note or
certain earlier dispositions, because a current deduction is only allowed to the
extent the interest expense exceeds an allocable portion of Market Discount. A
U.S. Holder may elect to include Market Discount in income currently as it
accrues (on either a ratable or semiannual compounding basis), in which case the
rules described above regarding the treatment as ordinary income of gain upon
the disposition of the Note and upon the receipt of certain cash payments and
regarding the deferral of interest deductions will not apply. Generally, such
currently included Market Discount is treated as ordinary interest for United
States Federal income tax purposes. Such an election will apply to all debt
instruments acquired by the U.S. Holder on or after the first day of the first
taxable year to which such election applies and may be revoked only with the
consent of the IRS.
PREMIUM. If a U.S. Holder purchases a Note for an amount that is greater
than the sum of all amounts payable on the Note after the purchase date other
than payments of Qualified Stated Interest, such U.S. Holder will be considered
to have purchased the Note with "Amortizable Bond Premium" equal in amount to
such excess. A U.S. Holder may elect to amortize such premium using a constant
yield method over the remaining term of the Note and may offset interest
otherwise required to be included in respect of the Note during any taxable year
by the amortized amount of such excess for the taxable year. However, if the
Note
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may be optionally redeemed after the U.S. Holder acquires it at a price in
excess of its stated redemption price at maturity, special rules would apply
which could result in a deferral of the amortization of some bond premium until
later in the term of the Note. Any election to amortize bond premium applies to
all taxable debt instruments acquired by the U.S. Holder on or after the first
day of the first taxable year to which such election applies and may be revoked
only with the consent of the IRS.
DISPOSITION OF A NOTE. Except as discussed above, upon the sale, exchange
or retirement of a Note, a U.S. Holder generally will recognize taxable gain or
loss equal to the difference between the amount realized on the sale, exchange
or retirement (other than amounts representing accrued and unpaid interest) and
such U.S. Holder's adjusted tax basis in the Note. A U.S. Holder's adjusted tax
basis in a Note generally will equal such U.S. Holder's initial investment in
the Note increased by any original issue discount included in income (and
accrued Market Discount, if any, if the U.S. Holder has included such Market
Discount in income) and decreased by the amount of any payments, other than
Qualified Stated Interest payments, received and Amortizable Bond Premium taken
with respect to such Note. Such gain or loss generally will be long-term capital
gain or loss if the Note were held for more than one year.
NOTES DENOMINATED, OR IN RESPECT OF WHICH INTEREST IS PAYABLE, IN A FOREIGN
CURRENCY
CASH METHOD. A U.S. Holder who uses the cash method of accounting for
United States Federal income tax purposes and who receives a payment of interest
on a Note (other than original issue discount or Market Discount) will be
required to include in income the U.S. dollar value of the Foreign Currency
payment (determined on the date such payment is received) regardless of whether
the payment is in fact converted to U.S. dollars at that time, and such U.S.
dollar value will be the U.S. Holder's tax basis in such Foreign Currency.
ACCRUAL METHOD. A U.S. Holder who uses the accrual method of accounting for
United States Federal income tax purposes, or who otherwise is required to
accrue interest prior to receipt, will be required to include in income the U.S.
dollar value of the amount of interest income (including original issue discount
or Market Discount and reduced by Amortizable Bond Premium to the extent
applicable) that has accrued and is otherwise required to be taken into account
with respect to a Note during an accrual period. The U.S. dollar value of such
accrued income will be determined by translating such income at the average rate
of exchange for the accrual period, or with respect to an accrual period that
spans two taxable years, at the average rate for the partial period within the
taxable year. A U.S. Holder may elect, however, to translate such accrued
interest income using the rate of exchange on the last day of the accrual period
or, with respect to an accrual period that spans two taxable years, using the
rate of exchange on the last day of the taxable year. If the last day of an
accrual period is within five business days of the date of receipt of the
accrued interest, a U.S. Holder may translate such interest using the rate of
exchange on the date of receipt. The above election will apply to other debt
obligations held by the U.S. Holder and may not be changed without the consent
of the IRS. A U.S. Holder should consult a tax advisor before making the above
election. A U.S. Holder will recognize exchange gain or loss (which will be
treated as ordinary income or loss) with respect to accrued interest income on
the date such income is received. The amount of ordinary income or loss
recognized will equal the difference, if any, between the U.S. dollar value of
the Foreign Currency payment received (determined on the date such payment is
received) in respect of such accrual period and the U.S. dollar value of
interest income that has accrued during such accrual period (as determined
above).
PURCHASE, SALE AND RETIREMENT OF NOTES. A U.S. Holder who purchases a Note
with previously owned Foreign Currency will recognize ordinary income or loss in
an amount equal to the difference, if any, between such U.S. Holder's tax basis
in the Foreign Currency and the U.S. dollar fair market value of the Foreign
Currency used to purchase the Note, determined on the date of purchase.
Except as discussed above with respect to Short-Term Notes, upon the sale,
exchange or retirement of a Note, a U.S. Holder will recognize taxable gain or
loss equal to the difference between the amount realized on the sale, exchange
or retirement and such U.S. Holder's adjusted tax basis in the Note. Such gain
or loss generally will be capital gain or loss (except to the extent of any
accrued Market Discount not previously included in the U.S. Holder's income) and
will be long-term capital gain or loss if at the time of sale, exchange or
retirement the Note has been held by such U.S. Holder for more than one year. To
the extent the
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amount realized represents accrued but unpaid interest, however, such amounts
must be taken into account as interest income, with exchange gain or loss
computed as described in "Payments of Interest in a Foreign Currency" above. If
a U.S. Holder receives Foreign Currency on such a sale, exchange or retirement
the amount realized will be based on the U.S. dollar value of the Foreign
Currency on the date the payment is received or the Note is disposed of (or
deemed disposed of as a result of a material change in the terms of the Note).
In the case of a Note that is denominated in Foreign Currency and is traded on
an established securities market, a cash basis U.S. Holder (or, upon election,
an accrual basis U.S. Holder) will determine the U.S. dollar value of the amount
realized by translating the Foreign Currency payment at the spot rate of
exchange on the settlement date of the sale. A U.S. Holder's adjusted tax basis
in a Note will equal the cost of the Note to such holder, increased by the
amounts of any Market Discount or original issue discount previously included in
income by the holder with respect to such Note and reduced by any amortized
acquisition or other premium and any principal payments received by the holder.
A U.S. Holder's tax basis in a Note, and the amount of any subsequent
adjustments to such holder's tax basis will be the U.S. dollar value of the
Foreign Currency amount paid for such Note, or of the Foreign Currency amount of
the adjustment, determined on the date of such purchase or adjustment.
Gain or loss realized upon the sale, exchange or retirement of a Note that
is attributable to fluctuations in currency exchange rates will be ordinary
income or loss which will not be treated as interest income or expense. Gain or
loss attributable to fluctuations in exchange rates will equal the difference
between the U.S. dollar value of the Foreign Currency principal amount of the
Note, determined on the date such payment is received or the Note is disposed
of, and the U.S. dollar value of the Foreign Currency principal amount of the
Note, determined on the date the U.S. Holder acquired the Note. Such Foreign
Currency gain or loss will be recognized only to the extent of the total gain or
loss realized by the U.S. Holder on the sale, exchange or retirement of the
Note.
ORIGINAL ISSUE DISCOUNT. In the case of an Original Issue Discount Note or
Short-Term Note, (i) original issue discount is determined in units of the
Foreign Currency, (ii) accrued original issue discount is translated into U.S.
dollars as described in "Payments of Interest in a Foreign Currency -- Accrual
Method" above and (iii) the amount of Foreign Currency gain or loss on the
accrued original issue discount is determined by comparing the amount of income
received attributable to the discount (either upon payment, maturity or an
earlier disposition), as translated into U.S. dollars at the rate of exchange on
the date of such receipt, with the amount of original issue discount accrued, as
translated above.
PREMIUM AND MARKET DISCOUNT. In the case of a Note with Market Discount,
(i) Market Discount is determined in units of the Foreign Currency, (ii) accrued
Market Discount taken into account upon the receipt of any partial principal
payment or upon the sale, exchange, retirement or other disposition of the Note
(other than accrued Market Discount required to be taken into account currently)
is translated into U.S. dollars at the exchange rate on such disposition date
(and no part of such accrued Market Discount is treated as exchange gain or
loss) and (iii) accrued Market Discount currently includible in income by a U.S.
Holder for any accrual period is translated into U.S. dollars on the basis of
the average exchange rate in effect during such accrual period, and the exchange
gain or loss is determined upon the receipt of any partial principal payment or
upon the sale, exchange, retirement or other disposition of the Note in the
manner described in "Payments of Interest in a Foreign Currency -- Accrual
Method" above with respect to computation of exchange gain or loss on accrued
interest.
With respect to a Note issued with Amortizable Bond Premium, such premium is
determined in the relevant Foreign Currency and reduces interest income in units
of the Foreign Currency. Although not entirely clear, a U.S. Holder should
recognize exchange gain or loss equal to the difference between the U.S. dollar
value of the bond premium amortized with respect to a period, determined on the
date the interest attributable to such period is received, and the U.S. dollar
value of the bond premium determined on the date of the acquisition of the Note.
EXCHANGE OF FOREIGN CURRENCIES. A U.S. Holder will have a tax basis in any
Foreign Currency received as interest or on the sale, exchange or retirement of
a Note equal to the U.S. dollar value of such Foreign
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Currency, determined at the time the interest is received or at the time of the
sale, exchange or retirement. Any gain or loss realized by a U.S. Holder on a
sale or other disposition of Foreign Currency (including its exchange for U.S.
dollars or its use to purchase Notes) will be ordinary income or loss.
NON-U.S. HOLDERS
A non-U.S. Holder will not be subject to United States Federal income taxes
on payments of principal, premium (if any) or interest (including original issue
discount, if any) on a Note, unless such non-U.S. Holder is a direct or indirect
10% or greater shareholder of the Company, a controlled foreign corporation
related to the Company or a bank receiving interest described in section
881(c)(3)(A) of the Code. To qualify for the exemption from taxation, the last
United States payor in the chain of payment prior to payment to a non-U.S.
Holder (the "Withholding Agent") must have received in the year in which a
payment of interest or principal occurs, or in either of the two preceding
calendar years, a statement that (i) is signed by the beneficial owner of the
Note under penalties of perjury, (ii) certifies that such owner is not a U.S.
Holder and (iii) provides the name and address of the beneficial owner. The
statement may be made on an IRS Form W-8 or a substantially similar form, and
the beneficial owner must inform the Withholding Agent of any change in the
information on the statement within 30 days of such change. If a Note is held
through a securities clearing organization or certain other financial
institutions, the organization or institution may provide a signed statement to
the Withholding Agent. However, in such case, the signed statement must be
accompanied by a copy of the IRS Form W-8 or the substitute form provided by the
beneficial owner to the organization or institution. The Treasury Department is
considering implementation of further certification requirements aimed at
determining whether the issuer of a debt obligation is related to holders
thereof.
Generally, a non-U.S. Holder will not be subject to Federal income taxes on
any amount which constitutes capital gain upon retirement or disposition of a
Note, provided the gain is not effectively connected with the conduct of a trade
or business in the United States by the non-U.S. Holder. Certain other
exceptions may be applicable, and a non-U.S. Holder should consult its tax
advisor in this regard.
The Notes will not be includible in the estate of a non-U.S. Holder unless
the individual is a direct or indirect 10% or greater shareholder of the
Company, or, at the time of such individual's death, payments in respect of the
Notes would have been effectively connected with the conduct by such individual
of a trade or business in the United States.
BACKUP WITHHOLDING
Backup withholding of United States Federal income tax at a rate of 31% may
apply to payments made in respect of the Notes to registered owners who are not
"Exempt Recipients" and who fail to provide certain identifying information
(such as the registered owner's taxpayer identification number) in the required
manner. Generally, individuals are not Exempt Recipients, whereas corporations
and certain other entities generally are Exempt Recipients. Payments made in
respect of the Notes to a U.S. Holder must be reported to the IRS, unless the
U.S. Holder is an Exempt Recipient or establishes an exemption. Compliance with
the identification procedures described in the preceding section would establish
an exemption from backup withholding for those non-U.S. Holders who are not
Exempt Recipients.
In addition, upon the sale of a Note to (or through) a broker, the broker
must withhold 31% of the entire purchase price, unless either (i) the broker
determines that the seller is a corporation or other Exempt Recipient or (ii)
the seller provides, in the required manner, certain identifying information
and, in the case of a non-U.S. Holder, certifies that such seller is a non-U.S.
Holder (and certain other conditions are met). Such a sale must also be reported
by the broker to the IRS, unless either (i) the broker determines that the
seller is an Exempt Recipient or (ii) the seller certifies its non-U.S. status
(and certain other conditions are met). Certification of the registered owner's
non-U.S. status would be made normally on an IRS Form W-8 under penalties of
perjury, although in certain cases it may be possible to submit other
documentary evidence.
Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.
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PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis for sale by the Company
through the Agents, who have agreed to use their reasonable efforts to solicit
offers to purchase the Notes. The Company may also sell Notes to an Agent, as
principal, for resale to investors and 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. The Company also
reserves the right to sell Notes directly to investors on its own behalf,
directly to one or more underwriters for resale to the public, or through
additional agents, acting either as agent or principal, on substantially
identical terms as those applicable to the Agents. The Company reserves the
right to withdraw, cancel or modify the offer made hereby without notice and may
reject orders in whole or in part whether placed directly with the Company or
through one of the Agents. The Agents will have the right, in their discretion
reasonably exercised, to reject in whole or in part any offer to purchase Notes
received by them. The Company will pay the Agents, in the form of a discount or
otherwise, a commission, ranging from .125% to .600%, depending on the maturity
of the Note, of the principal amount of any Note sold through the Agents. Each
Agent may be deemed to be an "underwriter" within the meaning of the Securities
Act of 1933, as amended.
In addition, the Agents may offer the Notes they have purchased as principal
to other dealers for resale to investors and other purchasers and may allow any
portion of the discount received in connection with such purchase from the
Company to such dealers. 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 from
time to time in one or more transactions, including negotiated transactions, at
a fixed price or at varying prices determined at the time of sale or may be
resold to certain dealers as described above. After the initial offering of
Notes to be resold to investors and other purchasers, the public offering price
(in the case of Notes to be resold at the fixed public offering price),
concession and discount may be changed.
Unless otherwise specified in an applicable Pricing Supplement, payment of
the purchase price of the Notes will be required to be made in immediately
available funds in The City of New York 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 no Agent is 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 but the Agents are not
obligated to do so and may discontinue any market-making activity at any time.
The Company may also enter into separate arrangements with firms other than
the Agents pursuant to which such firms may, from time to time and subject to
the terms and conditions of a purchase agreement, severally agree to purchase
for resale to the public, and the Company may agree to sell, all or a portion of
the Notes. The name of any such firm, the underwriting discount and the initial
public offering price for such Notes will be set forth on the cover page of the
Prospectus Supplement delivered in connection with the offering and the sale of
such Notes. Subject to the terms and conditions of each purchase agreement, any
such firm which agrees to purchase any Notes will agree to purchase all such
Notes if any are purchased.
The Company has agreed to indemnify each of such firms, including each
Agent, against and to make contribution with respect to certain liabilities,
including liabilities under the Securities Act of 1933. The Company has also
agreed to reimburse such firms for certain expenses. Each of such firms may
engage in transactions with or perform financing services for the Company,
PACCAR or other subsidiaries of PACCAR in the ordinary course of business. Each
of such firms acted as agent or underwriter in connection with the sale of other
series of the Company's medium-term notes.
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CERTAIN LEGAL MATTERS
The validity of the Notes offered hereby has been passed upon for the
Company by Bruce N. Holliday, Assistant General Counsel of PACCAR, and counsel
for the Company. Certain other legal matters have been passed upon for the
Company by Perkins Coie, Seattle, Washington, and for the firms referred to
above, including the Agents, by Brown & Wood, New York, New York.
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PROSPECTUS
[PACCAR LOGO]
PACCAR FINANCIAL CORP.
SENIOR DEBT SECURITIES
--------------
PACCAR Financial Corp. (the "Company") may offer from time to time to or
through underwriters, or directly to other purchasers or through agents, up to
$1,000,000,000 (or the equivalent thereof in one or more foreign currencies or
composite currency units) aggregate principal amount of its senior debt
securities (the "Securities"). The Securities will be offered in one or more
separate series in amounts, at prices and on terms to be determined at the time
of sale. See "Plan of Distribution."
In connection with the offering and sale of the series of the Securities in
respect of which this Prospectus is being delivered (the "Offered Securities"),
a Prospectus Supplement (the "Prospectus Supplement") will set forth the (1)
specific designation; (2) aggregate principal amount; (3) authorized
denominations; (4) the initial public offering price; (5) maturity or
maturities; (6) interest rate or rates or manner of determining the interest
rate; (7) time of payment of interest; (8) currency or composite currency unit
of payment (if other than United States dollars); (9) index, formula or other
method pursuant to which principal, premium or interest may be determined, if
any; (10) terms for optional or mandatory redemption, if any; (11) terms for
repayment at the option of the holder, if any; (12) the names of, and the
principal amounts to be purchased by or through, underwriters, dealers or
agents, if any; (13) the compensation of such persons; and (14) any other
special terms.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-------------------
The date of this Prospectus is March 11, 1996
<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"). Reports and other information filed by the
Company can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549; Suite 1400, Citicorp Center, 500 West Madison Street, Chicago,
Illinois 60661; and at 7 World Trade Center, 13th Floor, New York, New York
10048. Copies of such material can be obtained from the Public Reference Section
of the Commission, 450 Fifth Street, N.W., Washington D.C. 20549, at prescribed
rates. This Prospectus does not contain all of the information set forth in the
Registration Statement on Form S-3 and the exhibits thereto which the Company
has filed with the Commission under the Securities Act of 1933, as amended (the
"Securities Act") and to which reference is hereby made for further information.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company incorporates herein by reference the Company's annual report on
Form 10-K for the year ended December 31, 1994 and its quarterly reports on Form
10-Q for the quarters ended March 31, 1995, June 30, 1995 and September 30,
1995.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Securities shall be deemed to be
incorporated by reference into this Prospectus. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for all purposes to the extent that a
statement contained herein or in any other subsequently filed document which
also is incorporated or deemed to be incorporated by reference herein modifies
or supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of any such
person, a copy of any or all of the foregoing documents incorporated by
reference herein other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference to such documents. Requests should be
directed to the Treasurer, PACCAR Financial Corp., 777 106th Avenue N.E.,
Bellevue, Washington 98004, telephone (206) 462-4100.
THE COMPANY
The Company, a wholly owned subsidiary of PACCAR Inc ("PACCAR"), is a
Washington corporation organized in 1961 to finance the sale of PACCAR products.
The Company is primarily engaged in the financing of truck and related equipment
inventories and the retail financing and leasing of transportation equipment
consisting principally of Kenworth and Peterbilt heavy-duty diesel trucks
manufactured by PACCAR and sold through PACCAR's independent dealers in the
United States.
The principal executive offices of the Company are located in the same
facility as are the principal executive offices of PACCAR at 777 106th Avenue
N.E., Bellevue, Washington 98004, telephone (206) 462-4100. The Company also has
marketing and credit offices in other cities throughout the United States.
USE OF PROCEEDS
Except as may be set forth in the Prospectus Supplement, the net proceeds
from the sale of the Securities will be used for the repayment of existing
indebtedness, including indebtedness to PACCAR, and for general corporate
purposes. The precise amount and timing of sales of the Securities will be
dependent on the funding requirements of the Company, market conditions and the
availability and cost of other funds to the Company.
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The Company expects to incur additional long-term and short-term debt in the
future. The nature and amounts of such indebtedness can be expected to vary from
time to time as a result of the volume of the Company's business, market
conditions and other factors.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the Company and for PACCAR for the periods indicated.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEAR ENDED
DECEMBER 31,
-------------------- -----------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Company......................... 1.52 1.71 1.67 1.66 1.38 1.09 1.08
PACCAR and subsidiaries......... 4.12 4.48 4.44 4.14 2.16 1.48 1.75
</TABLE>
For purposes of calculating the ratio of earnings to fixed charges for the
Company, earnings consist of income from operations plus fixed charges. Fixed
charges consist of interest expense plus one-third of rent expense (which is
deemed representative of an interest factor). The method of computing the ratio
of earnings to fixed charges shown above complies with the Commission's
reporting requirements but differs from the method called for in the Support
Agreement (the "Support Agreement") between the Company and PACCAR. See
"Relationship with PACCAR." The ratios computed pursuant to the Support
Agreement were 1.82, 1.89, 1.59, 1.26 and 1.25 for the years 1994-1990,
respectively.
For purposes of calculating the ratio of earnings to fixed charges for
PACCAR and all its majority owned subsidiaries, including the Company, earnings
consist of net income plus fixed charges and income taxes, less minority
interest, and undistributed net earnings of affiliated companies. Fixed charges
consist of interest expense plus one-third of rent expense (which is deemed
representative of an interest factor).
RELATIONSHIP WITH PACCAR
GENERAL
The Company was formed to finance sales of PACCAR products to and by
PACCAR's dealers. Sales of PACCAR products continue to provide the Company's
principal source of financing business. The Company receives administrative
support and has occasionally borrowed funds from and loaned funds to PACCAR, and
may do so in the future. Since PACCAR owns all the Company's common stock,
PACCAR can control the management and policies of the Company.
SUPPORT AGREEMENT
The Company and PACCAR are parties to a Support Agreement which obligates
PACCAR to provide, when required, financial assistance to the Company to assure
that the Company maintains a ratio of net earnings available for fixed charges
to fixed charges (as defined therein) of at least 1.25 to 1 for any fiscal year,
and requires PACCAR to own, directly or indirectly, all outstanding voting stock
of the Company. The required ratios for the years ended December 31, 1991-1995
were met without assistance from PACCAR. In 1990, PACCAR provided earnings
support of $7,290,000 in order to maintain the ratio of 1.25 to 1. See "Ratio of
Earnings to Fixed Charges."
The Company and PACCAR may amend or terminate any or all of the provisions
of the Support Agreement upon 30 days' notice, with copies of the notice being
sent to all nationally recognized statistical rating organizations ("NRSROs")
which have issued ratings with respect to debt of the Company ("Rated Debt").
Such amendment or termination will be effective only if (i) two NRSROs confirm
in writing that their ratings with respect to any Rated Debt would remain the
same after such amendment or termination, or (ii) the notice of amendment or
termination provides that the Support Agreement will continue in effect with
respect to Rated Debt outstanding on the effective date of such amendment or
termination unless such debt has been paid or defeased pursuant to the indenture
or other agreement applicable to such debt, or (iii) the holders of at least
two-thirds of the aggregate principal amount of all outstanding Rated Debt with
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<PAGE>
an original maturity in excess of 270 days consent in writing to such amendment
or termination, provided that the holders of Rated Debt having an original
maturity of 270 days or less shall continue to have the benefit of the Support
Agreement until the maturity of such debt.
The Support Agreement expressly states that PACCAR's commitments to the
Company thereunder do not constitute a PACCAR guarantee of payment of any
indebtedness or liability of the Company to others and do not create rights
against PACCAR in favor of persons other than the Company. There are no
guarantees, direct or indirect, by PACCAR of payment of any indebtedness of the
Company, including, without limitation, the Securities.
DESCRIPTION OF SECURITIES
The Securities are to be issued under an indenture dated as of December 1,
1983 as amended by the first supplemental indenture dated as of June 19, 1989
(the "Indenture"), between the Company and Citibank, N.A., as Trustee (the
"Trustee"). Senior debt securities of the Company issued under the Indenture,
including the Securities, are sometimes referred to herein as the "Indenture
Securities." A copy of the Indenture is filed as an exhibit to the Registration
Statement. The following description summarizes certain provisions of the
Indenture and is subject to the detailed provisions of the Indenture. Whenever
any particular section of the Indenture or any term defined therein is referred
to, such section or definition is incorporated herein by reference, and the
statement in connection with which such reference is made is qualified in its
entirety by such reference. Further terms of the Offered Securities will be set
forth in a Prospectus Supplement.
GENERAL
The Indenture does not limit the aggregate principal amount of Indenture
Securities which may be issued thereunder and provides that Indenture Securities
may be issued from time to time in one or more series. Indenture Securities are
unsecured senior indebtedness of the Company.
The applicable Prospectus Supplement will describe the following terms of
the Offered Securities (to the extent such terms are applicable to such Offered
Securities); (1) the title of the Offered Securities; (2) any limit on the
aggregate principal amount of the Offered Securities; (3) the date or dates on
which the Offered Securities will mature; (4) the rate or rates per annum at
which the Offered Securities will bear interest, if any, or the manner in which
such rates are determined, and the date or dates from which such interest, if
any, will accrue; (5) the dates on which such interest, if any, on the Offered
Securities will be payable and the Regular Record Dates for such payment dates;
(6) any mandatory or optional sinking fund or analogous provisions; (7) whether
the Offered Securities are to be issued in the form of one or more global
securities (a "Global Security") and, if so, the identity of the Depositary for
such Global Security or Securities; (8) any redemption terms; (9) any additional
covenants for the benefit of the Holders of the Offered Securities; (10) the
currency or composite currency unit for payment of principal and interest (if
other than United States dollars); (11) whether the amount of payments of
principal, premium and interest on the Offered Securities may be determined with
reference to an index, formula or other method and the manner in which such
amounts shall be determined; and (12) certain other terms, including the ability
of the Company to satisfy and discharge its obligations under the Indenture more
than one year prior to the maturity or redemption of the Offered Securities.
(Sections 301 and 401).
Unless otherwise provided in the applicable Prospectus Supplement, principal
of and premium and interest, if any, on the Offered Securities will be payable,
and the transfer of the Offered Securities will be registrable, at the Corporate
Trust Office of the Trustee, except that payment of interest, if any, may be
made at the option of the Company by check mailed to the address of the person
entitled thereto as it appears in the Security Register for the Offered
Securities. (Sections 301, 305 and 1002).
Unless otherwise provided in the Prospectus Supplement, the Offered
Securities will be denominated in United States dollars, will be issued only in
fully registered form without coupons and, if denominated in United States
dollars, will be issued in denominations of $1,000 or any integral multiple
thereof. The Securities may be issuable in whole or in part in the form of one
or more Global Securities, as described
4
<PAGE>
below under "Global Securities." No service charge will be made for any transfer
or exchange of the Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. (Sections 302 and 305).
Indenture Securities of a single series may be issued at various times with
different maturity dates, may bear interest at different rates and may otherwise
vary, all as provided in the Indenture. (Section 301).
If the principal of, or premium or interest on, any Offered Securities is
payable in a currency or composite currency unit other than United States
dollars or is determined by reference to an index, formula or other method, any
special federal income tax considerations applicable to such Offered Securities
will be described in the Prospectus Supplement relating thereto.
The Securities may be issued as original issue discount Securities (bearing
no interest or bearing interest at a rate which at the time of issue is
significantly below market rates) to be sold at a substantial discount below
their principal amount. If any Offered Securities are issued as original issue
discount Securities, the special federal income tax, accounting and other
considerations applicable thereto will be described in the Prospectus Supplement
relating thereto.
GLOBAL SECURITIES
The Securities of a series may be issued in whole or in part in the form of
one or more Global Securities that will be deposited with, or on behalf of, a
depositary (the "Depositary") identified in the Prospectus Supplement relating
to such series. Unless and until it is exchanged in whole or in part for
Securities in definitive 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. (Sections 303 and
305).
The specific terms of the Depositary arrangement with respect to a series of
Securities will be described in the Prospectus Supplement relating to such
series. Unless otherwise stated in the Prospectus Supplement, the following
provisions will apply to all depositary arrangements.
Ownership of beneficial interests in a Global Security will be limited to
persons that have accounts with the Depositary for such Global Security or its
nominee ("Participants") or persons that may hold interests through
Participants. Such accounts shall be designated by the underwriters or agents
with respect to such Securities or by the Company if such Securities are offered
and sold directly by the Company. Upon the issuance of a Global Security, the
Depositary for such Global Security will credit, on its book-entry registration
and transfer system, the Participants' accounts with the respective principal
amounts of the Securities represented by such Global Security. 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 (with respect to interests of Participants) and on the records of
Participants (with respect to interests of persons held through Participants).
The laws of some states may require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such limits and such
laws may impair the ability to transfer beneficial interests in a Global
Security.
So long as the Depositary for a Global Security, or its nominee, 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 Securities
represented by such Global Security for all purposes under the Indenture. Except
as provided below, owners of beneficial interests in a Global Security will not
be entitled to have the Securities of the series represented by such Global
Security registered in their names, will not receive or be entitled to receive
physical delivery of the Securities of such series in definitive form and will
not be considered the owners or Holders thereof under the Indenture.
Principal, premium, if any, and interest payments on the Securities
registered in the name of a Depositary or its nominee will be made to the
Depositary or its nominee, as the case may be, as the registered owner of the
Global Security representing such Securities. None of the Company, the Trustee,
any Paying Agent or the Security Registrar will have any responsibility or
liability for any aspect of the records
5
<PAGE>
relating to or payments made on account of beneficial ownership interests of the
Global Security for such Securities or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
The Company will obtain confirmation from the Depositary that upon receipt
of any payment of principal, premium or interest on a Global Security, it 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. Payments by Participants to
owners of beneficial interests in such Global Security held through such
Participants will be the responsibility of such Participants, as is now the case
with securities held for the accounts of customers registered in "street name."
If the Depositary for any 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 ninety days, the Company will
issue such 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 Securities of a series represented by one or more Global
Securities and, in such event, will issue Securities of such series in
definitive form in exchange for all of the Global Securities representing such
Securities.
CERTAIN COVENANTS OF THE COMPANY
CERTAIN DEFINITIONS APPLICABLE TO COVENANTS. "Subsidiary" means a
corporation more than 50% of the outstanding voting stock of which is owned
directly or indirectly by the Company and/or one or more Subsidiaries of the
Company. "Restricted Debt" means any indebtedness for money borrowed for which
the Company or a Subsidiary is liable, directly or indirectly, absolutely or
contingently, and includes obligations created or arising under any conditional
sale, financing lease or other title retention agreement and obligations to pay
for property. "Consolidated Assets" means the aggregate amount of assets (less
applicable reserves for depreciation, amortization, unearned finance charges,
allowance for credit losses and other properly deductible items) after deducting
goodwill and like intangibles, all as set forth on the most recent balance sheet
of the Company and its consolidated Subsidiaries and computed in accordance with
generally accepted accounting principles. "Property" means any kind of property
or assets. "Lien" means any interests in Property securing an obligation owed
to, or a claim by, a person other than the owner of the Property, including, but
not limited to, a security interest arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt, or a lease, consignment or bailment
for security purposes. (Section 101).
RESTRICTIONS ON SECURED DEBT. The Indenture provides that the Company will
not, and will not permit any Subsidiary to, create, incur or suffer to exist any
Lien on any Property of the Company or any Subsidiary securing any Restricted
Debt, without effectively providing that the Indenture Securities (together
with, if the Company so determines, any other indebtedness of the Company of
such Subsidiary) shall be secured equally and ratably with (or, at the option of
the Company, prior to) such secured Restricted Debt unless, after giving effect
thereto, the aggregate amount of all Restricted Debt so secured would not exceed
15% of Consolidated Assets. This restriction will not apply to, and there shall
be excluded from Restricted Debt secured by Liens in any computation under such
restriction, Restricted Debt secured only by (i) Liens on the Property of, or on
any shares of capital stock of, any corporation existing at the time such
corporation becomes a Subsidiary, (ii) Liens in favor of the Company or a
Subsidiary or Liens securing indebtedness of a Subsidiary to the Company or of
the Company or a Subsidiary to a Subsidiary, (iii) Liens in favor of any
governmental body, or a surety for a governmental body, to secure progress,
advance or other payments, (iv) certain Liens on Property repossessed in the
ordinary course of business, (v) certain bankers' liens or other rights of
offset, (vi) Liens on Property and rentals therefrom existing at the time of
acquisition thereof (including acquisition through merger or consolidation), or
to secure the payment of all or any part of the purchase price thereof or
construction thereon or to secure any Restricted Debt incurred prior to, at the
time of, or within 180 days after the later of the acquisition of such Property
or the completion of construction for the purpose of financing all or any part
of the purchase price thereof or construction thereon, and (vii) any extension,
renewal or replacement of any Lien referred to in the foregoing clauses (i)
through (vi), inclusive. (Section 1005).
6
<PAGE>
EVENT RISKS. The Indenture does not contain any provision which would
prohibit a recapitalization transaction, a change of control of the Company or a
highly leveraged transaction, unless such transaction or change of control were
structured to include a merger, consolidation or sale, lease or conveyance of
all or substantially all of the assets of the Company. See "Description of
Securities -- Mergers and Sales of Assets by the Company." Except as may be
described in a Prospectus Supplement, there are no provisions for a right to a
put or to acquire any increased interests or any other rights that would afford
Holders of the Securities additional protection in the event of a
recapitalization transaction, a change of control of the Company or a highly
leveraged transaction. The Support Agreement does provide, however, that PACCAR
will own all outstanding voting stock of the Company and will provide financial
assistance to the Company under certain circumstances. See "Relationship with
PACCAR -- Support Agreement."
MERGERS AND SALES OF ASSETS BY THE COMPANY
The Company may consolidate or merge with or into any other corporation, and
the Company may sell or transfer all or substantially all of its assets to
another corporation, provided, among other things, that (a) the corporation
formed by or resulting from any such consolidation or merger or which shall have
received the transfer of such assets shall be a corporation organized and
existing under the laws of the United States, any State thereof or the District
of Columbia and shall expressly assume payment of the principal of (and premium,
if any) and interest on the Indenture Securities and the performance and
observance of the Indenture, (b) the Company or such successor corporation shall
not immediately thereafter be in default under the Indenture and (c) the Company
shall not become subject to a Lien not permitted by the provisions of the
Indenture or shall have secured the Indenture Securities equally and ratably
with (or, at the option of the Company, prior to) any indebtedness secured by
any Lien not so permitted. (Section 801).
SATISFACTION AND DISCHARGE
The Company shall be discharged from its obligations under the Securities of
a series at any time when (a) the Company has irrevocably deposited with the
Trustee in trust, (i) sufficient funds to pay the principal of (and premium, if
any) and interest to Stated Maturity or any Redemption Date on, the Securities
of such series, or (ii) to the extent the Securities of such series are payable
in United States dollars only, such amount of direct obligations of, or
obligations the principal of and interest on which are fully guaranteed by, the
United States, and which are not subject to prepayment, redemption or call, as
will, together with the predetermined and certain income to accrue thereon
without consideration of any reinvestment thereof, be sufficient to pay when due
the principal of (and premium, if any), and interests to Stated Maturity or any
Redemption Date on, the Securities of such series, (b) the Company has paid all
other sums payable with respect to the Securities of such series, and (c) unless
otherwise provided in the applicable Prospectus Supplement, if such deposit
occurs more than one year prior to the Stated Maturity or redemption of the
Securities of such series, notice has been given to the Holders of the
Securities of such series and the Trustee has received an opinion of recognized
tax counsel to the effect that such deposit and discharge will not result in
recognition by the Holders of the Securities of such series of income, gain or
loss for federal income tax purposes (other than income, gain or loss which
would have been recognized in like amount and at a like time absent such deposit
and discharge). Upon such discharge, the Holders of the Securities of such
series shall no longer be entitled to the benefits of the Indenture, except for
the purposes of registration of transfer and exchange of the Securities of such
series, and shall look only to such deposited funds or obligations for payment.
(Sections 401 and 403).
EVENTS OF DEFAULT
The following are Events of Default under the Indenture with respect to
Securities of any series: (i) default in the payment of principal of or any
premium on any Security of that series when due; (ii) default in the payment of
any interest on any Security of that series when due and continuance of such
default for 30 days; (iii) default in the deposit of any sinking fund payment
when due in respect of any Security of that series; (iv) default in the
performance of any other covenant of the Company in the Indenture (other than a
covenant included in the Indenture solely for the benefit of a series of the
Indenture Securities other than that series), and continuance of such default
for 90 days after written notice as provided in the Indenture; (v) certain
events of bankruptcy, insolvency or reorganization; (vi) a default under any
indenture or instrument evidencing indebtedness of the Company (including the
Indenture), which default shall have
7
<PAGE>
resulted in the acceleration of such indebtedness in excess of $10,000,000 in
aggregate principal amount (except that such amount shall not apply in respect
to a default on Indenture Securities of another series) and such acceleration
shall not have been rescinded or such indebtedness discharged within a period of
30 days after notice; and (vii) any other event of default provided for such
series of Securities. (Section 501).
If an Event of Default with respect to the Outstanding Securities of any
series occurs and is continuing, either the Trustee or the Holders of at least
25% in aggregate principal amount of the Outstanding Securities of that series
may declare the principal amount (or, if the Securities of that series are
original issue discount Securities, such portion of the principal amount as may
be specified in the terms of that series) of all the Securities of that series
to be due and payable immediately. At any time after a declaration of
acceleration with respect to Securities of any series has been made, but before
a judgment or decree based on acceleration has been obtained, the Holders of a
majority in principal amount of the Outstanding Securities of that series may,
under certain circumstances, rescind and annul such acceleration. (Section 502).
The Indenture provides that, subject to the duty of the Trustee during
default to act with the required standard of care, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any of the Holders, unless such Holders shall have
offered to the Trustee reasonable indemnity. (Section 603). Subject to such
provisions for the indemnification of the Trustee and certain other conditions,
the Holders of a majority in principal amount of the Outstanding Securities of
any series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, with respect to the Securities of
that series. (Section 512). The right of a Holder of any Security to institute a
proceeding with respect to the Indenture is subject to certain conditions
precedent, but each Holder has an absolute right to receive payment of
principal, and premium and interest, if any, when due and to institute suit for
the enforcement of any such payment. (Sections 507 and 508). The Indenture
provides that the Trustee, within 90 days after the occurrence of a default with
respect to the Securities of any series, is required to give the Holders of such
Securities notice of such default, unless previously cured or waived; provided
that, except in the case of default in the payment of principal, premium or
interest, if any, or in the payment of any sinking fund or redemption
installment, the Trustee may withhold such notice if it determines it is in the
interest of such Holders to do so. (Section 602).
The Company will be required to furnish to the Trustee annually a statement
as to the performance by the Company of its obligations under the Indenture and
as to any default in such performance. (Section 1006).
MODIFICATION AND WAIVER
Certain modifications and amendments of the Indenture may be made by the
Company and the Trustee with the consent of the Holders of not less than a
majority in principal amount of the Outstanding Securities of each series
affected by such modification or amendment; provided, however, that no such
modification or amendment may, without the consent of the Holder of each
Outstanding Security affected thereby, (i) change the stated maturity date of
the principal of, or any installment of principal of or interest, if any, on,
any Security, (ii) reduce the principal amount of, or premium or rate of
interest, if any, on, any Security, (iii) reduce the amount of principal of an
original issue discount Security payable upon acceleration of the maturity
thereof, (iv) change the place or currency of payment of principal of, or
premium or interest, if any, on, any Security, (v) impair the right to institute
suit for the enforcement of any payment on or with respect to any Security, or
(vi) reduce the percentage in principal amount of Outstanding Securities of any
series, the consent of whose Holders is required for modification or amendment
of the Indenture or for waiver of compliance with certain provisions of the
Indenture or for waiver of certain defaults. (Section 902).
The Holders of a majority in principal amount of the Outstanding Securities
of each series may, on behalf of all Holders of Securities of that series,
waive, insofar as that series is concerned, compliance by the Company with
certain restrictive provisions of the Indenture and any past default under the
Indenture with respect to Securities of that series, except a default in the
payment of principal, or premium or interest, if any, or in respect of a
covenant or condition which cannot be waived without the consent of each Holder
of Securities of that series. (Sections 513 and 1007).
8
<PAGE>
REGARDING THE TRUSTEE
The Company and PACCAR maintain general banking and credit relationships
with Citibank, N.A., in the ordinary course of business. Citibank, N.A., serves
as trustee under the Indenture with respect to certain of the Company's other
senior debt securities.
PLAN OF DISTRIBUTION
The Company may sell all or part of the Securities to or through one or more
underwriters for public offering and sale by them, and also may sell Securities
directly to investors or to or through one or more agents.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed from time
to time, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices.
In connection with the sale of Securities, underwriters and agents may
receive compensation from the Company or from purchasers of Securities in the
form of discounts, concessions or commissions. Underwriters and agents who
participate in the distribution of Securities may be deemed to be underwriters,
and any discounts or commissions received by them and any profit on the resale
of Securities by them may be deemed to be underwriting discounts and
commissions, under the Securities Act. Any such underwriter or agent will be
identified, and any such compensation will be described, in the Prospectus
Supplement.
Under agreements which may be entered into by the Company, underwriters and
agents who participate in the distribution of Securities may be entitled to
indemnification by the Company against, and contribution from the Company with
respect to, certain liabilities, including liabilities under the Securities Act.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters or agents to solicit offers by certain institutions to purchase the
Securities covered by the Prospectus Supplement from the Company at the public
offering price set forth therein pursuant to delayed delivery contracts which
will provide for payment and delivery on a future date. Each of such contracts
will be for an amount not less than, and unless the Company otherwise agrees the
aggregate principal amount of Securities sold pursuant to such contracts shall
not be more than, the respective amounts stated in the Prospectus Supplement.
VALIDITY OF SECURITIES
The validity of the Securities has been passed upon for the Company by Bruce
N. Holliday, Assistant General Counsel of PACCAR, and counsel for the Company.
EXPERTS
The financial statements of the Company appearing in the Company's Annual
Report (Form 10-K) for the year ended December 31, 1994 have been audited by
Ernst & Young, independent auditors, as set forth in their report thereon
included therein and incorporated by reference. Such financial statements are,
and audited financial statements to be included in subsequently filed documents
will be, incorporated herein by reference in reliance upon such report of Ernst
& Young pertaining to such financial statements (to the extent covered by
consents filed with the Commission) given upon the authority of such firm as
experts in accounting and auditing.
9
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT, THE APPLICABLE PRICING SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT, THE APPLICABLE
PRICING SUPPLEMENT AND THE PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR BY THE AGENTS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT,
THE APPLICABLE PRICING SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCE, CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS
SUPPLEMENT, THE APPLICABLE PRICING SUPPLEMENT AND THE PROSPECTUS DO NOT
CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER
OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER IS
NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
-------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Risk Factors................................... S-2
Description of Notes........................... S-5
Special Provisions Relating to Foreign Currency
Notes......................................... S-19
Certain United States Federal Income Tax
Considerations................................ S-22
Plan of Distribution........................... S-29
Certain Legal Matters.......................... S-30
PROSPECTUS
Available Information.......................... 2
Incorporation of Certain Documents by
Reference..................................... 2
The Company.................................... 2
Use of Proceeds................................ 2
Ratio of Earnings to Fixed Charges............. 3
Relationship With PACCAR....................... 3
Description of Securities...................... 4
Plan of Distribution........................... 9
Validity of Securities......................... 9
Experts........................................ 9
</TABLE>
$1,000,000,000
[PACCAR LOGO]
MEDIUM-TERM NOTES,
SERIES H
---------------------
PROSPECTUS SUPPLEMENT
---------------------
MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
LEHMAN BROTHERS
SALOMON BROTHERS INC
MARCH 11, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............... $ 344,828
Accounting fees and expenses...................................... 54,000*
Legal fees and expenses, including those of agents and
underwriters..................................................... 23,500*
Blue Sky qualification fees and expenses.......................... 10,750*
Printing and engraving............................................ 8,200*
Trustee's fees and expenses....................................... 31,500*
Rating agency fees................................................ 147,000*
Miscellaneous..................................................... 5,000*
---------
Total......................................................... $ 624,778*
---------
---------
</TABLE>
- ------------------------
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
A provision of the Washington Business Corporation Act (Section 23B.08.310
of the Revised Code of Washington) provides that a director held liable under
that section for an unlawful distribution is entitled to contribution (a) from
every other director who could be held liable under that section and (b) from
each shareholder for the amount the shareholder accepts knowing the distribution
was made in violation of the Washington Business Corporation Act or the
corporation's articles of incorporation.
Provisions of the Washington Business Corporation Act (Sections 23B.08.500
through 23B.08.600 of the revised Code of Washington) authorize a corporation's
board of directors to grant, or a court to award, indemnity to directors and
officers under certain circumstances and subject to certain limitations. Article
Nine of the registrant's Articles of Incorporation provides:
"The Corporation shall indemnify any director, officer or employee of
the Corporation, or any person who may have served at its request as a
director, officer or employee of another corporation in which it owns shares
of capital stock or of which it is a creditor, against expenses actually and
necessarily incurred by him in connection with the defense of any action,
suit or proceeding in which he is made a party by reason of being or having
been such director, officer, or employee, except in relation to matters as
to which he shall be adjudged in such action, suit or proceeding to be
liable for negligence or misconduct in the performance of duty. The
Corporation may also reimburse to any director, officer or employee the
reasonable costs of settlement of any such action, suit or proceeding, if it
shall be found by a majority of a committee composed of the directors not
involved in the matter in controversy (whether or not a quorum) that it was
to the interest of the Corporation that such settlement be made and that
such director, officer or employee was not guilty of negligence or
misconduct. Such rights of indemnification and reimbursement shall not be
deemed exclusive of any other rights to which such director, officer or
employee may be entitled under any Bylaw, agreement, vote of shareholders or
otherwise."
Pursuant to Section 145 of the Delaware General Corporation Law, under which
PACCAR is incorporated, PACCAR is in certain circumstances permitted, and in
other circumstances may be required, to indemnify directors and officers of the
registrant against certain expenses (including attorneys' fees) and other
amounts paid in connection with certain threatened, pending or completed civil,
criminal, administrative or investigative actions, suits or proceedings, in
which such persons were or are parties, or are threatened to be made parties, by
reason of the fact that such persons were or are directors or officers of the
registrant. Article Twelfth of the Certificate of Incorporation of PACCAR
contains provisions consistent with Section 145 with respect to indemnification
of the registrant's officers and directors.
II-1
<PAGE>
Reference is made to Section 7 of the forms of distribution agreement and
underwriting agreement filed as exhibits 1.1 and 1.2, respectively, to the
registration statement for provisions regarding the indemnification of the
registrant, its directors, certain of its officers and its controlling persons
against certain liabilities, including liabilities under the Securities Act of
1933.
PACCAR maintains directors' and officers' liability and corporation
reimbursement insurance with limits of $55,000,000 per policy year, under which
the registrant's directors and officers are insured against loss (as defined) as
a result of claims brought against them for their wrongful acts in such
capacities.
ITEM 16. EXHIBITS.
The exhibits to the registration statement required by Item 601 of
Regulation S-K are listed in the accompanying index to exhibits.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, unless the information required to be included in
such post-effective amendment is contained in a periodic report filed
with or furnished to the Commission by the registrant pursuant to Section
13 or Section 15(d) of the Securities Exchange Act of 1934 (the "Act")
and incorporated herein by reference;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement, unless the information required to be
included in such post-effective amendment is contained in a periodic
report filed with or furnished to the Commission by the registrant
pursuant to Section 13 or Section 15(d) of the Act and incorporated
herein by reference. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Act
that is incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or
II-2
<PAGE>
otherwise the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3, and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Bellevue, State of Washington, on the day of March
11, 1996.
PACCAR FINANCIAL CORP.
By _________/s/_R. E. Ranheim_________
(R. E. Ranheim, Treasurer)
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities indicated on the day of March 11, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------------------ ---------------------------------------------------------
<S> <C>
(1) Principal Executive Officer and Director
/s/ T. R. Morton
------------------------------------------- President and Director
(T. R. Morton)
(2) Principal Financial Officer
/s/ R. E. Ranheim
------------------------------------------- Treasurer
(R. E. Ranheim)
(3) Principal Accounting Officer
/s/ M. T. Barkley
------------------------------------------- Controller
(M. T. Barkley)
(4) A Majority of the Board of Directors
/s/ G. D. Hatchel*
------------------------------------------- Director
(G. D. Hatchel)
/s/ D. J. Hovind*
------------------------------------------- Director
(D. J. Hovind)
/s/ C. M. Pigott*
------------------------------------------- Director
(C. M. Pigott)
/s/ M. C. Pigott*
------------------------------------------- Director
(M. C. Pigott)
/s/ J. L. Shiplet*
------------------------------------------- Director
(J. L. Shiplet)
/s/ M. A. Tembreull*
------------------------------------------- Director
(M. A. Tembreull)
/s/ J. J. Waggoner*
------------------------------------------- Director
(J. J. Waggoner)
/s/ R. E. Ranheim
*By: --------------------------------------
(R. E. Ranheim, Attorney-in-Fact)
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIAL
NUMBERING
SYSTEM PAGE
NUMBER
---------------
<C> <S> <C>
1.1. Form of distribution agreement for the Medium-Term Notes, Series H.........................
1.2. Form of underwriting agreement for the Medium-Term Notes, Series H.........................
4.1. Indenture for Senior Debt Securities dated as of December 1, 1983 and first Supplemental
Indenture dated as of June 19, 1989 between the Company and Citibank, N.A. (incorporated
by reference to Exhibit 4.1 to the Company's Annual Report on Form 10-K dated March 26,
1984, File Number 0-12553 and Exhibit 4.2 to the Company's Registration Statement on Form
S-3 dated June 23, 1989, Registration Number 33-29434).
4.2A. Form of Medium-Term Note, Series H (Fixed-Rate)............................................
4.2B. Form of Medium-Term Note, Series H (Floating-Rate).........................................
4.3. Form of Letter of Representations among the registrant, Citibank, N.A. and The Depository
Trust Company.............................................................................
5.1. Opinion of B. N. Holliday, Esq. as to the legality of the Securities.......................
8.1. Opinion of Richard W. Blacker, Esq., with respect to certain tax matters...................
12.1. Statement re computation of ratio of earnings to fixed charges of the registrant.
Incorporated by reference to Exhibits 12.1 to the registrant's annual report on Form 10-K
for the fiscal year ended December 31, 1994 ("1994 Form 10-K") and the quarterly reports
on Form 10-Q for the quarters ended September 30, 1994 and September 30, 1995.............
12.2. Statement re computation of ratio of earnings to fixed charges of the registrant under the
Support Agreement (formerly the Operating Agreement) with PACCAR. Incorporated by
reference to Exhibit 12.2 to 1994 Form 10-K...............................................
12.3. Statement re computation of ratio of earnings to fixed charges of PACCAR. Incorporated by
reference to Exhibits 12.3 to 1994 Form 10-K and the quarterly reports on Form 10-Q for
the quarters ended September 30, 1994 and September 30, 1995..............................
12.4. Statement re computation of ratios for allowance for losses on receivables and past due
levels. Incorporated by reference to Exhibit 12.4 to 1994 Form 10-K.......................
23.1. Consent of Ernst & Young, independent public accountants...................................
23.2. Consent of B. N. Holliday, Esq. (included in Exhibit 5.1)..................................
23.3. Consent of Richard W. Blacker, Esq. (included in Exhibit 8.1)..............................
24.1. Power of attorney of certain officers and directors........................................
25.1. Form T-1 Statement of Eligibility and Qualification of Citibank, N.A. under the Trust
Indenture Act of 1939.....................................................................
99.1. Support Agreement dated as of June 19, 1989 between the registrant and PACCAR. Incorporated
by reference to Exhibit 28.1 to registrant's Registration Statement on Form S-3 dated June
23, 1989, Registration Number 33-29434....................................................
</TABLE>
- ------------------------
Other exhibits listed in Item 601 of Regulation S-K are not applicable.
<PAGE>
Exhibit 1.1
$1,000,000,000
PACCAR FINANCIAL CORP.
Medium-Term Notes, Series H
DISTRIBUTION AGREEMENT
______________________
To the several Agents March __, 1996
who are signatories hereto
Dear Sirs:
PACCAR Financial Corp., a Washington corporation (the
"Company"), confirms its agreement with you with respect to the
issue and sale by the Company of up to $1,000,000,000 (or the
equivalent based upon the applicable exchange rate at the time of
issuance in such foreign currency or composite currency units as
the Company shall designate), aggregate principal amount of its
Medium-Term Notes, Series H (the "Securities") to be issued
pursuant to the indenture, dated as of December 1, 1983 as
amended by the first supplemental indenture dated as of June 19,
1989 (the "Indenture"), between the Company and Citibank, N.A.,
as trustee (the "Trustee").
This Distribution Agreement (the "Agreement") provides
both for the sale of Securities by the Company directly to
purchasers through the Agents, in which case the Agents will act
as agents of the Company in soliciting Security purchasers, and
(as may from time to time be agreed to by the Company and the
Agents) to the Agents as principals for resale to purchasers.
Additional terms of any sale of Securities to the Agents as
principals will be set out in a Terms Agreement (as hereinafter
defined) relating to such sale, all as more fully provided
herein.
Subject to the terms and conditions stated herein and
subject to the reservations by the Company of the right to sell
Securities directly to investors on its own behalf or to one or
more underwriters for resale to the public, the Company hereby
(i) appoints the Agents as agents of the Company for the purpose
of soliciting purchases of the Securities from the Company by
others, (ii) agrees that it will sell Securities only to or
through the Agents or other agents appointed from time to time by
the Company pursuant to agreements having terms not more
favorable to such agents or the Company than the terms and
conditions of this Agreement and (iii) agrees that whenever the
Company determines to sell Securities directly to the Agents as
principals for resale to others, it will enter into a Terms
-1-
<PAGE>
Agreement relating to such sale in accordance with the provisions
of Section 2(b) hereof. The Company shall give the Agents prior
notice of the appointment of any additional agents for the
purpose of soliciting purchasers of the Securities. The Company
will notify each Agent of the amount of Securities from time to
time remaining unsold and of such other information as may be
reasonably necessary to prevent inadvertent solicitations for
sales in excess of the amount of Securities then remaining
unsold.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) The Company represents and warrants as of the date
hereof, as of the date of each acceptance by the Company of any
offer for the purchase of Securities, as of the date of each
delivery of the Securities (the date of each such delivery to an
Agent as principal being hereafter referred to as a "Settlement
Date"), as of the Closing Date hereinafter referred to, and as of
the times referred to in Sections 6(a), 6(b) and 6(c) hereof (in
each case a "Representation Date"), as follows:
(i) A registration statement on Form S-3 with
respect to the Securities has been prepared and filed
by the Company under the Securities Act of 1933, as
amended (the "Act"), and the rules and regulations (the
"Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder, and has
become effective. The Indenture has been qualified
under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"). As used in this Agreement,
(A) "Preliminary Prospectus" means each prospectus and
amendments or supplements thereof (including all
documents incorporated therein by reference) included
in such registration statement before it became
effective under the Act, including any prospectus filed
with the Commission pursuant to Rule 424(a) of the
Rules and Regulations; (B) "Registration Statement"
means such registration statement when it became
effective under the Act, as from time to time amended
or supplemented (including all documents incorporated
therein by reference); (C) "Basic Prospectus" means the
prospectus (including all documents incorporated
therein by reference) included in the Registration
Statement; and (D) "Prospectus" means the Basic
Prospectus, together with any prospectus amendments or
supplements (including in each case all documents
incorporated therein by reference), as filed with, or
mailed for filing to, the Commission pursuant to
paragraph (b) of Rule 424 of the Rules and Regulations.
(ii) The Registration Statement (including all
exhibits thereto) and each Prospectus conform, and will
conform as of each applicable Representation Date, in
all material respects with the applicable requirements
-2-
<PAGE>
of the Act, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Trust Indenture Act,
and the rules and regulations of the Commission under
such Acts; the Indenture, including any amendments and
supplements thereto, conforms, and will conform as of
the applicable Representation Date, in all material
respects with the requirements of the Trust Indenture
Act and the rules and regulations of the Commission
thereunder; and the Registration Statement does not,
and will not as of each applicable Representation Date,
contain any untrue statement of a material fact or omit
to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading and the Prospectus does not as of the date
hereof, and will not as of each applicable
Representation Date, contain an untrue statement of a
material fact or omit to state a material fact
necessary in order to make the statements therein, in
the light of the circumstances under which they were
made, not misleading; PROVIDED, HOWEVER, that the
Company makes no representation or warranty to any
Agent as to information contained in or omitted from
the Registration Statement or any Prospectus in
reliance upon and in conformity with written
information furnished to the Company by such Agent
specifically for inclusion therein.
(iii) The Company is not in violation of its
corporate charter or bylaws or in default in the
observance or performance of any agreement, indenture
or instrument, the effect of which violation or default
would be material to the Company; the execution,
delivery and performance of this Agreement and any
applicable Terms Agreement, the Indenture and the
Securities, and compliance by the Company with the
provisions of the Securities and the Indenture, have
been duly authorized by all necessary corporate action
and will not conflict with, result in the creation or
imposition of any lien, charge or encumbrance upon any
of the assets of the Company pursuant to the terms of,
or constitute a default in the observance or
performance of, any agreement, indenture or instrument,
or result in a violation of the corporate charter or
bylaws of the Company or any order, rule or regulation
of any court or governmental agency having jurisdiction
over the Company or its properties, the effect of which
conflict, lien, charge, encumbrance, default or
violation would be material to the Company; and except
as required by the Act, the Trust Indenture Act, the
Exchange Act and applicable state securities laws, no
consent, authorization or order of, or filing or
registration with, any court or governmental agency is
required for the execution, delivery and performance of
this Agreement, any applicable Terms Agreement and the
-3-
<PAGE>
Indenture or in connection with the sale of Securities
hereunder, the failure to obtain which consent,
authorization or order or make which filing or
registration would be material to the Company. The
Company has no subsidiaries within the meaning of
Rule 405 of the Rules and Regulations.
(iv) From the dates as of which information is
given in the Registration Statement and each
Prospectus, and except as described therein or in any
amendment or supplement thereto (A) there has not been
any material adverse change in the business,
properties, financial condition, results of operations
or prospects of the Company, (B) there has been no
material transaction entered into by the Company other
than those in the ordinary course of business,
(C) there has been no dividend or distribution of any
kind declared, paid or made by the Company on its
capital stock, and (D) there has been no amendment to
the support agreement between the Company and
PACCAR Inc ("PACCAR") as amended and restated under
date of June 19, 1989.
(v) Ernst & Young, whose report appears in the
Company's Annual Report on Form 10-K which is
incorporated by reference in the Prospectus, are
independent public accountants as required by the Act
and the Rules and Regulations.
(vi) (A) The Indenture has been duly executed and
delivered by the Company, has been validly authorized
by the Company and constitutes the legally binding
obligation of the Company enforceable in accordance
with its terms (except as enforcement thereof may be
limited by bankruptcy, insolvency, other laws relating
to creditor's rights generally or by general equity
principles), (B) when the Securities are offered for
sale pursuant hereto and to any applicable Terms
Agreement, they will have been validly authorized for
issuance and sale pursuant to this Agreement or such
Terms Agreement and, upon delivery and payment therefor
as provided in this Agreement, any applicable Terms
Agreement and the Indenture will be validly issued and
outstanding, and will constitute legally binding
obligations of the Company enforceable in accordance
with their terms (except as enforcement thereof may be
limited by bankruptcy, insolvency, or other laws
relating to creditors' rights generally or by general
equity principles) and entitled to the benefits of the
Indenture, and (C) the descriptions of the Securities
and the Indenture contained in the Prospectus fairly
present the information required with respect thereto
in all material respects.
-4-
<PAGE>
(vii) PACCAR has been duly incorporated and is
validly existing and in good standing under the laws of
the State of Delaware; and the Company has been duly
incorporated, is validly existing and in good standing
under the laws of the State of Washington, is duly
qualified to do business and in good standing as a
foreign corporation in each jurisdiction in which the
failure to so qualify and be in good standing would
materially adversely affect its business or financial
condition, and has the power and authority necessary to
own or hold its properties and to conduct the business
in which it is presently engaged.
(viii) Except as described in the Prospectus,
there is no material litigation or governmental
proceeding pending or, to the knowledge of the Company,
threatened against the Company which might result in
any material adverse change in the financial condition,
results of operations, business, property or prospects
of the Company or which is required to be disclosed in
the Registration Statement.
(ix) The financial statements filed as part of
the Registration Statement or included in any
Preliminary Prospectus or Prospectus present, and will
present as of each applicable Representation Date,
fairly, the financial condition and results of
operations of the Company, at the dates and for the
periods indicated therein, and have been, and will be
as of each applicable Representation Date, prepared in
conformity with generally accepted accounting
principles applied on a consistent basis throughout the
periods involved; and the supporting schedules included
or incorporated in the Registration Statement present
fairly the information required to be stated therein.
(x) The documents incorporated by reference into
the Preliminary Prospectus or Prospectus have been, and
will be as of each applicable Representation Date,
prepared by the Company in conformity in all material
respects with the applicable requirements of the Act
and the Rules and Regulations and the Exchange Act and
the rules and regulations of the Commission thereunder;
and such documents have been, or will be as of each
applicable Representation Date, timely filed as
required thereby.
(xi) There are no contracts or other documents
which are required to be filed as exhibits to the
Registration Statement by the Act or by the Rules and
Regulations, or which were required to be filed as
exhibits to any document incorporated by reference in
any Prospectus by the Exchange Act or the rules and
regulations of the Commission thereunder, which have
-5-
<PAGE>
not been filed as exhibits to the Registration
Statement or to such document or incorporated therein
by reference as permitted by the Rules and Regulations
or the rules and regulations of the Commission under
the Exchange Act, as the case may be.
(xii) All the authorized, issued and outstanding
capital stock of the Company has been duly authorized,
is validly issued, fully paid and nonassessable and is
owned, of record and beneficially, by PACCAR, free and
clear of any mortgage, pledge, lien, claim or
encumbrance, except as described in the Prospectus.
(xiii) The Company has all licenses for the
conduct of its business which the failure to have would
have a material adverse effect on the business of the
Company.
(xiv) The Company has complied and will comply
with all of the provisions of Section 517.075, Florida
Statutes (Chapter 92-198, Laws of Florida), and all
regulations promulgated thereunder relating to issuers
doing business with Cuba.
(b) Any certificate signed by any officer of the
Company and delivered to an Agent or to its counsel in connection
with an offering of Securities or the sale of Securities to an
Agent as principal shall be deemed a representation and warranty
by the Company to such Agent as to the matters covered thereby.
SECTION 2.
(a) SOLICITATIONS AS AGENT. On the basis of the
representations and warranties contained herein, but subject to
the terms and conditions herein set forth, each Agent agrees, as
agent of the Company, to use reasonable efforts to solicit offers
to purchase the Securities upon the terms and conditions set
forth in the Prospectus. The Agents shall not appoint sub-
agents. The Agents are authorized to engage the services of any
other broker or dealer in connection with the offer or sale of
the Notes purchased by the Agents as principal for resale to
others, and the Agents may allow any portion of the discount they
have received in connection with such purchases from the Company
to such brokers or dealers.
The Agents shall offer the Securities at such times, in
such amounts and maturities and at such rates of interest as the
Company shall authorize, but the Company shall not approve the
solicitation of purchases of Securities in excess of the amount
which shall be authorized by the Company from time to time or in
excess of the principal amount of Securities registered pursuant
to the Registration Statement. The Agent will have no
responsibility for maintaining records with respect to the
aggregate principal amount of Securities sold, or of otherwise
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monitoring the availability of Securities for sale under the
Registration Statement. The Agents shall furnish a copy of the
Prospectus to each offeree to the extent required by the Act.
The Agents shall not offer to sell or solicit offers to buy the
Securities in the state of Washington other than to an entity
specified in RCW 21.20.320(8) (i.e., a bank, savings institution,
trust company, insurance company, investment company as defined
in the Investment Company Act of 1940, pension or profit-sharing
trust, or other financial institution or institutional buyer, or
a broker-dealer, whether the entity is acting for itself or in
some fiduciary capacity) provided that any "other financial
institution or institutional buyer" not otherwise specified in
RCW 21.20.320(8) shall have net assets (i.e., the excess of total
assets over total liabilities) of at least $25,000,000. The
Agents shall not offer to sell to or solicit offers to buy from
any person in any state or jurisdiction otherwise than in
conformity with the Blue Sky Memorandum referred to in Section 4.
The Company reserves the right, in its sole discretion,
to suspend solicitation of purchases of the Securities,
commencing at any time, for a period of time or permanently.
Promptly after receipt of telephonic, telegraphic or written
notice from the Company, the Agents will suspend solicitation of
purchases of the Securities from the Company until such time as
the Company has advised them that such solicitation may be
resumed.
Promptly upon the closing of the sale of any
Securities, the Company agrees to pay the appropriate agent a
commission (or allow such Agent a discount) in the currency or
composite currency unit in which such Securities are denominated
equal to a percentage of the principal amount of each of the
Securities sold by the Company as a result of a solicitation made
by such Agent during the term of this Agreement as set forth in
Schedule A hereto.
The Agents are authorized to solicit orders for the
Securities in such denominations (in U.S. dollars or in another
currency or composite currency unit), upon such terms and at such
prices as the Company shall authorize and shall be set forth in a
pricing supplement to the Prospectus to be prepared following
each acceptance by the Company of an offer for the purchase of
Securities. Unless otherwise specifically authorized, the Agents
shall solicit orders only for the purchase of Securities (i) at
100 percent of their principal amount and (ii) denominated in
U.S. dollars in the amount of $1,000 or any integral multiple of
$1,000. Each Agent shall communicate to the Company, orally or
in writing, each reasonable offer to purchase Securities received
by it as Agent. The Company shall have the sole right to accept
offers to purchase the Securities and may in its absolute
discretion reject any such offer in whole or in part. The
Company shall have no liability to any Agent for any commission
for its rejection of any offer or its failure to consummate any
sale. Each Agent shall have the right, in its discretion
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reasonably exercised, to reject any offer to purchase the
Securities received by it in whole or in part, and any such
rejection shall not be deemed a breach of its agreement contained
herein.
(b) PURCHASES AS PRINCIPAL. Each sale of Securities
to an Agent as principal shall be made in accordance with the
terms contained herein and (unless the Company and the Agent
shall otherwise agree) in a separate agreement which will provide
for the sale of such Securities to, and the purchase and
reoffering thereof by, the Agent. Each such separate agreement
(which may be an oral agreement) between an Agent and the Company
is herein referred to as a "Terms Agreement." Unless the context
otherwise requires, each reference contained herein to "this
Agreement" shall be deemed to include any applicable Terms
Agreement between the Company and an Agent. Each such Terms
Agreement, whether oral or in writing, shall be with respect to
such information (as applicable) as is specified in Exhibit A
hereto. An Agent's commitment to purchase Securities as
principal pursuant to any Terms Agreement or otherwise shall be
deemed to have been made on the basis of the representations and
warranties of the Company herein contained and shall be subject
to the terms and conditions herein set forth. Each Terms
Agreement shall specify (i) the principal amount of Securities to
be purchased by such Agent pursuant thereto, (ii) the price to be
paid to the Company for such Securities (which, if not so
specified in a Terms Agreement, shall be at a discount equivalent
to the applicable commission set forth in Schedule A hereto),
(iii) the time and place of delivery of and payment for such
Securities, (iv) any provisions relating to the rights of and any
default by any broker or dealer acting together with such Agent
in the reoffering of the Securities, and (v) such other
provisions (including further terms of the Securities) as may be
mutually agreed upon. The Agents may utilize a selling or dealer
group in connection with the resale of the Securities purchased
and may reallow to any broker or dealer any portion of the
discount or commission payable pursuant hereto. Such Terms
Agreement shall also specify the requirements for the stand-off
agreement, officer's certificate, opinions of counsel and comfort
letter pursuant to Sections 3(l), 5(b), 5(c), 5(e) and 5(f)
hereof.
Securities to be purchased by an Agent as principal are
herein sometimes called the "Purchased Securities." Purchased
Securities will be represented by a global certificate (the
"Book-Entry Securities") registered in the name of the depositary
(the "Depositary") specified in the Prospectus or by certificates
issued in definitive form (the "Certificated Securities").
Delivery of Certificated Securities shall be made to the Agent
and delivery of Book-Entry Securities shall be made to the
Trustee as agent for the Depositary for the account of the Agent,
in either case, against payment by the Agent of the purchase
price to or upon the order of the Company in the funds specified
in the applicable Terms Agreement. Certificated Securities shall
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be registered in such names and in such denominations as the
Agent may request not less than two full business days prior to
the applicable Closing Date (as defined below). The Company will
have Certificated Securities available for inspection, checking
and packaging by the Agent in the city in which delivery and
payment is to occur, not later than 2 p.m., on the business day
prior to the applicable Closing Date.
(c) ADMINISTRATIVE PROCEDURES. Administrative
procedures respecting the sale of Securities shall be agreed upon
from time to time by the Agents and the Company (the
"Procedures"). The several Agents and the Company agree to
perform the respective duties and obligations specifically
provided to be performed by each of them herein and in the
Procedures.
(d) CLOSING DATE. The documents required to be
delivered by Section 5 hereof shall be delivered at the offices
of Brown & Wood, One World Trade Center, New York, New York
10048, on the date hereof or, with respect to any particular
Agent, such other date and time as such Agent and the Company may
agree upon in writing (the "Closing Date").
(e) OTHER DEBT SECURITIES. Nothing contained herein
shall limit the right of the Company to authorize and issue debt
securities, including medium-term notes other than the
Securities, under the Indenture or otherwise.
(f) RELIANCE. The Company and the Agents agree that
any Securities the placement of which the Agents arrange shall be
placed by the Agents, and any Securities purchased by an Agent
shall be purchased, in reliance on the representations,
warranties, covenants and agreements of the Company contained
herein and on the terms and conditions and in the manner provided
herein.
SECTION 3. COVENANTS OF THE COMPANY. The Company
covenants and agrees:
(a) To furnish promptly to each Agent a signed copy of
the Registration Statement as originally filed and each amendment
or supplement thereto, and a copy of each Prospectus with respect
to the Securities filed with the Commission, including all
supplements thereto and all documents incorporated therein by
reference, and all consents and exhibits filed therewith.
(b) To deliver promptly to each Agent such number of
the following documents as each Agent may reasonably request:
(i) conformed copies of the Registration Statement (excluding
exhibits other than the computation of the ratios of earnings to
fixed charges, the Indenture and this Agreement), (ii) each
Preliminary Prospectus, Basic Prospectus and Prospectus with
respect to the Securities, and (iii) any documents incorporated
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by reference in any Prospectus with respect to the Securities
(excluding exhibits).
(c) To file with the Commission, during any period in
which any Prospectus is required by law to be delivered in
connection with sales of the Securities, any amendment or
supplement to the Registration Statement or any Prospectus that
is required by the Act or the Rules and Regulations, and all
documents, and any amendments to previously filed documents,
required to be filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act.
(d) Prior to filing with the Commission during any
period in which the Prospectus is required by law to be delivered
in connection with sales of Securities (i) any amendment or
supplement to the Registration Statement, (ii) any Prospectus or
any amendment or supplement thereto, or (iii) any document
incorporated by reference in any of the foregoing or any
amendment of or supplement to any such incorporated document, to
furnish a copy thereof to the counsel for the Agents and to allow
it and its counsel a reasonable opportunity to comment thereon.
(e) To advise each Agent promptly (i) when any post-
effective amendment to the Registration Statement relating to or
covering the Securities becomes effective, (ii) of any request by
the Commission for an amendment or supplement to the Registration
Statement, to any Prospectus, to any document incorporated by
reference in any of the foregoing or for any additional
information, (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement
or any order directed to any Prospectus or any document
incorporated therein by reference or the initiation or threat of
any stop order proceeding or of any challenge by the Commission
to the accuracy or adequacy of any document incorporated by
reference in any Prospectus, (iv) of receipt by the Company of
any notification with respect to the suspension of the
qualification of the Securities for sale in any jurisdiction or
the initiation or threat of any proceeding for that purpose, and
(v) of the occurrence of any event which causes the Registration
Statement or any Prospectus to contain an untrue statement of a
material fact or omit to state a material fact necessary in order
to make the statements therein not misleading.
(f) If, during any period in which the Prospectus is
required by law to be delivered in connection with sales of the
Securities, the Commission shall issue a stop order suspending
the effectiveness of the Registration Statement, to make every
reasonable effort to obtain the lifting of that order at the
earliest possible time.
(g) To make generally available to its security
holders, as soon as practicable but in no event later than
90 days after each twelve-month period identified below, an
earnings statement (in form complying with the provisions of
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Section 11(a) of the Act, which need not be certified by
independent certified public accountants unless required by the
Act or the Rules and Regulations) covering the twelve-month
period beginning not later than the first day of the fiscal
quarter next following each date which (i) under Section 11(a) of
the Act and the Rules and Regulations is an effective date of the
Registration Statement for purposes of said Section 11(a), and
(ii) is not later than the last sale hereunder.
(h) So long as any of the Securities are outstanding,
to furnish to each Agent not later than the time the Company
makes the same generally available to others, copies of all
reports and financial statements furnished by the Company to any
securities exchange on which the Securities are listed pursuant
to requirements of or agreements with such exchange or to the
Commission pursuant to the Exchange Act or any rule or regulation
of the Commission thereunder.
(i) To endeavor, in cooperation with the Agents, to
qualify the Securities for offering and sale under the applicable
securities laws of such states and other jurisdictions of the
United States as we may agree upon and to maintain such
qualifications in effect for as long as may be required for the
distribution of the Securities. The Company will file such
statements and reports as may be required by the laws of each
jurisdiction in which the Securities have been qualified as above
provided.
(j) The Company will prepare, with respect to any
Securities to be sold through or to the Agents pursuant to this
Agreement, a Pricing Supplement with respect to such Securities
in a form previously approved by the Agents and will file such
Pricing Supplement pursuant to Rule 424(b)(3) (or any rule
succeeding or replacing such rule) under the Act not later than
the close of business of the Commission on the fifth business day
after the date on which such Pricing Supplement is first used.
(k) If at any time during the term of this Agreement
any event shall occur or any condition shall exist as a result of
which it is necessary, in the reasonable opinion of counsel for
the Agents or counsel for the Company, to further amend or
supplement the Prospectus in order that the Prospectus will not
include an untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements
therein not misleading in the light of the circumstances existing
at the time the Prospectus is delivered to a purchaser, or if it
shall be necessary, in the reasonable opinion of either of such
counsel, to amend or supplement the Registration Statement or the
Prospectus in order to comply with the requirements of the Act or
the Rules and Regulations, immediate notice shall be given, and
confirmed in writing, to the Agents to cease the solicitation of
offers to purchase the Securities in the Agents' capacity as
agent and to cease sales of any Securities the Agents may then
own as principal pursuant to a Terms Agreement, and the Company
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<PAGE>
will promptly prepare and file with the Commission such amendment
or supplement, whether by filing documents pursuant to the
Exchange Act, the Act or otherwise, as may be necessary to
correct such untrue statement or omission or to make the
Registration Statement and Prospectus comply with such
requirements. The Company shall not be required to comply with
the provisions of this subsection during any period from the time
(i) the Agents shall have suspended solicitation of purchases of
the Securities in their capacity as agents pursuant to a request
from the Company and (ii) the Agents shall not then hold any
Securities as principal purchased pursuant to a Terms Agreement,
to the time the Company shall determine that solicitation of
purchases of the Securities should be resumed or shall
subsequently enter into a new Terms Agreement with the Agents.
(l) If provided in a Schedule, between the date of any
Schedule and the Settlement Date with respect to such Schedule,
the Company will not offer or sell, or enter into any agreement
to sell, any debt securities of the Company (other than the
Securities that are to be sold pursuant to such Schedule and
commercial paper for other short-term debt with an original
maturity of 270 days or less in the ordinary course of business)
without such Agent's prior consent.
SECTION 4. PAYMENT OF EXPENSES. The Company will pay
(i) the costs incident to its authorization, issuance, sale and
delivery of the Securities and any taxes payable in that
connection, (ii) the costs incident to the preparation, printing
and filing under the Act of the Registration Statement and any
amendments and exhibits thereto, (iii) the costs incident to the
preparation, printing and filing of any document and any
amendments and exhibits thereto required to be filed by the
Company under the Exchange Act, (iv) the costs of furnishing to
the Agents copies of the Registration Statement as originally
filed and each amendment and post-effective amendment thereof
(including exhibits), any Preliminary Prospectus, Basic
Prospectus or Prospectus, any supplement to the Prospectus and
any documents incorporated by reference in any of the foregoing
documents, (v) the fees and disbursements of the Trustee and its
counsel, (vi) the cost of any filings with the National
Association of Securities Dealers, Inc., in respect of the
Securities, (vii) the fees and disbursements of counsel to the
Company, (viii) any fees payable to rating agencies in connection
with the rating of the Securities, (ix) the fees and expenses of
qualifying the Securities under the securities laws of the
several jurisdictions as provided in this Agreement and of
preparing and printing a Blue Sky Memorandum and a memorandum
concerning the legality of the Securities as an investment
(including reasonable fees and expenses of counsel for the Agents
in connection therewith), and (x) all other costs and expenses
incident to the Company's performance of its obligations under
this Agreement.
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<PAGE>
In addition, the Company agrees to pay the reasonable
fees and disbursements of Brown & Wood, counsel for the Agents in
connection with the sale of the Securities.
SECTION 5. CONDITIONS OF OBLIGATIONS. The obligations
of an Agent to solicit offers to purchase the Securities will be
subject to the continued accuracy of the representations and
warranties of the Company contained herein, to the accuracy of
the statements of the Company's officers made in any certificate
furnished pursuant to the provisions hereof, to the performance
and observance by the Company of all covenants and agreements
contained herein and to the following additional conditions:
(a) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings
for such purpose shall be pending before or threatened by the
Commission.
(b) At the Closing Date, the Agents shall have been
received the opinion, dated as of the delivery date thereof, of
Bruce N. Holliday, Assistant General Counsel of PACCAR and
counsel for the Company, in form and substance reasonably
satisfactory to the Agents and their counsel, to the effect that:
(i) PACCAR has been duly incorporated and is
validly existing as a corporation in good standing
under the laws of the State of Delaware and the Company
has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the
State of Washington.
(ii) The Company has corporate power and
authority to own, lease and operate its properties and
conduct its business as described in the Registration
Statement.
(iii) The Company is duly qualified and in good
standing as a foreign corporation to transact business
in each jurisdiction in which the failure so to qualify
and be in good standing would materially adversely
affect its business or financial condition.
(iv) The authorized, issued and outstanding
capital stock of the Company is as set forth in the
Prospectus and the shares of issued and outstanding
capital stock set forth therein have been duly
authorized and validly issued and are fully paid and
non-assessable and are owned, of record and
beneficially, by PACCAR, free and clear of any
mortgage, pledge, lien, claim or encumbrance except as
described in the Prospectus.
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<PAGE>
(v) This Agreement has been duly authorized,
executed and delivered by the Company and constitutes
the valid and binding agreement of the Company.
(vi) The Indenture has been duly and validly
authorized, executed and delivered by the Company and
constitutes the legal, valid and binding agreement of
the Company enforceable in accordance with its terms
(except as enforcement thereof may be limited by
bankruptcy, insolvency, other laws relating to
creditor's rights generally or by general equity
principles).
(vii) The Securities are in a form contemplated
by the Indenture and have been duly and validly
authorized by all necessary corporate action and, when
executed and authenticated as specified in the
Indenture and delivered against payment therefor in
accordance with this Agreement, will be legal, valid
and binding obligations of the Company enforceable in
accordance with their terms (except as enforcement
thereof may be limited by bankruptcy, insolvency, other
laws relating to creditor's rights generally or by
general equity principles).
(viii) Such counsel does not know of any
litigation or any governmental proceeding pending or
threatened against the Company which would affect the
subject matter of this Agreement or which is required
to be disclosed in the Prospectus and is not disclosed
and correctly summarized therein.
(ix) Such counsel does not know of any contracts
or other documents which are required to be filed as
exhibits to the Registration Statement by the Act or by
the Rules and Regulations, or which are required to be
filed by the Exchange Act or the rules and regulations
of the Commission thereunder as exhibits to any
document incorporated by reference in the Prospectus,
which have not been filed as exhibits to the
Registration Statement or to such document or
incorporated therein by reference as permitted by the
Rules and Regulations or the rules and regulations of
the Commission under the Exchange Act.
(x) To the best of such counsel's knowledge after
due inquiry, the Company is not in violation of its
corporate charter or bylaws, or in default under any
material agreement, indenture or instrument, the effect
of which violation or default would be material to the
Company.
(xi) The execution, delivery and performance of
this Agreement, and compliance by the Company with the
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provisions of the Securities and the Indenture, will
not conflict with, or result in the creation or
imposition of any lien, charge or encumbrance upon any
of the assets of the Company pursuant to the terms of,
or constitute a default under, any agreement, indenture
or instrument known to such counsel after due inquiry,
or result in a violation of the corporate charter or
bylaws of the Company or any order, rule or regulation
of any court or governmental agency having jurisdiction
over the Company, or its properties, the effect of
which conflict, lien, charge, encumbrance, default or
violation would be material to the Company; and, except
as may be required by the Act, the Trust Indenture Act,
the Exchange Act or state securities laws, no consent,
authorization or order of, or filing or registration
with, any court or governmental agency is required for
the execution, delivery and performance by the Company
of this Agreement or any Terms Agreement, the failure
to obtain which consent, authorization or order to make
which filing or registration would be material to the
Company.
(xii) The Registration Statement and the
Prospectus (except that no opinion need be expressed as
to the financial statements and other financial data
contained therein) comply as to form in all material
respects with the requirements of the Act and the Trust
Indenture Act and the rules and regulations of the
Commission under said Acts, and the documents
incorporated by reference in the Prospectus (except
that no opinion need be expressed as to the financial
statements and other financial data contained therein)
comply as to form in all material respects with the
applicable requirements of the Exchange Act and the
rules and regulations of the Commission thereunder;
and, to the knowledge of such counsel after due
inquiry, the Registration Statement does not contain
any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading
and the Prospectus does not contain an untrue statement
of a material fact or omit to state a material fact
necessary in order to make the statements therein, in
the light of the circumstances under which they were
made, not misleading.
(c) At the Closing Date, the Agents and the Company
shall have received the opinion, dated as of the date of delivery
thereof, of Perkins Coie, counsel for the Company, in form and
substance reasonably satisfactory to the Agents and their
counsel, to the effect that:
(i) The descriptions of the Securities and the
Indenture in the Registration Statement and each
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Prospectus fairly present the information required with
respect thereto by Form S-3 in all material respects.
(ii) The Indenture is qualified under, and
complies in all material respects as to form with, the
Trust Indenture Act.
(iii) The Registration Statement has become
effective under the Act; and, to the knowledge of such
counsel no stop order suspending its effectiveness has
been issued, and no proceeding for that purpose is
pending or threatened by the Commission, no order of
the Commission directed to any document incorporated by
reference in any Prospectus has been issued and there
are no proceedings of the Commission pending or
threatened challenging the accuracy or adequacy of any
such document.
(iv) The Registration Statement and the
Prospectus (except that no opinion need be expressed as
to the financial statements and other financial data
contained therein) comply as to form in all material
respects with the requirements of the Act and the Trust
Indenture Act and the rules and regulations of the
Commission under said Acts, and the documents
incorporated by reference in the Prospectus (except
that no opinion need be expressed as to the financial
statements and other financial data contained therein)
comply as to form in all material respects with the
applicable requirements of the Exchange Act and the
rules and regulations of the Commission thereunder;
and, to the knowledge of such counsel after due
inquiry, the Registration Statement does not contain
any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading
and the Prospectus does not contain an untrue statement
of a material fact or omit to state a material fact
necessary in order to make the statements therein, in
the light of the circumstances under which they were
made, not misleading.
(d) On or prior to the Closing Date, the Agents shall
have been furnished such documents, certificates and opinions as
it may reasonably request for the purpose of enabling it or Brown
& Wood, counsel for the Agents, to determine the accuracy,
completeness or satisfaction of any of the representations,
warranties or conditions herein contained.
(e) At each Closing Date, the Agents shall have
received a certificate of the President, a Vice President, the
General Manager, the Treasurer or the Controller of the Company
to the effect that to the best of such officer's knowledge the
conditions set forth in Section 5 (a) and (g) have been
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satisfied, and as to the continued accuracy of the
representations and warranties of the Company set forth herein.
(f) The Company has furnished to the Agents on the
Closing Date a letter of Ernst & Young, addressed to the Agents
and dated the Closing Date, confirming that they are independent
public accountants within the meaning of the Act and are in
compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of
the Commission, and stating, as of the date of such letter (or
with respect to matters involving changes or developments since
the respective dates as of which specified financial information
is given to the Prospectus, as of a date not more than five days
prior to the date of such letter), the conclusions and findings
of such accountants with respect to such financial information
and other matters as reasonably requested by the Agents.
(g) No order suspending the sale of the Securities in
any jurisdiction designated pursuant to Section 3(i) hereof shall
have been issued, and no proceeding for that purpose shall have
been instituted or, to the knowledge of the purchasing Agent or
the Company, shall be contemplated.
All opinions, letters, evidences and certificates
mentioned above or elsewhere in this Agreement shall be deemed to
be in compliance with the provisions hereof only if they are in
form and substance reasonably satisfactory to Brown & Wood,
counsel to the Agents.
If any conditions specified in this Section shall not
have been fulfilled in all material respects, the agency of any
Agent under this Agreement may be terminated by such Agent by
notice to the Company at any time on or prior to the Closing
Date, and such termination shall be without liability of either
the Company or such Agent, except with respect to any unpaid
commission then owing to such Agent by the Company and except
that Sections 3(g), 4, 7, 9 and 13 hereof shall remain in effect.
SECTION 6. ADDITIONAL COVENANTS OF THE COMPANY. The
Company covenants and agrees that:
(a) Each acceptance by the Company of an offer for the
purchase of Securities through an Agent, and each delivery of
Securities to an Agent pursuant to a Terms Agreement, shall be
deemed to be an affirmation to such Agent that the
representations and warranties of the Company contained in this
Agreement and in any certificate theretofore delivered to such
Agent pursuant hereto are true and correct at the time of such
acceptance, and an undertaking that such representations and
warranties will be true and correct at the time of delivery to
the purchaser or his agent of the Securities relating to such
acceptance, as though made at and as of each such time (it being
understood that such representations and warranties shall relate
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to the Registration Statement and the Prospectus as amended or
supplemented to each such time).
(b) Each time that the Registration Statement or the
Prospectus shall be amended or supplemented (other than by an
amendment or supplement providing solely for a change in the
interest rates, manner of determining interest rates, interest
payment dates or maturities of the Securities or a change in the
principal amount of Securities remaining to be sold or similar
changes or a supplement to the Prospectus in the form previously
furnished to the Agents relating to a sale of securities
otherwise than through an Agent) or the Company files with the
Commission any document incorporated by reference into the
Prospectus or (if required pursuant to the terms of a Terms
Agreement) the Company sells Securities to an Agent pursuant to a
Terms Agreement, the Company shall furnish or cause to be
furnished to each Agent promptly a certificate of the President,
a Vice President, the General Manager, the Treasurer or the
Controller of the Company to the effect that the statements
contained in the certificate referred to in Section 5(e) hereof
which was last furnished to such Agent are true and correct at
the time of such amendment or supplement or filing, as the case
may be, as though made at and as of such time (except that such
statements shall be deemed to relate to the Registration
Statement and the Prospectus as amended and supplemented to such
time) or, in lieu of such certificate, a certificate of the same
tenor as the certificate referred to in said Section 5(e),
modified as necessary to relate to the Registration Statement and
the Prospectus as amended and supplemented to the time of
delivery of such certificate.
(c) Each time that the Registration Statement or the
Prospectus shall be amended or supplemented or the Company files
with the Commission any document incorporated by reference into
the Prospectus (other than by an amendment or supplement
providing solely for a change in the interest rates, manner of
determining interest rates, interest payment dates or maturities
of the Securities remaining to be sold or similar changes or a
supplement to the Prospectus in the form previously furnished to
the Agents relating to the sale of securities otherwise than
through an Agent) or (if required pursuant to the terms of a
Terms Agreement) the Company sells Securities to an Agent
pursuant to a Terms Agreement, the Company shall cause to be
furnished promptly to each Agent and its counsel the written
opinion or opinions of Bruce N. Holliday, and/or, at the option
of the Company, of Perkins Coie, dated the date of delivery of
such opinion or opinions, of the same tenor as the opinions
referred to in Sections 5(b) and 5(c) hereof, but modified as
necessary, to relate to the Registration Statement and the
Prospectus as amended or supplemented to the time of delivery of
such opinion or opinions; PROVIDED, HOWEVER, that in lieu of such
opinion or opinions, counsel may furnish a letter to the effect
that the Agents may rely on a prior opinion of such counsel which
was to the same effect as the opinion in lieu of which such
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letter is given to the same extent as though it was dated the
date of such letter authorizing reliance (except that statements
in such prior opinion shall be deemed to relate to the
Registration Statement and the Prospectus as amended or
supplemented to the time of delivery of such letter authorizing
reliance).
(d) Each time that the Registration Statement or the
Prospectus shall be amended or supplemented to include additional
financial information or the Company files with the Commission
any document incorporated by reference into the Prospectus which
contains additional financial information or (if required
pursuant to the terms of a Terms Agreement) the Company sells
Securities to an Agent pursuant to a Terms Agreement, the Company
shall cause Ernst & Young promptly to furnish each Agent a
letter, dated the date of filing of such amendment, supplement or
document with the Commission, in form satisfactory to each Agent,
of the same tenor as the letter referred to in Section 6(c)
hereof but modified to relate to the Registration Statement and
Prospectus, as amended and supplemented to the date of such
letter, with such changes as may be necessary to reflect changes
in the financial statements and other information derived from
the accounting records of the Company; PROVIDED, HOWEVER, that if
the Registration Statement or the Prospectus is amended or
supplemented solely to include financial information as of and
for a fiscal quarter, Ernst & Young may limit the scope of such
letter to the unaudited financial statements included in such
amendment or supplement unless there is contained therein any
other accounting, financial or statistical information that, in
the reasonable judgment of an Agent, should be covered by such
letter.
SECTION 7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company shall indemnify and hold harmless each
Agent, each person, if any, who at the written request of such
Agent and with the consent of the Company is participating with
such Agent as the Company's agent in the distribution of the
Securities who is an "underwriter" within the meaning of Section
2(11) of the Act with respect to the distribution of the
Securities (the "Participants") and each person, if any, who
controls such Agent or any Participant within the meaning of the
Act from and against any loss, claim, damage or liability, joint
or several, and any action in respect thereof, to which such
Agent or such Participant or controlling person may become
subject, under the Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, any
untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration
Statement, or any Prospectus, or arises out of, or is based upon,
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and shall reimburse such Agent, each such
Participant, and each such controlling person for any legal and
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<PAGE>
other expenses reasonably incurred, as they are incurred, by it
in investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action; PROVIDED, HOWEVER,
that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or action
arises out of, or is based upon, any untrue statement or alleged
untrue statement or omission or alleged omission made in any
Preliminary Prospectus, the Registration Statement or any
Prospectus in reliance upon and in conformity with written
information furnished to the Company by such Agent specifically
for inclusion therein; and PROVIDED, FURTHER, that as to any
Preliminary Prospectus or Prospectus, this indemnity agreement
shall not inure to the benefit of any Agent, any Participant, or
any person controlling such Agent or any Participant, on account
of any loss, claim, damage, liability or action arising from the
sale of Securities to any person by such Agent or such
Participant if such Agent or such Participant failed to send or
give a copy of any later Prospectus, as the same may be amended
or supplemented, to that person within the time required by the
Act, and the untrue statement or alleged untrue statement of a
material fact or omission or alleged omission to state a material
fact in such earlier Preliminary Prospectus or Prospectus was
corrected in such later Prospectus, unless such failure resulted
from noncompliance by the Company with Section 3(b) or 3(d)
hereof. For purposes of the second proviso to the immediately
preceding sentence, under no circumstances shall any Agent or any
Participant be obligated to send or give any document
incorporated by reference or any supplement or amendment to any
document incorporated by reference in any Preliminary Prospectus
or any Prospectus to any person. The foregoing indemnity
agreement is in addition to any liability which the Company may
otherwise have to any Agent or any Participant or any controlling
person.
(b) Each Agent shall indemnify and hold harmless the
Company, each of its directors, each of its officers who signed
the Registration Statement and any person who controls the
Company within the meaning of the Act from and against any loss,
claim, damage or liability, joint or several, and any action in
respect thereof, to which the Company or any such director,
officer or controlling person may become subject, under the Act
or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or
alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement, or any
Prospectus, or arises out of, or is based upon, the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written
information furnished to the Company by such Agent specifically
for inclusion therein, and shall reimburse the Company for any
legal and other expenses reasonably incurred, as they are
-20-
<PAGE>
incurred, by the Company or any such director, officer or
controlling person in investigating or defending or preparing to
defend against such loss, claim, damage, liability or action.
The foregoing indemnity agreement is in addition to any liability
which any Agent may otherwise have to the Company or any of its
directors, officers or controlling persons.
(c) Promptly after receipt by an indemnified party
under this Section of notice of any claim or the commencement of
any action, the indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under this
Section, notify the indemnifying party in writing of the claim or
the commencement of that action; PROVIDED, HOWEVER, that the
failure to notify the indemnifying party shall not relieve it
from any liability which it may have to an indemnified party
otherwise than under this Section. If any such claim or action
shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party
shall be entitled to participate therein, and, to the extent that
it wishes, jointly with any other similarly notified indemnifying
party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, the indemnifying
party shall not be liable to the indemnified party under this
Section for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense thereof
other than reasonable costs of investigation; PROVIDED, HOWEVER,
that the indemnified party shall have the right to employ a
separate counsel and one local counsel to represent such
indemnified party who may be subject to liability arising out of
any claim in respect of which indemnity may be sought by the
indemnified party against the indemnifying party under this
Section if, in the reasonable judgment of the indemnified party,
it is advisable for such indemnified party to be represented by
separate counsel, but the fees and expenses of such counsel or
such local counsel shall be at the expense of such indemnified
party unless (i) the employment of counsel by such indemnified
party has been authorized by the indemnifying party, (ii) the
indemnified party shall have reasonably concluded that there is a
conflict of interest between the indemnifying party and the
indemnified party in the conduct of the defense of such action or
additional or different defenses such that the counsel retained
by the indemnifying party to defend the indemnified party in such
action cannot adequately represent the interests of the
indemnified party (in which case the indemnifying party shall not
have the right to direct the defense of such action on behalf of
the indemnified party), or (iii) the indemnifying party shall not
in fact have employed counsel to assume the defense of such
action, in each of which cases the fees and expense of such
separate counsel shall be paid by the indemnifying party. An
indemnifying party shall not be liable for any claim or action
settled without its consent.
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<PAGE>
(d) If the indemnification provided for in this
Section shall for any reason (other than as specified herein) be
unavailable to an indemnified party under Section 7(a) or 7(b) in
respect of any loss, claim, damage or liability, or any action in
respect thereof, referred to therein, then each indemnifying
party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or
action in respect thereof, in such proportion as shall be
appropriate to reflect the relative benefits received by the
indemnified party and the indemnifying party from the offering of
the Securities, the relative fault of the indemnified party and
the indemnifying party with respect to the statements or
omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative benefits
received by the Company on the one hand and an Agent on the other
with respect to an offering shall be determined in light of the
relation of the total net proceeds from the offering of the
Securities (before deducting expenses) received by the Company to
the total commissions received by the Agent with respect to such
offering. The relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates
to information supplied by the Company or by an Agent, the intent
of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement
or omission. The Company and the Agents agree that it would not
be just and equitable if contributions pursuant to this
Section 7(d) were to be determined by pro rata allocation or by
any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid
or payable by an indemnified party as a result of the loss,
claim, damage or liability, or action in respect thereof,
referred to above in this Section 7(d) shall be deemed to
include, for purposes of this Section 7(d), any legal or other
expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 7(d), no
Agent shall be required to contribute any amount in excess of the
amount by which the total price at which the Purchased Securities
were offered by it to the public exceeds the amount of any
damages which it shall have otherwise paid or become liable to
pay by reason of any untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(e) Each Agent represents for purposes of
Sections 7(a) and 7(b) that it has received a copy of the form of
Prospectus the Company proposes to mail for filing with the
Commission with respect to the Securities and that the Agent will
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<PAGE>
be soliciting offers to purchase the Securities (subject to the
conditions hereof) for sale as described therein.
SECTION 8. ASSISTANCE BY THE AGENTS. Each Agent will
make reasonable efforts to assist the Company in obtaining
performance by each purchaser whose offer to purchase Securities
from the Company has been solicited by the Agent and accepted by
the Company, but such Agent shall have no liability to the
Company in the event any such purchase is not consummated for any
reason.
SECTION 9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS
TO SURVIVE DELIVERY. All representations and warranties of the
Company contained in this Agreement, or contained in certificates
of officers of the Company submitted pursuant hereto, shall
remain operative and in full force and effect, regardless of the
termination of this Agreement or any investigation made by or on
behalf of any Agent or any person controlling any Agent or by or
on behalf of the Company, and shall survive each delivery of and
payment for any of the Securities.
SECTION 10. TERMINATION.
(a) TERMINATION OF THIS AGREEMENT. This Agreement
shall terminate when the Agents shall have been advised by the
Company that all of the Securities have been sold and the
purchase price therefor has been paid. This Agreement may be
terminated (except with respect to offers to purchase Securities
which have been accepted by the Company or a Terms Agreement has
been executed) for any reason, at any time, by either the Company
or such Agent, upon the giving of one day's written or
telegraphic notice of such termination to the other.
(b) TERMINATION OF A TERMS AGREEMENT. An Agent may
terminate any Terms Agreement, immediately upon notice to the
Company, at any time prior to the Settlement Date relating there-
to (i) if there has been, since the date of such Terms Agreement
or since the respective dates as of which information is given in
the Registration Statement, any material adverse change in the
condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there shall have occurred
any material adverse change in the financial markets in the
United States or any outbreak or escalation of hostilities or
other national or international calamity or crisis which, in the
reasonable judgement of such Agent, would have a material adverse
effect on the ability of such Agent to market the Securities or
enforce contracts for the sale of the Securities, or (iii) if
trading in any securities of the Company has been suspended by
the Commission or a national securities exchange, or if trading
generally on either the American Stock Exchange or the New York
Stock Exchange shall have been suspended, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices
-23-
<PAGE>
for securities have been required, by either of said exchanges or
by order of the Commission or any other governmental authority,
or if a banking moratorium shall have been declared by either
Federal or New York authorities or if a banking moratorium shall
have been declared by the relevant authorities in the country or
countries of origin of any foreign currency or currencies in
which the Securities are denominated or payable, or (iv) if the
rating assigned by any nationally recognized securities rating
agency to any debt securities of the Company as of the date of
any applicable Terms Agreement shall have been lowered since that
date or if any such rating agency shall have publicly announced
that it has under surveillance or review, with possible negative
implications, its rating of any debt securities of the Company,
or (v) if there shall have come to such Agent's attention any
facts that would cause such Agent to believe that the Prospectus,
at the time it was required to be delivered to a purchaser of
Securities, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances existing at the
time of such delivery, not misleading.
(c) GENERAL. In the event of a termination of this
Agreement, neither party will have any liability to the other
party hereto, except that (i) the Agents shall be entitled to any
commission earned in accordance with the fourth paragraph on
Section 2(a) hereof, (ii) if at the time of termination (a) an
Agent shall own any Securities purchased pursuant to a Terms
Agreement with the intention of reselling them or (b) an offer to
purchase any of the Securities has been accepted by the Company
but the time of delivery to the purchaser or his agent of the
Security or Securities relating thereto has not occurred, the
covenants set forth in Sections 3 and 6 hereof shall remain in
effect until such Notes are so resold or delivered, as the case
may be, and (iii) the provisions of Section 4 hereof, the
indemnity and contribution agreements set forth in Section 7
hereof, and the provisions of Sections 9 and 13 hereof shall
remain in effect.
SECTION 11. NOTICES. Except as otherwise provided
herein, all notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if mailed
or transmitted by any standard form of telecommunication.
Notices to the Agents shall be directed as set forth below their
respective signatures hereto. Notices to the Company shall be
directed to it as follows: PACCAR Financial Corp., 777 106th
Avenue N.E., Bellevue, Washington 98004, attention: Treasurer.
SECTION 12. PARTIES. This Agreement shall inure to
the benefit of and be binding upon the several Agents and the
Company and their respective successors. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the parties
hereto and their respective successors and the controlling
persons and officers and directors referred to in Section 7 and
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<PAGE>
their heirs and legal representatives, any legal or equitable
right, remedy or claim under or in respect of this Agreement or
any provision herein or therein contained. This Agreement and
all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the parties hereto and their
respective successors and said controlling persons and officers
and directors of their heirs and legal representatives, and for
the benefit of no other person, firm or corporation. No
purchaser of Securities shall be deemed to be a successor by
reason merely of such purchase.
SECTION 13. MISCELLANEOUS. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York. This Agreement may be executed in
counterparts and the executed counterparts shall together
constitute a single instrument.
Please indicate your acceptance hereof in the space
provided for that purpose below.
Very truly yours,
PACCAR Financial Corp.
By __________________________
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<PAGE>
ACCEPTED:
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
By: ______________________________
Title: ___________________________
Dated: March __, 1996
10th Floor North Tower
World Financial Center
New York, NY 10281-1310
Attention: MTN Product Management
Telephone: (212) 449-7476
Telecopy: (212) 449-2234
Morgan Stanley & Co. Incorporated
By: ______________________________
Title: ___________________________
Dated: March __, 1996
1585 Broadway, 2nd Floor
New York, NY 10036
Attention: Manager - Continuously
Offered Products
Telephone: (212) 761-2000
Telecopy: (212) 761-0780
Copy to:
1585 Broadway, 34th Floor
New York, NY 10036
Attention: Peter Cooper - Investment Banking Information
Center
Telephone: (212) 703-7182
Telecopy: (212) 703-4575
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<PAGE>
Lehman Brothers Inc.
By: ______________________________
Title: ___________________________
Dated: March __, 1996
3 World Financial Center, 12th Floor
New York, NY 10285
Attention: Medium-Term Note Department
Telephone: (212) 526-2040
Telecopy: (212) 528-1718,
Salomon Brothers Inc
By: ______________________________
Title: ___________________________
Dated: March __, 1996
Seven World Trade Center, 31st Flr.
New York, NY 10048
Attention: Medium-Term Note Department
Telephone: (212) 783-5897
Telecopy: (212) 783-2274
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<PAGE>
SCHEDULE A
As compensation for the services of the Agents hereunder,
the Company shall pay each Agent, on a discount basis, a
commission for the sale of each Security sold through such Agent
equal to the principal amount of such Security multiplied by the
appropriate percentage set forth below:
<TABLE>
<CAPTION>
PERCENT OF
MATURITY RANGES PRINCIPAL AMOUNT
- --------------- ----------------
<S> <C>
From 9 months to less than 1 year. . . . . . . . . . . .125%
From 1 year to less than 18 months . . . . . . . . . . .150
From 18 months to less than 2 years. . . . . . . . . . .200
From 2 years to less than 3 years. . . . . . . . . . . .250
From 3 years to less than 4 years. . . . . . . . . . . .350
From 4 years to less than 5 years. . . . . . . . . . . .450
From 5 years to less than 6 years. . . . . . . . . . . .500
From 6 years to less than 7 years. . . . . . . . . . . .550
From 7 years to 10 years . . . . . . . . . . . . . . . .600
</TABLE>
<PAGE>
Exhibit A
The following terms, if applicable, shall be agreed to by
the purchasing Agent and the Company pursuant to each Terms
Agreement:
Principal Amount: $_____________
(or principal amount of foreign currency)
Interest Rate:
If Fixed Rate Security, Interest Rate:
If Floating Rate Security:
Interest Rate Basis or Bases:
If LIBOR:
/ / LIBOR Reuters:
/ / LIBOR Telerate:
Index Currency:
If CMT Rate:
Designated CMT Telerate Page:
Designated CMT Maturity Index:
Interest Rate Basis:
Initial Interest Rate:
Initial Interest Reset Date:
Spread or Spread Multiplier, if any:
Interest Rate Reset Month(s):
Index Maturity:
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Interest Rate Reset Period:
Interest Payment Period:
Interest Payment Date:
Calculation Agent:
If Redeemable:
Initial Redemption Date:
Initial Redemption Percentage:
Annual Redemption Percentage Reduction:
If Repayable at Option of Holder:
Optional Repayment Date:
Date of Maturity:
Purchase Price: _____%
Settlement Date and Time:
Currency of Denomination:
Denominations (if currency is other than U.S. dollars):
Currency of Payment:
Exchange Rate Agent
Additional Terms:
<PAGE>
Also, agreement as to whether the following will be required:
Officer's Certificate pursuant to Section 5(e)
of the Distribution Agreement
Legal Opinions pursuant to Section 5(b) and (c)
of the Distribution Agreement
Comfort Letter pursuant to Section 5(f)
of the Distribution Agreement
Other sales prior to Settlement Date pursuant
to Section 3(l) of the Distribution Agreement
<PAGE>
PACCAR FINANCIAL CORP.
ADMINISTRATIVE PROCEDURES
FOR FIXED AND FLOATING RATE MEDIUM-TERM NOTES, SERIES H
(ATTACHMENT TO THE DISTRIBUTION AGREEMENT
DATED MARCH __, 1996)
Medium-Term Notes, Series H (the "Notes") in the aggregate
principal amount of up to U.S.$1,000,000,000, or the equivalent
in one or more foreign currencies or composite currency units are
to be offered on a continuing basis by PACCAR Financial Corp.
(the "Company") through Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co.
Incorporated, Lehman Brothers, Lehman Brothers Inc. and Salomon
Brothers Inc who, as agents (each an "Agent", and, collectively,
the "Agents"), have agreed to use their reasonable efforts to
solicit offers to purchase the Notes from the Company. The
Agents may also purchase Notes as principal for resale.
The Notes are being sold pursuant to a Distribution
Agreement between the Company and the Agents, dated March __,
1996 (the "Distribution Agreement"). The Notes will be issued
pursuant to an Indenture (the "Indenture"), dated as of
December 1, 1983, as amended by the first supplemental indenture
dated as of June 19, 1989 between the Company and Citibank, N.A.
as trustee (the "Trustee"). A Registration Statement (the
"Registration Statement", which term shall include any additional
registration statements filed in connection with the Notes as
provided in the Distribution Agreement) with respect to the Notes
has been filed with the Securities and Exchange Commission (the
"Commission"). The most recent basic Prospectus included in the
Registration Statement, as supplemented with respect to the
Notes, is herein referred to as the "Prospectus Supplement". The
most recent supplement to the Prospectus with respect to the
specific terms of the Notes is herein referred to as the "Pricing
Supplement".
The Notes will either be issued (a) in book-entry form and represented by
one or more fully registered Notes (each, a "Book-Entry Note") delivered to
the Trustee, as agent for The Depository Trust Company ("DTC"), and recorded
in the book-entry system maintained by DTC, or (b) in certificated form
(each, a "Certificated Note") delivered to the purchaser thereof or a person
designated by such purchaser. Owners of beneficial interest in Notes issued
in book-entry form will be entitled to physical delivery of Notes in
certificated form equal in principal amount to their respective beneficial
interests only upon certain limited circumstances described in the Prospectus.
<PAGE>
Administrative procedures and specific terms of the offering
are explained below.
General procedures relating to the issuance of all Notes are set forth in
Part I hereof. Additionally, Notes issued in book-entry form will be issued
in accordance with the procedures set forth in Part II hereof and Notes
issued in certificated form will be used in accordance with the procedures
set forth in Part III hereof. Capitalized terms used herein that are not
otherwise defined shall have the meanings ascribed thereto in the Indenture
or the Notes (which in the case of Notes issued in book-entry form shall be
the related Book-Entry Note), as the case may be.
PART I: PROCEDURES OF GENERAL
APPLICABILITY
Date of Issuance/
Authentication: Each Note will be dated as of the date
of its authentication by the Trustee.
Each Note shall also bear an original
issue date (the "Original Issue Date").
The Original Issue Date shall remain the
same for all Notes subsequently issued
upon transfer, exchange or substitution
of an original Note regardless of their
dates of authentication.
Maturities: Each Note will mature on a date selected
by the purchaser and agreed to by the
Company which is not less than nine
months nor more than ten years from its
Original Issue Date; provided, however,
that Notes bearing interest at rates
determined by reference to selected
indices ("Floating Rate Notes") will
mature on an Interest Payment Date
unless otherwise indicated in the
applicable pricing supplement.
Denominations: The Notes generally will be issued in
denominations of U.S. $1,000 and
integral multiples thereof. Any Notes
denominated other than in U.S. dollars
will be issuable in denominations as set
forth in the applicable pricing
supplement and in such Notes.
Registration: Notes will be issued only in fully
registered form.
Redemption/Repayment: The Notes will be subject to repayment
at the option of the Holders thereof in
accordance with the terms of the Notes
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<PAGE>
on their respective Optional Repayment
Dates, if any. Optional Repayment
Dates, if any, will be fixed at the time
of sale and set forth in the applicable
pricing supplement and in the applicable
Note. If no Optional Repayment Dates
are indicated with respect to a Note,
such Note will not be repayable at the
option of the Holder prior to maturity.
The Notes will be subject to redemption
by the Company on and after their
respective Redemption Dates, if any.
Redemption Dates, if any, will be fixed
at the time of sale and set forth in the
applicable pricing supplement and in the
applicable Note. If no Redemption Dates
are indicated with respect to a Note,
such Note will not be redeemable prior
to maturity.
Interest: Each Note will bear interest in
accordance with its terms. The Company
will advise the Paying Agent by telecopy
of each determination of the interest
rate applicable to each Floating Rate
Note promptly after such determination
is made by the Calculation Agent.
Acceptance and
Rejection of Offers: The Company shall have the sole right to
accept offers to purchase Notes from the
Company and may reject any such offer in
whole or in part. The Agents shall
communicate to the Company, orally or in
writing, each reasonable offer to
purchase Notes from the Company received
by it. Each Agent shall have the right,
in its discretion reasonably exercised,
without notice to the Company, to reject
any offer to purchase Notes in whole or
in part.
Preparation of
Pricing Supplement: If any offer to purchase a Note is
accepted by the Company, the Company
will prepare a Pricing Supplement
reflecting the terms of such Note.
Information to be included in the
Pricing Supplement shall include:
1. the name of the Company;
2. the title of the securities,
including series designation;
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<PAGE>
3. the date of the Pricing Supplement
and the date of the Prospectus
Supplement to which the Pricing
Supplement relates;
4. the Price to Public (but only if
(a) the trade is being made on an
agency basis and (b) such Price to
Public is other than 100%);
5. Net Proceeds to the Company, but
only if (a) the trade is being made
on a principal basis and (b) the
Net Proceeds to the Company is
other than 100%, less what would
have been the applicable agency
commission; and
6. the information with respect to the
terms of the Notes set forth below
(whether or not the applicable Note
is a Book-Entry Note) under
"Procedures for Notes Issued in
Book-Entry Form - Settlement
Procedures", items 2, 3, 7, 8 and
9; and
7. any other terms of the Notes not
otherwise specified in the
Prospectus or Prospectus
Supplement.
The Company shall use its reasonable
best efforts to send such Pricing
Supplement by telecopy or overnight
express (for delivery by the close of
business on the applicable trade date,
but in no event later than 11:00 A.M.
New York City time on the Business Day
(as defined below) following the trade
date) to the Agent which presented the
offer to purchase the applicable Note
(the "Presenting Agent") at the
following addresses:
If to Merrill Lynch & Co.:
For overnight, express, or special
delivery packages only:
Tritech Services
40 Colonial Drive
Piscataway, NJ 08854
Attention: Prospectus Operations/
Nachman Kimerling
Telephone: (908) 885-2769
-4-
<PAGE>
For all other types of deliveries:
Merrill Lynch & Co. - Tritech Services
4 Corporate Place
Corporate Park 287
Piscataway, NJ 08854
Attention: Final Prospectus Unit/
Nachman Kimerling
Telephone: (908) 885-2769
Telecopy: (908) 885-2774/5/6
also, for record keeping purposes,
please send a copy to:
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
World Financial Center, North Tower
10th Floor
New York, NY 10281-1310
Attention: MTN Product Management
Telephone: (212) 449-7476
Telecopy: (212) 449-2234
If to Morgan Stanley:
Morgan Stanley & Co. Incorporated
1585 Broadway, 2nd Floor
New York, NY 10036
Attention: Medium-Term Note Trading
Desk, Carlos Cabrera
If to Lehman Brothers:
Please send copies of Pricing
Supplements prepared in connection with
MTN trades done with Lehman Brothers to
the following telecopy/addresses:
By telecopy to
Lehman Brothers Inc
c/o ADP
Prospectus Services
536 Broadhollow Road
Melville, NY 11747
Attention: Mike Ward
Telecopy: (516)249-7942
Telephone: (516)254-7106
and by hand to
Lehman Brothers Inc
3 World Financial Center, 9th Floor
New York, New York 10285-0900
Attention: Brunnie Vazquez
Telephone: (212)640-8400
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All other notices and inquires should be
directed to:
Lehman Brothers Inc
3 World Financial Center, 12th Floor
New York, New York 10285-1200
Attention: Medium-Term Note Department
Telecopy: (212)528-1718
Telephone: (212)526-2040
Certified Notes should be delivered to:
Chemical Bank
4 New York Plaza
Ground Floor
Receive Window
FAO Lehman Brothers
New York, New York
Attn: Jennifer Jones
Telephone: (212) 623-5953
If to Salomon Brothers:
Salomon Brothers Inc
8800 Hidden River Parkway
Tampa, FL 33637
Attention: Enrique Castro
Telephone: (813) 558-7165
Telecopy: (813) 558-4123
In each instance that a Pricing
Supplement is prepared, the Agents will
provide a copy of such Pricing
Supplement to each investor or purchaser
of the relevant Notes or its agent.
Pursuant to Rule 434 ("Rule 434") of the
Securities Act of 1933, as amended, the
Pricing Supplement may be delivered
separately from the Prospectus.
Outdated Pricing Supplements, and the
supplemented Prospectuses to which they
are attached (other than those retained
for files) will be destroyed.
Settlement: The receipt of immediately available
funds by the Company in payment for a
Note and the authentication and delivery
of such Note shall, with respect to such
Note, constitute "settlement." Offers
accepted by the Company will generally
be settled from one to three Business
Days or at a time as the purchaser, the
applicable Agent and the Company shall
agree, pursuant to the timetable for
settlement set forth in Parts II and III
hereof under "Settlement Procedures"
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with respect to Book-Entry Notes and
Certificated Notes, respectively. Each
such date fixed for settlement is
hereinafter referred to as a
("Settlement Date"). If procedures A
and B of the applicable Settlement
Procedures with respect to a particular
offer are not completed on or before the
time set forth under the applicable
"Settlement Procedures Timetable," such
offer shall not be settled until the
Business Day following the completion of
settlement procedures A and B or such
later date as the purchaser and the
Company shall agree.
In the event of a purchase of Notes by
any Agent as principal, appropriate
settlement details will be between the
Agent and the Company pursuant to the
applicable Terms Agreement.
Procedure for Changing
Rates or Other
Variable Terms: When a decision has been reached to
change the interest rate or any other
variable term on any Notes being sold by
the Company, the Company will promptly
advise the Agents and the Agents will
forthwith suspend solicitation of offers
to purchase such Notes. The Agents will
telephone the Company with
recommendations as to the changed
interest rates or other variable terms.
At such time as the Company advises the
Agents of the new interest rates or
other variable terms, the Agents may
resume solicitation of offers to
purchase such Notes. Until such time
only "indications of interest" may be
recorded. Immediately after acceptance
by the Company of an offer to purchase
Notes at a new interest rate or new
variable term, the Company, the
Presenting Agent and the Trustee shall
follow the procedures set forth under
the applicable "Settlement Procedures."
The foregoing procedure for changes
shall in no way affect the Company's
right to suspend all solicitations of
offers to purchase Notes as set forth in
the Distribution Agreement.
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Suspension of Solicita-
tion; Amendment or
Supplement: Subject to its representations,
warranties and covenants contained in
the Distribution Agreement, the Company
may instruct the Agents to suspend
solicitation of to purchase Notes at any
time. Upon receipt of such
instructions, the Agents will forthwith
suspend solicitation of offers to
purchase from the Company until such
time as the Company has advised them
that solicitation of offers to purchase
may be resumed. If the Company decides
to amend or supplement the Registration
Statement (including incorporating any
documents by reference therein or the
Prospectus or any supplement relating to
the Notes (other than to change rates or
other variable terms with respect to the
offering of the Notes), it will promptly
advise the Agents, Trustee and Agents'
counsel and will furnish the Agents and
their counsel with copies of the
proposed amendment or supplement
(including any document proposed to be
incorporated by reference therein). One
copy of such filed document, along with
a copy of the cover letter sent to the
Commission, will be delivered or mailed
to the Agents at the following
respective addresses: MTN Product
Management, Merrill Lynch Money Markets,
North Tower, World Financial Center,
10th Floor, New York, NY 10281-1310;
Morgan Stanley & Co. Incorporated, 1585
Broadway, New York, NY 10036, Attention:
Manager - Continuously Offered Products;
Lehman Brothers Inc., American Express
Tower-9th Floor, World Financial Center,
New York, NY 10285, Attention: Medium-Term
Note Department or Salomon Brothers
Inc, 7 World Trade Center, 32nd Floor,
New York, NY 10048, Attention: Medium-Term Note Group.
In the event that at the time the
solicitation of offers to purchase from
the Company is suspended (other than to
change interest rates or other variable
terms) there shall be any offers to
purchase Notes that have been accepted
by the Company which have not been
settled, the Company will promptly
advise the Agents and the Trustee
whether such offers may be settled and
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whether copies of the Prospectus as
theretofore amended and/or supplemented
as in effect at the time of the
suspension may be delivered in
connection with the settlement of such
offers. The Company will have the sole
responsibility for such decision and for
any arrangements which may be made in
the event that the Company determines
that such offers may not be settled or
that copies of the Prospectus may not be
so delivered.
Delivery of
Prospectus: A copy of the most recent Prospectus
and the applicable Pricing Supplement,
which pursuant to Rule 434 may be
delivered separately from the
Prospectus, must accompany or precede
the earlier of (a) the written
confirmation of a sale sent to an
investor or other purchaser or its agent
and (b) the delivery of Notes to an
investor or other purchaser or its
agent. The Company will make all such
Prospectus deliveries with respect to
all Notes sold directly by the Company.
Authenticity of
Signatures: The Company will cause the Trustee to
furnish the Agent from time to time with
the specimen signatures of the Trustee's
officers, employees and agents who have
been authorized by the Trustee to
authenticate Notes. However, the Agent
will have no obligation or liability to
the Company or the Trustee in respect of
the authenticity of the signature of any
officer, employee or agent of the
Company or the Trustee on any Note.
Documents Incorporated
by Reference: The Company shall supply the Agents with
an adequate supply of all documents
incorporated by reference in the
Registration Statement.
Business Day: "Business Day" means, unless otherwise
stated in the applicable Pricing
Supplement, any day other than a
Saturday or Sunday that is not a day on
which banking institutions are
authorized or obligated by law to close
in The City of New York and, with
respect to LIBOR Notes, is also a London
Business Day. As used herein, "London
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<PAGE>
Business Day" means any day (a) if the
Index Currency (as defined below) is
other than the ECU, on which dealings in
deposits in such Index Currency are
transacted in the London interbank
market or (b) if the Index Currency is
the ECU, that is not designated as an
ECU Non-Settlement Day by the ECU
Banking Association in Paris or
otherwise generally regarded in the ECU
interbank market as a day on which
payments on ECUs shall not be made.
Trustee Not to Risk
Funds: Nothing herein shall be deemed to
require the Trustee to risk or expend
its own funds in connection with any
payment to the Company, or the Agents,
or DTC, or any Noteholder, it being
understood by all parties that payments
made by the Trustee to either the
Company, or the Agents, or DTC, or any
Noteholder shall be made only to the
extent that funds are provided to the
Trustee for such purpose.
PART II: PROCEDURES FOR NOTES ISSUED IN BOOK-ENTRY FORM
In connection with the qualification of Notes issued in
book-entry form for eligibility in the book-entry system
maintained by DTC, the Trustee will perform the custodial,
document control and administrative functions described below, in
accordance with its respective obligations under a Letter of
Representations from the Company and the Trustee to DTC, and a
Medium-Term Note Certificate Agreement, with respect to the Notes
dated October 31, 1988, between the Trustee and DTC (the
"Certificate Agreement"), and its obligations as a participant in
DTC, including DTC's Same-Day Funds Settlement System ("SDFS").
Issuance: All Fixed Rate Notes issued in book-
entry form having the same Original
Issue Date, redemption terms and/or
repayment, specified currency, interest
rate, and Stated Maturity (collectively,
the "Fixed Rate Terms") will be
represented initially by a single global
security in fully registered form
without coupons (each, a "Book-Entry
Note"); and all Floating Rate Notes
issued in book-entry form having the
same Original Issue Date, specified
currency, redemption and/or repayment
terms, base rate upon which interest may
be determined (each, a "Base Rate"),
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which may be the Commercial Paper Rate,
the Treasury Rate, LIBOR, the CD Rate,
the Federal Funds Rate, the CMT Rate,
the Prime Rate or any other rate set
forth by the Company, Initial Interest
Rate, Index Maturity, Spread or Spread
Multiplier, if any, Minimum Interest
Rate, if any, Maximum Interest Rate, if
any, and Stated Maturity (collectively,
the "Floating Rate Terms") will be
represented initially by a single Book-Entry Note.
Each Book-Entry Note will be dated and
issued as of the date of its
authentication by the Trustee. Each
Book-Entry Note will bear an Interest
Accrued Date, which will be (a) with
respect to an original Book-Entry Note
(or any portion thereof), its Original
Issue Date and (b) with respect to any
Book-Entry Note (or portion thereof)
issued subsequently upon exchange of a
Book-Entry Note or in lieu of a
destroyed, lost or stolen Book-Entry
Note, the most recent Interest Payment
Date to which interest has been paid or
duly provided for on the predecessor
Book-Entry Note or Notes (or if no such
payment or provision has been made, the
Original Issue Date of the predecessor
Book-Entry Note or Notes), regardless of
the date of authentication of such
subsequently issued Book-Entry Note. No
Book-Entry Note shall represent any Note
issued in certificated form.
Except as set forth in the Notes, no
owner of a beneficial interest in a
Book-Entry Note shall be entitled to
receive any Note issued in certificated
form with respect to such beneficial
interest.
Identification: The Company has arranged with the CUSIP
Service Bureau of Standard & Poor's
Corporation (the "CUSIP Service Bureau")
for the reservation of approximately 900
CUSIP numbers which have been reserved
for and relating to Book-Entry Notes and
the Company has delivered to the Trustee
and DTC such list of such CUSIP numbers.
The Trustee will assign CUSIP numbers to
Book-Entry Notes as described below
under Settlement Procedure C. DTC will
notify the CUSIP Service Bureau
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<PAGE>
periodically of the CUSIP numbers that
the Company has assigned to Book-Entry
Notes. The Trustee will notify the
Company at any time when fewer than 100
of the reserved CUSIP numbers remain
unassigned to Book-Entry Notes, and, if
it deems necessary, the Company will
reserve additional CUSIP numbers for
assignment to Book-Entry Notes. Upon
obtaining such additional CUSIP numbers,
the Company will deliver a list of such
additional numbers to the Trustee and
DTC. Book-Entry Notes having an
aggregate principal amount in excess of
$200,000,000 (or the equivalent thereof
in one or more foreign or composite
currencies)and otherwise required to be
represented by the same Global
Certificate will instead be represented
by two or more Global Certificates which
shall all be assigned the same CUSIP
number.
Registration: Each Book-Entry Note will be registered
in the name of CEDE & Co., as nominee
for DTC, on the register maintained by
the Trustee under the Indenture. The
beneficial owner of a Note issued in
book-entry form (i.e., an owner of a
beneficial interest in a Book-Entry
Note) (or one or more indirect
participants in DTC designated by such
owner) will designate one or more
participants in DTC (with respect to
such Note issued in book-entry form, the
"Participants") to act as agent for such
beneficial owner in connection with the
book-entry system maintained by DTC, and
DTC will record in book-entry form, in
accordance with instructions provided by
such Participants, a credit balance with
respect to such Note issued in book-
entry form in the account of such
Participants. The ownership interest of
such beneficial owner in such Note
issued in book-entry form will be
recorded through the records of such
Participants or through the separate
records of such Participants and one or
more indirect participants in DTC.
Neither the Company nor the Trustee
shall have any liability or
responsibility for the book-entry system
maintained by DTC. For all purposes
under the Indenture, CEDE & Co. as the
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registered owner of a Book-Entry Note
shall be considered the sole Holder of
such Note.
Transfers: Transfers of a beneficial interest in a
Book-Entry Note will be accomplished by
book entries made by DTC and, in turn,
by participants (and in certain cases,
one or more indirect participants in
DTC) acting on behalf of beneficial
transferors and transferees of such
Book-Entry Note.
Exchanges: The Trustee may deliver to DTC and the
CUSIP Service Bureau at any time a
written notice specifying (a) the CUSIP
numbers of two or more Book-Entry Notes
outstanding on such date that represent
Book-Entry Notes having the same Fixed
Rate Terms or Floating Rate Terms, as
the case may be, (other than Original
Issue Dates) and for which interest has
been paid to the same date; (b) a date,
occurring at least 30 days after such
written notice is delivered and at least
30 days before the next Interest Payment
Date for the related Notes issued in
book-entry form, on which such Book-
Entry Notes shall be exchanged for a
single replacement Book-Entry Note; and
(c) a new CUSIP number, obtained from
the Company to be assigned to such
replacement Book-Entry Note. Upon
receipt of such a notice, DTC will send
to its Participants (including the
Trustee) a written reorganization notice
to the effect that such exchange will
occur on such date. Prior to the
specified exchange date, the Trustee
will deliver to the CUSIP Service Bureau
written notice setting forth such
exchange date and the new CUSIP number
and stating that, as of such exchange
date, the CUSIP numbers of the Book-
Entry Notes to be exchanged will no
longer be valid. On the specified
exchange date, the Trustee will exchange
such Book-Entry Notes for a single Book-
Entry Note bearing the new CUSIP number
and the CUSIP numbers of the exchanged
Book-Entry Notes will, in accordance
with CUSIP Service Bureau procedures, be
cancelled and not immediately
reassigned. Notwithstanding the
foregoing, if the Book-Entry Notes to be
exchanged exceed $200,000,000 (or the
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<PAGE>
equivalent thereof in one or more
foreign or composite currencies) in
aggregate principal amount, one
replacement Book-Entry Note will be
authenticated and issued to represent
each $200,000,000 (or the equivalent
thereof in one or more foreign or
composite currencies) of principal
amount of the exchanged Book-Entry Notes
and an additional Book-Entry Note will
be authenticated and issued to represent
any remaining principal amount of such
Book-Entry Notes (see "Denominations"
below).
Denominations: All Notes issued in book-entry form will
be denominated in U.S. dollars. Notes
will be issued in denominations of
$1,000 and integral multiples in excess
thereof of $1,000. Book-Entry Notes
will be denominated in principal amounts
not in excess of $200,000,000 (or the
equivalent thereof in one or more
foreign or composite currencies). If
one or more Notes issued in book-entry
form having an aggregate principal
amount in excess of $200,000,000 (or the
equivalent thereof in one or more
foreign or composite currencies) would,
but for the preceding sentence, be
represented by a single Book-Entry Note,
then one Book-Entry Note will be issued
to represent $200,000,000 (or the
equivalent thereof in one or more
foreign or composite currencies)
principal amount of such Note or Notes
issued in book-entry form and an
additional Book-Entry Note or Notes will
be issued to represent any remaining
principal amount of such Note or Notes
issued in book-entry form. In such a
case, each of the Book-Entry Notes
representing such Note or Notes issued
in book-entry form shall be assigned the
same CUSIP number.
Payments of Principal
and Interest: PAYMENTS OF INTEREST ONLY. Promptly
after each Regular Record Date, the
Trustee will deliver to the Company and
DTC a written notice specifying by CUSIP
number the amount of interest to be paid
on each Book-Entry Note on the following
Interest Payment Date (other than an
Interest Payment Date coinciding with
Maturity) and the total of such amounts.
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Promptly after confirming such
information with the Company, the
Trustee will deliver written notice of
such information to DTC. DTC will
confirm the amount payable on each Book-Entry
Note on such Interest Payment Date
by reference to the daily bond reports
published by Standard & Poor's. On such
Interest Payment Date, the Company will
pay to the Trustee, and the Trustee in
turn will pay to DTC, such total amount
of interest due (other than at Maturity)
which is payable in U.S. dollars, at the
times and in the manner set forth below
under "Manner of Payment." The Trustee
shall make payment of that amount of
interest due and owing on any Book-Entry
Notes that Participants have elected to
receive in foreign or composite
currencies directly to such
Participants.
NOTICE OF INTEREST PAYMENTS AND REGULAR
RECORD DATES. On the first Business Day
of January, April, July and October of
each year, the Trustee will deliver to
the Company and DTC a written list of
Regular Record Dates and Interest
Payment Dates that will occur during the
six-month period beginning on such first
Business Day with respect to Floating
Rate Notes issued in book-entry form.
Promptly after each Determination Date
for Floating Rate Notes issued in book-entry
form, the Company will notify Standard & Poor's
of the interest rates determined on such Interest
Determination Date.
PAYMENTS AT MATURITY. On or about the
first Business Day of each month, the
Trustee will deliver to the Company and
DTC a written list of principal,
interest and premium, if any, to be paid
on each Book-Entry Note maturing either
at Stated Maturity or on a Redemption
Date in, or for which Notice of
Repayment at the option of the Holder
has been received with respect to, the
following month. The Trustee, the
Company and DTC will confirm the amount
of such principal and interest payments
with respect to a Book-Entry Note on or
about the fifth Business Day preceding
the Maturity of such Book-Entry Note.
At such Maturity, the Company will pay
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to the Trustee, and the Trustee in turn
will pay to DTC, the principal amount of
such Note, together with interest and
premium, if any, due at such Maturity
which are payable in U.S. dollars, at
the times and in the manner set forth
below under "Manner of Payment." The
Trustee shall make payment of the
principal, premium, if any, and interest
to be paid at maturity of such Book-Entry
Notes that Participants have
elected to receive in foreign or
composite currencies directly to such
Participants. If any Maturity of a
Book-Entry Note is not a Business Day,
the payment due on such day shall be
made on the next succeeding Business Day
and no interest shall accrue on such
payment for the period from and after
such Maturity. Promptly after (i)
payment to DTC of the principal,
interest and premium, if any, due at the
Maturity of such Book-Entry Note which
are payable in U.S. dollars and (ii)
payment of the principal, interest and
premium, if any, due at the maturity of
such Book-Entry Note to those
Participants who have elected to receive
such payments in foreign or composite
currencies, the Trustee will promptly
cancel such Book-Entry Note and
periodically destroy groups of such
Notes and deliver a certificate of
destruction to the Company. On the
first Business Day of each month, the
Trustee will deliver to the Company a
written statement indicating the total
principal amount of outstanding Book-Entry Notes
as of the close of business on the immediately
preceding Business Day.
MANNER OF PAYMENT. The total amount of
any principal, premium, if any, and
interest due on Book-Entry Notes on any
Interest Payment Date or at maturity or
upon redemption or repayment shall be
paid by the Company to the Trustee in
funds available for use by the Trustee
as of 9:30 A.M., New York City time, on
such date. The Company will make such
payment on such Book-Entry Notes by wire
transfer to the Trustee. Prior to 10:00
A.M., New York City time on such date or
as soon as possible thereafter,
following receipt of such funds from the
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Company, the Trustee will pay by
separate wire transfer (using Fedwire
message entry instructions in a form
previously specified by DTC) to an
account at the Federal Reserve Bank of
New York previously specified by DTC, in
funds available for immediate use by
DTC, each payment in U.S. dollars of
interest, principal and premium, if any,
due on a Book-Entry Note on such date.
On each Interest Payment Date, interest
payment shall be made to DTC in same day
funds in accordance with existing
arrangements between the Trustee and
DTC. Thereafter on each such date, DTC
will pay, in accordance with its SDFS
operating procedures then in effect,
such amounts in funds available for
immediate use to the respective
Participants in whose names such Notes
are recorded in the book-entry system
maintained by DTC. Neither the Company
nor the Trustee shall have any
responsibility or liability for the
payment in U.S. dollars by DTC to such
Participants of the principal of,
premium, if any, or interest on, the
Book-Entry Notes. The Trustee shall
make all payments of principal, premium,
if any, and interest on each Book-Entry
Note that Participants have elected to
receive in foreign or composite
currencies directly to such
Participants.
WITHHOLDING TAXES. The amount of any
taxes required under applicable law to
be withheld from any interest payment on
a Note will be determined and withheld
by the Participant, indirect participant
in DTC or other Person responsible for
forwarding payments and materials
directly to the beneficial owner of such
Note.
Settlement
Procedures: Settlement Procedures with regard to
each Note in book-entry form sold by
each Agent, as agent of the Company or
purchased by an Agent, as principal,
shall be completed as soon as possible
following the trade, but no later than
the times set forth below:
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A. The Presenting Agent will advise
the Company by telecopy of the
following Settlement information:
1. Taxpayer identification number
of the purchaser.
2. Principal amount, authorized
denomination and specified
currency of the Note.
3. Fixed Rate Notes:
(a) interest rate;
(b) interest payment dates.
Floating Rate Notes:
(a) interest rate basis or
bases;
(b) initial interest rate;
(c) spread or spread
multiplier, if any;
(d) interest rate reset dates;
(e) interest rate reset period;
(f) interest payment dates;
(g) interest payment period;
(h) record dates;
(i) index maturity, if any;
(j) calculation agent;
(k) maximum interest rate, if
any;
(l) minimum interest rate, if
any;
(m) calculation date; and
(n) interest determination
dates.
4. Price to public of the Note.
5. Trade date.
6. Settlement Date (Original Issue
Date).
7. Maturity Date.
8. Redemption provisions, if any,
including: Redemption Date,
Initial Redemption Percentage
and Annual Redemption Reduction
Percentage.
9. Optional Repayment Date(s), if
any.
10. Net Proceeds to the Company.
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11. Whether the trade is being made
on an agency basis or a
principal basis and the Agent's
commission or discount, as
applicable.
12. Currency payment option for
specified currency.
13. Whether such Note is being
issued with Original Issue
Discount and the terms thereof.
14. Exchange Rate Agent, if any.
15. Such other information specified
with respect to the Notes.
B. The Company will provide to the
Trustee by telecopy or other
acceptable method executed by the
President, any Vice President or
Treasurer the applicable settlement
information outlined above received
from the agent including the name of
the Agent.
C. The Trustee will assign a CUSIP
number to the Book-Entry Note, and
will telephone and advise the Company
and the Presenting Agent of said
CUSIP number.
The Trustee will communicate to DTC
and the Presenting Agent through
DTC's Participant Terminal System, a
pending deposit message specifying
the following settlement information:
1. The information set forth in
Settlement Procedure A.
2. Identification numbers of the
participant accounts maintained
by DTC on behalf of the Trustee
and the Presenting Agent.
3. Identification of the Book-Entry
Note of the Book-Entry Note as a
Fixed Rate Book-Entry Note or
Floating Rate Book-Entry Note.
4. Initial Interest Payment Date
for such Note, number of days by
which said date succeeds the
related record date for DTC
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purposes (or, in the case of
Floating Rate Notes which reset
daily or weekly, the date which
is five calendar days preceding
the Interest Payment Date) and,
if then calculable, the amount
of interest payable on such
Interest Payment Date (which
amount shall have been confirmed
by the Trustee).
5. CUSIP number of the Book-Entry
Note representing such Note.
6. Whether such Book-Entry Note
represents any other Notes
issued or to be issued in book-entry form.
DTC will arrange for each pending
deposit message described above to be
transmitted to Standard & Poor's,
which will use the information in the
message to include certain terms of
the related Book-Entry Note in the
appropriate daily bond report
published by Standard & Poor's.
D. The Company will complete and deliver
to the Trustee a Book-Entry Note
representing such Note in a form that
has been approved by the Company, the
Agents and the Trustee.
E. The Trustee will authenticate the
Book-Entry Note representing such
Note.
F. DTC will credit such Note to the
participant account of the Trustee
maintained by DTC.
G. The Trustee will enter an SDFS
deliver order through DTC's
Participant Terminal System
instructing DTC (i) to debit such
Note to the Trustee's participant
account and credit such Note to the
participant account of the Presenting
Agent maintained by DTC and (ii) to
debit the settlement account of the
Presenting Agent and credit the
settlement account of the Trustee
maintained by DTC, in an amount equal
to the price of such Note less such
Presenting Agent's commission or
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discount. Any entry of such deliver
order shall be deemed to constitute a
representation and warranty by the
Trustee to DTC that (i) the Book-Entry
Note representing such Note has
been issued and authenticated and
(ii) the Trustee is holding such
Book-Entry Note pursuant to the
Medium-Term Note Certificate
Agreement.
H. In the case of Book-Entry Notes sold
through the Presenting Agent, as
agent, the Presenting Agent will
enter an SDFS deliver order through
DTC's Participant Terminal System
instructing DTC (i) to debit such
Note to the Presenting Agent's
participant account and credit such
Note to the participant account of
the Participants maintained by DTC
and (ii) to debit the settlement
accounts of such Participants and
credit the settlement account of the
Presenting Agent maintained by DTC,
in an amount equal to the initial
public offering price of such Note.
I. Transfers of funds in accordance with
SDFS deliver orders described in
Settlement Procedures G and H will be
settled in accordance with SDFS
operating procedures in effect on the
Settlement Date.
J. The Trustee will credit to an account
of the Company maintained at the
Trustee funds available for immediate
use in the amount transferred to the
Trustee in accordance with Settlement
Procedure G.
K. The Trustee will send a copy of the
Book-Entry Note by first class mail
to the Company together with a
statement setting forth the principal
amount of Notes Outstanding as of the
related Settlement Date after giving
effect to such transaction and all
other offers to purchase Notes of
which the Company has advised the
Trustee but which have not yet been
settled.
L. If such Note was sold through the
Presenting Agent, as agent, the
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Presenting Agent will confirm the
purchase of such Note to the
purchaser either by transmitting to
the Participant with respect to such
Note a confirmation order through
DTC's Participant Terminal System or
by mailing a written confirmation to
such purchaser.
Settlement Procedures
Timetable: For offers to purchase Notes accepted by
the Company, Settlement Procedures "A"
through "L" set forth above shall be
completed as soon as possible but not
later than the respective times (New York
City time) set forth below:
Settlement
Procedure Time
---------- ----
A If possible by 2:00 p.m. on the
trade date or within one hour
following the trade
B As soon as practicable following
the trade, but in no event later
than 2:00 p.m. on the Business
Day following the trade
C No later than the close of
business on the trade date
D 3:00 p.m. on the Business Day
before Settlement Date
E 9:00 a.m. on Settlement Date
F 10:00 a.m. on Settlement Date
G-H No later than 2:00 p.m. on
Settlement Date
I 4:00 p.m. on Settlement Date
J-L 5:00 p.m. on Settlement Date
Settlement Procedure I is subject to
extension in accordance with any extension
of Fedwire closing deadlines and in the
other events specified in the SDFS
operating procedures in effect on the
Settlement Date.
If settlement of a Note issued in book-entry
form is rescheduled or canceled, the
Company shall notify the Trustee thereof,
and upon receipt of such notice the
Trustee will deliver to DTC, through DTC's
Participant Terminal System, a
cancellation message to such effect by no
later than 5:00 p.m., New York City time,
on the Business Day immediately preceding
the scheduled Settlement Date.
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Fails: If the Trustee fails to enter an SDFS
deliver order with respect to a Book-Entry
Note issued in book-entry form pursuant to
Settlement Procedure G, then upon written
request (which may be evidenced by
telecopy transmission) of the Company, the
Trustee shall deliver to DTC, through
DTC's Participant Terminal System, as soon
as practicable a withdrawal message
instructing DTC to debit such Note to the
participant account of the Trustee
maintained at DTC. DTC will process the
withdrawal message, provided that such
participant account contains a principal
amount of the Book-Entry Note representing
such Note that is at least equal to the
principal amount to be debited. If
withdrawal messages are processed with
respect to all the Notes represented by a
Book-Entry Note, the Trustee will mark
such Book-Entry Note "cancelled," make
appropriate entries in its records and
send such cancelled Book-Entry Note to the
Company. The CUSIP number assigned to
such Book-Entry Note shall, in accordance
with CUSIP Service Bureau procedures, be
cancelled and not immediately reassigned.
If withdrawal messages are processed with
respect to a portion of the Notes
represented by a Book-Entry Note, the
Trustee will exchange such Book-Entry Note
for two Book-Entry Notes, one of which
shall represent the Notes for which
withdrawal messages are processed and
shall be cancelled immediately after
issuance, and the other of which shall
represent the other Notes previously
represented by the surrendered Book-Entry
Note and shall bear the CUSIP number of
the surrendered Book-Entry Note.
In the case of any Book-Entry Note sold
through the Presenting Agent, as agent, if
the purchase price for any Book-Entry Note
is not timely paid to the Participants
with respect to such Note by the
beneficial purchaser thereof (or a Person,
including an indirect participant in DTC,
acting on behalf of such purchaser), such
Participants and, in turn, the related
Presenting Agent may enter SDFS deliver
orders through DTC's Participant Terminal
System reversing the orders entered
pursuant to Settlement Procedures G and H,
respectively. Thereafter, the Trustee
will deliver the withdrawal message and
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take the related actions described in the
preceding paragraph. If such failure
shall have occurred for any reason other
than default by the applicable Presenting
Agent to perform its obligations hereunder
or under the Distribution Agreement, the
Company will reimburse such Presenting
Agent on an equitable basis for its loss
of the use of funds during the period when
the funds were credited to the account of
the Company.
Notwithstanding the foregoing, upon any
failure to settle with respect to a Book-Entry
Note, DTC may take any actions in
accordance with its SDFS operating
procedures then in effect. In the event
of a failure to settle with respect to a
Note that was to have been represented by
a Book-Entry Note also representing other
Notes, the Trustee will provide, in
accordance with Settlement Procedures D
and E, for the authentication and issuance
of a Book-Entry Note representing such
remaining Notes and will make appropriate
entries in its records.
PART III: PROCEDURES FOR NOTES ISSUED IN
CERTIFICATED FORM
Denominations: The Certificated Notes will be issued in
denominations of U.S. $1,000 and integral
multiples thereof. Any notes denominated
other than in U.S. dollars will be
issuable in denominations as set forth in
the applicable pricing supplement and in
such Notes.
Payments of Princi-
pal and Interest: Upon presentment and delivery of the
Certificated Note, the Trustee will pay
the principal amount of each Certificated
Note at Maturity and the final installment
of interest in immediately available
funds. All other interest payments on a
Certificated Note, other than interest due
at Maturity, will be made by check drawn
on the Trustee and mailed by the Trustee
to the person entitled thereto as provided
in the Indenture and Certificated Note.
However, holders of $10,000,000 or more in
aggregate principal amount of Certificated
Notes (whether having identical or
different terms and provisions) shall be
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entitled to receive payments of interest,
other than at Maturity, by wire transfer
of immediately available funds if
appropriate wire transfer instructions
have been received in writing by the
Trustee not less than 16 days prior to the
applicable Interest Payment Date. Any
payment of principal or interest required
to be made on an Interest Payment Date or
at maturity of a Note which is not a
Business Day (as defined below) need not
be made on such day, but may be made on
the next succeeding Business Day with the
same force and effect as if made on the
Interest Payment Date or at maturity, as
the case may be, and no interest shall
accrue for the period from and after such
Interest Payment Date or Maturity Date.
The Trustee will provide monthly to the
Company a list of the principal and
interest in each currency to be paid on
Certificated Notes maturing in the next
succeeding month. The Trustee will be
responsible for withholding taxes on
interest paid as required by applicable
law, but shall be relieved from any such
responsibility if it acts in good faith
and in reliance upon an opinion of
counsel.
Certificated Notes presented to the
Trustee at maturity for payment will be
cancelled by the Trustee. All cancelled
Certificated Notes held by the Trustee
shall be destroyed, and the Trustee shall
furnish to the Company a certificate with
respect to such destruction.
Settlement Procedures: Settlement Procedures with regard to each
Certificated Note purchased through any
Agent, as agent, or purchased by an Agent,
as principal, shall be as follows:
A. The Presenting Agent will advise the
Company by telephone of the following
Settlement information with regard to
each Note:
1. Exact name in which the
Certificated Note(s) is to be
registered (the "Registered
Owner").
2. Exact address of the Registered
Owner for delivery, notices and
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<PAGE>
payments of principal and
interest.
3. Taxpayer identification number
of the Registered Owner.
4. Principal amount, authorized
denomination and specified
currency of the Certificated
Note.
5. Denomination of the Certificated
Note.
6. Fixed Rate Notes:
(a) interest rate;
(b) interest payment dates.
Floating Rate Notes:
(a) interest rate basis or
bases;
(b) initial interest rate;
(c) spread or spread
multiplier, if any;
(d) interest rate reset dates;
(e) interest rate reset period;
(f) interest payment dates;
(g) interest payment period;
(h) record dates;
(i) index maturity, if any;
(j) calculation agent;
(k) maximum interest rate, if
any;
(l) minimum interest rate, if
any;
(m) calculation date; and
(n) interest determination
dates.
7. Price to public of the
Certificated Note.
8. Trade date.
9. Settlement date (Original Issue
Date).
10. Maturity date.
11. Redemption provisions, if any,
including: Initial Redemption
Date, Initial Redemption
Percentage and Annual redemption
Reduction Percentage.
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<PAGE>
12. Optional Repayment Date(s), if
any.
13. Net proceeds to the Company.
14. Whether the trade is being made
on an agency basis or a
principal basis and the Agent's
commission or discount, as
applicable.
15. Currency payment option for
specified currency.
16. Whether such Note is being
issued with Original Issue
Discount and the terms thereof.
17. Exchange Rate Agent, if any.
18. Such other information specified
with respect to the Notes.
B. After receiving such settlement
information from the Agent, the
Company will advise the Trustee of
the above settlement information.
The Company will prepare a Pricing
Supplement to the Prospectus and
deliver copies to the Agent and the
Trustee and will cause the Trustee to
issue, authenticate and deliver
Notes.
C. The Trustee will complete the
preprinted 4-ply Certificated Note
packet containing the following
documents in forms approved by the
Company, the Presenting Agent and the
Trustee:
1. Certificated Note with Agent's
customer confirmation.
2. Stub 1 - for Trustee.
3. Stub 2 - for Presenting Agent.
4. Stub 3 - for the Company.
D. With respect to each trade, the
Trustee will deliver the Certificated
Notes and Stub 2 thereof to the
Presenting Agent at the following
applicable address: Merrill Lynch,
Pierce, Fenner & Smith, Incorporated,
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<PAGE>
Merrill Lynch Money Markets
Clearance, 55 Water Street, 3rd Flr.,
N.S.C.C. Window, New York, NY 10041,
Attention: Al Mitchell; Morgan
Stanley & Co. Incorporated at Bank of
New York, Dealer Clearance
Department, 1 Wall Street, 3rd Flr.,
Window 3b, New York, NY 10005,
Attention: For the Account of Morgan
Stanley & Co. Incorporated; Lehman
Brothers, Lehman Special Securities
Inc., 1 Battery Park Plaza, Second
Floor, New York, NY 10004, Attention:
Eddie Steffens or Salomon Brothers
Inc, or Salomon Brothers Inc, at The
Bank of New York, Dealer Clearance,
1 Wall Street 4th Flr., New York, NY
10005, Account: Salomon Brothers Inc.
The Trustee will keep Stub 1. The
Presenting Agent will acknowledge
receipt of the Certificated Note
through a broker's receipt and will
keep Stub 2. Delivery of the
Certificated Note will be made only
against such acknowledgment of
receipt. Upon determination that the
Certificated Note has been
authorized, delivered and completed
as aforementioned, the Presenting
Agent will wire the net proceeds of
the Certificated Note after deduction
of its applicable commission to the
Company pursuant to the standard wire
instructions given by the Company.
E. The Presenting Agent will deliver the
Certificated Note (with
confirmation), as well as a copy of
the Prospectus and any applicable
Prospectus Supplement or Supplements
received from the Company to the
purchaser against payment in full in
immediately available funds. In all
cases, the prospectus, prospectus
supplement and pricing sticker must
accompany or precede the earlier of
the written confirmation of the sale
of the Notes or the delivery of the
Notes. If instructed by the
purchaser to deliver the Note and
confirmation to different locations,
the Note and the confirmation will
each be accompanied or preceded by
the prospectus, prospectus supplement
and pricing sticker to the Note being
delivered.
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<PAGE>
F. The Trustee will send Stub 3 to the
Company.
Settlement Procedures
Timetable: For offers to purchase Certificated Notes
accepted by the Company, Settlement
Procedures "A" through "F" set forth above
shall be completed as soon as possible but
not later than the respective times
(New York City time) set forth below:
Settlement
Procedure Time
---------- ----
A - B 3:00 p.m. on Business Day
prior to Settlement Date
C - D 2:15 p.m. on Settlement Date
E 3:00 p.m. on Settlement Date
F 5:00 p.m. on Settlement Date
Failure to Settle: In the event that a purchaser of a Note
from the Company shall either fail to
accept delivery of or make payment for a
Certificated Note on the date fixed for
settlement, the Presenting Agent will
forthwith notify the Trustee and the
Company by telephone, confirmed in
writing, and return the Certificated Note
to the Trustee.
The Trustee, upon receipt of the
Certificated Note from the Presenting
Agent, will immediately advise the Company
and the Company will promptly arrange to
credit the account of the Presenting Agent
in an amount of immediately available
funds equal to the amount previously paid
by such Presenting Agent in settlement for
the Certificated Note. Such credits will
be made on the Settlement Date if
possible, and in any event not later than
the Business Day following the Settlement
Date; provided that the Company has
received notice on the same day. If such
failure shall have occurred for any reason
other than failure by such Presenting
Agent to perform its obligations hereunder
or under the Distribution Agreement, the
Company will reimburse such Presenting
Agent on an equitable basis for its loss
of the use of funds during the period when
the funds were credited to the account of
the Company. Upon receipt of the
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<PAGE>
Certificated Note in respect of which the
failure occurred, the Trustee will mark
the note "cancelled," make appropriate
entries in its records to reflect the fact
that the Note was never issued, and
accordingly notify the Company in writing.
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<PAGE>
PACCAR FINANCIAL CORP.
Medium-Term Notes, Series H
UNDERWRITING AGREEMENT
To each of the Underwriters March __, 1996
who are signatories hereto
Dear Sirs:
PACCAR Financial Corp., a Washington corporation (the "Company"),
proposes to sell its Medium-Term Notes, Series H (the "Securities") to each
of you acting severally as an underwriter (each of you being referred to
herein as an "Underwriter") in such principal amount or amounts as the
Company and the purchasing Underwriter may agree upon from time to time. The
Securities are to be issued pursuant to the indenture, dated as of December
1, 1983, as amended by the first supplemental indenture dated as of June 19,
1989 (the "Indenture"), between the Company and Citibank, N.A., as trustee
(the "Trustee").
SECTION 1. REPRESENTATIONS AND WARRANTIES. (a) The Company
represents and warrants as of the date hereof, as of the date of each
applicable Schedule hereinafter referred to and as of each applicable Closing
Date hereinafter referred to, and as of the times referred to in Sections
6(e), 6(f) and 6(g) hereof (in each case a "Representation Date"), as follows:
(i) A registration statement on Form S-3 with
respect to the Securities has been prepared and filed
by the Company under the Securities Act of 1933, as
amended (the "Act"), and the rules and regulations (the
"Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder, and has
become effective. The Indenture has been qualified
under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"). As used in this Agreement,
(A) "Preliminary Prospectus" means each prospectus and
amendments or supplements thereof (including all
documents incorporated therein by reference) included
in such registration statement before it became
effective under the Act, including any prospectus filed
with the Commission pursuant to Rule 424(a) of the
Rules and Regulations; (B) "Registration Statement"
means such registration statement when it became
effective under the Act, as from time to time amended
or supplemented (including all documents incorporated
therein by reference); (C) "Basic Prospectus" means the
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<PAGE>
prospectus (including all documents incorporated
therein by reference) included in the Registration
Statement; and (D) "Prospectus" means the Basic
Prospectus, together with any prospectus amendments or
supplements (including in each case all documents
incorporated therein by reference) but excluding any
amended or supplemented prospectus with respect to the
offer and sale of debt securities other than the
Securities, as filed with, or mailed for filing to, the
Commission pursuant to paragraph (b) of Rule 424 of the
Rules and Regulations.
(ii) The Registration Statement (including all
exhibits thereto) and each Prospectus conform, and will
conform as of each applicable Representation Date, in
all material respects with the applicable requirements
of the Act, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Trust Indenture Act,
and the rules and regulations of the Commission under
such Acts; the Indenture, including any amendments and
supplements thereto, conforms, and will conform as of
the applicable Representation Date, in all material
respects with the requirements of the Trust Indenture
Act and the rules and regulations of the Commission
thereunder; and the Registration Statement does not as
of the date hereof, and will not as of each applicable
Representation Date, contain any untrue statement of a
material fact or omit to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading and the Prospectus
does not as of the date hereof, and will not as of each
applicable Representation Date, contain an untrue
statement of a material fact or omit to state a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which
they were made, not misleading; PROVIDED, HOWEVER, that
the Company makes no representation or warranty to any
Underwriter as to information contained in or omitted
from the Registration Statement or any Prospectus in
reliance upon and in conformity with written
information furnished to the Company by such
Underwriter specifically for inclusion therein.
(iii) The Company is not in violation of its
corporate charter or by-laws or in default in the
observance or performance of any agreement, indenture
or instrument, the effect of which violation or default
would be material to the Company; the execution,
delivery and performance of this Agreement, the
Indenture and the Securities, and compliance by the
Company with the provisions of the Securities and the
Indenture, have been duly authorized by all necessary
corporate action and will not conflict with, result in
the creation or imposition of any lien, charge or
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<PAGE>
encumbrance upon any of the assets of the Company
pursuant to the terms of, or constitute a default in
the observance or performance of, any agreement,
indenture or instrument, or result in a violation of
the corporate charter or by-laws of the Company or any
order, rule or regulation of any court or governmental
agency having jurisdiction over the Company or its
properties, the effect of which conflict, lien, charge,
encumbrance, default or violation would be material to
the Company; and except as required by the Act, the
Trust Indenture Act, the Exchange Act and applicable
state securities laws, no consent, authorization or
order of, or filing or registration with, any court or
governmental agency is required for the execution,
delivery and performance of this Agreement and the
Indenture or in connection with the sale of the
Securities hereunder, the failure to obtain which
consent, authorization or order or make which filing or
registration would be material to the Company. The
Company has no subsidiaries within the meaning of Rule
405 of the Rules and Regulations.
(iv) From the dates as of which information is
given in the Registration Statement and each
Prospectus, and except as described therein or in any
amendment or supplement thereto (A) there has not been
any material adverse change in the business,
properties, financial condition, results of operations
or prospects of the Company, (B) there has been no
material transaction entered into by the Company other
than those in the ordinary course of business, and
(C) there has been no dividend or distribution of any
kind declared, paid or made by the Company on its
capital stock, and (D) there has been no amendment to
the support agreement between the Company and
PACCAR Inc ("PACCAR") as amended and restated under
date of June 19, 1989.
(v) Ernst & Young, whose report appears in the
Company's Annual Report on Form 10-K which is
incorporated by reference in the Prospectus, are
independent public accountants as required by the Act
and the Rules and Regulations.
(vi) (A) The Indenture has been validly
authorized, duly executed and delivered by the Company
and constitutes the legally binding obligation of the
Company enforceable in accordance with its terms
(except as enforcement thereof may be limited by
bankruptcy, insolvency, other laws relating to
creditor's rights generally or by general equity
principles), (B) when Securities are sold pursuant
hereto, they will have been validly authorized for
issuance and sale pursuant to this Agreement and, upon
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<PAGE>
delivery and payment therefor as provided in this
Agreement and the Indenture, will be validly issued and
outstanding, and will constitute legally binding
obligations of the Company enforceable in accordance
with their terms (except as enforcement thereof may be
limited by bankruptcy, insolvency, or other laws
relating to creditors' rights generally or by general
equity principles) and entitled to the benefits of the
Indenture, and (C) the descriptions of the Securities
and the Indenture contained in the Prospectus fairly
present the information required with respect thereto
in all material respects.
(vii) PACCAR has been duly incorporated and is
validly existing and in good standing under the laws of
the State of Delaware; and the Company has been duly
incorporated, is validly existing and in good standing
under the laws of the State of Washington, is duly
qualified to do business and in good standing as a
foreign corporation in each jurisdiction in which the
failure to so qualify and be in good standing would
materially adversely affect its business or financial
condition, and has the power and authority necessary to
own or hold its properties and to conduct the business
in which it is presently engaged.
(viii) Except as described in the Prospectus,
there is no material litigation or governmental
proceeding pending or, to the knowledge of the Company,
threatened against the Company which might result in
any material adverse change in the financial condition,
results of operations, business, property or prospects
of the Company or which is required to be disclosed in
the Registration Statement.
(ix) The financial statements filed as part of
the Registration Statement or included in any
Preliminary Prospectus or Prospectus present, and will
present as of each applicable Representation Date,
fairly, the financial condition and results of
operations of the Company, at the dates and for the
periods indicated therein, and have been, and will be
as of each applicable Representation Date, prepared in
conformity with generally accepted accounting
principles applied on a consistent basis throughout the
periods involved; and the supporting schedules included
or incorporated in the Registration Statement present
fairly the information required to be stated therein.
(x) The documents incorporated by reference into
any Preliminary Prospectus or Prospectus have been, and
will be as of each applicable Representation Date,
prepared by the Company in conformity in all material
respects with the applicable requirements of the Act
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<PAGE>
and the Rules and Regulations and the Exchange Act and
the rules and regulations of the Commission thereunder;
and such documents have been, or will be as of each
applicable Representation Date, timely filed as
required thereby.
(xi) There are no contracts or other documents
which are required to be filed as exhibits to the
Registration Statement by the Act or by the Rules and
Regulations, or which were required to be filed as
exhibits to any document incorporated by reference in
any Prospectus by the Exchange Act or the rules and
regulations of the Commission thereunder, which have
not been filed as exhibits to the Registration
Statement or to such document or incorporated therein
by reference as permitted by the Rules and Regulations
or the rules and regulations of the Commission under
the Exchange Act, as the case may be.
(xii) All the authorized, issued and outstanding
capital stock of the Company has been duly authorized,
is validly issued, fully paid and nonassessable and is
owned, of record and beneficially, by PACCAR, free and
clear of any mortgage, pledge, lien, claim or
encumbrance, except as described in the Prospectus.
(xiii) The Company has all licenses for the
conduct of its business, the failure to have which
would have a material adverse effect on the Company.
(xiv) The Company has complied and will comply
with all of the provisions of Section 517.075, Florida
Statutes (Chapter 92-198, Laws of Florida), and all
regulations promulgated thereunder relating to issuers
doing business with Cuba.
(b) Any certificate signed by any officer of the
Company and delivered to an Underwriter or to its counsel in
connection with a sale of Securities to it shall be deemed a
representation and warranty by the Company to such Underwriter as
to the matters covered thereby.
SECTION 2. PURCHASE AND SALE. Subject to the terms
and conditions and in reliance upon the representations and
warranties herein set forth, from time to time the Company may
agree to sell Securities to an Underwriter, and such Underwriter
may agree to purchase Securities from the Company. Each such
agreement shall incorporate the terms of this Agreement and shall
be evidenced by the execution and delivery by the Company and the
Underwriter of a schedule in the form of Exhibit A hereto
appropriately completed to set forth the principal amount,
interest rate(s) or manner of determining the interest rate(s),
interest payment dates, purchase price of the Securities to be
purchased and any other terms of the Securities and the purchase
-5-
<PAGE>
thereof (a "Schedule"). Such execution and delivery may be
accomplished by exchange of telecopied facsimiles, by telex or by
other mutually agreed means. Securities to be purchased by an
Underwriter are herein sometimes called the "Purchased
Securities." Purchased Securities will be represented by a
global certificate (the "Book-Entry Securities) registered in the
name of the depositary (the "Depositary") specified in the
Prospectus or by certificates issued in definitive form (the
"Certificated Securities").
Each delivery of and payment for Purchased Securities
shall be made at the location, on the date and at the time
specified in the applicable Schedule, which date and time may be
postponed by agreement between the purchasing Underwriter and the
Company (each such date and time of delivery and payment for the
Securities being herein called the "Closing Date"). Delivery of
Certificated Securities shall be made to the Underwriter and
delivery of Book-Entry Securities shall be made to the Trustee as
agent for the Depositary for the account of the Underwriter, in
either case against payment by the Underwriter of the purchase
price to or upon the order of the Company in immediately
available funds, unless otherwise specified in the applicable
Schedule. Certificated Securities shall be registered in such
names and in such denominations as the Underwriter may request at
least one full business day prior to the applicable Closing Date.
The Company will have Certificated Securities available for
inspection, checking and packaging by the Underwriter in the city
in which delivery and payment is to occur, not later than 2 p.m.
Eastern Time, on the business day prior to the applicable Closing
Date.
SECTION 3. COVENANTS OF THE COMPANY. The Company
covenants and agrees:
(a) To furnish promptly to each Underwriter a signed
copy of the Registration Statement as originally filed and each
amendment or supplement thereto, and a copy of each Prospectus
with respect to the Securities filed with the Commission,
including all supplements thereto and all documents incorporated
therein by reference, and all consents and exhibits filed
therewith;
(b) To deliver promptly to each Underwriter such
number of the following documents as each Underwriter may
reasonably request: (i) conformed copies of the Registration
Statement (excluding exhibits other than the computation of the
ratios of earnings to fixed charges, the Indenture and this
Agreement), (ii) each Preliminary Prospectus, Basic Prospectus
and Prospectus with respect to the Securities, and (iii) any
documents incorporated by reference in any Prospectus with
respect to the Securities (excluding exhibits).
(c) To file with the Commission, during any period in
which any Prospectus is required by law to be delivered in
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connection with sales of the Securities, any amendment or
supplement to the Registration Statement or any Prospectus that
is required by the Act or the Rules and Regulations, and all
documents, and any amendments to previously filed documents,
required to be filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act;
(d) Prior to filing with the Commission during any
period in which the Prospectus is required by law to be delivered
in connection with sales of Securities (i) any amendment or
supplement to the Registration Statement, (ii) any Prospectus or
any amendment or supplement thereto, or (iii) any document
incorporated by reference in any of the foregoing or any
amendment of or supplement to any such incorporated document, to
furnish a copy thereof to each Underwriter and its counsel and,
between the date of delivery of any Schedule and prior to the
applicable Closing Date, not to file any such document to which
the purchasing Underwriter reasonably objects;
(e) To advise each Underwriter promptly (i) when any
post-effective amendment to the Registration Statement relating
to or covering the Securities becomes effective, (ii) of any
request by the Commission for an amendment or supplement to the
Registration Statement, to any Prospectus, to any document
incorporated by reference in any of the foregoing or for any
additional information, (iii) of the issuance by the Commission
of any stop order suspending the effectiveness of the
Registration Statement or any order directed to any Prospectus or
any document incorporated therein by reference or the initiation
or threat of any stop order proceeding or of any challenge by the
Commission to the accuracy or adequacy of any document
incorporated by reference in any Prospectus, (iv) of receipt by
the Company of any notification with respect to the suspension of
the qualification of the Securities for sale in any jurisdiction
or the initiation or threat of any proceeding for that purpose,
and (v) of the occurrence of any event which causes the
Registration Statement or any Prospectus to contain an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading;
(f) If, during any period in which the Prospectus is
required by law to be delivered in connection with sales of the
Securities, the Commission shall issue a stop order suspending
the effectiveness of the Registration Statement, to make every
reasonable effort to obtain the lifting of that order at the
earliest possible time;
(g) To make generally available to its security
holders, as soon as practicable but in no event later than
90 days after the end of the twelve-month period identified
below, an earnings statement (in form complying with the
provisions of Section 11(a) of the Act, which need not be
certified by independent certified public accountants unless
required by the Act or the Rules and Regulations) covering the
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twelve-month period beginning not later than the first day of the
fiscal quarter next following the latest date which (i) under
Section 11(a) of the Act and the Rules and Regulations is an
effective date of the Registration Statement for purposes of said
Section 11(a), and (ii) is not later than the sale of all the
Securities;
(h) So long as any of the Securities are outstanding,
to furnish to each Underwriter not later than the time the
Company makes the same generally available to others, copies of
all reports and financial statements furnished by the Company to
any securities exchange on which the Securities are listed
pursuant to requirements of or agreements with such exchange or
to the Commission pursuant to the Exchange Act or any rule or
regulation of the Commission thereunder; and
(i) To endeavor, in cooperation with the Underwriters,
to qualify the Securities for offering and sale under the
applicable securities laws of such states and other jurisdictions
of the United States as we may agree upon and to maintain such
qualifications in effect for as long as may be reasonably
required for the distribution of the Securities. The Company
will file such statements and reports as may be required by the
laws of each jurisdiction in which the Securities have been
qualified as above provided.
(j) If provided in the Schedule, between the date of
such Schedule and the Settlement Date with respect to such
Schedule, the Company will not offer or sell, or enter into any
agreement to sell, any debt securities of the Company (other than
the Securities that are to be sold pursuant to such Schedule and
commercial paper for other short-term debt with an original
maturity of 270 days or less in the ordinary course of business)
without such Underwriter's prior consent.
SECTION 4. PAYMENT OF EXPENSES. The Company will pay
(i) the costs incident to its authorization, issuance, sale and
delivery of the Securities and any taxes payable in that
connection, (ii) the costs incident to the preparation, printing
and filing under the Act of the Registration Statement and any
amendments and exhibits thereto, (iii) the costs incident to the
preparation, printing and filing of any document and any
amendments and exhibits thereto required to be filed by the
Company under the Exchange Act, (iv) the costs of furnishing to
the Underwriters copies of the Registration Statement as
originally filed and each amendment and post-effective amendment
thereof (including exhibits), any Preliminary Prospectus, Basic
Prospectus or Prospectus, any supplement to the Prospectus and
any documents incorporated by reference in any of the foregoing
documents, (v) the fees and disbursements of the Trustee and its
counsel, (vi) the cost of any filings with the National
Association of Securities Dealers, Inc., in respect of the
Securities, (vii) the fees and disbursements of counsel to the
Company, (viii) any fees payable to rating agencies in connection
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with the rating of the Securities, (ix) the fees and expenses of
qualifying the Securities under the securities laws of the
several jurisdictions as provided in this Agreement and of
preparing and printing a Blue Sky Memorandum and a memorandum
concerning the legality of the Securities as an investment
(including reasonable fees and expenses of counsel for the
Underwriters in connection therewith), and (x) all other costs
and expenses incident to the Company's performance of its
obligations under this Agreement.
In addition, the Company agrees to pay the reasonable
fees and disbursements of Brown & Wood, counsel for the
Underwriters in connection with the sale of the Securities.
SECTION 5. CONDITIONS OF OBLIGATIONS. The obligations
of an Underwriter to purchase the Securities identified on a
Schedule will be subject to the continued accuracy of the
representations and warranties of the Company contained herein,
to the accuracy of the statements of the Company's officers made
in any certificate furnished pursuant to the provisions hereof,
to the performance and observance by the Company of all covenants
and agreements contained herein and to the following additional
conditions:
(a) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no order shall
have been issued by the Commission suspending or preventing the
use of any Prospectus, and no proceedings for such purpose shall
be pending before or threatened by the Commission.
(b) On or prior to the applicable Closing Date, the
purchasing Underwriter shall have been furnished such documents,
certificates, accountants' letters and opinions as it may
reasonably request for the purpose of enabling it or its counsel
to determine the accuracy, completeness or satisfaction of any of
the representations, warranties or conditions herein contained.
(c) At each Closing Date, the purchasing Underwriter
shall have received a certificate, dated such Closing Date, of
the President, a Vice President, the General Manager, the
Treasurer or the Controller of the Company to the effect that, to
the best of such officer's knowledge, the conditions set forth in
subsections (a) and (d) of this Section 5 have been satisfied,
and as to the continued accuracy of the representations and
warranties of the Company set forth herein.
(d) No order suspending the sale of the Securities in
any jurisdiction designated pursuant to subsection 3(i) hereof
shall have been issued, and no proceeding for that purpose shall
have been instituted or, to the knowledge of the purchasing
Underwriter or the Company, shall be contemplated.
(e) Subsequent to the date of the applicable Schedule
and on or prior to the applicable Closing Date, there shall not
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have occurred (i) since the date of such Schedule or since the
respective dates as of which information is given in the
Registration Statement, any material adverse change in the
condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there shall have occurred
any material adverse change in the financial markets in the
United States or any outbreak or escalation of hostilities or
other national or international calamity or crisis which, in the
reasonable judgement of such Underwriter, would have a material
adverse effect on the ability of such Underwriter to market the
Securities or enforce contracts for the sale of the Securities,
or (iii) any suspension by the Commission or a national
securities exchange of trading in any securities of the Company,
or suspension of trading generally on either the American Stock
Exchange or the New York Stock Exchange, or the fixing of minimum
or maximum prices for trading, or the requirement of maximum
ranges for prices for securities by either of said exchanges or
by order of the Commission or any other governmental authority,
or a banking moratorium declared by either Federal or New York
authorities, or a declaration of a banking moratorium by the
relevant authorities in the country or countries of origin of any
foreign currency or currencies in which the Securities are
denominated or payable, or (iv) a lowering of the rating assigned
by any nationally recognized securities rating agency to any debt
securities of the Company as of the date of any applicable
Schedule since that date, or a public announcement by any such
rating agency that it has under surveillance or review, with
possible negative implications, its rating of any debt securities
of the Company, or (v) any facts coming to such Underwriter's
attention that would cause such Underwriter to believe that the
Prospectus, at the time it was required to be delivered to a
purchaser of Securities, contained an untrue statement of a
material fact or omitted to state a material fact necessary in
order to make the statements therein, in light of the
circumstances existing at the time of such delivery, not
misleading.
(f) At the applicable Closing Date, the purchasing
Underwriter shall have received an opinion of counsel, dated such
Closing Date, to the effect specified in Section 6(f) hereof.
SECTION 6. EVIDENCE OF COMPLIANCE.
(a) On the date of its execution of this Agreement,
each Underwriter has received the opinion, dated as of the
delivery date thereof, of Bruce N. Holliday, Assistant General
Counsel of PACCAR and counsel for the Company, in form and
substance reasonably satisfactory to such Underwriter and its
counsel, to the effect that:
(i) PACCAR has been duly incorporated and is
validly existing as a corporation in good standing
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under the laws of the State of Delaware and the Company
has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the
State of Washington.
(ii) The Company has corporate power and
authority to own, lease and operate its properties and
conduct its business as described in the Registration
Statement.
(iii) The Company is duly qualified and in good
standing as a foreign corporation to transact business
in each jurisdiction in which the failure so to qualify
and be in good standing would materially adversely
affect its business or financial condition.
(iv) The authorized, issued and outstanding
capital stock of the Company is as set forth in the
Prospectus and the shares of issued and outstanding
capital stock set forth therein have been duly
authorized and validly issued and are fully paid and
non-assessable and are owned, of record and
beneficially, by PACCAR, free and clear of any
mortgage, pledge, lien, claim or encumbrance except as
described in the Prospectus.
(v) This Agreement has been duly authorized,
executed and delivered by the Company and constitutes
the valid and binding agreement of the Company.
(vi) The Indenture has been duly and validly
authorized, executed and delivered by the Company and
constitutes the legal, valid and binding agreement of
the Company enforceable in accordance with its terms
(except as enforcement thereof may be limited by
bankruptcy, insolvency, other laws relating to
creditor's rights generally or by general equity
principles).
(vii) The Securities are in a form contemplated
by the Indenture and have been duly and validly
authorized by all necessary corporate action and, when
executed and authenticated as specified in the
Indenture and delivered against payment therefor in
accordance with this Agreement, will be legal, valid
and binding obligations of the Company enforceable in
accordance with their terms (except as enforcement
thereof may be limited by bankruptcy, insolvency, other
laws relating to creditor's rights generally or by
general equity principles).
(viii) Such counsel does not know of any
litigation or any governmental proceeding pending or
threatened against the Company which would affect the
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subject matter of this Agreement or which is required
to be disclosed in the Prospectus and is not disclosed
and correctly summarized therein.
(ix) Such counsel does not know of any contracts
or other documents which are required to be filed as
exhibits to the Registration Statement by the Act or by
the Rules and Regulations, or which are required to be
filed by the Exchange Act or the rules and regulations
of the Commission thereunder as exhibits to any
document incorporated by reference in the Prospectus,
which have not been filed as exhibits to the
Registration Statement or to such document or
incorporated therein by reference as permitted by the
Rules and Regulations or the rules and regulations of
the Commission under the Exchange Act.
(x) To the best of such counsel's knowledge after
due inquiry, the Company is not in violation of its
corporate charter or bylaws, or in default under any
material agreement, indenture or instrument, the effect
of which violation or default would be material to the
Company.
(xi) The execution, delivery and performance of
this Agreement, and compliance by the Company with the
provisions of the Securities and the Indenture, will
not conflict with, or result in the creation or
imposition of any lien, charge or encumbrance upon any
of the assets of the Company pursuant to the terms of,
or constitute a default under, any agreement, indenture
or instrument known to such counsel, after due inquiry,
or result in a violation of the corporate charter or
bylaws of the Company or any order, rule or regulation
of any court or governmental agency having jurisdiction
over the Company, or its properties, the effect of
which conflict, lien, charge, encumbrance, default or
violation would be material to the Company; and, except
as may be required by the Act, the Trust Indenture Act,
the Exchange Act or state securities laws, no consent,
authorization or order of, or filing or registration
with, any court or governmental agency is required for
the execution, delivery and performance by the Company
of this Agreement, the failure to obtain which consent,
authorization or order or make which filing or
registration would be material to the Company.
(xii) The Registration Statement and the
Prospectus (except that no opinion need be expressed as
to the financial statements and other financial data
contained therein) comply as to form in all material
respects with the requirements of the Act and the Trust
Indenture Act and the rules and regulations of the
Commission under said Acts, and the documents
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<PAGE>
incorporated by reference in the Prospectus (except
that no opinion need be expressed as to the financial
statements and other financial data contained therein)
comply as to form in all material respects with the
applicable requirements of the Exchange Act and the
rules and regulations of the Commission thereunder;
and, to the knowledge of such counsel after due
inquiry, the Registration Statement does not contain
any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading
and the Prospectus does not contain an untrue statement
of a material fact or omit to state a material fact
necessary in order to make the statements therein, in
the light of the circumstances under which they were
made, not misleading;
(b) At the date of its execution of this Agreement,
each Underwriter has received the opinion, dated as of the date
of delivery thereof, of Perkins Coie, counsel for the Company (or
at the option of the Company, of Bruce N. Holliday), in form and
substance reasonably satisfactory to such Underwriter and its
counsel, to the effect that:
(i) The descriptions of the Securities and the
Indenture in the Registration Statement and each
Prospectus fairly present the information required with
respect thereto by Form S-3 in all material respects.
(ii) The Indenture is qualified under, and
complies in all material respects as to form with, the
Trust Indenture Act.
(iii) The Registration Statement has become
effective under the Act; and, to the knowledge of such
counsel no stop order suspending its effectiveness has
been issued, and no proceeding for that purpose is
pending or threatened by the Commission, no order of
the Commission directed to any document incorporated by
reference in any Prospectus has been issued and there
are no proceedings of the Commission pending or
threatened challenging the accuracy or adequacy of any
such document.
(iv) The Registration Statement and the
Prospectus (except that no opinion need be expressed as
to the financial statements and other financial data
contained therein) comply as to form in all material
respects with the requirements of the Act and the Trust
Indenture Act and the rules and regulations of the
Commission under said Acts, and the documents
incorporated by reference in the Prospectus (except
that no opinion need be expressed as to the financial
statements and other financial data contained therein)
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<PAGE>
comply as to form in all material respects with the
applicable requirements of the Exchange Act and the
rules and regulations of the Commission thereunder;
and, to the knowledge of such counsel after due
inquiry, the Registration Statement does not contain
any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading
and the Prospectus does not contain an untrue statement
of a material fact or omit to state a material fact
necessary in order to make the statements therein, in
the light of the circumstances under which they were
made, not misleading.
(c) The Company has furnished to each Underwriter a
letter of Ernst & Young, addressed to the Underwriters and dated
the date hereof, confirming that they are independent public
accountants within the meaning of the Act and are in compliance
with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission,
and stating certain conclusions and findings with respect to
financial information concerning the Company, all as more fully
set forth in the letter, as of the date of the letter, or as to
certain items specified therein as of a date not more than five
days prior to such date.
(d) Each execution and delivery by the Company of a
Schedule for the purchase of Purchased Securities shall be deemed
to be an affirmation to the purchasing Underwriter that the
representations and warranties of the Company contained in this
Agreement and in any certificate theretofore delivered to such
Underwriter pursuant hereto are true and correct at the date of
such Schedule as though made at and as of each such time (it
being understood that such representations and warranties shall
relate to the Registration Statement and the Prospectus as
amended or supplemented to each such time).
(e) Each time that the Registration Statement or the
Prospectus shall be amended or supplemented (other than by an
amendment or supplement providing solely for a change in the
interest rates, manner of determining interest rates, interest
payment dates or maturities of the Securities or a change in the
principal amount of Securities remaining to be sold or a
supplement in the form previously furnished to the Underwriters
reflecting the price and underwriting discount applicable to a
particular issue of Securities or similar changes) or the Company
files with the Commission any document incorporated by reference
into the Prospectus, the Company shall furnish or cause to be
furnished to each Underwriter promptly a certificate of the
President, a Vice President, the General Manager, the Treasurer
or the Controller of the Company to the effect that the
representations and warranties of the Company herein are true and
correct at the time of such amendment or supplement or filing, as
the case may be, as though made at and as of such time (except
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that such statements shall be deemed to relate to the
Registration Statement and the Prospectus as amended and
supplemented to such time).
(f) Each time that the Registration Statement or the
Prospectus shall be amended or supplemented or the Company files
with the Commission any document incorporated by reference into
the Prospectus (other than by an amendment or supplement
providing solely for a change in the interest rates, manner of
determining interest rates, interest payment dates or maturities
of the Securities or a change in the principal amount of
Securities remaining to be sold or a supplement in the form
previously furnished to the Underwriters reflecting the price and
underwriting discount applicable to a particular issue of
securities or similar changes), the Company shall cause to be
furnished promptly to each Underwriter and its counsel the
written opinion or opinions of Bruce N. Holliday, and/or, at the
option of the Company, of Perkins Coie, dated the date of
delivery of such opinion or opinions, of the same tenor as the
opinions referred to in Sections 6(a) and 6(b) hereof, but
modified as necessary, to relate to the Registration Statement
and the Prospectus as amended or supplemented to the time of
delivery of such opinion or opinions; PROVIDED, HOWEVER, that in
lieu of such opinion or opinions, counsel may furnish the
Underwriters with a letter to the effect that they may rely on a
prior opinion of such counsel which was to the same effect as the
opinion in lieu of which such letter is given to the same extent
as though it was dated the date of such letter authorizing
reliance (except that statements in such prior opinion shall be
deemed to relate to the Registration Statement and the Prospectus
as amended or supplemented to the time of delivery of such letter
authorizing reliance).
(g) Each time that the Registration Statement or the
Prospectus shall be amended or supplemented to include additional
financial information or the Company files with the Commission
any document incorporated by reference into the Prospectus which
contains additional financial information, the Company shall
cause Ernst & Young promptly to furnish each Underwriter a
letter, dated the date of filing of such amendment, supplement or
document with the Commission, in form satisfactory to each
Underwriter, of the same tenor as the letter referred to in
Section 6(c) hereof but modified to relate to the Registration
Statement and Prospectus, as amended and supplemented to the date
of such letter, with such changes as may be necessary to reflect
changes in the financial statements and other information derived
from the accounting records of the Company; PROVIDED, HOWEVER,
that if the Registration Statement or the Prospectus is amended
or supplemented solely to include financial information as of and
for a fiscal quarter, Ernst & Young may limit the scope of such
letter to the unaudited financial statements included in such
amendment or supplement unless there is contained therein any
other accounting, financial or statistical information that, in
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the reasonable judgment of an Underwriter, should be covered by
such letter.
All opinions, letters, evidences and certificates
mentioned above or elsewhere in this Agreement shall be deemed to
be in compliance with the provisions hereof only if they are in
form and substance reasonably satisfactory to Brown & Wood,
counsel to the Underwriters. Any opinion, certificate,
accountants' letter or other document to be delivered to an
Underwriter hereunder may be addressed and delivered in multiple
counterparts to the several Underwriters appointed by the Company
in connection with the offering of the Securities.
SECTION 7. INDEMNIFICATION AND CONTRIBUTION. (a) The
Company shall indemnify and hold harmless each Underwriter and
each person, if any, who controls such Underwriter within the
meaning of the Act from and against any loss, claim, damage or
liability, joint or several, and any action in respect thereof,
to which such Underwriter or controlling person may become
subject, under the Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, any
untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration
Statement, or any Prospectus, or arises out of, or is based upon,
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and shall reimburse such Underwriter and
each such controlling person for any legal and other expenses
reasonably incurred, as they are incurred, by such Underwriter or
controlling person in investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action;
PROVIDED, HOWEVER, that the Company shall not be liable in any
such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, the Registration
Statement or any Prospectus in reliance upon and in conformity
with written information furnished to the Company by such
Underwriter specifically for inclusion therein; and PROVIDED,
FURTHER, that as to any Preliminary Prospectus or Prospectus,
this indemnity agreement shall not inure to the benefit of any
Underwriter, or any person controlling such Underwriter, on
account of any loss, claim, damage, liability or action arising
from the sale of Securities to any person by such Underwriter if
such Underwriter failed to send or give a copy of any later
Prospectus, as the same may be amended or supplemented, to that
person within the time required by the Act, and the untrue
statement or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact in such
earlier Preliminary Prospectus or Prospectus was corrected in
such later Prospectus, unless such failure resulted from non-
compliance by the Company with Section 3(b) or 3(d) hereof. For
purposes of the second proviso to the immediately preceding
sentence, no Underwriter shall be obligated to send or give any
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document incorporated by reference or any supplement or amendment
to any document incorporated by reference in any Preliminary
Prospectus or any Prospectus to any person. The foregoing
indemnity agreement is in addition to any liability which the
Company may otherwise have to any Underwriter or any controlling
person.
(b) Each Underwriter severally agrees to indemnify and
hold harmless the Company, each of its directors, each of its
officers who signed the Registration Statement and any person who
controls the Company within the meaning of the Act from and
against any loss, claim, damage or liability, joint or several,
and any action in respect thereof, to which the Company or any
such director, officer or controlling person may become subject,
under the Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration
Statement, or any Prospectus, or arises out of, or is based upon,
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by such Underwriter
specifically for inclusion therein, and shall reimburse the
Company for any legal and other expenses reasonably incurred, as
they are incurred, by the Company or any such director, officer
or controlling person in investigating or defending or preparing
to defend against such loss, claim, damage, liability or action.
The foregoing indemnity agreement is in addition to any liability
which any Underwriter may otherwise have to the Company or any of
its directors, officers or controlling persons.
(c) Promptly after receipt by an indemnified party
under this Section of notice of any claim or the commencement of
any action, the indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under this
Section, notify the indemnifying party in writing of the claim or
the commencement of that action; PROVIDED, HOWEVER, that the
failure to notify the indemnifying party shall not relieve it
from any liability which it may have to an indemnified party
otherwise than under this Section. If any such claim or action
shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party
shall be entitled to participate therein, and, to the extent that
it wishes, jointly with any other similarly notified indemnifying
party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, the indemnifying
party shall not be liable to the indemnified party under this
Section for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense thereof
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other than reasonable costs of investigation; PROVIDED, HOWEVER,
that the indemnified party shall have the right to employ a
separate counsel and one local counsel to represent such
indemnified party who may be subject to liability arising out of
any claim in respect of which indemnity may be sought by the
indemnified party against the indemnifying party under this
Section if, in the reasonable judgment of the indemnified party,
it is advisable for such indemnified party to be represented by
separate counsel, but the fees and expenses of such counsel or
such local counsel shall be at the expense of such indemnified
party unless (i) the employment of counsel by such indemnified
party has been authorized by the indemnifying party, (ii) the
indemnified party shall have reasonably concluded that there is a
conflict of interest between the indemnifying party and the
indemnified party in the conduct of the defense of such action or
additional or different defenses such that the counsel retained
by the indemnifying party to defend the indemnified party in such
action cannot adequately represent the interests of the
indemnified party (in which case the indemnifying party shall not
have the right to direct the defense of such action on behalf of
the indemnified party), or (iii) the indemnifying party shall not
in fact have employed counsel to assume the defense of such
action, in each of which cases the fees and expense of such
separate counsel shall be paid by the indemnifying party. An
indemnifying party shall not be liable for any claim or action
settled without its consent.
(d) If the indemnification provided for in this
Section shall for any reason (other than as specified herein) be
unavailable to an indemnified party under Section 7(a) or 7(b) in
respect of any loss, claim, damage or liability, or any action in
respect thereof, referred to therein, then each indemnifying
party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or
action in respect thereof, in such proportion as shall be
appropriate to reflect the relative benefits received by the
indemnified party and the indemnifying party from the offering of
the Securities, the relative fault of the indemnified party and
the indemnifying party with respect to the statements or
omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative benefits
received by the Company on the one hand and an Underwriter on the
other with respect to an offering shall be determined in light of
the relation of the total net proceeds from the offering of the
Securities (before deducting expenses) received by the Company to
the total commissions received by such Underwriter with respect
to such offering. The relative fault shall be determined by
reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company or by such
Underwriter, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or
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prevent such statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if
contributions pursuant to this Section 7(d) were to be determined
by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred
to herein. The amount paid or payable by an indemnified party as
a result of the loss, claim, damage or liability, or action in
respect thereof, referred to above in this Section 7(d) shall be
deemed to include, for purposes of this Section 7(d), any legal
or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 7(d), no
Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Purchased
Securities were offered by it to the public exceeds the amount of
any damages which it shall have otherwise paid or become liable
to pay by reason of any untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS
TO SURVIVE DELIVERY. All representations and warranties of the
Company and the Underwriters contained in this Agreement, or
contained in certificates of officers submitted pursuant hereto,
shall remain operative and in full force and effect, regardless
of the termination of this Agreement or any investigation made by
or on behalf of any Underwriter or any person controlling any
Underwriter or by or on behalf of the Company, and shall survive
each delivery of and payment for any of Purchased Securities.
SECTION 9. TERMINATION. If the Company shall fail to
tender the Purchased Securities for delivery to the purchasing
Underwriter for any reason permitted under this Agreement, or if
such Underwriter shall decline to purchase the Purchased
Securities for any reason permitted under this Agreement, the
Company shall reimburse such Underwriter for the reasonable fees
and expenses of its counsel and for such other out-of-pocket
expenses as shall have been incurred by it in connection with the
proposed purchase of Purchased Securities, and upon demand the
Company shall pay the full amount thereof to such Underwriter.
This Agreement shall terminate when all the Securities
have been sold and the purchase price therefor has been paid.
This Agreement may be terminated as to any Underwriter (except
with respect to Securities as to which a Schedule has been
executed) for any reason, at any time, by either the Company or
such Underwriter, upon the giving of one day's written or
telegraphic notice of such termination to the other. The
provisions of Sections 3(g), 4, 7, 8 and 13 shall survive any
such termination.
-19-
<PAGE>
SECTION 10. AGREEMENTS OF UNDERWRITERS. Each
Underwriter severally represents, warrants and agrees that:
(a) It has received a copy of the form of Prospectus
the Company proposes to mail for filing with the Commission with
respect to the Securities and it will be purchasing the
Securities (subject to the conditions hereof) for sale as
described therein.
(b) The Securities will not be offered or sold in the
State of Washington other than to an entity specified in
RCW 21.20.320(8) (i.e., a bank, savings institution, trust
company, insurance company, investment company as defined in the
Investment Company Act of 1940, pension or profit-sharing trust,
or other financial institution or institutional buyer, or a
broker-dealer, whether the entity is acting for itself or in some
fiduciary capacity) provided that any "other financial
institution or institutional buyer" not otherwise specified in
RCW 21.20.320(8) shall have net assets (i.e., the excess of total
assets over total liabilities) of at least $25,000,000.
SECTION 11. NOTICES. Except as otherwise provided
herein, all notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if mailed
or transmitted by any standard form of telecommunication.
Notices to the Underwriters shall be directed as set forth below
their respective signatures hereto. Notices to the Company shall
be directed to it as follows: PACCAR Financial Corp., 777 106th
Avenue N.E., Bellevue, Washington 98004, attention: Treasurer.
SECTION 12. PARTIES. This Agreement shall inure to
the benefit of and be binding upon each Underwriter and the
Company and their respective successors. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the parties
hereto and their respective successors and the controlling
persons and officers and directors referred to in Section 7 and
their heirs and legal representatives, any legal or equitable
right, remedy or claim under or in respect of this Agreement or
any provision herein or therein contained. This Agreement and
all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the parties hereto and their
respective successors and said controlling persons and officers
and directors and their heirs and legal representatives, and for
the benefit of no other person, firm or corporation. No
purchaser of Securities shall be deemed to be a successor by
reason merely of such purchase.
SECTION 13. OTHER. The Company has reserved the right
to appoint one or more additional Underwriters with respect to
sale of Securities. The appointment of additional Underwriters
may be effected by the Company's addition of the name and address
of such Underwriter to the signature page of a counterpart of
this Agreement and the execution of such counterpart of this
-20-
<PAGE>
Agreement by such Underwriter. This Agreement shall be governed
by and construed in accordance with the laws of the State of
New York applicable to agreements made and to be performed in
such state. This Agreement may be executed in counterparts and
the executed counterparts shall together constitute a single
instrument. Additional terms and conditions may be set forth on
one or more Schedules.
Please indicate your acceptance hereof in the space
provided for that purpose below.
Very truly yours,
PACCAR Financial Corp.
By ___________________________
___________________________
By: _______________________
Title: ____________________
Dated: ____________________
Address: ___________________________
___________________________
Attention:__________________________
Telephone:__________________________
Fax: __________________________
-21-
<PAGE>
Exhibit A
SCHEDULE TO UNDERWRITING AGREEMENT OF PACCAR FINANCIAL CORP.
WITH RESPECT TO MEDIUM TERM NOTES, SERIES H ("SECURITIES")
Date of Schedule:
Name of Underwriter:
Securities to be purchased:
Maturity:
Principal amount:
Purchase price (include accrued
interest or amortization if
applicable):
Redemption/repayment terms and conditions, if any:
Price to public:
Interest:
Rate if fixed rate:
Terms if floating rate*:
Interest Rate Basis or Bases:
If LIBOR:
/ / LIBOR Reuters:
/ / LIBOR Telerate:
Index Currency:
If CMT Rate:
Designated CMT Telerate Page:
Designated CMT Maturity Index:
Initial Interest Rate:
Initial Interest Reset Date:
Spread or Spread Multiplier, if any:
Interest Rate Reset Period:
Index Maturity:
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Interest Rate Reset Period:
Interest Payment Period:
Interest Payment Date:
Interest Determination Date:
Calculation Date:
Calculation Agent:
Specified currency, currency payment option and authorized
denominations, if other than U.S. dollars:
Exchange Rate Agent:
Closing Date, time and location:
<PAGE>
ADDITIONAL TERMS AND CONDITIONS:
* The listed terms are as used in the most recent prospectus
supplement to the Basic Prospectus.
The terms of the Underwriting Agreement dated March __,
1996, between PACCAR Financial Corp. and the undersigned
Underwriter are incorporated herein by reference.
[NAME OF UNDERWRITER] PACCAR Financial Corp.
By ________________________ By ________________________
<PAGE>
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY
TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY
OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK,
NEW YORK) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN. IF APPLICABLE, THE "TOTAL AMOUNT OF OID", "YIELD TO MATURITY" AND
"INITIAL ACCRUAL PERIOD" (COMPUTED UNDER THE APPROPRIATE METHOD) BELOW WILL
BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME TAX
ORIGINAL ISSUE DISCOUNT ("OID") RULES.
- ------------------------------------------------------------------------------
No. H PACCAR FINANCIAL CORP. Principal Amount
Medium-Term Note, Series H
CUSIP: (Fixed Rate) $
INTEREST RATE: ORIGINAL ISSUE DATE:
ISSUE PRICE: TOTAL AMOUNT OF OID: YIELD TO MATURITY:
INITIAL ACCRUAL PERIOD OID:
MATURITY DATE: INITIAL REDEMPTION DATE:
HOLDER'S OPTIONAL REPAYMENT DATE(S):
OTHER PROVISIONS:
If an Initial Redemption Date is specified above, (i) the Redemption
Price will initially be % of the principal amount of this Note to be
redeemed (or, if this Note is an OID Note, as defined below, such lesser
amount as is provided below) declining at each anniversary of the Initial
Redemption Date shown above by % of the principal amount to be
redeemed until the Redemption Price is 100% of such principal amount, and
(ii) this Note may be redeemed either in whole or from time to time in part
except if the following box is marked, this Note may be redeemed in whole
only [ ]. If no Initial Redemption Date is specified above, this Note may
not be redeemed prior to Maturity.
PACCAR FINANCIAL CORP., a Washington corporation (herein called the
"Company," which term includes any successor corporation under the Indenture
referred to herein), for value received, hereby promises to pay to:
or registered assigns, the principal sum of
DOLLARS
on the Maturity Date shown above, and to pay interest thereon at the rate per
annum shown above (computed on the basis of a 360-day year of twelve 30-day
months) until the principal hereof is paid or made available for payment.
The Company will pay interest semi-annually on March 15 and September 15,
commencing with the March 15 or September 15 immediately following the
Original Issue Date shown above, and at Maturity; provided, however, that if
the Original Issue Date shown above is after March 1 and on or before the
immediately following March 15 or after September 1 and on or before the
immediately following September 15, interest payments will commence on the
next succeeding September 15 or March 15, as the case may be. Interest on
this Note will accrue from the most recent date to which interest has been
paid or duly provided for or, if no interest has been paid or duly provided
for, from the Original Issue Date shown above. If any Interest Payment Date
would fall on a day that is not a Business Day, the payment of principal or
interest shall be postponed to the next day that is a Business Day, and no
interest on such payment shall accrue from and after such Interest Payment
Date. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in the Indenture, be paid to the
Person in whose name this Note (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the March 1 or the September 1 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date,
and interest payable at Maturity shall be payable to the Person to whom the
principal hereof is payable. Any such interest not so punctually paid or
duly provided for shall forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this
Note (or one or more Predecessor Securities) is registered on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to the Holder of this Note not less
than 10 days prior to such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange upon which the Securities of the series shown above may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in the Indenture. Payment of principal and interest payable at
Maturity of this Note will be made at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan, The City of New
York, New York, in such coin or currency of the United States of America as
at the time of payment is legal tender for payment of public and private
debts, and will be made in immediately available funds if this Note is
presented in time for payment to be made in such funds in accordance with
normal procedures of the Paying Agent. Unless otherwise agreed between the
Holder and the Company, payment of interest other than at Maturity will be
made by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register.
"Business Day" means any day other than a Saturday or Sunday that is not
a day on which banking institutions are authorized or obligated by law to
close in The City of New York.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been manually
executed by or on behalf of the Trustee under the Indenture, this Note shall
not be entitled to any benefits under the Indenture or be valid or obligatory
for any purpose.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed
under its corporate seal.
Dated: PACCAR FINANCIAL CORP.
CERTIFICATE OF AUTHENTICATION By
This is one of the Securities of the
series designated herein issued under the President
within-mentioned Indenture.
ATTEST:
CITIBANK, N.A., as Trustee
By
Authorized Officer Secretary
<PAGE>
References herein to "the Note," "hereof," "herein" and comparable terms
shall include an Addendum hereto if an Addendum is specified under "Other
Provisions" above.
Any provision contained herein with respect to the calculation of the
rate of interest applicable to this Note, its payment dates or any other
matter relating hereto may be modified as specified in an Addendum relating
hereto if so specified above.
This Note is one of a duly authorized issue of Securities of the
Company, issued and to be issued in one or more series under an indenture
dated as of December 1, 1983, as amended by a first supplemental indenture
dated as of June 19, 1989 (herein collectively called the "Indenture"),
between the Company and Citibank, N.A., as trustee (herein called the
"Trustee," which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights, duties
and immunities thereunder of the Company, the Trustee and the Holders of the
Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Note is one of the series of the
Securities designated as the Medium-Term Notes of the series designated above
(herein called the "Notes"). The Notes may bear different dates and mature
at different times, may bear interest at different rates and may otherwise
vary, all as provided in the Indenture.
This Note may be subject to repayment at the option of the Holder prior
to the Maturity Date specified above on the Holder's Optional Repayment
Date(s), if any, specified above. If no Holder's Option Repayment Dates are
specified above, this Note may not be so repaid at the option of the Holder
hereof prior to the Maturity Date. On any Holder's Repayment Date, this Note
shall be repayable in whole or in part in an amount equal to $1,000 or
integral multiples thereof (provided that any remaining principal amount
shall be an authorized denomination of this Note) at the option of the Holder
hereof at a repayment price equal to 100% of the principal amount to be
repaid (or, if this Note is an OID Note, as defined below, such lesser amount
as is provided below), together with interest thereon payable to the date of
repayment. For this Note to be repaid in whole or in part at the option of
the Holder hereof, this Note must be received, with the form entitled "Option
to Elect Repayment" available at the office of the Trustee set forth below
duly completed, by the Trustee at its office at 111 Wall Street, 5th Floor,
New York, New York, 10043; Attention: Securities Services, or such address
which the Company shall from time to time notify the Holders of the Notes,
not more than 60 or less than 30 days prior to a Holder's Optional Repayment
Date. Exercise of such repayment option by the Holder hereof shall be
irrevocable. In the event of payment of this Note in part only, a new Note
for the unpaid portion hereof shall be issued in the name of the Holder
hereof upon the surrender hereof.
If an Event of Default (as defined in the Indenture) with respect to the
Notes shall occur and be continuing, the principal of all the Notes may be
declared due and payable in the manner and with the effect provided in the
Indenture.
An "OID Note" is (a) any Note that has been issued at an Issue Price
lower, by more than a DE MINIMIS amount (as determined under United States
federal income tax rules applicable to original issue discount instruments),
than the principle amount thereof and (b) any other Note that for United
States Federal Income Tax purposes would be considered an original issue
discount instrument. If this Note is an OID Note, the amount payable in the
event of redemption of the Company, repayment at the option of the Holder or
acceleration of the maturity hereof in lieu of the principal amount due at
the Maturity Date specified above, shall be the Amortized Faced Amount (as
defined below) of this Note as of the date of such redemption, repayment or
acceleration. The "Amortized Face Amount" of such Note shall be the amount
equal to the sum of (a) the Issue Price as specified above plus (b) the
aggregate of the portions of the original issue discount (the excess of the
amounts considered as part of the "stated redemption price at maturity" of
this 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 of this Note) 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 this Note to the date of
determination, minus (c) any amount considered as part of the "stated
redemption price at maturity" of this Note which has been paid on this Note
from the date of issue to the date of determination.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series under
the Indenture to be affected at any time by the Company with the consent of
the Holders of a majority in principal amount of the Securities at the time
Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of a majority in principal amount of the
Securities of each series at the time Outstanding, on behalf of the Holders
of all Securities of such series, to waive compliance by the Company with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder
of this Note shall be conclusive and binding upon such Holder and upon all
future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Note.
As provided in the Indenture, the Company shall be discharged from its
obligations under the Notes if at any time (a) the Company has irrevocably
deposited with the Trustee, in trust, (i) sufficient funds to pay the
principal of and interest to Stated Maturity on, the Notes, or (ii) to the
extent the Notes are payable in U.S. dollars only, such amount of direct
obligations of, or obligations the principal and interest on which are fully
guaranteed by, the United States of America as will, together with the
predetermined and certain income to accrue thereon without consideration of
any reinvestment thereof, be sufficient to pay when due the principal of, and
interest to Stated Maturity on, the Notes, and which are not subject to
prepayment, redemption or call, (b) the Company has paid all other sums
payable with respect to the Notes and (c) unless the Notes are to become due
and payable at their Stated Maturity within one year, the Trustee has
received an opinion of recognized tax counsel to the effect that such deposit
and discharge will not result in recognition by the Holders of the Notes of
income, gain or loss for federal income tax purposes (other than income, gain
or loss which would have been recognized in like amount and at a like time
absent such deposit and discharge). Upon such discharge, the Holders of the
Notes shall no longer be entitled to the benefits of the Indenture, except
for the purposes of registration of transfer and exchange of Notes, and shall
look only to such deposited funds or obligations for payment.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company which is
absolute and unconditional to pay the principal of and interest on this Note
at the times, place and rate, and in the coin or currency herein and in the
Indenture prescribed; subject, however, to the provisions for the discharge
of the Company from its obligations under the Notes upon satisfaction of the
conditions set forth in the preceding paragraph and in the Indenture.
This Note may be redeemed at the option of the Company on any date on or
after the Initial Redemption Date, if any, specified above, and prior to the
Maturity Date specified above, upon mailing a notice of such redemption not
less than thirty nor more than sixty days prior to the date fixed for
redemption to the Holder of this Note at such Holder's address appearing in
the Security Register, all as provided in the Indenture, at the Redemption
Price, if any, specified above (expressed as a percentage of the principal
amount) together in each case with accrued interest to the date fixed for
redemption, provided, however, that the first two paragraphs of Section 1103
of the Indenture shall not apply to this Note, and if less than all of the
Notes are to be redeemed, the Company may select, from Notes that are subject
to redemption pursuant to the terms thereof, the Note or Notes, or portion or
portions thereof, to be redeemed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Note is registrable in the Security Register,
upon surrender of this Note for registration of transfer at the office or
agency of the Company in any place where the principal of and interest on
this Note are payable, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar duly executed by, the Holder hereof or his attorney duly authorized
in writing, and thereupon one or more new Notes of the same series in
authorized denominations and for the same aggregate principal amount will be
issued to the designated transferee or tranferees.
The Notes are issuable only in registered form without coupons and, if
payable in U.S. dollars, only in denominations of $1,000 and any integral
multiple of $1,000. As provided in the Indenture and subject to certain
limitations therein set forth, Notes of this series are exchangeable for a
like aggregate principal amount of Notes of this series of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
<PAGE>
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
As provided in the Indenture, no recourse for the payment of the
principal of or interest on any Note, or for any claim based thereon, and no
recourse upon any obligation of the Company in the Indenture or in any Note
shall be had against any incorporator, stockholder, officer or director, as
such, past, present or future, of the Company or of any successor corporation.
All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
This Note shall be governed by and construed in accordance with the laws
of the State of New York.
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
- -------------------------------------
| |
| |
- ------------------------------------------------------------------------------
(Name and address of assignee, including zip code, must be printed or
typewritten)
- ------------------------------------------------------------------------------
the within Note, and all rights thereunder, hereby irrevocably constituting
and appointing
Attorney
- ---------------------------------------------------------
to transfer said Note on the books of the within Company,
with full power of substitution in the premises.
Dated:
- ----------------------------- ---------------------------------
---------------------------------
NOTICE: The signature to this assignment must correspond with the name
as it appears on the first page of the within Note in every particular,
without alteration or enlargement or any change whatever and must be
guaranteed by a commercial bank or trust company having its principal office
or a correspondent in The City of New York or by a member of the New York
Stock Exchange.
<PAGE>
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY
TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY
OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK,
NEW YORK) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO., OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN. IF APPLICABLE, THE "TOTAL AMOUNT OF OID", "YIELD TO MATURITY" AND
"INITIAL ACCRUAL PERIOD" (COMPUTED UNDER THE APPROPRIATE METHOD) BELOW WILL
BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME TAX
ORIGINAL ISSUE DISCOUNT ("OID") RULES.
No. FRH PACCAR Financial Corp. Principal Amount
Medium-Term Note, Series H
CUSIP: (Floating Rate) $
ORIGINAL ISSUE DATE: MATURITY DATE:
INITIAL INTEREST RATE: SPREAD:
INDEX MATURITY: SPREAD MULTIPLIER:
INTEREST RATE BASIS:
MAXIMUM INTEREST RATE: INTEREST PAYMENT PERIOD:
MINIMUM INTEREST RATE: INTEREST RATE RESET PERIOD:
INTEREST RESET DATES: INTEREST PAYMENT DATES:
INTEREST DETERMINATION DATES:
(if different than provided below)
ISSUE PRICE: TOTAL AMOUNT OF OID:
YIELD TO MATURITY: INITIAL ACCRUAL PERIOD OID:
HOLDER'S OPTIONAL REPAYMENT DATE(S):
OTHER PROVISIONS:
INITIAL REDEMPTION DATE: CALCULATION AGENT:
If an Initial Redemption Date is specified above, (i) the Redemption
Price will initially be % of the principal amount of this Note to
be redeemed declining at each anniversary of the Initial Redemption Date
shown above by
% of the principal amount to be redeemed (or, if this Note is an
OID Note, as defined below, such lesser amount as is provided below) until
the Redemption Price is 100% of such principal amount, and (ii) this Note may
be redeemed either in whole or from time to time in part except if the
following box is marked, this Note may be redeemed in whole only [ ]. If
no Initial Redemption Date is specified above, this Note may not be redeemed
prior to Maturity.
PACCAR Financial Corp., a Washington corporation (herein called the
"Company," which term includes any successor corporation under the Indenture
referred to on the reverse hereof), for value received, hereby promises to
pay to
or registered assigns, the principal sum of
DOLLARS
on the Maturity Date shown above, and to pay interest thereon from the most
recent Interest Payment Date to which interest has been paid or duly provided
for or, if no interest has been paid or duly provided for, from the Original
Issue Date shown above at the rate per annum determined by reference to the
Interest Rate Basis or Bases, if any, specified above and in accordance with
the provisions herein, until the principal hereof is paid or made available
for payment. The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in the Indenture, be paid
to the Person in whose name this Note (or one or more Predecessor Securities)
is registered at the close of business on the Regular Record Date for such
interest, which shall be the fifteenth calendar day (whether or not a
Business Day), next preceding such Interest Payment Date, and interest
payable at Maturity shall be payable to the Person to whom the principal
hereof is payable; provided that if the Original Issue Date specified above
follows a Regular Record Date and precedes the next succeeding Interest
Payment Date, the first payment of interest on this Note will be made on the
Interest Payment Date following the next succeeding Regular Record Date to
the Holder of such Regular Record Date. Any such interest not so punctually
paid or duly provided for shall forthwith cease to be payable to the Holder
on such Regular Record Date and may either be paid to the Person in whose
name this Note (or one or more Predecessor Securities) is registered on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to the Holder of this Note not
less than 10 days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange upon which the Securities of the series shown above may
be listed, and upon such notice as may be required by such exchange, all as
more fully provided in the Indenture. Payment of the principal and interest
payable at Maturity of this Note will be made at the office or agency of the
Company maintained for that purpose in the Borough of Manhattan, The City of
New York, New York, in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts, and will be made in immediately available funds if this Note is
presented in time for payment to be made in such funds in accordance with the
normal procedures of the Paying Agent. Unless otherwise agreed between the
Holder and the Company, payment of interest other than at Maturity will be
paid by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register.
Reference is hereby made to the further provisions of this Note set
forth below, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has been manually
executed by or on behalf of the Trustee under the Indenture, this Note shall
not be entitled to any benefits under the Indenture or be valid or obligatory
for any purpose.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed
under its corporate seal.
Dated: PACCAR Financial Corp.
CERTIFICATE OF AUTHENTICATION By
-------------------------------
This is one of the Securities of the President
series designated herein issued under the
within-mentioned Indenture.
ATTEST:
CITIBANK, N.A., as Trustee
By
----------------------------------
Authorized Officer Secretary
<PAGE>
References herein to "the Note," "hereof," "herein" and comparable terms
shall include an Addendum hereto if an Addendum is specified under "Other
Provisions" above.
Any provision contained herein with respect to the calculation of the
rate of interest applicable to this Note, its payment dates or any other
matter relating hereto may be modified as specified in an Addendum relating
hereto if so specified above.
This Note is one of a duly authorized issue of Securities of the Company,
issued and to be issued in one or more series under an indenture dated as of
December 1, 1983, as amended by a first supplemental indenture dated as of
June 19, 1989 (herein collectively called the "Indenture"), between the
Company and Citibank, N.A., as trustee (herein called the "Trustee," which
term includes any successor trustee under the Indenture), to which Indenture
and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the Holders of the
Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Note is one of the series of the
Securities designated as the Medium-Term Notes of the series designated above
(herein called the "Notes"). The Notes may bear different dates and mature
at different times, may bear interest at different rates and may otherwise
vary, all as provided in the Indenture.
This Note may be subject to repayment at the option of the Holder prior
to the Maturity Date specified above on the Holder's Optional Repayment
Date(s), if any, specified above. If no Holder's Option Repayment Dates are
specified above, this Note may not be so repaid at the option of the Holder
hereof prior to the Maturity Date. On any Holder's Repayment Date, this Note
shall be repayable in whole or in part in an amount equal to $1,000 or
integral multiples thereof (provided that any remaining principal amount
shall be an authorized denomination of this Note) at the option of the Holder
hereof at a repayment price equal to 100% of the principal amount to be
repaid (or, if this Note is an OID Note, as defined below, such lesser amount
as is provided below), together with interest thereon payable to the date of
repayment. For this Note to be repaid in whole or in part at the option of
the Holder hereof, this Note must be received, with the form entitled "Option
to Elect Repayment" available at the office of the Trustee set forth below
duly completed, by the Trustee at its office at 111 Wall Street, 5th Floor,
New York, New York, 10043; Attention: Securities Services, or such address
which the Company shall from time to time notify the Holders of the Notes,
not more than 60 or less than 30 days prior to a Holder's Optional Repayment
Date. Exercise of such repayment option by the Holder hereof shall be
irrevocable. In the event of payment of this Note in part only, a new Note
for the unpaid portion hereof shall be issued in the name of the Holder
hereof upon the surrender hereof.
Commencing with the Interest Reset Date specified above, first following
the Original Issue Date specified above, the rate at which interest on this
Note is payable shall be adjusted daily, weekly, monthly, quarterly,
semi-annually or annually as shown above under Interest Reset Period;
PROVIDED, HOWEVER, that (i) the interest rate in effect for the period from
the Original Issue Date to the first Interest Reset Date will be the Initial
Interest Rate specified above and (ii) the interest rate in effect for the
ten calendar days immediately prior to Maturity will be that in effect on the
tenth calendar day preceding such Maturity. Each such adjusted rate shall be
applicable on and after the Interest Reset Date to which it relates, to, but
not including, the next succeeding Interest Reset Date, or until Maturity, as
the case may be. If any Interest Reset Date is not a Business Day, such
Interest Reset Date shall be postponed to the next day that is a Business
Day, except, that if the Interest Rate Basis specified above is LIBOR, and if
such Business Day is in the next succeeding calendar month, such Interest
Reset Date shall be the immediately preceding Business Day. If the Interest
Rate Basis specified above is the Treasury Rate, and if such Interest Reset
Date would otherwise be a day on which Treasury Bills (as defined below) are
auctioned, then such Interest Reset Date shall be the first Business Day
immediately following such auction day. Subject to applicable provisions of
law and except as specified herein, on each Interest Reset Date the rate of
interest on this Note shall be the rate determined in accordance with the
provisions of the applicable heading below.
All percentages resulting from any calculations with respect to this Note
will be rounded, if necessary, to the nearest one hundred-thousandth of a
percentage point, with five one-millionths of a percentage point being
rounded upwards; and all dollar amounts used in or resulting from such
calculations will be rounded to the nearest cent with one-half cent being
rounded upwards.
Determination of CD Rate. If the Interest Reset Basis specified above is
the CD Rate, the interest rate with respect to this Note shall be the CD Rate
plus or minus the Spread, if any, or multiplied by the Spread Multiplier, if
any, as specified above. "CD Rate" means, with respect to any Interest
Determination Date, the rate on such date for negotiable United States dollar
certificates of deposit having the Index Maturity designated 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 of the Board of Governors of the Federal
Reserve System ("H.15(519)") under the heading "CDs (Secondary Market)" or,
if not so published by 3:00 P.M., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the CD Rate will be the rate
on such Interest Determination Date for negotiable United States dollar
certificates of deposit of the Index Maturity designated 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 United
States 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 Calculation Date pertaining to such Interest
Determination Date, then the CD Rate on such 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
Interest Determination Date, of three leading nonbank dealers in negotiable
United States dollar certificates of deposit in The City of New York selected
by the Calculation Agent for negotiable certificates of deposit of major
United States money market banks for negotiable United States dollar
certificates of deposit with a remaining maturity closest to the Index
Maturity designated in the Pricing Supplement in an amount that is
representative for a single transaction in that market at that time;
provided, however, that if the dealers selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this sentence, the CD Rate
will be the CD Rate in effect on such Interest Determination Date.
Determination of CMT Rate. If the Interest Reset Basis specified above
is the CMT Rate, the interest rate with respect to this note shall be the CMT
Rate plus or minus the Spread, if any, or multiplied by the Spread
Multiplier, if any, as specified above. "CMT Rate" means, with respect to
any Interest Determination Date, the rate displayed on the Designated CMT
Telerate Page under the caption "...Treasury Constant Maturities...Federal
Reserve Board Release H.15...Mondays Approximately 3:45 P.M.," under the
column for the Designated CMT Maturity Index for (i) if the Designated CMT
Telerate Page is 7055, the rate on such Interest Determination Date and (ii)
if the Designated CMT Telerate Page is 7052, the weekly or monthly averages
as specified in the applicable Pricing Supplement for the week or the month,
as applicable, ended immediately preceding the week in which the related
Interest Determination Date occurs. If such rate is no longer displayed on
the relevant page or is not displayed by 3:00 P.M., New York City time, on
the related Calculation Date, then the CMT Rate for such Interest
Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index as published in H.15(519). If such rate is no
longer published or is not published by 3:00 P.M., New York City time, on the
related Calculation Date, then the CMT Rate on such 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 Interest Determination Date with respect to such
Interest Reset Date as may then be published by either the Board of Governors
of the Federal Reserve System or the United States Department of the Treasury
that the Calculation Agent determines to be comparable to the rate formerly
displayed on the Designated CMT Telerate Page and published in H.15(519). If
such information is not provided by 3:00 P.M., New York City time, on the
related Calculation Date, then the CMT Rate on the Interest Determination
Date will be calculated by the Calculation Agent and will be a yield to
maturity, based on the arithmetic mean of the secondary market closing offer
side prices as of approximately 3:30 P.M., New York City time, on such
Interest Determination Date reported, according to their written records, by
three leading primary United States government securities dealers (each, a
"Reference Dealer") in The City of New York (which may include the 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 is unable to obtain three such Treasury Note quotations, the CMT Rate
on such Interest Determination Date will be calculated by the Calculation
Agent and will be a yield to maturity based on the arithmetic mean of the
secondary market offer side prices as of approximately 3:30 P.M., New York
City time, on such 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,
<PAGE>
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 $100,000,000. If three or
four (and not five) of such Reference Dealers are quoting as described above,
then the CMT Rate will be based on the arithmetic mean of the offer prices
obtained and neither the highest nor the lowest of such quotes will be
eliminated; provided however, that if fewer than three Reference Dealers so
selected by the Calculation Agent are quoting as mentioned herein, the CMT
Rate determined as of such Interest Determination Date will be the CMT Rate
in effect on such Interest Determination Date. If two Treasury Notes with an
original maturity as described in the second preceding sentence have
remaining terms to maturity equally close to the Designated CMT Maturity
Index, the Calculation Agent will obtain from five Reference Dealers
quotations for the Treasury Note with the shorter remaining term to maturity.
"Designated CMT Telerate Page" means the display on the Dow Jones
Telerate Service on the page specified in the applicable Pricing Supplement
(or any other page as may replace such page on that service for the purpose
of displaying Treasury Constant Maturities as reported in H.15(519)) 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 Treasury Notes (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.
Determination of Commercial Paper Rate. If the Interest Rate Reset Basis
specified above is the Commercial Paper Rate, the interest rate with respect
to this Note shall be the Commercial Paper Rate plus or minus the Spread, if
any, or multiplied by the Spread Multiplier, if any, as specified above.
"Commercial Paper Rate" means, with respect to any Interest Determination
Date, the Money Market Yield (as defined below) of the rate on such date for
commercial paper having the Index Maturity designated in the applicable
Pricing Supplement as published in H.15(519), under the heading "Commercial
Paper." In the event that such rate is not published by 3:00 P.M., New York
City time, on the Calculation Date pertaining to such Interest Determination
Date, then the Commercial Paper Rate shall be the Money Market Yield of the
rate on that Interest Determination Date for commercial paper having the
Index Maturity designated 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 such Calculation Date such rate is not yet published in
either H.15(519) or Composite Quotations, the Commercial Paper Rate for that
Interest Determination Date shall be calculated by the Calculation Agent and
shall be the Money Market Yield of the arithmetic mean of the offered rates,
as of 11:00 A.M., New York City time, on that Interest Determination Date, of
three leading dealers of commercial paper in The City of New York 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 Interest Determination Date.
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
Money Market Yield = D x 360 x 100
-------------------
360 - (D x M)
where "D" refers to the 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.
Determination of Federal Funds Rate. If the Interest Rate Basis
specified above is the Federal Funds Rate, the interest rate with respect to
this Note shall be the Federal Funds Rate plus or minus the Spread, if any,
or multiplied by the Spread Multiplier, if any, as specified above. "Federal
Funds Rate" means, with respect to any Interest Determination Date, the rate
on that day for United States Federal Funds as published in H.15(519) under
the heading "Federal Funds (Effective)" or, if not so published by 3:00 P.M.,
New York City time, on the Calculation Date pertaining to such Interest
Determination Date, the Federal Funds Rate will be the rate on such Interest
Determination Date as published in Composite Quotations under the heading
"Federal Funds/Effective Rate." If such rate is not yet published by 3:00
P.M., New York City time, on the Calculation Date pertaining to such Interest
Determination Date, the Federal Funds Rate for such 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 Federal Funds
arranged by three leading brokers of Federal Funds transactions in The City
of New York selected by the Calculation Agent prior to 9:00 A.M., New York
City time, on such Interest Determination Date; provided, however, that if
the brokers selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the Federal Funds Rate will be the Federal Funds
Rate in effect on such Interest Determination Date.
Determination of LIBOR. If the Interest Rate Basis specified above is
LIBOR, the interest rate with respect to this Note shall be LIBOR plus or
minus the Spread, if any, or multiplied by the Spread Multiplier, if any, as
specified above. "LIBOR" will be determined by the Calculation Agent in
accordance with the following provisions:
(i) With respect to an Interest Determination Date, LIBOR will be either: (a)
if "LIBOR Reuters" is specified in the applicable Pricing Supplement, the
arithmetic mean of the offered rates (unless the specified Designated LIBOR
Page (as defined below) by its terms provides only for a single rate, in
which case such single rate shall be used) for deposits in the Index Currency
having the Index Maturity designated in the applicable Pricing Supplement,
commencing on the second London Business Day immediately following such
Interest Determination Date, that appear (or, if only a single rate is
required as aforesaid, appears) on the Designated LIBOR Page specified in the
applicable Pricing Supplement as of 11:00 A.M., London time, on that Interest
Determination Date, if at least two such offered rates appear (unless, as
aforesaid, only a single rate is required) on such Designated LIBOR Page, or
(b) if "LIBOR Telerate" is specified in the applicable Pricing Supplement,
the rate for deposits in the Index Currency having the Index Maturity
designated in the applicable Pricing Supplement commencing on the second
London Business Day immediately following that Interest Determination Date
that appears on the Designated LIBOR Page specified in the applicable Pricing
Supplement as of 11:00 A.M., London time, on that Interest Determination
Date. If fewer than two offered rates appear, or no rate appears, as
applicable, LIBOR in respect of the related Interest Determination Date will
be determined as if the parties had specified the rate described in clause
(ii) below.
(ii) With respect to an Interest Determination Date on which fewer than two
offered rates appear, or no rate appears, as the case may be, on the
applicable Designated LIBOR Page as specified in clause (i) above, the
Calculation Agent will request the principal London offices of each of four
major reference banks in the London interbank market, as selected by the
Calculation Agent, to provide the Calculation Agent with its offered
quotation for deposits in the Index Currency for the period of the Index
Maturity designated in the applicable Pricing Supplement, commencing on the
second London Business Day immediately following such Interest Determination
Date, to prime banks in the London interbank market at approximately 11:00
A.M., London time, on such Interest Determination Date and in a principal
amount that is representative for a single transaction in such Index Currency
in such market at such time. If at least two such quotations are provided,
LIBOR determined on such Interest Determination Date will be the arithmetic
mean of such quotations. If fewer than two quotations are provided, LIBOR
determined on such Interest Determination Date will be the arithmetic mean of
the rates quoted at approximately 11:00 A.M., in the applicable Principal
Financial Center (as defined below), on such Interest Determination Date by
three major banks in such Principal Financial Center selected by the
Calculation Agent for loans in the Index Currency to leading European banks,
having the Index Maturity designated in the applicable Pricing Supplement and
in a principal amount that is representative for a single transaction in such
Index Currency in such market at such time; provided, however, that if the
banks so selected by the Calculation Agent are not quoting as mentioned in
this sentence, LIBOR determined on such Interest Determination Date will be
LIBOR in effect on such Interest Determination Date.
<PAGE>
"Index Currency" means the currency (including composite currencies)
specified in the applicable Pricing Supplement as the currency for which
LIBOR shall be calculated. If no such currency is specified in the applicable
Pricing Supplement, the Index Currency shall be United States dollars.
"Designated LIBOR Page" means either (a) if "LIBOR Reuters" is
designated in the applicable Pricing Supplement, the display on the Reuter
Money Rates Service (or any successor service) for the purpose of displaying
the London interbank rates of major banks for the applicable Index Currency,
or (b) if "LIBOR Telerate" is designated in the applicable Pricing
Supplement, the display on the Dow Jones Telerate Service (or any successor
service) for the purpose of displaying the London interbank rates of major
banks for the applicable Index Currency. If neither LIBOR Reuters nor LIBOR
Telerate is specified in the applicable Pricing Supplement, LIBOR for the
applicable Index Currency will be determined as if LIBOR Telerate (and, if
the United States dollar is the Index Currency, Page 3750) had been specified.
"Principal Financial Center" will generally be the capital city of the
country of the specified Index Currency, except that with respect to United
States dollars and ECUs, the Principal Financial Center shall be The City of
New York and Luxembourg, respectively.
Determination of Prime Rate. If the Interest Rate Basis specified above
is the Prime Rate, the interest rate with respect to this Note shall be the
Prime Rate plus or minus the Spread, if any, or multiplied by the Spread
Multiplier, if any, as specified above. "Prime Rate" means, with respect to
any Interest Determination Date, the rate set forth in H.15(519) for such
date opposite the caption "Bank Prime Loan." If such rate is not yet
published by 3:00 P.M., New York City time, on the Calculation Date, the
Prime Rate for such Interest Determination Date will be the arithmetic mean
of the rates of interest publicly announced by each bank named on the Reuters
Screen USPRIME1 (as defined below) as such bank's prime rate or base lending
rate as in effect for such Interest Determination Date as quoted on the
Reuters Screen USPRIME1 on such Interest Determination Date, or, if fewer
than four such rates appear on the Reuters Screen USPRIME1 for such Interest
Determination Date, the 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 360
as of the close of business on such Interest Determination Date by four major
money center banks in The City of New York selected by the Calculation Agent
from which quotations are requested. If fewer than two quotations are
provided, the Prime Rate shall be calculated by the Calculation Agent and
shall be determined as the arithmetic mean on the basis of the prime rates 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,
in each case having total equity capital of at least $500,000,000 and being
subject to supervision or examination by federal or state authority, selected
by the Calculation Agent to quote such rate or rates; provided, however, that
if the banks or trust companies so selected by the Calculation Agent are not
quoting as mentioned in this sentence, the Prime Rate with respect to such
Interest Determination Date will be the Prime Rate in effect on such Interest
Determination Date.
"Reuters Screen USPRIME1" means the display designated as Page
"USPRIME1" on the Reuter Money Rates Service (or such other page as may
replace the USPRIME1 page on that service for the purpose of displaying prime
rates or base lending rates of major United States banks).
Determination of Treasury Rate. If the Interest Rate Basis specified
above is the Treasury Rate, the interest rate with respect to this Note shall
be the Treasury Rate plus or minus the Spread, if any, or multiplied by the
Spread Multiplier, if any, as specified above. "Treasury Rate" means, with
respect to any Interest Determination Date, the rate from the auction held on
such Interest Determination Date of direct obligations of the United States
("Treasury Bills") having the Index Maturity designated in the applicable
Pricing Supplement as such rate is published in H.15(519) under the heading
"Treasury Bills --auction average (investment)" or, if not so published by
9:00 A.M., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, the auction average rate of such Treasury Bills
(expressed as a bond equivalent, on the basis of a year of 365 or 366 days,
as applicable, and applied on a daily basis) as otherwise announced by the
United States Department of the Treasury. In the event that the results of
the auction of Treasury Bills having the Index Maturity 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 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 Interest Determination Date, of three leading primary United
States government securities dealers 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 Interest Determination Date.
Notwithstanding the determination of the interest rate as provided
above, the interest rate on this Note for any interest period shall not be
greater than the Maximum Interest Rate, if any, or less than the Minimum
Interest Rate, if any, specified above. The interest rate on this Note will
in no event be higher than the maximum rate permitted by New York law, as the
same may be modified by United States law of general application. The
Calculation Agent shall calculate the interest rate on this Note in
accordance with the foregoing on or before each Calculation Date.
The Company will notify the Paying Agent of each determination of the
interest rate applicable to this Note promptly after such determination is
made by the Calculation Agent. Citibank, N.A., will act as Paying Agent,
through its Corporate Trust Office in The City of New York. The Paying Agent
will, upon the request of the Holder of this Note, provide the interest rate
then in effect and, if determined and notified to the Paying Agent, the
interest rate which will become effective as a result of a determination made
with respect to the most recent Interest Determination Date with respect to
this Note. The Paying Agent will not be responsible for determining the
interest rate applicable to this Note.
If any Interest Payment Date specified above would otherwise be a day
that is not a Business Day, such Interest Payment Date shall be postponed to
the next day that is a Business Day, except that if the Interest Rate Basis
specified above is LIBOR, and if such Business Day is the next succeeding
calendar month, such Interest Payment Date shall be the immediately preceding
Business Day. "Business Day" means any day other than a Saturday or Sunday
that is not a day on which banking institutions are authorized or obligated
by law to close in The City of New York and, if the applicable Interest Rate
Basis specified above is LIBOR, is also a London Business Day. As used
herein, "London Business Day" means any day (a) if the Index Currency is
other than the ECU, on which dealings in deposits in such Index Currency are
transacted in the London interbank market or (b) if the Index Currency is the
ECU, that is not designated as an ECU Non-Settlement Day by the ECU Banking
Association in Paris or otherwise generally regarded in the ECU interbank
market as a day on which payments on ECUs shall not be made.
If the Interest Rate Basis specified above is the CD Rate or the
Commercial Paper Rate, the Interest Determination Date pertaining to an
Interest Reset Date will be the second Business Day next preceding such
Interest Reset Date. If the Interest Rate Basis specified above is the
Federal Funds Rate on the Prime Rate, the Interest Determination Date
pertaining to an Interest Reset Date will be the Business Day immediately
preceding such Interest Reset Date. If the Interest Rate Basis specified
above is LIBOR, the Interest Determination Date pertaining to an Interest
Reset Date will be the second London Business Day next preceding such
Interest Reset Date. If the Interest Rate Basis specified above is the
Treasury Rate, the Interest Determination Date pertaining to an Interest
Reset Date will be the day of the week in which such Interest Reset Date
falls on which Treasury Bills of the Index Maturity specified above are
auctioned. Treasury Bills are normally sold at auction 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. If, as the result of a legal holiday, an auction is
so held on the preceding Friday, such Friday will be the Interest
Determination Date pertaining to the Interest Reset Date occurring in the
next succeeding week. If the interest rate of this Note is determined with
reference to two or more Interest Rate Bases, the Interest Determination Date
pertaining to this Note will be the first Business Day which is at least two
Business Days prior to the Interest Reset Date on which each Interest Rate
Basis shall be determinable. Each Interest Rate Basis shall be determined on
such date and the applicable interest rate shall take effect on the related
Interest Reset Date.
The "Calculation Date," where applicable, pertaining to an Interest
Determination Date is the earlier of (i) the tenth calendar day after such
Interest Determination Date or if any such day is not a Business Day, the
next succeeding
<PAGE>
Business Day or (ii) the Business Day preceding the applicable Interest
Payment Date or Maturity Date, as the case may be.
Interest payments on this Note (unless the Interest Reset Period
specified above is a daily or weekly period) will include accrued interest
from and including the Original Issue Date or from and including the next
preceding Interest Payment Date in respect of which interest has been paid,
as the case may be, to, but excluding, the Interest Payment Date. If the
Interest Reset Period is a daily or weekly period, interest payments will
include accrued interests from and including the Original Issue Date or from,
but excluding, the last date in respect of which interest has been paid or
duly provided for, as the case may be, to and including the Regular Record
Date immediately preceding the applicable Interest Payment Date, except that
at Maturity, the interest payable will include accrued from and including the
Original Issue Date or from, but excluding, the last date in respect of which
interest has been paid or duly provided for, as the case may be, to, but
excluding, the date of Maturity. Accrued interest will be calculated by
multiplying the principal amount of this Note by an accrued interest factor.
The accrued interest factor will be computed by adding the interest factors
calculated for each day in the period for which accrued interest is being
calculated. The interest factor (expressed as a decimal) for each such day
will be computed by dividing the interest rate applicable to such day by 360,
if the Interest Rate Basis specified above is the CD Rate, Commercial Paper
Rate, Federal Funds Rate, LIBOR or the Prime Rate, or by the actual number of
days in the year if the Interest Rate Basis specified above is the Treasury
Rate.
If an Event of Default (as defined in the Indenture) with respect to
the Notes shall occur and be continuing, the principal of all the Notes may
be declared due and payable in the manner and with the effect provided in the
Indenture.
An "OID Note" is (a) any Note that has been issued at an Issue Price
lower, by more than a DE MINIMIS amount (as determined under United States
federal income tax rules applicable to original issue discount instruments),
than the principle amount thereof and (b) any other Note that for United
States Federal Income Tax purposes would be considered an original issue
discount instrument. If this Note is an OID Note, the amount payable in the
event of redemption of the Company, repayment at the option of the Holder or
acceleration of the maturity hereof in lieu of the principal amount due at
the Maturity Date specified above, shall be the Amortized Faced Amount (as
defined below) of this Note as of the date of such redemption, repayment or
acceleration. The "Amortized Face Amount" of such Note shall be the amount
equal to the sum of (a) the Issue Price as specified above plus (b) the
aggregate of the portions of the original issue discount (the excess of the
amounts considered as part of the "stated redemption price at maturity" of
this 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 of this Note) 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 this Note to the date of
determination, minus (c) any amount considered as part of the "stated
redemption price at maturity" of this Note which has been paid on this Note
from the date of issue to the date of determination.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series under
the Indenture to be affected at any time by the Company with the consent of
the Holders of a majority in principal amount of the Securities at the time
Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of a majority in principal amount of the
Securities of each series at the time Outstanding, on behalf of the Holders
of all Securities of such series, to waive compliance by the Company with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder
of this Note shall be conclusive and binding upon such Holder and upon all
future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange herefor and in lieu hereof, whether or not
notation of such consent or waiver is made upon this Note.
As provided in the Indenture, the Company shall be discharged from its
obligation under the Notes if at any time (a) the Company has irrevocably
deposited with the Trustee, in trust, (i) sufficient funds to pay the
principal of and interest to Stated Maturity on, the Notes, or (ii) to the
extent the Notes are payable in U.S. dollars only, such amount of direct
obligations of, or obligations the principal and interest on which are fully
guaranteed by, the United States of America as will, together with the
pre-determined and certain income to accrue thereon without consideration of
any reinvestment thereof, be sufficient to pay when due the principal of, and
interest to Stated Maturity on, the Notes, and which are not subject to
prepayment, redemption or call, (b) the Company has paid all other sums
payable with respect to the Notes and (c) unless the Notes are to become due
and payable at their Stated Maturity within one year, the Trustee has
received an opinion of recognized tax counsel to the effect that such deposit
and discharge will not result in recognition by the Holders of the Notes of
income, gain or loss for federal income tax purposes (other than income, gain
or loss which would have been recognized in like amount and at a like time
absent such deposit and discharge). Upon such discharge, the Holders of the
Notes shall no longer be entitled to the benefits of the Indenture, except
for the purposes of registration of transfer and exchange of Notes, and shall
look only to such deposited funds or obligations for payment.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company which is
absolute and unconditional to pay the principal of and interest on this Note
at the times, place and rate, and in the coin or currency herein and in the
Indenture prescribed; subject, however, to the provisions for the discharge
of the Company from its obligations under the Notes upon satisfaction of the
conditions set forth in the preceding paragraph and in the Indenture.
This Note may be redeemed at the option of the Company on any date on
or after the Initial Redemption Date, if any, specified above, and prior to
the Maturity Date specified above, upon mailing a notice of such redemption
not less than thirty or more than sixty days prior to the date fixed for
redemption to the Holder of this Note at such Holder's address appearing in
the Security Register, all as provided in the Indenture, at the Redemption
Price, if any, specified above (expressed as percentage of the principal
amount) together in each case with accrued interest to the date fixed for
redemption, provided, however, that the first two paragraphs of Section 1103
of the Indenture shall not apply to this Note, and if less than all of the
Notes are to be redeemed, the Company may select, from Notes that are subject
to redemption pursuant to the terms thereof, the Note or Notes, or portion or
portions thereof, to be redeemed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Note is registrable in the Security Register,
upon surrender of this Note for registration of transfer at the office or
agency of the Company in any place where the principal of and interest on
this Note are payable, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar duly executed by, the Holder hereof or his attorney duly authorized
in writing, and thereupon one or more new Notes of the same series in
authorized denominations and for the same aggregate principal amount will be
issued to the designated transferee or transferees.
The Notes are issuable only in registered form without coupons and, if
payable in U.S. dollars, only in denominations of $1,000 and any integral
multiple of $1,000. As provided in the Indenture and subject to certain
limitations therein set forth, Notes of this series are exchangeable for a
like aggregate principal amount of Notes of this series of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
As provided in the Indenture, no recourse for the payment of the
principal of or interest on any Note, or for any claim based thereon, and no
recourse upon any obligation of the Company in the Indenture or in any Note
shall be had against any incorporator, stockholder, officer or director, as
such, past, present or future, of the Company or of any successor
corporation.
<PAGE>
All terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
This note shall be governed by and construed in accordance with the
Laws of the State of New York.
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
- ------------------------------------
- -----------------------------------------------------------------------------
(Name and address of assignee, including zip code, must be printed or
typewritten)
- -----------------------------------------------------------------------------
the within Note, and all rights thereunder, hereby irrevocably constituting
and appointing
Attorney
- --------------------------------------------------------------
to transfer said Note on the books of the within Company, with
full power of substitution in the premises.
Dated:
- --------------------------------- --------------------------------
--------------------------------
NOTICE: The signature to this assignment must correspond with the name
as it appears on the first page of the within Note in every particular,
without alteration or enlargement or any change whatever and must be
guaranteed by a commercial bank or trust company having its principal office
or a correspondent in The City of New York or by a member of the New York
Stock Exchange.
<PAGE>
Medium-Term Notes (MTNs)
- --------------------------------------------------------------------------------
ANNEX 5
(Page 1 of 8) [LOGO]
BOOK-ENTRY-ONLY MEDIUM-TERM NOTE, DEPOSIT NOTE, OR
MEDIUM-TERM BANK NOTE
[MASTER NOTE AND/OR GLOBAL CERTIFICATES] PROGRAM
LETTER OF REPRESENTATIONS
(To be Completed by Issuer, Issuing Agent, and Paying Agent)
----------------------------------------------------------------
[Name of Issuer]
----------------------------------------------------------------
[Name and DTC Participant Number of Issuing Agent]
----------------------------------------------------------------
[Name and DTC Participant Number of Issuing Agent]
--------------------
[Date]
Attention: General Counsel's Office
THE DEPOSITORY TRUST COMPANY
55 Water Street; 49th Floor
New York, NY 10041-0099
Re: --------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
[Description of Note Program, including, as applicable, (i) series
designator; (ii) rank of indebtedness; and (iii) reference to the
provision of the Securities Act of 1933, as amended, pursuant to
which Note Program is exempt from registration]
Ladies and Gentleman:
This letter sets forth our understanding with respect to certain matters
relating to the issuance by Issuer from time to time of notes under its note
program described above (the "Securities"). Issuing Agent will act as issuing
agent with respect to the Securities. Paying Agent will act as paying agent
with respect to the Securities. The Securities will be issued pursuant to a
prospectus supplement, private placement memorandum, or other such document
authorizing the issuance of the Securities, dated as of ___________________,
19__.
Paying Agent has entered into a Money Market Instrument Master Note
and/or Global Certificates Certificate Agreement, or a Medium-Term Note
Certificate Agreement, with The Depository Trust Company ("DTC") dated as of
_______________, 19__, pursuant to which Paying Agent will act as custodian
of a Master Note Certificate and/or Global Certificates evidencing the
Securities, when issued. Paying Agent will amend Exhibit A to such
Certificate Agreement to include the note program described above, prior to
issuance of the Securities.
To induce DTC to accept the Securities as eligible for deposit at DTC and
to act in accordance with its Rules with respect to the Securities, Issuer,
Issuing Agent, and Paying Agent make the following representations to DTC:
294
<PAGE>
Medium-Term Notes (MTNs)
- --------------------------------------------------------------------------------
ANNEX 5
(Page 2 of 8)
1. All or certain issues of the Securities shall be evidenced by one
Master Note Certificate, or by one or more Global Certificates for each
issue, in registered form registered in the name of DTC's nominee, Cede &
Co., and such Certificate or Certificates shall represent 100% of the
principal amount of the Securities issued through DTC. The Master Note
Certificate, if any, shall include the substance of all material provisions
set forth in the appropriate DTC model Master Note for the note program
described above, a copy of which previously has been furnished to Issuing
Agent and Paying Agent, and may include additional provisions as long as they
do not conflict with the material provisions set forth in the DTC model. If
the principal amount of an issue of the Securities to be evidenced by one or
more Global Certificates, if any, exceeds $200,000,000, one Global
Certificate shall be issued with respect to each $200,000,000 of principal
amount and an additional Global Certificate shall be issued with respect to
any remaining principal amount. Paying Agent shall cause each Global
Certificate to be stamped with the following legend:
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to Issuer or its agent for registration of
transfer, exchange, or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as
the registered owner hereof, Cede[nb]& Co., has an interest herein.
2. Issuer of Issuing Agent has obtained from the CUSIP Service Bureau a
written list of approximately 900 nine-character numbers (the basic first six
characters of which are the same and uniquely identify Issuer and the
Securities to be issued under its note program described above). The CUSIP
numbers on such list have been reserved for future assignment to issues of the
Securities. At any time when fewer than 100 of the CUSIP numbers on such list
remain unassigned, Issuer or Issuing Agent shall promptly obtain from the
CUSIP Service Bureau an additional written list of approximately 900 such
numbers.
3. When Securities are to be issued through DTC, Issuing Agent shall
give notice to Paying Agent and issuance instructions to DTC in accordance
with DTC's Procedures, including DTC's Final Plan for DTC Money Market
Programs, and DTC's Issuing/Paying Agent General Operating Procedures
and Participant Terminal System Procedures for Medium-Term Notes (MTNs)
Including Deposit Notes and Medium-Term Bank Notes (the "Procedures"), a copy
of which previously has been furnished to Issuing Agent and Paying Agent. The
giving of such issuance instructions, which include delivery instructions, to
DTC shall constitute: (a) a representation that the Securities are issued in
accordance with applicable law; and (b) a confirmation that a Master Note
Certificate, or a Global Certificate (or Certificates), evidencing such
Securities, in the form described in Paragraph 1, has been issued and
authenticated.
4. Issuer recognized that DTC does not in any way undertake to, and
shall not have any responsibility to, monitor or ascertain the compliance of
any transactions in the Securities with any exemptions from registration
under the Securities Act of 1933 or of any other state or federal securities
laws.
5. If issuance of Securities through DTC is scheduled to take place one
or more days after Issuing Agent has given issuance instructions to DTC,
Issuing Agent may cancel such issuance by giving a cancellation instruction
to DTC in accordance with the Procedures.
6. At any time that Paying Agent has Securities in its DTC accounts, it
may request withdrawal of such Securities from DTC by giving a withdrawal
instruction to DTC in accordance with the Procedures. Upon DTC's acceptance
of such withdrawal instruction, Paying Agent shall reduce the principal
amount of the Securities evidenced, as the case may be, by the Master Note
Certificate, or by one or more Global Certificates, accordingly.
295
<PAGE>
Medium-Term Notes (MTNs)
- --------------------------------------------------------------------------------
ANNEX 5
(Page 3 of 8)
7. In the event of any solicitation of consents from or voting by
holders of the Securities, Issuer, Issuing Agent, or Paying Agent shall
establish a record date for such purposes (with no provision for revocation
of consents or votes by subsequent holders) and shall, to the extent possible,
send notice of such record date to DTC not less than 15 calendar days in
advance of such record date. If delivered by hand or sent by mail or overnight
delivery, such notice shall be sent to:
Supervisor: Proxy
Reorganization Department
The Depository Trust Company
7 Hanover Square; 23rd Floor
New York, NY 10004-2695
If sent by telecopy, such notice shall be sent to (212) 709-6896 or (212)
709-6897. Issuer, Issuing Agent, or Paying Agent shall confirm DTC's receipt
of such telecopy by telephoning (212) 709-6870.
8. Notices of reorganization events (corporate actions) with respect to
the Securities, including full or partial redemptions (calls), repayments
(puts), extensions of maturities, resets of interest rates or spreads,
mandatory tenders, and consolidations of individual issues, shall be given to
DTC by Paying Agent in accordance with the Procedures.
9. Paying Agent may override DTC's determination of interest and
principal payment dates, in accordance with the Procedures.
10. Notice regarding the amount of variable interest and principal
payments on the Securities shall be given to DTC by Paying Agent in
accordance with the Procedures.
11. All notices sent to DTC shall contain the CUSIP number of the
Securities.
12. Paying Agent shall confirm with DTC daily by CUSIP number the face
value of the Securities outstanding, and Paying Agent's corresponding interest
and principal payment obligation, in accordance with the Procedures.
13. DTC may direct Issuer, Issuing Agent, or Paying Agent to use any
other number or address as the number or address to which notices may be sent.
14. Payments on the Securities, including payments in currencies other
than the U.S. Dollar, shall be made by Paying Agent in accordance with the
Procedures.
15. In the event that Issuer determines that beneficial owners of
Securities shall be able to obtain certificated Securities, Issuer or Paying
Agent shall notify DTC of the availability of certificates. In such event,
Issuer or Paying Agent shall issue, transfer, and exchange certificates in
appropriate amounts, as required by DTC and others.
16. DTC may discontinue providing its services as securities depository
with respect to the Securities at any time by giving reasonable notice to
Issuer or Paying Agent (at which time DTC will confirm with Issuer or Paying
Agent the aggregate amount of Securities outstanding by CUSIP number). Under
such circumstance, at DTC's request Issuer and Paying Agent shall cooperate
fully with DTC by taking appropriate action to make available one or more
separate certificates evidencing Securities to any DTC Participant having
Securities credited to its DTC accounts.
17. Issuer: (a) understands that DTC has no obligation to, and will not,
communicate to its Participants or to any person having an interest in the
Securities any information contained in the Master Note Certificate, if any,
or the Global Certificates, if any; and (b) acknowledges that neither
296
<PAGE>
Medium-Term Notes (MTNs)
- --------------------------------------------------------------------------------
ANNEX 5
(Page 4 of 8)
DTC's Participants nor any person having an interest in the Securities shall
be deemed to have notice of the provisions of such Certificate or
Certificates by virtue of submission of such Certificate or Certificates to
DTC.
18. Issuer authorizes DTC to provide to Issuing Agent or Paying Agent
listings of DTC Participants' holdings with respect to the Securities from
time to time at the request of Issuing Agent or Paying Agent. Issuer
authorizes Issuing Agent and Paying Agent to provide DTC with such
signatures, exemplars of signatures, and authorizations to act as may be
deemed necessary by DTC to permit DTC to discharge its obligations to DTC
Participants and appropriate regulatory authorities.
19. Nothing herein shall be deemed to require Issuing Agent or Paying
Agent to advance funds on behalf of Issuer.
NOTE: Very truly yours,
Schedule A contains statements
that DTC believes accurately describe
DTC, the method of effecting book- ______________________________________
entry transfers of securities distri- (Issuer)
buted through DTC, and certain
related matters. By: ____________________________________
(Authorized Officer's Signature)
____________________________________
(Issuing Agent)
By: ____________________________________
(Authorized Officer's Signature)
____________________________________
(Paying Agent)
By: ____________________________________
(Authorized Officer's Signature)
Received and Accepted:
THE DEPOSITORY TRUST COMPANY
By: ____________________________________
297
<PAGE>
Medium-Term Notes (MTNs)
- --------------------------------------------------------------------------------
ANNEX 5
(Page 5 of 8)
SAMPLE OFFERING DOCUMENT LANGUAGE
DESCRIBING BOOK-ENTRY-ONLY ISSUANCE
(PREPARED BY DTC--BRACKETED MATERIAL MAY BE APPLICABLE TO CERTAIN ISSUES)
1. The Depository Trust Company ("DTC"), New York, NY, will act as
securities depository for the securities (the "Securities"). The Securities
will be issued as fully-registered securities registered in the name of Cede
& Co. (DTC's partnership nominee). One fully-registered Security certificate
will be issued for [each issue of] the Securities, [each] in the aggregate
principal amount of such issue, and will be deposited with DTC. [If, however,
the aggregate principal amount of [any] issue exceeds $200 million, one
certificate will be issued with respect to each $200 million of principal
amount and an additional certificate will be issued with respect to any
remaining principal amount of such issue.]
2. DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934. DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other
organizations. DTC is owned by a number of its Direct Participants and by the
New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and dealers, banks, and
trust companies that clear through or maintain a custodial relationship with
a Direct Participant, either directly or indirectly ("Indirect
Participants"). The Rules applicable to DTC and its Participants are on file
with the Securities and Exchange Commission.
3. Purchases of Securities under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Securities
on DTC's records. The ownership interest of each actual purchaser of each
Security ("Beneficial Owner") is in turn to be recorded on the Direct and
Indirect Participants' records. Beneficial Owners will not receive written
confirmation from DTC of their purchase, but Beneficial Owners are expected
to receive written confirmations providing details of the transaction, as
well as periodic statements of their holdings, from the Direct or Indirect
Participant through which the Beneficial Owner entered into the transaction.
Transfers of ownership interests in the Securities are to be accomplished by
entries made on the books of Participants acting on behalf of Beneficial
Owners. Beneficial Owners will not receive certificates representing their
ownership interests in Securities, except in the event that use of the
book-entry system for the Securities is discontinued.
4. To facilitate subsequent transfers, all Securities deposited by
Participants with DTC are registered in the name of DTC's partnership
nominee, Cede & Co. The deposit of Securities with DTC and their registration
in the name of Cede & Co. effect no change in beneficial ownership. DTC has
no knowledge of the actual Beneficial Owners of the Securities; DTC's records
reflect only the identity of the Direct Participants to whose accounts such
Securities are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
5. Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
298
<PAGE>
EXHIBIT A
---------
EXHIBIT A of Certificate Agreement dated as of ___________________, 199_,
between The Depository Trust Company and _____________________________________
("Custodian")
ISSUER NAME PROGRAM* DATE OF ISSUANCE
- ----------------------- -------------------------- ---------------------
PACCAR Financial Corp. Medium-Term Notes Series H
- ------------------
*AS APPLICABLE:(i) SERVICE DESIGNATOR; (ii) RANK OF INDEBTEDNESS; AND (iii)
REFERENCE TO THE PROVISION OF THE SECURITIES ACT OF 1933, AS AMENDED,
PURSUANT TO WHICH THE PROGRAM IS EXEMPT FROM REGISTRATION.
<PAGE>
[PACCAR LOGO]
March 11, 1996
PACCAR Financial Corp.
777 - 106th Avenue, N.E.
Bellevue, Washington 98004
Re: Registration Statement on Form S-3
Registration of Senior Debt Securities
$1,000,000,000 Principal Amount
Gentlemen:
Reference is made to the Registration Statement on Form S-3 (the
"Registration Statement") to be filed by PACCAR Financial Corp., a Washington
corporation (the "Company"), registering under the Securities Act of 1933, as
amended, senior debt securities of the Company in the aggregate principal
amount of $1,000,000,000 (the "Debt Securities") to be issued under the
indenture dated as of December 1, 1983 as amended by the first supplemental
indenture dated as of June 19, 1989 (the "Indenture") between the Company and
Citibank, N.A., from time to time as set forth in the prospectus (the
"Prospectus") included in the Registration Statement and in supplements to
the Prospectus.
As counsel for the Company, I have been requested to furnish this opinion in
connection with such registration. I have examined originals or copies,
certified or otherwise identified to my satisfaction, of such corporate
records, certificates of public officials and other documents as I have
considered necessary as a basis for this opinion.
Based on the foregoing, it is my opinion that:
1. The Indenture has been duly authorized, executed and delivered
by the Company and constitutes a legal, valid and binding
indenture of the Company.
2. When (i) the issuance of the Debt Securities has been duly authorized by
appropriate corporate action, (ii) the Debt Securities have been duly
executed, authenticated and delivered in accordance with the Indenture and
(iii) the Debt Securities are sold as described in the Registration
Statement, the Prospectus and in supplements to the Prospectus, and payment
is received therefor, and while the Registration Statement is effective and
in compliance with applicable state securities laws, the Debt Securities
will constitute legal, valid and binding obligations of the Company
entitled to the benefits of the Indenture.
<PAGE>
PACCAR Financial Corp.
March 11, 1996
Page Two
This opinion is based upon the laws of the United States and the State of
Washington at the date hereof and would not necessarily be the same at any
subsequent date.
I consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference made to me under the caption "Validity of
Securities" in the prospectus.
Very truly yours,
Bruce N. Holliday
Counsel, PACCAR Financial Corp.
Assistant General Counsel, PACCAR Inc
<PAGE>
[PACCAR LOGO]
March 11, 1996
PACCAR Financial Corp.
P.O. Box 1518
Bellevue, WA 98009
Gentlemen:
Reference is made to the Registration Statement on Form S-3 dated March 11,
1996 to be filed by PACCAR Financial Corp. with the Securities and Exchange
Commission (the "Commission") for the purpose of registering under the
Securities Act of 1933, as amended, (the "Securities Act") $1,000,000,000 of
Senior Debt Securities.
I have been advised that the Company intends to establish a series of the
Senior Debt Securities (the "Notes") as described in a proposed prospectus
supplement (the "Prospectus Supplement") to be filed with the Commission
pursuant to Rule 424(b) of the rules and regulations under the Securities Act
substantially in the form provided to me. The Prospectus Supplement as so
filed will include a summary of certain of the United States federal income
tax consequences of the ownership of the Notes in substantially the form
attached to this letter as Exhibit A.
In my opinion, based upon my review of the Registration Statement and the
Prospectus Supplement, the summary attached to this letter as Exhibit A
correctly describes certain of the United States federal income tax
consequences of the ownership of the Notes. This opinion is based on the
Internal Revenue code of 1986 as amended to the date hereof, and existing and
proposed Treasury Regulations, revenue rulings and judicial decisions, all of
which are subject to change either prospectively or retroactively. I express
no opinion as to the laws of any state, local or foreign jurisdiction.
I consent to the filing of this opinion as an exhibit to the Registration
Statement and any amendments thereto. In giving this consent, I do not
thereby admit that I come within the category of persons whose consent is
required under Section 7 of the Securities Act or the rules and regulations
of the Commission thereunder.
Very truly yours,
Richard W. Blacker, Esq.
Tax Counsel to PACCAR Inc
RWB:lp
Attachment
<PAGE>
EXHIBIT A
---------
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of the Notes is based
upon laws, regulations, rulings and decisions now in effect, all of which are
subject to change (including changes in effective dates) or possible differing
interpretations. It deals only with Notes held as capital assets and does not
purport to deal with persons in special tax situations, such as financial
institutions, insurance companies, regulated investment companies, dealers in
securities or currencies, persons holding Notes as a hedge against currency
risks or as a position in a "straddle" for tax purposes, or persons whose
functional currency is not the United States dollar. It also does not deal with
holders other than original purchasers (except where otherwise specifically
noted). 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 beneficial owner of a Note that is not a U.S. Holder.
U.S. HOLDERS
PAYMENTS OF INTEREST. Payments of interest on a Note generally will be
taxable to a U.S. Holder as ordinary interest income at the time such payments
are accrued or are received (in accordance with the U.S. Holder's regular method
of tax accounting).
ORIGINAL ISSUE DISCOUNT. The following summary is a general discussion of
the United States Federal income tax consequences to U.S. Holders of the
purchase, ownership and disposition of Notes issued with original issue
discount. The following summary is based in part upon final Treasury regulations
(the "OID Regulations") released by the Internal Revenue Service ("IRS") on
January 27, 1994 under the original issue discount provisions of the Internal
Revenue Code of 1986, as amended (the "Code").
In general, a U.S. Holder is required to report as ordinary interest income
original issue discount as it accrues under a constant yield method regardless
of the U.S. Holder's regular method of tax accounting. Under these rules, U.S.
Holders generally will have to include in income increasingly greater amounts of
original issue discount in successive accrual periods.
In general, original issue discount is the excess of what a borrower is
obligated to repay when the loan becomes due over the amount borrowed. The
clearest example of original issue discount is a situation in which a debt
instrument is issued for a cash amount that is less than its stated principal
amount. However, there are a variety of other situations in which original issue
discount can exist and certain exemptions that can apply under which original
issue discount can be avoided. This discussion describes in general terms
certain of the situations that can give rise to original issue discount with
respect to the Original Issue Discount Notes. Because the original issue
discount analysis will vary depending on the terms of the Notes, U.S. Holders
should refer to the applicable Pricing Supplement to obtain more detailed
information regarding the original issue discount analysis for a particular
Note.
In determining whether there is original issue discount, a U.S. Holder must
first determine if the stated redemption price at maturity of a Note exceeds the
issue price of the Note. Stated more technically, original issue discount is the
excess of the stated redemption price at maturity of a Note over its issue
price. Original issue discount can exist only if any 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 issued date or, in the case of a Note providing for the payment of any
amount other than qualified stated interest (as hereinafter defined) prior to
maturity, multiplied by the weighted average of maturity of such Note).
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For this purpose, the issue price is the first 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 is
the sum of all payments provided by the Note other than "Qualified Stated
Interest" payments. In general, "Qualified Stated Interest" is interest that is
unconditionally payable in cash or property (other than debt instruments of the
issuer) at least annually at a single fixed rate, single qualified floating
rate, or a single "objective rate," provided that the single rate appropriately
takes into account the length of interval between payments. Each Pricing
Supplement will indicate whether the Original Issue Discount Notes issued
thereunder will be issued with Qualified Stated Interest or not.
Payments for 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).
U.S. Holders should be aware that on December 15, 1994, the IRS released
proposed amendments to the OID Regulations that would broaden the definition of
an objective rate and would further clarify certain other provisions contained
in the OID Regulations. If ultimately adopted, these amendments to the OID
Regulations would be effective for debt instruments issued 60 days or more after
the date on which such proposed amendments are finalized.
A U.S. Holder who purchases an Original Issue Discount Note for an amount
that is greater than its adjusted issue price as of the purchase date and less
than or equal to the sum of all amounts payable on the Original Issue Discount
Note after the purchase date other than payments of Qualified Stated Interest,
will be considered to have purchased the Original Issue Discount Note at an
"acquisition premium." Under the acquisition premium rules, the amount of
original issue discount which such U.S. Holder must include in its gross income
with respect to such Original Issue Discount Note for any taxable year (or
portion thereof in which the U.S. Holder holds the Original Issue Discount Note)
will be reduced (but not below zero) by the portion of the acquisition premium
properly allocable to the period.
Under the OID Regulations, Floating Rate Notes and Indexed Notes ("Variable
Notes") are subject to special rules whereby a Variable Note will qualify as a
"variable rate debt instrument" if (a) its issue price does not exceed the total
noncontingent principal payments due under the Variable Note by more than a
specified de minimis amount and (b) it provides for stated interest, paid or
compounded at least annually, at current values of (i) one or more Qualified
Floating Rates (as defined below), (ii) a single fixed rate and one or more
Qualified Floating Rates, (iii) a Single Objective Rate (as defined below), or
(iv) a single fixed rate and a Single Objective Rate that is a Qualified Inverse
Floating Rate (as defined below). The applicable Pricing Supplement will
indicate whether a Variable Note is a "variable rate debt instrument."
If a Variable Note that provides for stated interest at either a single
Qualified Floating Rate or a single Objective Rate throughout the term thereof
qualifies as a "variable rate debt instrument" under the OID Regulations, then
any stated interest on such Note which is unconditionally payable in cash or
property (other than debt instruments of the issuer) at least annually will
constitute Qualified Stated Interest and will be taxed accordingly. Thus, a
Variable Note that provides for stated interest at either a single Qualified
Floating Rate or a single Objective Rate throughout the term thereof and that
qualifies as a "variable rate debt instrument" under the OID Regulations will
generally not be treated as having been issued with original issue discount
unless the Variable Note is issued at a "true" discount (i.e., at a price below
the Note's stated principal amount) in excess of a specified de minimis amount.
Original issue discount on such a Variable Note arising from "true" discount is
allocated to an accrual period using the constant yield method described above
by assuming that the variable rate is a fixed rate equal to (i) in the case of a
Qualified Floating Rate or Qualified Inverse Floating Rate, the value as of the
issue date, of the Qualified Floating Rate or Qualified Inverse Floating Rate,
or (ii) in the case of an Objective Rate (other than a Qualified Inverse
Floating Rate), a fixed rate that reflects the yield that is reasonably expected
for the Variable Note.
In general, any other Variable Note that qualifies as a "variable rate debt
instrument" will be converted into an "equivalent" fixed rate debt instrument
for purposes of determining the amount and accrual of original issue discount
and Qualified Stated Interest on the Variable Note. The OID Regulations
generally
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require that such a Variable Note be converted into an "equivalent" fixed rate
debt instrument by substituting any Qualified Floating Rate or Qualified Inverse
Floating Rate provided for under the terms of the Variable Note with a fixed
rate equal to the value of the Qualified Floating Rate or Qualified Inverse
Floating Rate, as the case may be, as of the Variable Note's issue date. Any
Objective Rate (other than a Qualified Inverse Floating Rate) provided for under
the terms of the Variable Note is converted into a fixed rate that reflects the
yield that is reasonably expected for the Variable Note. In the case of a
Variable Note that qualifies as a "variable rate debt instrument" and provides
for stated interest at a fixed rate in addition to either one or more Qualified
Floating Rates or a Qualified Inverse Floating Rate, the fixed rate is initially
converted into a Qualified Floating Rate (or a Qualified Inverse Floating Rate,
if the Variable Note provides for a Qualified Inverse Floating Rate). Under such
circumstances, the Qualified Floating Rate or Qualified Inverse Floating Rate
that replaces the fixed rate must be such that the fair market value of the
Variable Note as of the Variable Note's issue date is approximately the same as
the fair market value of an otherwise identical debt instrument that provides
for either the Qualified Floating Rate or Qualified Inverse Floating Rate rather
than the fixed rate. Subsequent to converting the fixed rate into either a
Qualified Floating Rate or a Qualified Inverse Floating Rate, the Variable Note
is then converted into an "equivalent" fixed rate debt instrument in the manner
described above.
Once the Variable Note is converted into an "equivalent" fixed rate debt
instrument pursuant to the foregoing rules, the amount of original issue
discount and Qualified Stated Interest, if any, are determined for the
"equivalent" fixed rate debt instrument by applying the general original issue
discount rules to the "equivalent" fixed rate debt instrument and a U.S. Holder
of the Variable Note will account for such original issue discount and Qualified
Stated Interest as if the U.S. Holder held the "equivalent" fixed rate debt
instrument. For each accrual period appropriate adjustments will be made to the
amount of Qualified Stated Interest or original issue discount assumed to have
been accrued or paid with respect to the "equivalent" fixed rate debt instrument
in the event that such amounts differ from the actual amount of interest accrued
or paid on the Variable Note during the accrual period.
If a Variable Note does not qualify as a "variable rate debt instrument"
under the OID Regulations, then the Variable Note would be treated as a
contingent payment debt obligation. On December 15, 1994, the IRS released
proposed Treasury regulations dealing with the treatment of contingent payment
obligations (the "Proposed Regulations"). The Proposed Regulations supersede
certain previously proposed Treasury regulations originally published on April
8, 1986 dealing with contingent payment obligations, and are not proposed to be
effective for debt instruments issued prior to the date that is 60 days after
the date on which the Proposed Regulations are finalized.
Generally, if a Variable Note is treated as a contingent payment obligation,
interest payments thereon will be treated as "contingent interest" payments.
Under the Proposed Regulations, any contingent interest payments on a Variable
Note would be includible in income in a taxable year whether or not the amount
of any payment is fixed or determinable in that year. The amount of interest
included in income in any particular accrual period would be determined by
estimating a projected payment schedule (as determined under the Proposed
Regulations) for the Variable Note and applying daily accrual rules similar to
those for accruing original issue discount on Notes issued with original issue
discount (as discussed above). If the actual amount of contingent interest
payments is not equal to the projected amount, an adjustment to income at the
time of payment must be made to reflect the difference. There can be no
assurance, however, that the final Treasury regulations regarding contingent
payment obligations will not differ materially from the Proposed Regulations.
Accordingly, the ultimate Federal income tax treatment of any Variable Note that
is treated as a contingent payment obligation may differ from that described
herein. The proper United States Federal income tax treatment of Variable Notes
that are treated as contingent payment debt obligations will be more fully
described in the applicable Pricing Supplement. Furthermore, any other special
United States Federal income tax considerations, not otherwise discussed herein,
which are applicable to any particular issue of Notes will be discussed 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
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above. Investors intending to purchase Notes with such features should consult
their own tax advisors, since the original issue discount consequences will
depend, in part, on the particular terms and features of the purchased Notes.
U.S. Holders may generally, upon election, include in income all interest
(including stated interest, acquisition discount, original issue discount, de
minimis original issue discount, market discount, de minimis market discount,
and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium) that accrues on a debt instrument by using the constant
yield method applicable to original issue discount, subject to certain
limitations and exceptions.
SHORT-TERM NOTES. Notes that have a fixed maturity of one year or less
("Short-Term Notes") will be treated as having been issued with original issue
discount. In general, an individual or other cash method U.S. Holder is not
required to accrue such original issue discount unless the U.S. Holder elects to
do so. If such an election is not made, any gain recognized by the U.S. Holder
on the sale, exchange or maturity of the Short-Term Note will be ordinary income
to the extent of the original issue discount accrued on a straight-line basis,
or upon election under the constant yield method (based on daily compounding),
through the date of sale or maturity, and a portion of the deductions otherwise
allowable to the U.S. Holder for interest on borrowings allocable to the
Short-Term Note will be deferred until a corresponding amount of income is
realized. U.S. Holders who report income for United States Federal income tax
purposes under the accrual method, and certain other holders including banks and
dealers in securities, are required to accrue original issue discount on a
Short-Term Note on a straight-line basis unless an election is made to accrue
the original issue discount under a constant yield method (based on daily
compounding).
MARKET DISCOUNT. If a U.S. Holder purchases a Note, other than an Original
Issue Discount Note, for an amount that is less than its issue price (or, in the
case of a subsequent purchaser, its stated redemption price at maturity) or, in
the case of an Original Issue Discount Note, for an amount that is less than its
adjusted issue price as of the purchase date, such U.S. Holder will be treated
as having purchased such Note at a "Market Discount," unless such Market
Discount is less than a specified de minimis amount.
Under the market discount rules, a U.S. Holder will be required to treat any
partial principal payment (or, in the case of an Original Issue Discount Note,
any payment that does not constitute Qualified Stated Interest) on, or any gain
realized on the sale, exchange, retirement or other disposition of, a Note as
ordinary income to the extent of the lesser of (i) the amount of such payment or
realized gain or (ii) the Market Discount which has not previously been included
in income and is treated as having accrued on such Note at the time of such
payment or disposition. Market Discount will be considered to accrue ratably
during the period from the date of acquisition to the Maturity Date of the Note,
unless the U.S. Holder elects to accrue Market Discount on the basis of
semiannual compounding.
A U.S. Holder may be required to defer the deduction of all or a portion of
the interest paid or accrued on any indebtedness incurred or maintained to
purchase or carry a Note with Market Discount until the maturity of the Note or
certain earlier dispositions, because a current deduction is only allowed to the
extent the interest expense exceeds an allocable portion of Market Discount. A
U.S. Holder may elect to include Market Discount in income currently as it
accrues (on either a ratable or semiannual compounding basis), in which case the
rules described above regarding the treatment as ordinary income of gain upon
the disposition of the Note and upon the receipt of certain cash payments and
regarding the deferral of interest deductions will not apply. Generally, such
currently included Market Discount is treated as ordinary interest for United
States Federal income tax purposes. Such an election will apply to all debt
instruments acquired by the U.S. Holder on or after the first day of the first
taxable year to which such election applies and may be revoked only with the
consent of the IRS.
PREMIUM. If a U.S. Holder purchases a Note for an amount that is greater
than the sum of all amounts payable on the Note after the purchase date other
than payments of Qualified Stated Interest, such U.S. Holder will be considered
to have purchased the Note with "Amortizable Bond Premium" equal in amount to
such excess. A U.S. Holder may elect to amortize such premium using a constant
yield method over the remaining term of the Note and may offset interest
otherwise required to be included in respect of the Note during any taxable year
by the amortized amount of such excess for the taxable year. However, if the
Note
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may be optionally redeemed after the U.S. Holder acquires it at a price in
excess of its stated redemption price at maturity, special rules would apply
which could result in a deferral of the amortization of some bond premium until
later in the term of the Note. Any election to amortize bond premium applies to
all taxable debt instruments acquired by the U.S. Holder on or after the first
day of the first taxable year to which such election applies and may be revoked
only with the consent of the IRS.
DISPOSITION OF A NOTE. Except as discussed above, upon the sale, exchange
or retirement of a Note, a U.S. Holder generally will recognize taxable gain or
loss equal to the difference between the amount realized on the sale, exchange
or retirement (other than amounts representing accrued and unpaid interest) and
such U.S. Holder's adjusted tax basis in the Note. A U.S. Holder's adjusted tax
basis in a Note generally will equal such U.S. Holder's initial investment in
the Note increased by any original issue discount included in income (and
accrued Market Discount, if any, if the U.S. Holder has included such Market
Discount in income) and decreased by the amount of any payments, other than
Qualified Stated Interest payments, received and Amortizable Bond Premium taken
with respect to such Note. Such gain or loss generally will be long-term capital
gain or loss if the Note were held for more than one year.
NOTES DENOMINATED, OR IN RESPECT OF WHICH INTEREST IS PAYABLE, IN A FOREIGN
CURRENCY
CASH METHOD. A U.S. Holder who uses the cash method of accounting for
United States Federal income tax purposes and who receives a payment of interest
on a Note (other than original issue discount or Market Discount) will be
required to include in income the U.S. dollar value of the Foreign Currency
payment (determined on the date such payment is received) regardless of whether
the payment is in fact converted to U.S. dollars at that time, and such U.S.
dollar value will be the U.S. Holder's tax basis in such Foreign Currency.
ACCRUAL METHOD. A U.S. Holder who uses the accrual method of accounting for
United States Federal income tax purposes, or who otherwise is required to
accrue interest prior to receipt, will be required to include in income the U.S.
dollar value of the amount of interest income (including original issue discount
or Market Discount and reduced by Amortizable Bond Premium to the extent
applicable) that has accrued and is otherwise required to be taken into account
with respect to a Note during an accrual period. The U.S. dollar value of such
accrued income will be determined by translating such income at the average rate
of exchange for the accrual period, or with respect to an accrual period that
spans two taxable years, at the average rate for the partial period within the
taxable year. A U.S. Holder may elect, however, to translate such accrued
interest income using the rate of exchange on the last day of the accrual period
or, with respect to an accrual period that spans two taxable years, using the
rate of exchange on the last day of the taxable year. If the last day of an
accrual period is within five business days of the date of receipt of the
accrued interest, a U.S. Holder may translate such interest using the rate of
exchange on the date of receipt. The above election will apply to other debt
obligations held by the U.S. Holder and may not be changed without the consent
of the IRS. A U.S. Holder should consult a tax advisor before making the above
election. A U.S. Holder will recognize exchange gain or loss (which will be
treated as ordinary income or loss) with respect to accrued interest income on
the date such income is received. The amount of ordinary income or loss
recognized will equal the difference, if any, between the U.S. dollar value of
the Foreign Currency payment received (determined on the date such payment is
received) in respect of such accrual period and the U.S. dollar value of
interest income that has accrued during such accrual period (as determined
above).
PURCHASE, SALE AND RETIREMENT OF NOTES. A U.S. Holder who purchases a Note
with previously owned Foreign Currency will recognize ordinary income or loss in
an amount equal to the difference, if any, between such U.S. Holder's tax basis
in the Foreign Currency and the U.S. dollar fair market value of the Foreign
Currency used to purchase the Note, determined on the date of purchase.
Except as discussed above with respect to Short-Term Notes, upon the sale,
exchange or retirement of a Note, a U.S. Holder will recognize taxable gain or
loss equal to the difference between the amount realized on the sale, exchange
or retirement and such U.S. Holder's adjusted tax basis in the Note. Such gain
or loss generally will be capital gain or loss (except to the extent of any
accrued Market Discount not previously included in the U.S. Holder's income) and
will be long-term capital gain or loss if at the time of sale, exchange or
retirement the Note has been held by such U.S. Holder for more than one year. To
the extent the
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amount realized represents accrued but unpaid interest, however, such amounts
must be taken into account as interest income, with exchange gain or loss
computed as described in "Payments of Interest in a Foreign Currency" above. If
a U.S. Holder receives Foreign Currency on such a sale, exchange or retirement
the amount realized will be based on the U.S. dollar value of the Foreign
Currency on the date the payment is received or the Note is disposed of (or
deemed disposed of as a result of a material change in the terms of the Note).
In the case of a Note that is denominated in Foreign Currency and is traded on
an established securities market, a cash basis U.S. Holder (or, upon election,
an accrual basis U.S. Holder) will determine the U.S. dollar value of the amount
realized by translating the Foreign Currency payment at the spot rate of
exchange on the settlement date of the sale. A U.S. Holder's adjusted tax basis
in a Note will equal the cost of the Note to such holder, increased by the
amounts of any Market Discount or original issue discount previously included in
income by the holder with respect to such Note and reduced by any amortized
acquisition or other premium and any principal payments received by the holder.
A U.S. Holder's tax basis in a Note, and the amount of any subsequent
adjustments to such holder's tax basis will be the U.S. dollar value of the
Foreign Currency amount paid for such Note, or of the Foreign Currency amount of
the adjustment, determined on the date of such purchase or adjustment.
Gain or loss realized upon the sale, exchange or retirement of a Note that
is attributable to fluctuations in currency exchange rates will be ordinary
income or loss which will not be treated as interest income or expense. Gain or
loss attributable to fluctuations in exchange rates will equal the difference
between the U.S. dollar value of the Foreign Currency principal amount of the
Note, determined on the date such payment is received or the Note is disposed
of, and the U.S. dollar value of the Foreign Currency principal amount of the
Note, determined on the date the U.S. Holder acquired the Note. Such Foreign
Currency gain or loss will be recognized only to the extent of the total gain or
loss realized by the U.S. Holder on the sale, exchange or retirement of the
Note.
ORIGINAL ISSUE DISCOUNT. In the case of an Original Issue Discount Note or
Short-Term Note, (i) original issue discount is determined in units of the
Foreign Currency, (ii) accrued original issue discount is translated into U.S.
dollars as described in "Payments of Interest in a Foreign Currency -- Accrual
Method" above and (iii) the amount of Foreign Currency gain or loss on the
accrued original issue discount is determined by comparing the amount of income
received attributable to the discount (either upon payment, maturity or an
earlier disposition), as translated into U.S. dollars at the rate of exchange on
the date of such receipt, with the amount of original issue discount accrued, as
translated above.
PREMIUM AND MARKET DISCOUNT. In the case of a Note with Market Discount,
(i) Market Discount is determined in units of the Foreign Currency, (ii) accrued
Market Discount taken into account upon the receipt of any partial principal
payment or upon the sale, exchange, retirement or other disposition of the Note
(other than accrued Market Discount required to be taken into account currently)
is translated into U.S. dollars at the exchange rate on such disposition date
(and no part of such accrued Market Discount is treated as exchange gain or
loss) and (iii) accrued Market Discount currently includible in income by a U.S.
Holder for any accrual period is translated into U.S. dollars on the basis of
the average exchange rate in effect during such accrual period, and the exchange
gain or loss is determined upon the receipt of any partial principal payment or
upon the sale, exchange, retirement or other disposition of the Note in the
manner described in "Payments of Interest in a Foreign Currency -- Accrual
Method" above with respect to computation of exchange gain or loss on accrued
interest.
With respect to a Note issued with Amortizable Bond Premium, such premium is
determined in the relevant Foreign Currency and reduces interest income in units
of the Foreign Currency. Although not entirely clear, a U.S. Holder should
recognize exchange gain or loss equal to the difference between the U.S. dollar
value of the bond premium amortized with respect to a period, determined on the
date the interest attributable to such period is received, and the U.S. dollar
value of the bond premium determined on the date of the acquisition of the Note.
EXCHANGE OF FOREIGN CURRENCIES. A U.S. Holder will have a tax basis in any
Foreign Currency received as interest or on the sale, exchange or retirement of
a Note equal to the U.S. dollar value of such Foreign
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Currency, determined at the time the interest is received or at the time of the
sale, exchange or retirement. Any gain or loss realized by a U.S. Holder on a
sale or other disposition of Foreign Currency (including its exchange for U.S.
dollars or its use to purchase Notes) will be ordinary income or loss.
NON-U.S. HOLDERS
A non-U.S. Holder will not be subject to United States Federal income taxes
on payments of principal, premium (if any) or interest (including original issue
discount, if any) on a Note, unless such non-U.S. Holder is a direct or indirect
10% or greater shareholder of the Company, a controlled foreign corporation
related to the Company or a bank receiving interest described in section
881(c)(3)(A) of the Code. To qualify for the exemption from taxation, the last
United States payor in the chain of payment prior to payment to a non-U.S.
Holder (the "Withholding Agent") must have received in the year in which a
payment of interest or principal occurs, or in either of the two preceding
calendar years, a statement that (i) is signed by the beneficial owner of the
Note under penalties of perjury, (ii) certifies that such owner is not a U.S.
Holder and (iii) provides the name and address of the beneficial owner. The
statement may be made on an IRS Form W-8 or a substantially similar form, and
the beneficial owner must inform the Withholding Agent of any change in the
information on the statement within 30 days of such change. If a Note is held
through a securities clearing organization or certain other financial
institutions, the organization or institution may provide a signed statement to
the Withholding Agent. However, in such case, the signed statement must be
accompanied by a copy of the IRS Form W-8 or the substitute form provided by the
beneficial owner to the organization or institution. The Treasury Department is
considering implementation of further certification requirements aimed at
determining whether the issuer of a debt obligation is related to holders
thereof.
Generally, a non-U.S. Holder will not be subject to Federal income taxes on
any amount which constitutes capital gain upon retirement or disposition of a
Note, provided the gain is not effectively connected with the conduct of a trade
or business in the United States by the non-U.S. Holder. Certain other
exceptions may be applicable, and a non-U.S. Holder should consult its tax
advisor in this regard.
The Notes will not be includible in the estate of a non-U.S. Holder unless
the individual is a direct or indirect 10% or greater shareholder of the
Company, or, at the time of such individual's death, payments in respect of the
Notes would have been effectively connected with the conduct by such individual
of a trade or business in the United States.
BACKUP WITHHOLDING
Backup withholding of United States Federal income tax at a rate of 31% may
apply to payments made in respect of the Notes to registered owners who are not
"Exempt Recipients" and who fail to provide certain identifying information
(such as the registered owner's taxpayer identification number) in the required
manner. Generally, individuals are not Exempt Recipients, whereas corporations
and certain other entities generally are Exempt Recipients. Payments made in
respect of the Notes to a U.S. Holder must be reported to the IRS, unless the
U.S. Holder is an Exempt Recipient or establishes an exemption. Compliance with
the identification procedures described in the preceding section would establish
an exemption from backup withholding for those non-U.S. Holders who are not
Exempt Recipients.
In addition, upon the sale of a Note to (or through) a broker, the broker
must withhold 31% of the entire purchase price, unless either (i) the broker
determines that the seller is a corporation or other Exempt Recipient or (ii)
the seller provides, in the required manner, certain identifying information
and, in the case of a non-U.S. Holder, certifies that such seller is a non-U.S.
Holder (and certain other conditions are met). Such a sale must also be reported
by the broker to the IRS, unless either (i) the broker determines that the
seller is an Exempt Recipient or (ii) the seller certifies its non-U.S. status
(and certain other conditions are met). Certification of the registered owner's
non-U.S. status would be made normally on an IRS Form W-8 under penalties of
perjury, although in certain cases it may be possible to submit other
documentary evidence.
Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.
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EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of PACCAR Financial
Corp. for the registration of $1,000,000,000 of Medium Term Notes, Series H
and to the incorporation by reference therein of our report dated February
10, 1995, with respect to the financial statements of PACCAR Financial Corp.
included in its Annual Report (Form 10-K) for the year ended December 31,
1994, filed with the Securities and Exchange Commission.
Ernst & Young LLP
Seattle, WA
March 8, 1996
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
We, the undersigned directors and officers of PACCAR Financial Corp., a
Washington corporation, hereby severally constitute and appoint M. A.
Tembreull, T. R. Morton and R. E. Ranheim, or any of them, singly, our true
and lawful attorney-in-fact, with full power to them and each of them to sign
for us, and in our names in the capacities as indicated below, a registration
statement on Form S-3 to be filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, for the purpose of registering
debt securities of this corporation, together with any and all amendments
(including post-effective amendments) thereto, hereby ratifying and
confirming our signatures as they may be signed by our said attorney-in-fact
to said registration statement and any and all amendments thereto.
IN WITNESS WHEREOF, each of the undersigned has executed this power of
attorney as of the 20th day of February 1996.
/s/ M. T. Barkley Controller
- ---------------------------
(M. T. Barkley)
/s/ G. D. Hatchel Vice President and Director
- ---------------------------
(G. D. Hatchel)
/s/ D. J. Hovind Director
- ---------------------------
(D. J. Hovind)
/s/ T. R. Morton President and Director
- ---------------------------
(T. R. Morton)
/s/ C. M. Pigott Chairman and Director
- ---------------------------
(C. M. Pigott)
/s/ M. C. Pigott Director
- ---------------------------
(M. C. Pigott)
/s/ R. E. Ranheim Treasurer
- ---------------------------
(R. E. Ranheim)
/s/ J. L. Shiplet Director
- ---------------------------
(J. L. Shiplet)
/s/ M. A. Tembreull Vice Chairman and Director
- ---------------------------
(M. A. Tembreull)
/s/ J. J. Waggoner Director
- ---------------------------
(J. J. Waggoner)
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an application to determine eligibility of a Trustee pursuant
to Section 305(b)(2) _____
_____________________________________
CITIBANK, N.A.
(Exact name of trustee as specified in its charter)
13-5266470
(I.R.S. employer
identification no.)
399 Park Avenue, New York, New York 10043
(Address of principal executive office) (Zip Code)
Citibank, N.A.
120 Wall Street
New York, NY 10043
Attn: Corporate Agency & Trust Department
(Name and address of agent for service)
_____________________________________
PACCAR FINANCIAL CORP.
(Exact name of obligor as specified in its charter)
Washington 91-6029712
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
777-106th Avenue, N.E.
Bellevue, Washington 98004
(Address of Principal Executive Offices) (Zip Code)
_____________________________________
Debt Securities
(Title of the indenture securities)
<PAGE>
1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Comptroller of the Currency, Washington, D.C.
Federal Reserve Bank of New York
35 Liberty Street, New York, NY
Federal Deposit Insurance Corporation
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation
None.
16. LIST OF EXHIBITS.
LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS STATEMENT OF ELIGIBILITY.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS EXHIBITS HERETO.
Exhibit 1 - Copy of Articles of Association of the Trustee, as now in
effect. (Exhibit 1 to T-1 to Registration Statement
No. 2-79983)
Exhibit 2 - Copy of certificate of authority of the Trustee to commence
business. (Exhibit 2 to T-1 to Registration Statement
No. 2-29577)
Exhibit 3 - Copy of authorization of the Trustee to exercise corporate trust
powers. (Exhibit 3 to T-1 to Registration Statement
No. 2-55519)
Exhibit 4 - Copy of existing By-Laws of the Trustee. (Exhibit 4 to T-1 to
Registration Statement No. 33-34988)
Exhibit 5 - Not applicable.
2
<PAGE>
Exhibit 6 - The consent of the Trustee required by Section 321(b) of the
Trust Indenture Act of 1939. (Exhibit 6 to T-1 to Registration
Statement No. 33-19227.)
Exhibit 7 - Copy of the latest Report of Condition of the Trustee
Exhibit 8 - Not applicable.
Exhibit 9 - Not applicable.
_____________________
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, Citibank, N.A., a national banking association organized and
existing under the laws of the United States of America, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in The City of New York and State of New York,
on the 20th day of February, 1996.
CITIBANK, N.A.
BY: /s/Louis A. Piscitelli
----------------------
Louis A. Piscitelli
Senior Trust Officer
3
<PAGE>
Charter No. 1461
Comptroller of the Currency
Northeastern District
REPORT OF CONDITION
CONSOLIDATING
DOMESTIC AND FOREIGN
SUBSIDIARIES OF
CITIBANK, N.A.
of New York in the State of New York, at the close of business on December 31,
1995, published in response to call made by Comptroller of the Currency, under
Title 12, United States Code, Section 161. Charter Number 1461 Comptroller of
the Currency Northeastern District.
ASSETS
<TABLE>
<CAPTION>
THOUSANDS
OF DOLLARS
<S> <C>
Cash and balances due from de-
pository institutions:
Noninterest-bearing balances
and currency and coin. . . . . . . . . . . . . $ 7,451,000
Interest-bearing balances. . . . . . . . . . . 9,256,000
Held-to-maturity securities. . . . . . . . . . . 0
Available-for-sale securities. . . . . . . . . . 15,587,000
Federal funds sold and securities
purchased under agreements to
resell in domestic offices of the
bank and of its Edge and Agree-
ment subsidiaries, and in IBFs:
Federal funds sold. . . . . . . . . . . . . . . 3,981,000
Securities purchased under
agreements to resell. . . . . . . . . . . . . . 423,000
Loans and lease financing receiv-
ables:
Loans and Leases, net of un-
earned income. . . . . . . . $145,221,000
LESS: Allowance for loan
and lease losses . . . . . . . .4,403,000
------------
Loans and leases, net of un-
earned income, allowance,
and reserve . . . . . . . . . . . . . . . . . . 140,818,000
Trading assets . . . . . . . . . . . . . . . . . 28,407,000
Premises and fixed assets (includ-
ing capitalized leases) . . . . . . . . . . . . 3,454,000
Other real estate owned. . . . . . . . . . . . . 849,000
Investments in unconsolidated
subsidiaries and associated com-
panies. . . . . . . . . . . . . . . . . . . . . 1,181,000
Customers' liability to this bank
on acceptances outstanding. . . . . . . . . . . 1,542,000
Intangible assets. . . . . . . . . . . . . . . . 14,000
Other assets . . . . . . . . . . . . . . . . . . 7,147,000
-------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . $ 220,110,000
-------------
-------------
LIABILITIES
DEPOSITS:
In domestic offices . . . . . . . . . . . . . . $ 35,377,000
Noninterest-
bearing. . . . . . . . . . . .$13,214,000
Interest-
bearing. . . . . . . . . . . . 22,163,000
-----------
In foreign offices, Edge and
Agreement subsidiaries, and
IBFs. . . . . . . . . . . . . . . . . . . . . . 121,599,000
Noninterest-
bearing. . . . . . . . . . . . .8,014,000
Interest-
bearing. . . . . . . . . . . .113,585,000
-----------
Federal funds purchased and se-
curities sold under agreements
to repurchase in domestic offices
of the bank and of its Edge and
Agreement subsidiaries, and in
IBFs:
Federal funds purchased. . . . . . . . . . . . 1,852,000
Securities sold under agree-
ments to repurchase. . . . . . . . . . . . . . 556,000
Trading liabilities. . . . . . . . . . . . . . . 17,544,000
Other borrowed money:
With original maturity of one
year or less. . . . . . . . . . . . . . . . . . 7,740,000
With original maturity of more
than one year . . . . . . . . . . . . . . . . . 5,788,000
Mortgage indebtedness and obli-
gations under capitalized leases. . . . . . . . 95,000
Bank's liability on acceptances ex-
ecuted and outstanding. . . . . . . . . . . . . 1,559,000
Subordinated notes and
debentures . . . . . . . . . . . . . . . . . . . 4,700,000
Other liabilities. . . . . . . . . . . . . . . . 8,483,000
-------------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . $ 205,293,000
-------------
-------------
EQUITY CAPITAL
Common stock . . . . . . . . . . . . . . . . . . $ 751,000
Surplus. . . . . . . . . . . . . . . . . . . . . 6,744,000
Undivided profits and capital re-
serves. . . . . . . . . . . . . . . . . . . . . 7,816,000
Net unrealized holding gains (losses)
on available-for-sale securities. . . . . . . . 62,000
Cumulative foreign currency
translation adjustments . . . . . . . . . . . . (556,000)
-------------
TOTAL EQUITY CAPITAL . . . . . . . . . . . . . . $ 14,817,000
-------------
TOTAL LIABILITIES, LIMITED-
LIFE PREFERRED STOCK, AND
EQUITY CAPITAL. . . . . . . . . . . . . . . . . $ 220,110,000
-------------
-------------
</TABLE>
I, Roger W. Trupin, Controller of the above-named bank do hereby declare that
this Report of Condition is true and correct to the best of my knowledge and
belief.
ROGER W. TRUPIN
We, the undersigned directors, attest to the correctness of this Report of
Condition. We declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions and
is true and correct.
PEI-YUAN CHIA
WILLIAM R. RHODES
PAUL J. COLLINS
DIRECTORS
