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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)
WASHINGTON 91-6029712
(State of Incorporation) (I.R.S. employer identification no.)
777 106TH AVENUE N.E., BELLEVUE, WASHINGTON 98004, (425) 468-7100
(Address and telephone number of registrant's principal executive offices)
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G. GLEN MORIE
PACCAR FINANCIAL CORP.
777 106TH AVENUE N.E.
BELLEVUE, WASHINGTON 98004
(425) 468-7499
(Name, address and telephone number of agent for service)
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COPIES TO:
Andrew Bor Norman D. Slonaker
Perkins Coie LLP Brown & Wood LLP
1201 Third Avenue, 40th Floor One World Trade Center
Seattle, Washington 98101 New York, New York 10048
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<PAGE>
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.
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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>
TITLE OF EACH CLASS OF AMOUNT TO PROPOSED PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED * MAXIMUM AGGREGATE REGISTRATION
OFFERING PRICE OFFERING PRICE ** FEE
PER UNIT **
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<S> <C> <C> <C> <C>
Senior Debt Securities $1,000,000,000 100% $1,000,000,000 $295,000
</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.
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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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<PAGE>
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED SEPTEMBER 10, 1998)
[PACCAR LOGO]
$1,000,000,000
PACCAR FINANCIAL CORP.
MEDIUM-TERM NOTES, SERIES I
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
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PACCAR Financial Corp. (the "Company") may offer from time to time its
Medium-Term Notes, Series I (the "Notes"), in an aggregate principal amount of
up to $1,000,000,000, or the equivalent thereof in one or more foreign
currencies (including the ECU). The Notes will mature nine months or more from
the date of issue, as selected by the purchaser and agreed to by the Company,
and may be subject to redemption at the option of the Company or repayment at
the option of the holder prior to maturity, all 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.
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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.
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<CAPTION>
AGENTS' DISCOUNTS AND
PRICE TO PUBLIC(1) COMMISSIONS(2)(3) PROCEEDS TO COMPANY(2)(4)
<S> <C> <C> <C>
Per Note............................... 100% .125%-.750% 99.875%-99.400%
Total(5)............................... $1,000,000,000 $1,250,000-$7,500,000 $988,750,000-$992,500,000
</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 (or grant a discount) to Merrill Lynch &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley Dean
Witter & Co. Incorporated, Lehman Brothers Inc. or Salomon Brothers Inc,
each as agent ("Agent"), ranging from .125% to .750% of the principal
amount, depending upon maturity, of any Note sold through such firm as
agent. Commissions with respect to Notes with stated maturities in excess of
30 years that are sold through such Agent will be negotiated between the
Company and such Agent at the time of such sale. See "Plan of Distribution".
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. 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 discount equal to the commission applicable
to any agency sale of a Note of similar maturity, unless otherwise stated in
the applicable Pricing Supplement.
(3) The Company has agreed to indemnify the Agents against, and to provide
contribution with respect to certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Plan of Distribution".
(4) Before deducting other expenses payable by the Company, estimated at
$750,000, including reimbursement of certain of the Agents' expenses.
(5) Or the equivalent thereof in one or more foreign currencies.
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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."
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MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
LEHMAN BROTHERS
SALOMON SMITH BARNEY
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The date of this Prospectus Supplement is September 10, 1998
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IN CONNECTION WITH THE OFFERING OF NOTES PURCHASED BY ONE OR MORE AGENTS AS
PRINCIPAL ON A FIXED OFFERING PRICE BASIS, SUCH AGENT(S) MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES
OFFERED HEREBY. SPECIFICALLY, THE AGENTS MAY OVER-ALLOT IN CONNECTION WITH THE
OFFERING AND MAY BID FOR, AND PURCHASE, THE NOTES IN THE OPEN MARKET TO COVER
SHORT POSITIONS OF SUCH AGENT(S). FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"PLAN OF DISTRIBUTION."
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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 OTHER THAN UNITED STATES DOLLARS OR TO ONE OR MORE
INTEREST RATES, CURRENCIES OR OTHER INDICES OR FORMULAS OR OTHERWISE. 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 AND THE SUITABILITY OF INVESTING IN SUCH NOTES IN LIGHT
OF THEIR PARTICULAR CIRCUMSTANCES. 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. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER,
AMONG OTHER FACTORS, THE MATTERS DESCRIBED BELOW.
STRUCTURE RISKS
INDEXED NOTES
An investment in Notes indexed, as to principal, premium, if any, and/or
interest, to one or more currencies (including exchange rates and swap indices
between 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 no interest will be payable in respect of such Indexed Notes or
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
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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 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 (including the ECU) ("Specified Currency") other than
United States dollars ("Foreign Currency Notes") entails significant risks that
are not associated with a similar investment in a debt 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, financial 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 to
continue 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
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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 maturity of a Foreign Currency Note. Even if there are
no exchange controls, it is possible that the Specified Currency for 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. Investors in 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 (as herein after defined) converts
United States dollars to the Specified Currency for payment of the judgment.
CREDIT RATINGS
The credit ratings assigned to the Company's medium-term note program may
not reflect the potential impact of all risks related to structure and other
factors on the value of the Notes. Accordingly, prospective investors should
consult their own financial and legal advisors as to the risks entailed by an
investment in the Notes and the suitability of investing in such Notes in light
of their particular circumstances.
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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
nine months or more 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
(other than Foreign Currency 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. Notes with different variable terms other
than interest rates may also be offered concurrently to different investors.
Interest rates or formulas and other terms of Notes are subject to change by the
Company from time to time, but no such change will affect any Note previously
issued or as to which an offer to purchase has been accepted by the Company.
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. See "Description of Securities" in the accompanying
Prospectus for a description of the rights of the holders of the Notes under the
Indenture. The Company may, from time to time, without the consent of the
holders of the Notes, provide for the issuance of Notes or other Securities
under the Indenture in addition to the $1,000,000,000 aggregate principal amount
of Notes offered hereby.
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.
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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. Notwithstanding the foregoing, a holder
of $10,000,000 (or, if the Specified Currency is other than United States
dollars, the equivalent thereof in such Specified Currency) or more in aggregate
principal amount of Certificated Notes (whether having identical or different
terms and provisions) will be entitled to receive interest payments, if any,
other than interest payable at maturity or upon earlier redemption or repayment
by wire transfer of immediately available funds if appropriate wire transfer
instructions have been received in writing by the Paying Agent not less than
fifteen days prior to such interest payment date. Any such wire transfer
instructions received by the Paying Agent shall remain in effect until revoked
by such holder. 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. For
special payment terms applicable to Foreign Currency Notes, see "Special
Provisions Relating to Foreign Currency Denominated Notes" below.
The applicable Pricing Supplement for each Note will specify the date on
which such Note will mature (such date or an earlier date of redemption or
repayment 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 fifth 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.
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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 specified, the
Notes will be subject to redemption at the option of the Company on any date on
and after the applicable Initial Redemption Date at any time in whole or from
time to time in part in increments of $1,000 or any other integral multiple of
an authorized denomination specified in such Pricing Supplement (provided that
any remaining principal amount thereof shall be at least $1,000 or the minimum
authorized denomination applicable thereto) at the option of the Company at the
applicable Redemption Price (as defined below), together with interest thereon
payable to the Redemption Date, on written notice given to the holders thereof
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 multiplied by the unpaid
principal amount to be redeemed. The Initial Redemption Percentage, if any,
applicable to a note 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 specified 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 specified in the
applicable Pricing Supplement, Notes will be repayable in whole or in part in
increments of $1,000 or any other integral multiple of an authorized
denomination specified in such Pricing Supplement (provided that any remaining
principal amount thereof shall be at least $1,000 or the minimum authorized
denomination applicable thereto). 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. Except as set forth below, or
in any Note to be repaid, such Note must be received, together with the form
thereon entitled "Option to Elect Repayment" duly completed, by the Paying Agent
at its office maintained for such purpose in the Borough of Manhattan, The City
of New York, currently the Corporate Trust Office located at 111 Wall Street,
New York, New York 10043, not more than 60 nor less than 30 calendar days prior
to the Optional Repayment Date. Exercise of such repayment option by the holder
will be irrevocable.
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 Paying Agent 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 Paying Agent 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 Paying Agent 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
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<PAGE>
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.
If applicable, the Company will comply with the requirements of Section
14(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and the rules promulgated thereunder, and any other securities laws or
regulations in connection with any such repayment.
The Company may at any time purchase Notes at any price or prices in the
open market or otherwise. Notes so purchased by the Company may, at the
discretion of the Company, be held, resold or surrendered to the Paying Agent
for cancellation.
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 in arrears 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, Citibank,
N.A. 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 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
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<PAGE>
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 appears as an ECU non-settlement day on the display
designated as "ISDE" on the Reuter Monitor Money Rates Service (or is not a day
designated as an ECU non-settlement day by the ECU Banking Association) or, if
ECU non-settlement days do not appear on that page (or are not so designated), a
day that is not a day on which payments in ECU cannot be settled in the
international interbank market.
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 or on such other basis (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 of each year; 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 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,
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<PAGE>
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 factor
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 second 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
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<PAGE>
or more interest rate 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 immediately 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 ("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 U.S. Government Securities" or any successor
publication ("Composite Quotations") under the heading "Certificates of
Deposit." If such rate is not yet published in either H.15(519) or Composite
Quotations by 3:00 P.M., New York City time, on the 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.
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<PAGE>
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 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
average as specified in the applicable Pricing Supplement for the week or the
month, as applicable, ended immediately preceding the week or the month, as
applicable, 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 offered rates 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
offered rates 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 offered rates 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.
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<PAGE>
"Designated CMT Telerate Page" means the display on the Dow Jones Markets
Limited (or any successor 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). 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.
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-Nonfinancial." 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, at approximately 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 (which may include the Agents or their
affiliates) selected by the Calculation Agent, for commercial paper having the
Index Maturity designated in the applicable Pricing Supplement placed for a
non-financial entity whose bond rating is "AA", or the equivalent, from a
nationally recognized statistical rating organization; 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 (expressed as a percentage) calculated
in accordance with the following formula:
<TABLE>
<S> <C> <C> <C>
D X 360
Money Market Yield = ---------------- X 100
360 - (D X M)
</TABLE>
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.
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<PAGE>
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 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, 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 United States
dollar federal funds arranged by three leading brokers of federal funds
transactions in The City of New York (which may include the Agents or their
affiliates) 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.
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 (which may include affiliates of the Agents) 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
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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 (which may include affiliates of the
Agents) 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 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 Monitor 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 Markets Limited (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.
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 prior to 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 (which may include affiliates of the Agents) in The City of New
York selected by the Calculation Agent. If fewer than four such quotations are
so provided, the Prime Rate shall be calculated by the Calculation Agent and
shall be the arithmetic mean of four prime rates quoted on the basis of the
actual number of days in the year divided by a 360-day year as of the close of
business on such Interest Determination Date as furnished in The City of New
York by the major money center banks, if any, that have provided such quotations
and by a reasonable number of substitute banks or trust companies (which may
include affiliates of the Agents) to obtain four such prime rate quotations,
provided such substitute banks or trust companies are organized and doing
business under the laws of the United States, or any State thereof, each having
total equity capital of at least $500 million and being subject to supervision
or examination by federal or state authority, selected by the Calculation Agent
to provide such rate or rates; provided,
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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 on the Reuter Monitor Money
Rates Service (or any successor service) on the "USPRIME1" page (or such other
page as may replace the USPRIME1 page on 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 3:00 P.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 (which may include the Agents or their affiliates) selected by the
Calculation Agent for the issue of Treasury Bills with a remaining maturity
closest to the Index Maturity designated in the applicable Pricing Supplement;
provided, however, that if the dealers selected as aforesaid by the Calculation
Agent are not quoting as mentioned in this sentence, the Treasury Rate will be
the Treasury Rate in effect on such Interest Determination Date.
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.
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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 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 specified in
the applicable Pricing Supplement, interest on each Amortizing Note will be
computed on the basis of a 360-day year of twelve 30-day months. 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 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
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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 transferable. 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, or the Company becomes aware that Depositary has ceased to be a
clearing agency registered under the Exchange Act and any other applicable
statute or regulation and, in any such case, the Company shall not have
appointed a successor to the Depositary within 90 days thereafter, or (ii) the
Company in its sole discretion determines that the Global Securities shall be
exchangeable for Certificated 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 Paying Agent.
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 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
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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 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 Paying Agent. The requirement for physical
delivery of Book-Entry Notes in connection with a demand for repayment
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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 with
respect to Foreign Currency Notes, is by necessity incomplete. The Company and
the Agents disclaim 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 Foreign Currency Notes. Such persons
should consult their own financial and legal advisors with regard to such
matters.
PAYMENT OF PRINCIPAL AND ANY PREMIUM AND INTEREST
Unless otherwise specified in the applicable Pricing Supplement, 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 into 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, in the manner hereinafter described, 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 all or a specified portion of any
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 applicable Record Date or at least fifteen calendar 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 or a specified portion of 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
fifteenth 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 which are to
be made on an interest payment date other than the Maturity Date will be paid by
check mailed to the address of the holder entitled thereto as shown on the Note
Register, subject to the right to receive such interest payments by wire
transfer of immediately available funds under the circumstances described under
"Description of Notes--General". 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 designated at least
fifteen 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 the Borough of Manhattan, The City of New York 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 fifteenth 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 or at least ten calendar days prior to the Maturity Date, as the case may
be. 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
Except as set forth below, 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 or is no longer used by the government of the
country issuing such currency or for the settlement of transactions by public
institutions within the international banking community, 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; PROVIDED, HOWEVER, that if the euro has been
substituted for such Specified Currency (as described under "European Monetary
Union" below), the Company may at its option (or shall, if so required by
applicable law) without the consent of the holders of such Notes effect the
payment of principal of, premium, if any, or interest on, any Note denominated
in such Specified Currency in euro in lieu of such Specified Currency, in
conformity with legally applicable measures taken pursuant to, or by virtue of,
the treaty establishing the European Community (the "EC"), as amended by the
treaty on European Union (as so amended the "Treaty"). 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 or in euro as described above where the required payment
is in other than United States dollars will not constitute an Event of Default
under the Indenture.
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JUDGMENTS
Under current New York law, a state court in the State of New York rendering
a judgment in respect of a Foreign Currency Note would be required to render
such judgment in the Specified Currency, and such foreign currency judgment
would be converted into United States dollars at the exchange rate prevailing on
the date of entry of such judgment. Accordingly, the holder of such Foreign
Currency Note would be subject to exchange rate fluctuations between the date of
entry of such foreign currency judgment and the time the amount of such foreign
currency judgment is paid to such holder in United States dollars and converted
by such holder into the Specified Currency. It is not certain, however, whether
a non-New York state court would follow the same rules and procedures with
respect to conversions of foreign currency judgments.
The Company will indemnify the holder of any Note against any loss incurred
by such holder as a result of any judgment or order being given or made for any
amount due under such Note and such judgment or order requiring payment in a
currency or composite currency (the "Judgment Currency") other than the
Specified Currency, and as a result of any variation between (i) the rate of
exchange at which the Specified Currency amount is converted into the Judgment
Currency for the purpose of such judgement or order, and (ii) the rate of
exchange at which the holder of such Note, on the date of payment of such
judgment or order, is able to purchase the Specified Currency with the amount of
the Judgment Currency actually received by such holder, as the case may be.
EUROPEAN MONETARY UNION
SPECIAL PROVISIONS RELATING TO NOTES DENOMINATED IN ECU
The value of the ECU, in which the Notes may be denominated or may be
payable, is equal to the value of the ECU that is from time to time used as the
unit of account of the EC and which is at the date hereof valued on the basis of
specified amounts of the currencies of twelve of the fifteen member states of
the EC. Under Article 109G of the Treaty, the currency composition of the ECU
may not be changed. Other changes to the ECU may be made by the EC in conformity
with EC law, in which event the ECU will change accordingly. The Treaty
contemplates that European economic and monetary union ("EMU") will occur in
three stages. The Treaty provides that the third stage of EMU will start on
January 1, 1999, and on that date the value of the ECU as against the currencies
of member states participating in the third stage will be irrevocably fixed and
the ECU will become a currency in its own right, replacing all or some of the
currencies of the fifteen member states of the EC. On June 17, 1997, the Council
of the European Union adopted Council Regulation (EC) No. 1103/97, which recites
that the name of that currency will be the euro and provides that, in accordance
with the Treaty, references to the ECU will be replaced by references to the
euro at the rate of one euro for one ECU. The euro will be divided into one
hundred cents and references in this section to the "euro" and the "cent" are to
such new currency adopted pursuant to the Treaty. On May 3, 1998, it was
announced that the eleven member states that will enter the EMU are Austria,
Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands,
Portugal, and Spain. The euro will therefore replace the Austrian shilling,
Belgian franc, Dutch guilder, Finnish markka, French franc, German mark, Irish
pound, Italian lira, Luxembourg franc, Portuguese escudo, and Spanish peseta.
From the start of the third stage of EMU, all payments in respect of the Notes
denominated or payable in ECU, will be payable in euro at the rate of one euro
for one ECU. In such circumstances, the following provisions for payment in a
component currency will not apply.
ALTERNATIVE CALCULATIONS FOR PAYMENT OF NOTES DENOMINATED IN ECU IN A
COMPONENT CURRENCY
With respect to each due date for the payment of principal of, or interest
on, the Notes on or after the first business day in Brussels on which the ECU
ceases to be used as the unit of account of the EC, the Company shall choose a
substitute currency (the "Chosen Currency"), which may be United States dollars
or any currency which was, on the last day on which the ECU was used as the unit
of account of the EC, a
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component currency of the ECU, in which all payments due on or after that date
with respect to the Notes and coupons shall be made. The Company shall give
notice of the Chosen Currency so selected to the Paying Agent promptly after
such determination is made. The amount of each payment in such Chosen Currency
shall be computed on the basis of the equivalent of the ECU in that currency,
determined as described below, as of the fourth business day in Brussels prior
to the date on which such payment is due.
On the first business day in Brussels on which the ECU ceases to be used as
the unit of account of the EC, the Company Shall select a Chosen Currency in
which all payments with respect to Notes and coupons having a due date prior
thereto but not yet presented for payment are to be made. The Company shall give
notice of the Chosen Currency so selected to the Paying Agent promptly after
such determination is made. The amount of each payment in such Chosen Currency
shall be computed on the basis of the equivalent of the ECU in that currency,
determined as described below, as of such first business day.
The equivalent of the ECU in the relevant Chosen Currency as of any date
(the "Day of Valuation") shall be determined by, or on behalf of, the Exchange
Rate Agent on the following basis. The amounts and components composing the ECU
for this purpose (the "Components") shall be the amounts and components that
composed the ECU as of the last date on which the ECU was used as the unit of
account of the EC. The equivalent of the ECU in the Chosen Currency shall be
calculated by, first, aggregating the United States dollar equivalents of the
Components; and then, in the case of a Chosen Currency other than United States
dollars, using the rate used for determining the United States dollar equivalent
of the Components in the Chosen Currency as set forth below, calculating the
equivalent in the Chosen Currency of such aggregate amount in United States
dollars.
The United States dollar equivalent of each of the Components shall be
determined by, or on behalf of, the Exchange Rate Agent on the basis of the
middle spot delivery quotations prevailing at 2:30 P.M., Brussels time, on the
Day of Valuation, as obtained by, or on behalf of, the Exchange Rate Agent from
one or more major banks (which may include affiliates of the Agents), as
selected by the Company, in the country of issue of the component currency in
question.
If for any reason no direct quotations are available for a Component as of a
Day of Valuation from any of the banks selected for this purpose, in computing
the United States dollar equivalent of such Component, the Exchange Rate Agent
shall (except as provided below) use the most recent direct quotations for such
Component obtained by it or on its behalf, provided that such quotations were
prevailing in the country of issue not more than two Business Days before such
Day of Valuation. If such most recent quotations were so prevailing in the
country of issue more than two Business Days before such Day of Valuation, the
Exchange Rate Agent shall determine the United States dollar equivalent of such
Component on the basis of cross rates derived from the middle spot delivery
quotations for such component currency and for the United States dollar
prevailing at 2:30 P.M., Brussels time, on such Day of Valuation, as obtained
by, or on behalf of, the Exchange Rate Agent from one or more major banks (which
may include affiliates of the Agents), as selected by the Company, in a country
other than the country of issue of such component currency. Notwithstanding the
foregoing, the Exchange Rate Agent shall determine the United States dollar
equivalent of such Component on the basis of such cross rates if the Company or
such agent judges that the equivalent so calculated is more representative than
the United States dollar equivalent calculated as provided in the first sentence
of this paragraph. Unless otherwise specified by the Company, if there is more
than one market for dealing in any component currency by reason of foreign
exchange regulations or for any other reason, the market to be referred to in
respect of such currency shall be that upon which a nonresident issuer of
securities denominated in such currency would purchase such currency in order to
make payments in respect of such securities.
All determinations referred to above made by, or on behalf of, the Company
or by, or on behalf of, the Exchange Rate Agent shall be at such entity's sole
discretion and shall, in the absence of manifest error, be conclusive for all
purposes and binding on holders of Notes and coupons.
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SPECIAL PROVISIONS RELATING TO PAYMENTS ON NOTES DENOMINATED IN THE
CURRENCIES OF EC MEMBER STATES
If, pursuant to the Treaty, the euro is substituted for all or some of the
currencies of the member countries of the EC, the Company may at its option (or
shall, if so required by applicable law) without the consent of the holders of
the affected Notes effect the payment of principal of, premium, if any, or
interest on, the Notes denominated in such currencies in euro in conformity with
legally applicable measures taken pursuant to, or by virtue of, the Treaty. On
May 3, 1998, it was announced that eleven of the fifteen member states will
enter the EMU. These eleven are Austria, Belgium, Finland, France, Germany,
Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain.
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, any state thereof or the
District of Columbia, (unless in the case of a partnership, Treasury regulations
provide otherwise), (iii) an estate the income of which is subject to United
States Federal income taxation regardless of its source, (iv) a trust if a court
within the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust, or (v) 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 the rules governing
original issue discount that are set forth in Sections 1271 through 1275 of the
Internal Revenue Code of 1986, as amended (the "Code") and in Treasury
regulations (the "OID Regulations").
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,
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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).
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).
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."
A "qualified floating rate" is a variable rate whose variations can
reasonably be expected to measure contemporaneous variations in the cost of
newly borrowed funds in the currency in which the debt instrument is
denominated. A qualified floating rate may be multiplied by a fixed, positive
multiple that is greater than .65 but not more than 1.35. and may be increased
or decreased by a fixed rate. Certain combinations of rates constitute a single
qualified floating rate. including (i) interest stated at a fixed rate for an
initial period of one year or less followed by a qualified floating rate if the
value of the floating rate at the issue date is intended to approximate the
fixed rate, and (ii) two or more qualified floating rates that can reasonably be
expected to have approximately the same values throughout the term of the debt
instrument. A combination of such rates is conclusively presumed to be a single
qualified floating rate if the values of all rates on the issue date are within
0.25 percentage points of each other. A variable rate that is subject to an
interest rate cap. floor, "governor" or similar restriction on rate adjustment
may be a qualified floating rate only if such restriction is fixed throughout
the term of the debt instrument, or is not reasonably expected as of the issue
date to cause the yield on the debt instrument to differ significantly
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from its expected yield absent the restriction. The OID Regulations define an
'objective rate" as a rate (other than a qualified floating rate) that is
determined using a single fixed formula and that is based on objective financial
or economic information (other than a rate based on information that is within
the control of the issuer (or a related party) or that is unique to the
circumstances of the issuer (or a related party)). The Internal Revenue Service
("IRS") may designate other variable rates that will be treated as objective
rates. However, a variable rate is not an objective rate if it is reasonably
expected that the average value of the rate during the first half of the debt
instrument's term will differ significantly from the average value of such rate
during the final half of its term. A combination of interest stated at a fixed
rate for an initial period of one year or less followed by an objective rate is
treated as a single objective rate if the value of the objective rate at the
issue date is intended to approximate the fixed rate; such a combination of
rates is conclusively presumed to be a single objective rate if the objective
rate on the issue date does not differ from the fixed rate by more than 0.25
percentage points. An objective rate is a qualified inverse floating rate if it
is equal to a fixed rate reduced by a qualified floating rate, the variations in
which can reasonably be expected to inversely reflect contemporaneous variations
in the qualified floating rate (disregarding permissible rate caps, floors,
governors and similar restrictions such as are discussed above). Under these
rules, Commercial Paper Rate Notes, Prime Rate Notes, LIBOR Notes, Treasury Rate
Notes, CD Rate Notes, and Federal funds Rate Notes will generally be treated as
bearing interest at a qualifying variable rate.
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 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
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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. Generally, if a Variable Note is treated as
a contingent payment obligation, interest payments thereon will be treated as
"contingent interest" payments. Under the 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 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. 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 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
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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 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. Long term capital
gain of a non-corporate United States holder is generally subject to a maximum
tax rate of 20% in respect of property held for more than one year.
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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 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.
S-31
<PAGE>
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 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
S-32
<PAGE>
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. On
October 6, 1997, the Treasury Department issued new regulations (the "Final
Withholding Regulations") which make certain modifications to the backup
withholding and information reporting rules described above. The Final
Withholding Regulations attempt to unify certification requirements and modify
reliance standards. The Final Withholding Regulations also require, in the case
of Notes held by a foreign partnership, that (i) the certification described
above be provided by the partners rather than by the foreign partnership and
(ii) the partnership provide certain information, including a United States
taxpayer identification number. A look-through rule would apply in the case of
tiered partnerships. The Final Withholding Regulations will generally be
effective for payments made after December 31, 1999, subject to certain
transition rules. Prospective investors are urged to consult their own tax
advisors regarding the Final Withholding Regulations.
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.
S-33
<PAGE>
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,
acting individually or with the other Agents as part of a syndicate 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 .750%, 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. Commissions with respect to Notes with stated
maturities in excess of 30 years that are sold through an Agent as an agent of
the Company will be negotiated between the Company and such Agent at the time of
such sale and may be greater than .750%.
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 discount
equal to the commission applicable to any agency sale of a Note of similar
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.
In connection with an offering of Notes purchased by one or more Agents as
principal on a fixed offering price basis, such Agent(s) will be permitted to
engage in certain transactions that stabilize the price of Notes. Such
transactions may consist of bids or purchases for the purpose of pegging, fixing
or maintaining the price of Notes. If the Agent creates or the Agents create, as
the case may be, a short position in Notes, i.e., if it sells or they sell Notes
in an aggregate principal amount exceeding that set forth in the applicable
Pricing Supplement, such Agent(s) may reduce that short position by purchasing
Notes in the open market. In General, purchases of Notes for the purpose of
stabilization or to reduce a short position could cause the price of Notes to be
higher than it might be in the absence of such purchases.
Neither the Company nor any of the Agents makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described in the immediately preceding paragraph may have on the price of Notes.
In addition, neither the Company nor any of the Agents makes
S-34
<PAGE>
any representation that the Agents will engage in any such transactions or that
such transactions, once commenced, will not be discontinued without notice.
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 Agents and these other firms may be deemed to be "underwriters" within
the meaning of the Securities Act of 1933, as amended (the "Securities Act").
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. 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.
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 LLP, Seattle, Washington, and for the Agents, by Brown &
Wood LLP, New York, New York.
S-35
<PAGE>
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
(which may include the ECU) 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 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 September 10, 1998
<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. The Commission maintains a Website at HTTP://WWW.SEC.GOV containing
reports, information statements and other information regarding the registrants,
including the Company, that file electronically with the Commission. Reports,
Information statements and other information concerning the Company may also be
inspected at the offices of the New York Stock Exchange. 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, 1997, its quarterly reports on Form
10-Q for the quarters ended March 31, 1998 and June 30, 1998, its current report
on Form 8-K dated September 4, 1998 (concerning additional Year 2000
disclosures).
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 (425) 468-7100.
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 (425) 468-7100. The Company also has
marketing and credit offices in other cities throughout the United States.
2
<PAGE>
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. Such general corporate purposes may include extensions of credit to,
or the funding of investments in, PACCAR and PACCAR's other finance and leasing
subsidiaries. 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.
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>
SIX MONTHS
ENDED JUNE
30, YEAR ENDED DECEMBER 31,
---------- ----------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Company..................................................... 1.44 1.51 1.50 1.53 1.52 1.67 1.66
PACCAR and subsidiaries..................................... 4.70 3.68 4.47 3.27 4.09 4.44 4.14
</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 an estimate of the interest factor
inherent in rent expense. 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 1.57, 1.62, 1.63, 1.82
and 1.89 for the years 1997-1993, respectively, and 1.50 and 1.59 for the first
half of 1998 and 1997, respectively.
For purposes of calculating the ratio of earnings to fixed charges for
PACCAR and all its subsidiaries, including the Company, earnings consist of net
income plus fixed charges and income taxes, and undistributed net earnings of
affiliated companies. Fixed charges consist of interest expense plus an estimate
of the interest factor inherent in rent expense.
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
PACCAR's other finance and leasing subsidiaries, 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
3
<PAGE>
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, 1993-1997 were met without assistance from PACCAR. 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
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 for payment of principal and interest (if other than United States
4
<PAGE>
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, but not limited to, 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 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 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 terms thereof and 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
5
<PAGE>
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 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, without limitation, 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, trade names, trademarks, patents,
organization expenses and other 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,
6
<PAGE>
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 then existing or thereafter created) 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 pursuant to any
contract or provision of any statute or rule of court, (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 provided, however; that
such extension, renewal or replacement Lien shall be limited to all or part of
the same Property that secured the Lien extended, reserved or replaced (plus
improvements on such Property). (Section 1005).
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). Subject to the foregoing, the Company
will do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence. (Section 1004).
7
<PAGE>
SATISFACTION AND DISCHARGE
The Company shall be deemed to have satisfied and discharged from its
obligations under the Securities of a series at any time when, among other
things, (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 interest 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, satisfaction 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
mortgage, indenture or instrument evidencing indebtedness of the Company
(including the Indenture), which default shall have 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
written notice as provided in the Indenture; 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 by written notice as provided in the
Indenture. 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
8
<PAGE>
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 written notice
as provided in the Indenture 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, premium or rate of interest,
if any, on, or any premium payable upon the redemption of any Security or modify
the manner of determination of the rate of interest thereon so as to affect
adversely the interest of the Holder of such 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).
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.
9
<PAGE>
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 in the Company's Annual Report (Form
10-K) for the year ended December 31, 1997 have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon included therein
and incorporated herein 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
LLP 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.
10
<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 OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER
AND THEREUNDER SHALL, UNDER ANY CIRCUMSTANCE, CREATE AN IMPLICATION THAT THERE
HAS NOT BEEN ANY CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR
THEREOF. THIS PROSPECTUS SUPPLEMENT, THE APPLICABLE PRICING SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER 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-21
Certain United States Federal Income Tax
Considerations................................ S-26
Plan of Distribution........................... S-34
Certain Legal Matters.......................... S-35
PROSPECTUS
Available Information.......................... 2
Incorporation of Certain Documents by
Reference..................................... 2
The Company.................................... 2
Use of Proceeds................................ 3
Ratio of Earnings to Fixed Charges............. 3
Relationship With PACCAR....................... 3
Description of Securities...................... 4
Plan of Distribution........................... 10
Validity of Securities......................... 10
Experts........................................ 10
</TABLE>
$1,000,000,000
[PACCAR LOGO]
MEDIUM-TERM NOTES,
SERIES I
---------------------
PROSPECTUS SUPPLEMENT
---------------------
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
LEHMAN BROTHERS
SALOMON SMITH BARNEY
SEPTEMBER 10, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee. . . . . . . . . $295,000
Accounting fees and expenses . . . . . . . . . . . . . . . . . . . . 87,000*
Legal fees and expenses, including those of agents, underwriters
and trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,000*
Blue Sky qualification fees and expenses . . . . . . . . . . . . . . 2,000*
Printing and engraving . . . . . . . . . . . . . . . . . . . . . . . 13,730*
Trustee and paying agent's fees. . . . . . . . . . . . . . . . . . . 55,980*
Rating agency fees . . . . . . . . . . . . . . . . . . . . . . . . . 231,920*
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,370*
--------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $750,000*
--------
</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, and in some
instances require, 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 persons serving at the
request of PACCAR as a director or officer of another corporation 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
II-1
<PAGE>
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.
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.
II-2
<PAGE>
(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 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
September 10, 1998.
PACCAR FINANCIAL CORP.
By /s/ P. A. Donohoe
-----------------------
(P. A. Donohoe, 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 September 10, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
(1)Principal Executive Officer and
Director
<S> <C>
/s/ A. J. Wold President and Director
__________________________________
(A. J. Wold)
(2)Principal Financial Officer
/s/ P. A. Donohoe Treasurer
___________________________________
(P. A. Donohoe)
(3)Principal Accounting Officer
/s/ M. T. Barkley Controller
___________________________________
(M. T. Barkley)
(4) A Majority of the Board of Directors
/s/ D. J. Hovind* Director
___________________________________
(D. J. Hovind)
/s/ M. C. Pigott* Director
___________________________________
(M. C. Pigott)
/s/ M. A. Tembreull* Director
___________________________________
(M. A. Tembreull)
*By: /s/ P. A. Donohoe
___________________________________
(P. A. Donohoe, Attorney-in-Fact)
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIAL
NUMBERING
SYSTEM PAGE
NUMBER
------
<S> <C>
1.1. Form of distribution agreement for the Medium-Term Notes, Series I . . . .
1.2. Form of underwriting agreement for the Medium-Term Notes, Series I . . . .
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 I (Fixed-Rate) . . . . . . . . . . . . . .
4.2B. Form of Medium-Term Note, Series I (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, 1997
("1997 Form 10-K") and the quarterly report on Form 10-Q for the quarter
ended June 30, 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 1997
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 1997 Form 10-K and the
quarterly report on Form 10-Q for the quarter ended June 30, 1998 . . . . .
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 1997
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.
II-5
<PAGE>
Exhibit 1.1
PACCAR FINANCIAL CORP.
Medium-Term Notes, Series I
DISTRIBUTION AGREEMENT
To the several Agents September __, 1998
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 (which may
include the ECU) as the Company shall designate), aggregate principal amount
of its Medium-Term Notes, Series I (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"). It is
understood, however, that the Company may from time to time authorize the
issuance of additional Securities and that such additional Securities may be
sold pursuant to the terms of this Agreement, as though the issuance of such
Securities were authorized as of the date hereof.
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 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
1
<PAGE>
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) provided, that if the Company files a registration statement
with the Commission pursuant to Rule 462(b) of the Rules and Regulations
(the "Rule 462(b) Registration Statement"), then, after such filing, all
references to the "Registration Statement" shall also be deemed to include
the Rule 462(b) Registration Statement; (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. For purposes of
this Agreement, all references to the Preliminary Prospectus, Registration
Statement, Basic Prospectus or Prospectus or any amendment or supplement
thereto shall be deemed to include any copy filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval System
("EDGAR").
(ii) The Company meets the requirements for use of Form S-3 under
the Act; 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
2
<PAGE>
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;
each Prospectus delivered to the applicable Agent(s) for use in
connection with the Securities is identical to any electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR,
except to the extent permitted by Regulation S-T; 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 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) except as disclosed in
the financial statements incorporated by reference in the prospectus,
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
3
<PAGE>
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 LLP, whose report appears in the Company's
Annual Report on Form 10-K which is incorporated by reference in the
Prospectus, are independent auditors 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 and except further as
enforcement thereof may be limited by requirements that a claim with
respect to any debt securities issued under the Indenture that are
payable in a foreign or composite currency (or a foreign or composite
currency judgment in respect of such claim) be converted into U.S.
dollars at a rate of exchange prevailing on a date determined pursuant
to applicable law or by governmental authority to limit, delay or
prohibit the making of payments outside the United States), (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 except further as enforcement thereof may be limited by
requirements that a claim with respect to any Notes payable in a
foreign or composite currency (or a foreign or composite currency
judgment in respect of such claim) be converted into U.S. dollars at a
rate or exchange prevailing on a date determined pursuant to applicable
law or by governmental authority to limit delay or prohibit the making
of payments outside the United States); the Securities will be in a
form previously certified to the Agents and contemplated by the
Indenture 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
4
<PAGE>
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 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 Medium-Term Note Program under which the Securities
are issued (the "Program"), as well as the Securities, are rated [A1]
by Moody's Investors Service, Inc. and [AA-] by Standard & Poor's
Rating Services, or such other rating as to which the Company has have
most recently notified the Agents pursuant to Section 3(e) hereof.
(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
5
<PAGE>
principal shall be deemed a representation and warranty by the Company to
such Agent as to the matters covered thereby.
SECTION 2. AGENTS.
(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 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 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 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), 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
6
<PAGE>
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 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 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.
7
<PAGE>
(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 LLP, 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. The
Registration Statement and each amendment thereto so furnished to the Agents
will be identical to any electronically transmitted copies thereof filed with
the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(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 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.
8
<PAGE>
(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, (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, and (vi) any change in the rating
assigned by any nationally recognized statistical rating organization
("NRSRO") to the Program or any debt securities (including the Securities) of
the Company, or the public announcement by any NRSRO that it has under
surveillance or review, with possible negative implications, its rating of
the Program or any such debt securities, or the withdrawal by an NRSRO of its
rating of the Program or any such debt securities.
(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 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
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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 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.
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(m) The Company will use the net proceeds received by it from the
issuance and sale of the Securities in the manner specified in the Prospectus.
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.
In addition, the Company agrees to pay the reasonable fees and
disbursements of Brown & Wood LLP, 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 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) 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:
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(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.
(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
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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 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 LLP,
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 Prospectus fairly present the
information required with respect thereto by Form S-3 in all
material respects.
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(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 LLP, 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
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 LLP, addressed to the Agents and dated the Closing
Date, confirming that they are independent auditors 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 in the Prospectus, as of a
date not more than three 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.
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(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 LLP, 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 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
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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 LLP,
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 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 LLP 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 5(f) 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 LLP 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
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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 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 the then current version of the Prospectus 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 incurred, by the Company or any
such director, officer or
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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.
(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
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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 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
19
<PAGE>
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, if such Securities are denominated
and/or payable in, or indexed to, one or more foreign currencies, in the
international financial markets, or any outbreak or escalation of hostilities
or other calamity or crisis or any change or development or event involving a
prospective change in national or international political, financial or
economic conditions, in each case the effect of which is such as to make it,
in the judgment of such Agent(s), impracticable 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
materially limited, or minimum or maximum prices for trading have been fixed,
or maximum ranges for prices 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 NRSRO 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 organization 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.
20
<PAGE>
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 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 __________________________
21
<PAGE>
Accepted:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By: ______________________________
Title: ___________________________
Dated: __, 1998
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: __, 1998
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) 761-8385
Telecopy: (212) 761-0260
22
<PAGE>
Lehman Brothers Inc.
By: ______________________________
Title: ___________________________
Dated: __, 1998
3 World Financial Center, 12th Floor
New York, NY 10285
Attention: Medium-Term Note Department
Telephone: (212) 526-5926
Telecopy: (212) 528-1718,
Salomon Brothers Inc
By: ______________________________
Title: ___________________________
Dated: __, 1998
Seven World Trade Center, 32nd Flr.
New York, NY 10048
Attention: Medium-Term Note Department
Telephone: (212) 783-5897
Telecopy: (212) 783-2274
23
<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:
Initial Interest Rate:
Initial Interest Reset Date:
Spread or Spread Multiplier, if any:
Interest Rate Reset Date(s):
Index Maturity:
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Interest Rate Reset Period:
Interest Payment Period:
Interest Payment Date(s):
Interest Determination Date(s):
Calculation 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: _____%
24
<PAGE>
Settlement Date and Time:
Currency of Denomination:
Denominations (if currency is other than U.S. dollars):
Currency of Payment:
Exchange Rate Agent
Additional Terms:
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
25
<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 less than 10 years .600
From 10 years to less than 15 years .650
From 15 years to less than 20 years .700
From 20 years to 30 years .750
Beyond 30 years- To be agreed upon by the Company and
the Agent at the time of sale.
</TABLE>
26
<PAGE>
PACCAR FINANCIAL CORP.
ADMINISTRATIVE PROCEDURES
FOR FIXED AND FLOATING RATE MEDIUM-TERM NOTES, SERIES I
(ATTACHMENT TO THE DISTRIBUTION AGREEMENT
DATED SEPTEMBER __, 1998)
Medium-Term Notes, Series I (the "Notes") in the aggregate principal
amount of up to U.S. $l,000,000,000, or the equivalent in one or more foreign
currencies (which may include the ECU) 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 September __, 1998 (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 interests 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.
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.
1
<PAGE>
PART I: PROCEDURES OF GENERAL
APPLICABILITY
<TABLE>
<S> <C>
Date of Issuance/ Each Note will be dated as of the date of its
Authentication: 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 nine
months or more 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 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
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
Note promptly after such determination is made by the
Calculation Agent, Citibank, N.A.
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, and any such rejection shall not be
a breach of such Agent's agreement contained in the
Distribution Agreement, dated the date hereof, by and
among the Company and the Agents.
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;
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 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.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
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 DELIVERIES only:
Tritech Services
44B Colonial Drive
Piscataway, NJ 08854
Attention: Prospectus Operations/
Nachman Kimerling
Telephone: (732) 885-2769
Telecopy: (732) 885-2774/5/6
FOR ALL OTHER DELIVERIES ONLY:
Merrill Lynch & Co., Tritech Services
4 Corporate Place
Corporate Park 287
Piscataway, NJ 08854
Attention: Final Prospectus Unit/
Nachman Kimerling
Telephone: (732) 885-2769
Telecopy: (732) 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
With a copy to Brown & Wood LLP
One World Trade Center
New York, New York 10048
Attention: Norman D. Slonaker
If to Morgan Stanley:
Morgan Stanley & Co. Incorporated
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
1585 Broadway, 2nd Floor
New York, NY 10036
Attention: Medium-Term Note Trading Desk
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/c 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
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)526-5926
Certificated Notes should be delivered to:
Chase Manhattan Bank
4 New York Plaza
Ground Floor
Receive Window
FAO Lehman Brothers
New York, New York
Attn: Verna Covington
Telephone: (212)623-2884
If to Salomon Smith Barney:
Salomon Smith Barney
Brooklyn Army Terminal
140 58th Street
Brooklyn, New York 11220
Attention: Diane Graham, 8th Floor
Telephone: (718) 921-8475
Telecopy: (718) 921-8472
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
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 Timetable"
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 Trustee by facsimile
transmission 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
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
and the Trustee 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.
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. 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. For record keeping purposes, one copy of each
such amendment or supplement shall also be mailed or
telecopied to Brown & Wood LLP, One World Trade
Center, New York, New York 10048, Attention: Norman D.
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
Slonaker, Esq., (212) 839-5356, telecopier: (212)
839-5599.
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 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 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 Business Day" means
any day (a) if the Index Currency (as defined
below) is
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
other than the ECU, on which dealings deposits in
such Index Currency are transacted in the London
interbank market or (b) if the Index Currency is
the ECU, that does not appear as an ECU
non-settlement day on the display designated as
"ISDE" on the Reuter Monitor Money Rates Service
(or is not a day designated as an ECU
non-settlement day by the ECU Banking Association)
or, if ECU non-settlement days do not appear on
that page (and are not so designated), a day that
is not a day on which payments in ECU cannot be
settled in the international interbank market.
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.
</TABLE>
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").
<TABLE>
<S> <C>
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"), 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
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
(collectively, the "Floating Rate Terms") will be
represented initially by a single Book-Entry Note.
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.
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 one series of CUSIP
numbers, which series consists of approximately 900
CUSIP numbers which have been reserved for and
relating to Book-Entry Notes and the Company has
delivered to each of the Trustee and DTC such list of
such CUSIP numbers. The Company will assign CUSIP
numbers to Book-Entry Notes as described below under
Settlement Procedure C. DTC will notify the CUSIP
Service Bureau 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 and obtain
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 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: Unless otherwise specified by DTC, 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
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
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 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
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
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 canceled and not
immediately reassigned. Notwithstanding the foregoing,
if the Book-Entry Notes to be exchanged exceed
$200,000,000 the equivalent thereof in one or more
foreign 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 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: Unless otherwise provided in the applicable Pricing
Supplement, 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
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
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 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
</TABLE>
12
<PAGE>
<TABLE>
<S> <C>
an Interest Payment Date coinciding with Maturity)
and the total of such amounts.
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
Corporation. On such Interest Payment Date, the
Company will pay to the Trustee in immediately
available funds, and the Trustee in turn will pay in
immediately available funds 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
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 Corporation
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 to the Trustee in
immediately available funds, and the Trustee in
turn will pay to DTC in immediately available
funds, 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
13
<PAGE>
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 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
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
instructing the Trustee to withdraw funds from an
account maintained by the Trustee at Citibank,
N.A. 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 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
</TABLE>
14
<PAGE>
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
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 Book-Entry 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:
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
15
<PAGE>
(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.
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:
16
<PAGE>
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 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
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
17
<PAGE>
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
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 Presenting Agent will
confirm the purchase of such Note to the
purchaser either by transmitting to the
Participant with
18
<PAGE>
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:
<TABLE>
<CAPTION>
Settlement
Procedure Time
---------- ----
<C> <S>
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
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
</TABLE>
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.
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
19
<PAGE>
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
"canceled," make appropriate entries in its records
and send such canceled Book-Entry Note to the
Company. The CUSIP number assigned to such
Book-Entry Note shall, in accordance with CUSIP
Service Bureau procedures, be canceled 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 canceled 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 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.
20
<PAGE>
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 Principal
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 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 of Maturity Date.
21
<PAGE>
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 canceled by the
Trustee. All canceled 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. Denomination of the Certificated Note.
3. Fixed Rate Notes:
(a) interest rate;
(b) interest payment dates.
22
<PAGE>
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
5. Trade date.
6. Settlement Date (Original Issue Date)
7. Maturity Date.
8. Redemption provisions, if any, including:
Initial Redemption Date, Initial Redemption
Percentage and Annual redemption Reduction
Percentage.
9. Net proceeds to the Company.
10. Optional Repayment Date(s), if any.
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.
23
<PAGE>
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 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, 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,
101 Hudson Street, Jersey City, NJ 07302,
Attention: Eddie Steffens 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 acknowledgement 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
24
<PAGE>
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.
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
E 3:00 p.m. on Settlement
F 5:00 p.m. on Settlement
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
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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 Certificated
Note in respect of which the failure occurred, the
Trustee will mark the note "canceled," 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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PACCAR FINANCIAL CORP.
Medium-Term Notes, Series I
UNDERWRITING AGREEMENT
To each of the Underwriters September __, 1998
who are signatories hereto
Dear Sirs:
PACCAR Financial Corp., a Washington corporation (the "Company"),
proposes to sell its Medium-Term Notes, Series I (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) provided, that if the Company files a registration
statement with the Commission pursuant to Rule 462(b) of the Rules and
Regulations (the "Rule 462(b) Registration Statement"), then, after
such filing all references to the "Registration Statement" shall also
be deemed to include the Rule 462(b) Registration Statement; (C) "Basic
Prospectus" means the prospectus (including all documents incorporated
therein
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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. For purposes of this Agreement, all references
to the Preliminary Prospectus, Registration Statement, Basic Prospectus
or Prospectus or any amendment or supplement thereto shall be deemed to
include any copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval System ("EDGAR").
(ii) The Company meets the requirements for use of Form S-3
under the Act; 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; 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;
each Prospectus delivered to the applicable Underwriter(s) for use in
connection with the Securities is identical to any electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR,
except to the extent permitted by Regulation S-T; 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 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
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<PAGE>
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) except as disclosed
in the financial statements incorporated by reference in the
Prospectus, 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 LLP, whose report appears in the Company's
Annual Report on Form 10-K which is incorporated by reference in the
Prospectus, are independent public auditors 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 and except further as enforcement thereof may
be limited by requirements that a claim with respect to any debt
securities issued under the Indenture that are payable in a foreign or
composite currency (or a foreign or composite currency judgment in
respect of such claim) be converted into U.S. dollars at a rate of
exchange prevailing on a date determined pursuant to applicable law or
by governmental authority to limit, delay or prohibit the making of
payments outside the United States), (B) when Securities are sold
pursuant hereto, they will have been validly authorized for issuance
and sale pursuant to this Agreement and, upon 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 except further as enforcement thereof may
be limited by requirements that a claim with respect to any Notes
payable in a foreign or composite currency (or a foreign or composite
currency judgment in respect of such claim) be converted into U.S.
dollars at a rate or exchange prevailing on a date determined to
applicable law or by governmental authority to limit, delay or prohibit
the making of payments outside the United States), the Securities will
be in a form previously certified to the Underwriters and contemplated
by the Indenture 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.
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<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 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 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.
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<PAGE>
(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 Medium-Term Note Program under which the Securities are
issued (the "Program"), as well as the Securities, are rated [A1] by
Moody's Investors Service, Inc. and [AA-1] by Standard & Poor's Rating
Services, or such rating as to which the Company has have most recently
notified the Agents pursuant to Section 3(e) hereof.
(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 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:
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<PAGE>
(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. The Registration Statement and each amendment
thereto so furnished to the Underwriter will be identical to any
electronically transmitted copies thereof filed with the Commission pursuant
to EDGAR, except to the extent permitted by Regulation S-T.
(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 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, (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, and (vi) any change in the rating assigned by any nationally
recognized statistical rating organization ("NRSRO") to the Program or any
debt securities (including the Securities) of the Company, or the public
announcement by any NRSRO that it has under surveillance or
6
<PAGE>
review, with possible negative implications, its rating of the Program or any
such debt securities, or the withdrawal by any NRSRO of its rating of the
Program or any such debt securities.
(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 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.
(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.
(k) The Company will use the net proceeds received by it from the
issuance and sale of the Securities in the manner specified in the Prospectus.
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
7
<PAGE>
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 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 LLP, 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
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<PAGE>
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 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) any material adverse change in the financial markets in the United
States or, if such Securities are denominated and/or payable in, or indexed
to, one or more foreign currencies, in the international financial markets,
or any outbreak or escalation of hostilities or other calamity or crisis or
any change or development or event involving a prospective change in national
or international political, financial or economic conditions, in each case
the effect of which is such as to make it, in the judgment of such
Underwriter(s), impracticable 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 or material limitation 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
NRSRO 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 organization
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 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.
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(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 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,
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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 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
LLP, 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,
11
<PAGE>
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.
(c) The Company has furnished to each Underwriter a letter of
Ernst & Young LLP, addressed to the Underwriters and dated the date hereof,
confirming that they are independent auditors 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 three 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
12
<PAGE>
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).
(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 LLP, 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 LLP 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 LLP 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 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 LLP, 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.
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<PAGE>
(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 the then
current version of the Prospectus 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
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,
14
<PAGE>
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 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
15
<PAGE>
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
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.
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<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) It shall not offer to sell, sell or solicit offers to buy the
Securities to or from any person in any state or jurisdiction otherwise than
in conformity with the Blue Sky Memorandum referred to in Section 4.
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 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.
17
<PAGE>
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:
18
<PAGE>
Exhibit A
Schedule to Underwriting Agreement of PACCAR Financial Corp.
With Respect to Medium Term Notes, Series I ("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 Date(s):
Index Maturity:
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Interest Rate Reset Period:
19
<PAGE>
Interest Payment Period:
Interest Payment Date(s):
Interest Determination Date(s):
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:
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 September __, 1998,
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.
- --------------------------------------------------------------------------------
No. I PACCAR FINANCIAL CORP. Principal Amount
Medium-Term Note, Series I
CUSIP: (Fixed Rate) $
INTEREST RATE: ORIGINAL ISSUE DATE:
ISSUE PRICE:
MATURITY DATE: INITIAL REDEMPTION DATE:
HOLDER'S OPTIONAL REPAYMENT DATE(S): INITIAL REDEMPTION PERCENTAGE:
OTHER PROVISIONS: ANNUAL REDEMPTION PERCENTAGE REDUCTION:
If an Initial Redemption Date is specified above, (i) the Redemption
Price will initially be the Initial Redemption Percentage specified above and
shall decline at each anniversary of the Initial Redemption Date shown above
by the Annual Redemption Percentage Reduction specified above 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
1
<PAGE>
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
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.
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
--------------------------
President
This is one of the Securities of the
series designated herein issued under the ATTEST:
within-mentioned Indenture.
By
--------------------------
Secretary
CITIBANK, N.A., as Trustee
By
--------------------------
Authorized Officer
2
<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 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
3
<PAGE>
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 the Maturity Date ("Stated Maturity" in the
Indenture) 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 the Maturity Date 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 Maturity Date 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
more than 60 days nor less than 30 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.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or
4
<PAGE>
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.
5
<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.
- --------------------------------------------------------------------------------
No. FRI PACCAR Financial Corp. Principal Amount
Medium-Term Note, Series I
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:
HOLDER'S OPTIONAL REPAYMENT DATE(S):
OTHER PROVISIONS:
INITIAL REDEMPTION DATE: CALCULATION AGENT:
INITIAL REDEMPTION PERCENTAGE:
ANNUAL REDEMPTION PERCENTAGE REDUCTION:
1
<PAGE>
If an Initial Redemption Date is specified above, (i) the Redemption Price
will initially be the Initial Redemption Percentage specified above and shall
decline at each anniversary of the Initial Redemption Date shown above by the
Annual Redemption Percentage Reduction specified above 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
--------------------------
President
This is one of the Securities of the
series designated herein issued under the ATTEST:
within-mentioned Indenture.
By
--------------------------
Secretary
CITIBANK, N.A., as Trustee
2
<PAGE>
By
-----------------------------
Authorized Officer
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 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 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. 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.
3
<PAGE>
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 specified above as
published by the Board of Governors of the Federal Reserve System in
"Statistical Release H.15 (519), Selected Interest Rates," or any successor
publication ("H.15 (519)") under the heading "CDs (Secondary Market)" or, if
not 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 specified above as published by
the Federal Reserve Bank of New York in its daily statistical release,
"Composite 3:30 P.M. Quotations for U.S. Government Securities" or any
successor publication ("Composite Quotations") under the heading
"Certificates of Deposit." If such rate is not yet published in either
H.15(519) or Composite Quotations by 3:00 P.M., New York City time, on the
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 specified
above 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 average as
specified above for the week or the month, as applicable, ended immediately
preceding the week or the month, as applicable, 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 offered rates
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 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 offered rates 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 offered rates obtained and neither the highest nor the lowest of such
4
<PAGE>
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 Markets
Limited (or any successor service) on the page specified above (or any other
page as may replace such page on that service) for the purpose of displaying
Treasury Constant Maturities as reported in H.15 (519). If no such page is
specified above, 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 above
with respect to which the CMT Rate will be calculated. If no such maturity
is specified above, 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 specified above as published in
H.15 (519) under the heading "Commercial Paper-Nonfinancial". 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
specified above 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 at approximately 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 specified above placed
for a non-financial entity whose bond rating is "AA," or the equivalent, from
a nationally recognized statistical rating organization; 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 (expressed as a percentage) calculated
in accordance with the following formula:
D X 360 x 100
Money Market Yield = -----------------
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 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, 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 United States dollar 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
5
<PAGE>
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 above, 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
specified above, 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 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 above, the rate for deposits in the Index Currency having the Index
Maturity specified above commencing on the second London Business Day
immediately following that Interest Determination Date that appears on the
Designated LIBOR Page 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 specified above, 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
specified above 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 specified above as the currency for
which LIBOR shall be calculated. If no such currency is specified above, the
Index Currency shall be United States dollars.
"Designated LIBOR Page" means either (a) if "LIBOR Reuters" is specified
above, 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
specified above, the display on the Dow Jones Markets Limited (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 above, 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 European Currency Units ("ECU"), 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 published
prior to 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
6
<PAGE>
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. If fewer than four such
quotations are provided, the Prime Rate shall be calculated by the
Calculation Agent and shall be the arithmetic mean of four prime rates quoted
on the basis of the actual number of days in the year divided by a 360-day
year as of the close of business on such Interest Determination Date as
furnished in The City of New York by the major money center banks, if any,
that have provided such quotations and by a reasonable number of substitute
banks or trust companies to obtain four such prime rate quotations, provided
such substitute banks or trust companies are organized and doing business
under the laws of the United States, or any State thereof, each having total
equity capital of at least $500 million and being subject to supervision or
examination by federal or state authority, selected by the Calculation Agent
to provide such rate or rates; provided, however, that if the banks or trust
companies 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 on the Reuter Money Rates
Service (or any successor service) on the "US PRIME1" page (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 specified above as
such rate is published in H.15 (519) under the heading "Treasury Bills --
auction average (investment)" or, if not so published by 3:00 P.M., New York
City time, on the 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 specified above 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 specified above; 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
7
<PAGE>
preceding Business Day. "Business Day" means 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, 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 does not
appear as an ECU non-settlement day on the display designated as "ISDE" on
the Reuter Monitor Money Rates Service (or is not a day designated as an ECU
non-settlement day by the ECU Banking Association) or, if ECU non-settlement
days do not appear on that page (and are not so designated), a day that is
not a day on which payments in ECU cannot be settled in the international
interbank market.
If the Interest Rate Basis specified above is the CD Rate, the CMT 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 latest 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 Business Day or (ii) the Business Day immediately 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 Maturity Date. 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 or the CMT 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,
8
<PAGE>
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 the Maturity Date on, the Notes, or (ii) to the
extent the Notes are payable in United States 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 the Maturity Date 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 Maturity Date 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
more than 60 days nor less than 30 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.
9
<PAGE>
The Notes are issuable only in registered form without coupons and, if
payable in United States 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.
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.
10
<PAGE>
[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 OCTOBER 31,
1988, pursuant to which Paying Agent will act as custodian of a Master Note
Certificate and/or
-1-
<PAGE>
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:
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 & Co., has an interest herein.
2. Issuer or 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
-2-
<PAGE>
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 recognizes 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.
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
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<PAGE>
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 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
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<PAGE>
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 (Issuer)
of securities distributed 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:
--------------------------
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<PAGE>
SCHEDULE A
SAMPLE OFFERING DOCUMENT LANGUAGE
DESCRIBING BOOK-ENTRY-ONLY ISSUANCE
(Prepared by DTC-bracketed material may be applicable only 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
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<PAGE>
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.
[6. Redemption notices shall be sent to Cede & Co. If less than all of the
Securities within an issue are being redeemed, DTC's practice is to
determine by lot the amount of the interest of each Direct Participant in
such issue to be redeemed.]
7. Neither DTC nor Cede & Co. will consent or vote with respect to Securities.
Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as
soon as possible after the record date. The Omnibus Proxy assigns Cede &
Co.'s consenting or voting rights to those Direct Participants to whose
accounts the Securities are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
8. Principal and interest payments on the Securities will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on payable date
in accordance with their respective holdings shown on DTC's records unless
DTC has reason to believe that it will not receive payment on payable 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 DTC,
the Agent, or the Issuer, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of principal
and interest to DTC is the responsibility of the Issuer or the Agent,
disbursement of such payments to Direct Participants shall be the
responsibility of DTC, and disbursement of such payments to the Beneficial
Owners shall be the responsibility of Direct and Indirect Participants.
[9. A Beneficial Owner shall give notice to elect to have its Securities
purchased or tendered, through its Participant, to the [Tender/Remarketing]
Agent, and shall effect delivery of such Securities by causing the Direct
Participant to transfer the Participant's interest in the Securities, on
DTC's records, to the [Tender/Remarketing] Agent. The requirement for
physical delivery of Securities in connection with a demand for purchase or
a mandatory
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<PAGE>
purchase will be deemed satisfied when the ownership rights in the
Securities are transferred by Direct Participants on DTC's records.]
10. DTC may discontinue providing its services as securities depository with
respect to the Securities at any time by giving reasonable notice to the
Issuer or the Agent. Under such circumstances, in the event that a
successor securities depository is not obtained, Security certificates are
required to be printed and delivered.
11. The Issuer may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that
event, Security certificates will be printed and delivered.
12. The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Issuer believes to be reliable, but
the Issuer takes no responsibility for the accuracy thereof.
BOUND BY RIDER
The Issuer and the Agent acknowledge that DTC is not a party to the Trust
Deed and that no obligations or liabilities shall be deemed to accrue to DTC
with regard to the Trust Deed.
-8-
<PAGE>
[PACCAR LOGO]
September 10, 1998
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.
September 10, 1998
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>
[LOGO]
September 10, 1998
PACCAR Financial Corp.
P.O. Box 1518
Bellevue, WA 98009
Gentlemen:
Reference is made to the Registration Statement on Form S-3 dated September 10,
1998 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:pa
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, any state thereof or the
District of Columbia, (unless in the case of a partnership, Treasury regulations
provide otherwise), (iii) an estate the income of which is subject to United
States Federal income taxation regardless of its source, (iv) a trust if a court
within the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust, or (v) 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).
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<PAGE>
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 the rules governing
original issue discount that are set forth in Sections 1271 through 1275 of the
Internal Revenue Code of 1986, as amended (the "Code") and in Treasury
regulations (the "OID Regulations").
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).
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
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<PAGE>
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).
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."
A "qualified floating rate" is a variable rate whose variations can
reasonably be expected to measure contemporaneous variations in the cost of
newly borrowed funds in the currency in which the debt instrument is
denominated. A qualified floating rate may be multiplied by a fixed, positive
multiple that is greater than .65 but not more than 1.35. and may be increased
or decreased by a fixed rate. Certain combinations of rates constitute a single
qualified floating rate. including (i)
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<PAGE>
interest stated at a fixed rate for an initial period of one year or less
followed by a qualified floating rate if the value of the floating rate at the
issue date is intended to approximate the fixed rate, and (ii) two or more
qualified floating rates that can reasonably be expected to have approximately
the same values throughout the term of the debt instrument. A combination of
such rates is conclusively presumed to be a single qualified floating rate if
the values of all rates on the issue date are within 0.25 percentage points of
each other. A variable rate that is subject to an interest rate cap. floor,
"governor" or similar restriction on rate adjustment may be a qualified floating
rate only if such restriction is fixed throughout the term of the debt
instrument, or is not reasonably expected as of the issue date to cause the
yield on the debt instrument to differ significantly from its expected yield
absent the restriction. The OID Regulations define an 'objective rate" as a rate
(other than a qualified floating rate) that is determined using a single fixed
formula and that is based on objective financial or economic information (other
than a rate based on information that is within the control of the issuer (or a
related party) or that is unique to the circumstances of the issuer (or a
related party)). The Internal Revenue Service ("IRS") may designate other
variable rates that will be treated as objective rates. However, a variable rate
is not an objective rate if it is reasonably expected that the average value of
the rate during the first half of the debt instrument's term will differ
significantly from the average value of such rate during the final half of its
term. A combination of interest stated at a fixed rate for an initial period of
one year or less followed by an objective rate is treated as a single objective
rate if the value of the objective rate at the issue date is intended to
approximate the fixed rate; such a combination of rates is conclusively presumed
to be a single objective rate if the objective rate on the issue date does not
differ from the fixed rate by more than 0.25 percentage points. An objective
rate is a qualified inverse floating rate if it is equal to a fixed rate reduced
by a qualified floating rate, the variations in which can reasonably be expected
to inversely reflect contemporaneous variations in the qualified floating rate
(disregarding permissible rate caps, floors, governors and similar restrictions
such as are discussed above). Under these rules, Commercial Paper Rate Notes,
Prime Rate Notes, LIBOR Notes, Treasury Rate Notes, CD Rate Notes, and Federal
funds Rate Notes will generally be treated as bearing interest at a qualifying
variable rate.
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
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<PAGE>
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 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
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<PAGE>
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. Generally, if a Variable Note is treated as
a contingent payment obligation, interest payments thereon will be treated as
"contingent interest" payments. Under the 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 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. 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 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,
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<PAGE>
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.
-7-
<PAGE>
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 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
-8-
<PAGE>
held for more than one year. Long term capital gain of a non-corporate United
States holder is generally subject to a maximum tax rate of 20% in respect of
property 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).
-9-
<PAGE>
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 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
-10-
<PAGE>
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 Currency, determined at
the time the
-11-
<PAGE>
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. On October 6, 1997, the
Treasury Department issued new regulations (the "Final Withholding Regulations")
which make certain modifications to the backup withholding and information
reporting rules described above. The Final Withholding Regulations attempt to
unify certification requirements and modify reliance standards. The Final
Withholding Regulations also require, in the case of Notes held by a foreign
partnership, that (i) the certification described above be provided by the
partners rather than by the foreign partnership and (ii) the partnership provide
certain information, including a United States taxpayer identification number. A
look-through rule would apply in the case of tiered partnerships. The Final
Withholding Regulations will generally be effective for payments made after
December 31, 1999, subject to certain transition rules. Prospective investors
are urged to consult their own tax advisors regarding the Final Withholding
Regulations.
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
-12-
<PAGE>
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.
-13-
<PAGE>
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 I and
to the incorporation by reference therein of our report dated February 16, 1998,
with respect to the financial statements of PACCAR Financial Corp. included in
its Annual Report (Form 10-K) for the year ended December 31, 1997, filed with
the Securities and Exchange Commission.
Ernst & Young LLP
Seattle, Washington
September 10, 1998
<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 P. A. Donohoe, 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 14 day of August 1998.
- ---------------------------- Controller
M. T. Barkley
- ---------------------------- Treasurer
P. A. Donohoe
- ---------------------------- Vice President
G. D. Hatchel
- ---------------------------- Director
D. J. Hovind
- ---------------------------- President and Director
T. R. Morton
- ---------------------------- Chairman and Director
M. C. Pigott
- ---------------------------- Vice Chairman and Director
M. A. Tembreull
<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)
-----------------------
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.)
777 106 Avenue N.E.
Bellevue, Washington 98004
(Address of principal executive offices) (Zip Code)
-------------------------
Debt Securities
(Title of the indenture securities)
<PAGE>
Item 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.
NAME ADDRESS
Comptroller of the Currency Washington, D.C.
Federal Reserve Bank of New York New York, NY
33 Liberty Street
New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
Item 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)
<PAGE>
Exhibit 5 - Not applicable.
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 Citibank, N.A.
(as of March 31, 1998 - attached)
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 30th day
of June, 1998.
CITIBANK, N.A.
By /s/Nancy Forte
----------------------
Nancy Forte
Trust Officer
<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 March 31,
1998, 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
depository institutions:
Noninterest-bearing balances
and currency and coin $ 6,890,000
Interest-bearing balances 14,848,000
Held-to-maturity securities 0
Available-for-sale securities 31,464,000
Federal funds sold and
securities purchased under
agreements to resell 19,345,000
Loans and lease financing receivables:
Loans and Leases, net of
unearned income $ 159,106,000
LESS: Allowance for loan
and lease losses 4,259,000
Loans and leases, net of
unearned income, allowance,
and reserve 154,847,000
Trading assets 36,633,000
Premises and fixed assets
including capitalized leases) 3,376,000
Other real estate owned 485,000
Investments in unconsolidated
subsidiaries and associated
companies 1,386,000
Customers' liability to this bank
on acceptances outstanding 1,824,000
Intangible assets 160,000
Other assets 9,670,000
TOTAL ASSETS $ 280,928,000
LIABILITIES
Deposits:
In domestic offices $ 37,884,000
Noninterest-bearing $ 12,822,000
Interest-bearing 25,062,000
In foreign offices, Edge and
Agreement subsidiaries, and
IBFs 155,776,000
Noninterest-bearing 9,878,000
Interest-bearing 145,898,000
Federal funds purchased and
securities sold under
agreements to repurchase 7,429,000
Trading liabilities 29,266,000
Other borrowed money (includes
mortgage indebtedness and
obligations under capitalized
leases):
With a remaining maturity of one
year or less 9,518,000
With a remaining maturity of more
than one year through three years 2,340,000
With a remaining maturity of more
than three years 898,000
Bank's liability on acceptances
executed and outstanding 1,992,000
Subordinated notes and
debentures 5,600,000
Other liabilities 12,507,000
TOTAL LIABILITIES $ 263,210,000
EQUITY CAPITAL
Perpetual preferred stock
and related surplus 0
Common stock $ 751,000
Surplus 7,604,000
Undivided profits and capital
reserves 9,617,000
Net unrealized holding gains (losses)
on available-for-sale securities 443,000
Cumulative foreign currency
translation adjustments (697,000)
TOTAL EQUITY CAPITAL $ 17,718,000
TOTAL LIABILITIES, LIMITED-
LIFE PREFERRED STOCK, AND
EQUITY CAPITAL $ 280,928,000
</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
CONTROLLER
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.
PAUL J. COLLINS
JOHN S. REED
WILLIAM R. RHODES
DIRECTORS
