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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)
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WASHINGTON 91-6029712
(State of Incorporation) (I.R.S. employer identification no.)
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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:
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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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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
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PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE OFFERING PRICE REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED* PER UNIT ** ** FEE
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Senior Debt Securities.................... $2,500,000,000 100% $2,500,000,000 $660,000
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* 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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PROSPECTUS SUPPLEMENT
(TO PROSPECTUS MARCH 2, 2000)
[LOGO]
$2,500,000,000
PACCAR FINANCIAL CORP.
Medium-Term Notes, Series J
TERMS OF SALE
The following terms may apply to the notes which PACCAR Financial Corp. may
sell at one or more times. The final terms for each note will be included in a
Pricing Supplement. PACCAR Financial Corp. will receive between $2,497,500,000
and $2,483,750,000 of the proceeds from the sale of the notes, after paying the
agents commissions of between $2,500,000 and $16,250,000.
- - Mature 9 months or more from date of issue
- - Fixed or floating interest rate or indexed notes or zero-coupon or other
original issue discount notes. The floating interest rate may be based on:
/ / CD rate
/ / CMT rate
/ / Commercial paper rate
/ / Federal Funds rate
/ / LIBOR
/ / Prime rate
/ / Treasury rate
/ / Any other rate specified by us in the Pricing Supplement
/ / Any combination of rates specified in a Pricing Supplement
- - Certificated or book-entry form
- - Subject to redemption and repurchase at option of PACCAR Financial Corp. or
the holder
- - Not convertible or subject to a sinking fund
- - Interest paid on fixed rate notes semi-annually
- - Interest paid on floating rate notes daily, weekly, monthly, quarterly,
semi-annually or annually
- - Minimum denominations of $1,000 increased in multiples of $1,000
- - May be foreign currency denominated
- - Same day settlement and payment in immediately available funds
Neither the Securities and Exchange Commission nor any other regulatory body
has approved or disapproved of these securities or determined if this prospectus
supplement is truthful or complete. Any representation to the contrary is a
criminal offense.
PACCAR Financial Corp. may sell the notes directly or through one or more
agents or dealers, including the agents listed below. The agents are not
required to sell any specific number or amount of the notes. They will use their
reasonable efforts to sell the notes offered.
GOLDMAN, SACHS & CO.
BANC OF AMERICA SECURITIES LLC
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
SALOMON SMITH BARNEY
Prospectus Supplement dated March 2, 2000
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References in this prospectus supplement to "PFC", "we", "us" and "our" are
to PACCAR Financial Corp.
RISK FACTORS
Your investment in the notes involves certain risks. In consultation with
your own financial and legal advisers, you should carefully consider, among
other matters, the following discussion of risks before deciding whether an
investment in the notes is suitable for you. The notes are not an appropriate
investment for you if you are unsophisticated with respect to the significant
components and their relationships.
STRUCTURE RISKS OF NOTES INDEXED TO INTEREST RATES, CURRENCIES OR OTHER INDICES
OR FORMULAS
If you invest in notes indexed to one or more interest rates, currencies or
other indices or formulas, there will be significant risks not associated with a
conventional fixed rate or floating rate debt security. These risks include
fluctuation of the indices or formulas that may cause you to receive a lower, or
no, amount of principal, premium or interest and to receive these amounts at
different times than you expected. We have no control over a number of matters,
including economic, financial and political events, that are important in
determining the existence, magnitude and longevity of these risks and their
results. In addition, if an index or formula used to determine any amounts
payable in respect of the notes contains a multiplier or leverage factor, the
effect of any change in that index or formula will be magnified. In recent
years, values of certain indices and formulas have been volatile and volatility
in those and other indices and formulas may be expected in the future. However,
past experience is not necessarily indicative of what may occur in the future.
FOREIGN CURRENCY RISKS
If you invest in notes that are denominated or provide for payments in a
currency (including the Euro) other than United States dollars, there will be
significant risks that are not associated with a similar investment in a debt
security denominated in United States dollars. These risks include 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. We have no control over these risks, which depend on
economic, financial and political events and the supply and demand for the
relevant currencies. In addition, if the formula used to determine any amount
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. However, past experience in the fluctuation of
exchange rates are not necessarily indicative of fluctuations in the rates that
may occur during the term of any foreign currency note.
Governments may impose or revise exchange controls which could affect the
availability of the specified currency at the 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
maturity due to other circumstances beyond our control. In that event, we will
pay any amounts due under the note in United States dollars based on the most
recently available exchange rate.
REDEMPTION MAY ADVERSELY AFFECT YOUR RETURN ON THE NOTES
If your notes are redeemable at our option or are otherwise subject to
mandatory redemption, we may, in the case of optional redemption, or must, in
the case of mandatory redemption, choose
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to redeem your notes at times when prevailing interest rates may be relatively
low. Accordingly, you generally will not be able to reinvest the redemption
proceeds in a comparable security at an effective interest rate as high as that
of the notes.
THERE MAY BE AN UNCERTAIN TRADING MARKET FOR YOUR NOTES; MANY FACTORS AFFECT THE
TRADING VALUE OF YOUR NOTES
We cannot assure you a trading market for your notes will ever develop or be
maintained. Many factors independent of our creditworthiness may affect the
trading market for your notes. These factors include:
- the complexity and volatility of the index or formula applicable to the
notes,
- the method of calculating the principal, premium and interest in respect
of the notes,
- the time remaining to the maturity of the notes,
- the outstanding amount of the notes,
- the redemption features of the notes,
- the amount of other securities linked to the index or formula applicable
to the notes, and
- the level, direction and volatility of market interest rates generally.
In addition, because some notes were designed for specific investment
objectives or strategies, these notes may have a more limited trading market and
may experience more price volatility. There may be a limited number of buyers
for these notes. This may affect the price you receive for these notes or your
ability to sell these notes at all. You should not purchase notes unless you
understand and know you can bear the related investment risks.
OUR CREDIT RATINGS MAY NOT REFLECT ALL RISKS OF AN INVESTMENT IN THE NOTES
Our credit ratings are an assessment of our ability to pay our obligations.
Consequently, real or anticipated changes in our credit ratings will generally
affect the market value of your notes. Our credit ratings, however, may not
reflect the potential impact of risks related to structure, market or other
factors discussed above on the value of your notes.
DESCRIPTION OF THE NOTES
The notes will be issued as a single series of debt securities under an
indenture, dated as of December 1, 1983, as amended by the first supplemental
indenture dated as of June 19, 1989, between PFC and Citibank, N.A., as trustee.
The term "senior debt securities," as used in this prospectus supplement, refers
to all securities issued and issuable from time to time under the Indenture and
includes the notes. The senior debt securities and the Indenture are more fully
described in the accompanying prospectus. The following summary of the material
provisions of the notes and of the Indenture is not complete and is qualified in
its entirety by reference to the Indenture, a copy of which has been filed as an
exhibit to the registration statement of which this prospectus supplement and
the accompanying prospectus are a part.
You should rely only on the information contained or incorporated by
reference in this prospectus supplement, the accompanying prospectus and any
pricing supplement. Neither we nor the agents have authorized any other person
to provide you with different or additional information. If anyone provides you
with different or additional information, you should not rely on it. Neither we
nor the agents are making an offer to sell these securities in any jurisdiction
where the offer or sale is not permitted. You should assume that the information
contained or incorporated by reference in
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this prospectus supplement, the accompanying prospectus and any pricing
supplement is accurate only as of the date on the front cover of the applicable
pricing supplement.
THE FOLLOWING DESCRIPTION OF NOTES WILL APPLY UNLESS OTHERWISE SPECIFIED IN
AN APPLICABLE PRICING SUPPLEMENT.
TERMS OF THE NOTES
All senior debt securities, including the notes, issued and to be issued
under the Indenture will be unsecured general obligations of PFC and will rank
equally with all other unsecured and unsubordinated indebtedness of PFC from
time to time outstanding.
The notes are limited to an aggregate principal amount of $2,500,000,000 or
the equivalent in one or more foreign currencies. PFC may, from time to time,
without the consent of the holders of the notes, provide for the issuance of
notes or other senior debt securities under the Indenture in addition to the
$2,500,000,000 aggregate principal amount of notes offered by this prospectus
supplement. The aggregate principal amount of notes which may be offered and
sold by this prospectus supplement may be reduced by the sale by PFC of other
securities under the registration statement of which this prospectus supplement
and the accompanying prospectus are a part.
The notes will be offered on a continuing basis and will mature on a day
nine months or more from the date of issue, as selected by the purchaser and
agreed to by PFC. Interest-bearing notes will bear interest at either fixed or
floating rates as specified in the applicable pricing supplement. Notes may be
issued at significant discounts from their principal amount payable at stated
maturity, or on any date before the stated maturity date on which the principal
or an installment of principal of a note becomes due and payable, whether by the
declaration of acceleration, call for redemption at the option of PFC, repayment
at the option of the holder or otherwise (the stated maturity date or such prior
date, as the case may be, is referred to as, a "Maturity"). Some notes may not
bear interest.
Unless otherwise indicated in a note and in the applicable pricing
supplement, the notes will be denominated in, and payments of principal,
premium, if any, and/or interest on such notes will be made in, United States
dollars. PFC may also issue notes ("foreign currency notes") that are
denominated in, and payments of principal, premium, if any, and/or interest on
such notes will be made in, a currency other than United States dollars (a
"specified currency"). The terms of and any considerations relating to any
foreign currency notes will be described in the applicable notes and in the
applicable pricing supplement. See "Special Provisions Relating to Foreign
Currency Denominated Notes."
The terms of the notes provide that PFC may at any time, including more than
one year prior to the stated maturity of the notes, be discharged from its
obligations on the notes 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 -- Provisions of the Indenture --
Satisfaction and Discharge" in the accompanying prospectus.
Until the notes are paid or payment of the notes is provided for, PFC will,
at all times maintain a paying agent in The City of New York capable of
performing the duties described in this prospectus supplement to be performed by
the paying agent. PFC 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 notes in
book-entry form will be exchangeable only in the manner and to the extent set
forth in "Description of the Notes -- Book-Entry Notes" in this prospectus
supplement and "Description of Securities -- Global Securities" in the
accompanying
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prospectus. PFC will notify the holders of the notes in accordance with the
Indenture of any change in the paying agent or its address. There will be no
service charge for any registration of transfer or exchange of notes, but PFC
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection with any transfer or exchange, other than exchanges
pursuant to the Indenture not involving any transfer.
Interest rates, interest rate formulae and other variable terms of the notes
are subject to change by PFC from time to time, but no change will affect any
note already issued or as to which PFC has accepted an offer to purchase.
Each note will be issued in fully registered book-entry form or certificated
form, in denominations of $1,000 and integral multiples of $1,000. The
authorized denominations of foreign currency notes will be indicated in the
applicable pricing supplement.
In the case of notes in certificated form, PFC will make United States
dollar payments of interest, other than interest payable at Maturity, by check
mailed to the address of the person entitled to such interest payment as shown
on the note register. Notwithstanding the immediately preceding sentence, a
holder of $1,000,000, or the equivalent amount in a specified currency, or more
in aggregate principal amount of notes in certificated form, whether having
identical or different terms and provisions, will be entitled to receive
interest payments, if any, other than interest payable at Maturity, 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 before the applicable interest payment date. Any wire transfer
instructions received by the paying agent shall remain in effect until revoked
by the holder. United States dollar payments of principal and interest at
Maturity 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 the payment in such funds in accordance with its normal procedures. In the
case of notes in book-entry form, United States dollar payments of principal,
premium and interest, if any, will be made to the depository, as holder of the
notes in book-entry form, in immediately available funds. For special payment
terms applicable to foreign currency notes, see "Special Provisions Relating to
Foreign Currency Denominated Notes" in this prospectus supplement.
Each note will be denominated in the currency that is specified on the face
of the applicable note and in the applicable pricing supplement. Purchasers will
be 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 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 before 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 the offer
to purchase notes to PFC, 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 the agent, each conversion will
be made by the agent on terms and subject to conditions, limitations and charges
as the 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 the applicable foreign currency notes.
"Business Day" means any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which commercial banks are authorized or
required by law, regulation or executive order to close in The City of New York;
provided, however, that, with respect to foreign currency notes, the day is also
not a day on which commercial banks are authorized or required by law,
regulation or executive order to close in the Principal Financial Center, as
defined below, of the country issuing the specified currency or, if the
specified currency is Euro, the day is also a day on
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which the Trans-European Automated Real-time Gross Settlement Express Transfer
(TARGET) System is open; provided, further, that, with respect to notes as to
which LIBOR is an applicable Interest Rate Basis, the day is also a London
Business Day. "London Business Day" means a day on which commercial banks are
open for business, including dealings in the LIBOR Currency, as defined below,
in London.
"Principal Financial Center" means, unless otherwise specified in the
applicable pricing supplement,
(1) the capital city of the country issuing the specified currency, except
that with respect to United States dollars, Australian dollars, Canadian
dollars, Deutsche marks, Dutch guilders, South African rand and Swiss
francs, the "Principal Financial Center" will be The City of New York,
Sydney and Melbourne, Toronto, Frankfurt, Amsterdam, Johannesburg and
Zurich, respectively, or
(2) the capital city of the country to which the LIBOR Currency relates,
except that with respect to United States dollars, Canadian dollars,
Deutsche marks, Dutch guilders, Portuguese escudos, South African rand
and Swiss francs, the "Principal Financial Center" will be The City of
New York, Toronto, Frankfurt, Amsterdam, London, Johannesburg and Zurich,
respectively.
TRANSACTION AMOUNT
Interest rates offered by PFC with respect to the notes may differ depending
upon, among other things, the aggregate principal amount of notes purchased in
any transaction. PFC may offer notes with similar variable terms but different
interest rates concurrently at any time. PFC may also concurrently offer notes
having different variable terms to different investors.
REDEMPTION AT THE OPTION OF PFC
The notes will not be subject to any sinking fund. PFC may redeem the notes
at its option before their stated maturity only if an initial redemption date is
specified in the applicable notes and in the applicable pricing supplement. If
so indicated in the applicable notes and the applicable pricing supplement, PFC
may redeem the notes at its option on any date on and after the applicable
initial redemption date specified in the applicable notes and the applicable
pricing supplement. On and after the initial redemption date, if any, PFC may
redeem the related note at any time in whole or from time to time in part at its
option at the applicable redemption price referred to below together with
interest on the principal of the applicable note payable to the redemption date,
on written notice given not more than 60 nor less than 30 days before the
redemption date. PFC will redeem the notes in increments of $1,000 or any other
integral multiple of the authorized denomination of the applicable note,
provided that any remaining principal amount will be at least $1,000 or the
minimum authorized denomination of the note. The redemption price with respect
to a note will initially mean a percentage, the initial redemption percentage,
of the principal amount of the note specified in the applicable note and the
applicable pricing supplement. The redemption price shall decline at each
anniversary of the initial redemption date by the percentage of the principal
amount of the note to be redeemed specified in the applicable note and the
applicable pricing supplement until the redemption price is 100% of the
principal amount.
REPAYMENT AT THE OPTION OF THE HOLDER
If so indicated in the applicable notes and the applicable pricing
supplement, PFC will repay the notes in whole or in part at the option of the
holders of the notes on any optional repayment date specified in the applicable
notes and the applicable pricing supplement. If no optional
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repayment date is indicated with respect to a note, it will not be repayable at
the option of the holder before its stated maturity. Any repayment in part will
be in an amount equal to $1,000 or any other integral multiple of the authorized
denomination of the applicable note, provided that any remaining principal
amount will be at least $1,000 or the minimum authorized denomination of the
note. The repurchase price for any note so repurchased will be 100% of the
principal amount to be repaid, together with interest on the principal of the
applicable note payable to the date of repayment. For any note to be repaid, the
paying agent must receive, at its corporate trust office located at 111 Wall
Street, New York, New York 10043, not more than 60 nor less than 30 days before
the optional repayment date:
- in the case of a note in certificated form, the note and the form entitled
"Option to Elect Repayment" duly completed, or
- in the case of a note in book-entry form, instructions to that effect from
the applicable beneficial owner of the notes to the depository and
forwarded by the depository. Notices of elections to exercise the
repayment option with respect to notes in book-entry form must be received
by the paying agent by 5:00 p.m., New York City time, on the last day for
giving such notice.
Only the depository may exercise the repayment option in respect of global
securities representing notes in book-entry form. Accordingly, beneficial owners
of global securities that desire to have all or any portion of the notes in
book-entry form represented by global securities repaid must instruct the
participant through which they own their interest to direct the depository to
exercise the repayment option on their behalf by forwarding the repayment
instructions to the trustee as discussed above. In order to ensure that the
instructions are received by the paying agent on a particular day, the
applicable beneficial owner must so instruct the participant through which it
owns its interest before that participant's deadline for accepting instructions
for that day. Different firms may have different deadlines for accepting
instructions from their customers. Accordingly, beneficial owners of notes in
book-entry form should consult the participants through which they own their
interest for the respective deadlines. All instructions given to participants
from beneficial owners of notes in book-entry form relating to the option to
elect repayment will be irrevocable. In addition, at the time instructions are
given, each beneficial owner will cause the participant through which it owns
its interest to transfer its interest in the global security or securities
representing the related notes in book-entry form, on the depository's records,
to the trustee.
Exercise of the repayment option by the holder of a note will be
irrevocable.
If applicable, PFC will comply with the requirements of Section 14(e) of the
Securities Exchange Act of 1934, as amended, and the rules promulgated
thereunder and any other securities laws or regulations in connection with any
repayment at the option of the holder.
PFC may at any time purchase notes at any price or prices in the open market
or otherwise. Notes so purchased by PFC may, at the discretion of PFC, be held,
resold or surrendered to the paying agent for cancellation.
INTEREST
Each note will bear interest from the date of issue at the rate per annum
or, in the case of a floating rate note, pursuant to the interest rate formula
stated in the applicable note and the applicable pricing supplement until the
principal of the note is paid or made available for payment. Interest will be
payable in arrears on each interest payment date specified in the applicable
note and the applicable pricing supplement on which an installment of interest
is due and payable and at Maturity. Interest payable on an interest payment date
will be payable to the person in whose
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name the applicable note is registered at the close of business on (a) March 2
or September 1, whether or not a Business Day, next preceding the interest
payment date in the case of a fixed rate note, or (b) the fifteenth calendar
day, whether or not a Business Day, next preceding the interest payment date in
the case of a floating rate note (in each case, the "record date"); provided,
however, that interest payable at Maturity will be payable to the person to whom
principal shall be payable. The first payment of interest on any note originally
issued between a record date and the related interest payment date will be made
on the interest payment date immediately following the next succeeding record
date to the registered holder on the next succeeding record date.
FIXED RATE NOTES
Each fixed rate note will bear interest from, and including, the date of
issue, at the rate per annum specified in the applicable note and the applicable
pricing supplement until the principal amount of the note is paid or made
available for payment. Interest payments on fixed rate notes will equal the
amount of interest accrued from and including the immediately preceding interest
payment date in respect of which interest has been paid or from and including
the date of issue, if no interest has been paid with respect to the applicable
fixed rate notes, to, but excluding, the related interest payment date or
Maturity, as the case may be. Interest on fixed rate notes will be computed on
the basis of a 360-day year of twelve 30-day months.
Interest on fixed rate notes will be payable semiannually on March 15 and
September 15 of each year and at Maturity. If any interest payment date or the
Maturity of a fixed rate note falls on a day that is not a Business Day, the
related payment of principal, premium, if any, or interest will be made on the
next succeeding Business Day as if made on the date the applicable payment was
due, and no interest will accrue on the amount payable for the period from and
after the interest payment date or the Maturity, as the case may be.
FLOATING RATE NOTES
Interest on floating rate notes will be determined by reference to the
applicable Interest Rate Basis or Interest Rate Bases, which may be 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
- any other Interest Rate Basis or interest rate formula that is specified
in the applicable pricing supplement.
A floating rate note may bear interest with respect to two or more Interest
Rate Bases.
TERMS. Each applicable pricing supplement will specify the terms of the
floating rate note being delivered, including:
- whether the floating rate note is
- a "Regular Floating Rate Note",
- a "Inverse Floating Rate Note" or
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- a "Floating Rate/Fixed Rate Note",
- the Interest Rate Basis or Bases,
- the Initial Interest Rate,
- the Interest Reset Dates,
- the interest payment dates,
- the period to maturity of the instrument or obligation with respect to
which the Interest Rate Basis or Bases will be calculated (the "Index
Maturity"),
- the Maximum Interest Rate and Minimum Interest Rate, if any,
- the number of basis points to be added to or subtracted from the related
Interest Rate Basis or Bases (the "Spread"),
- the percentage of the related Interest Rate Basis or Bases by which the
Interest Rate Basis or Bases will be multiplied to determine the
applicable interest rate (the "Spread Multiplier"),
- if one or more of the specified Interest Rate Bases is LIBOR, the LIBOR
Currency, the Index Maturity and the Designated LIBOR Page, and
- if one or more of the specified Interest Rate Bases is the CMT Rate, the
CMT Telerate Page, the weekly average or the monthly average and the Index
Maturity.
The interest rate borne by the floating rate notes will be determined as
follows:
REGULAR FLOATING RATE NOTES. Unless a floating rate note is designated as a
Floating Rate/Fixed Rate Note, an Inverse Floating Rate Note or as having an
Addendum attached or as having "Other Provisions" apply relating to a different
interest rate formula, it will be a "Regular Floating Rate Note" and will bear
interest at the rate determined by reference to the applicable Interest Rate
Basis or Bases:
- plus or minus the applicable Spread, if any, and/or
- multiplied by the applicable Spread Multiplier, if any
Commencing on the first Interest Reset Date, the rate at which interest on
the Regular Floating Rate Note will be payable will be reset as of each Interest
Reset Date; provided, however, that the interest rate in effect for the period
from the date of issue to the first Interest Reset Date will be the Initial
Interest Rate.
FLOATING RATE/FIXED RATE NOTES. If a floating rate note is designated as a
"Floating Rate/Fixed Rate Note", it will bear interest at the rate determined by
reference to the applicable Interest Rate Basis or Bases:
- plus or minus the applicable Spread, if any, and/or
- multiplied by the applicable Spread Multiplier, if any
Commencing on the first Interest Reset Date, the rate at which interest on
the applicable Floating Rate/Fixed Rate Note will be payable will be reset as of
each Interest Reset Date; provided, however, that:
- the interest rate in effect for the period from the date of issue to the
first Interest Reset Date will be the Initial Interest Rate, and
- the interest rate in effect commencing on, and including, the date on
which interest begins to accrue on a fixed rate basis to Maturity will be
the Fixed Interest Rate, if the rate is specified
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<PAGE>
in the applicable pricing supplement, or if no Fixed Interest Rate is
specified, the interest rate in effect on the Floating Rate/Fixed Rate
Note on the day immediately preceding the date on which interest begins to
accrue on a fixed rate basis.
INVERSE FLOATING RATE NOTES. If a floating rate note is designated as an
"Inverse Floating Rate Note", except as described below, it will bear interest
equal to the Fixed Interest Rate specified in the note and the related pricing
supplement minus the rate determined by reference to the applicable Interest
Rate Basis or Bases:
- plus or minus the applicable Spread, if any, and/or
- multiplied by the applicable Spread Multiplier, if any;
provided, however, the interest rate on the applicable Inverse Floating Rate
Note will not be less than zero percent. Commencing on the first Interest Reset
Date, the rate at which interest on the applicable Inverse Floating Rate Note is
payable will be reset as of each Interest Reset Date; provided, however, that
the interest rate in effect for the period from the date of issue to the first
Interest Reset Date will be the Initial Interest Rate.
Each Interest Rate Basis shall be the rate determined in accordance with the
applicable provisions below. Except as set forth above, the interest rate in
effect on each day will be:
- if the day is an Interest Reset Date, the interest rate determined as of
the Interest Determination Date, as defined below, immediately preceding
the applicable Interest Reset Date or
- if the day is not an Interest Reset Date, the interest rate determined as
of the Interest Determination Date immediately preceding the applicable
Interest Reset Date.
INTEREST RESET DATES. The applicable floating rate note and the applicable
pricing supplement will specify the dates on which the interest rate on the
related floating rate note will be reset (each, an "Interest Reset Date"). The
Interest Reset Date will be, in the case of floating rate notes which reset:
- daily -- each Business Day;
- weekly -- the Wednesday of each week, with the exception of weekly reset
floating rate notes as to which the Treasury Rate is an applicable
Interest Rate Basis, which will reset the Tuesday of each week, except as
described below;
- monthly -- the third Wednesday of each month;
- quarterly -- the third Wednesday of March, June, September and December of
each year;
- semiannually -- the third Wednesday of the two months specified in the
applicable pricing supplement; and
- annually -- the third Wednesday of the month specified in the applicable
pricing supplement;
provided, however, that with respect to Floating Rate/Fixed Rate Notes, the rate
of interest will not reset after the applicable date on which interest on a
fixed rate basis begins to accrue.
If any Interest Reset Date for any floating rate note would otherwise be a
day that is not a Business Day, the applicable Interest Reset Date will be
postponed to the next succeeding day that is a Business Day. However, in the
case of a floating rate note as to which LIBOR is an applicable Interest Rate
Basis, if the next succeeding Business Day falls in the next succeeding calendar
month, then the Interest Reset Date will be the immediately preceding Business
Day. In addition, in the case of a floating rate note for which the Treasury
Rate is an applicable Interest Rate Basis, if
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the Interest Determination Date would otherwise fall on an Interest Reset Date,
then the applicable Interest Reset Date will be postponed to the next succeeding
Business Day.
MAXIMUM AND MINIMUM INTEREST RATES. A floating rate note may also have
either or both of the following:
- a maximum numerical limitation, or ceiling, on the rate at which interest
may accrue during any interest period (a "Maximum Interest Rate"), and
- a minimum numerical limitation, or floor, on the rate at which interest
may accrue during any period (a "Minimum Interest Rate").
The Indenture and any senior debt securities issued under the Indenture,
including the notes, are and will be governed by and construed in accordance
with the laws of the State of New York. 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 securities in which $2,500,000 or more has
been invested. While PFC believes that New York law would be given effect by a
state or federal court sitting outside of New York, state laws frequently
regulate the amount of interest that may be charged to and paid by a borrower,
including, in some cases, corporate borrowers. It is suggested that prospective
investors consult their personal advisors with respect to the applicability of
these laws.
INTEREST PAYMENTS. Each applicable pricing supplement will specify the
dates on which interest will be payable. Each floating rate note will bear
interest from the date of issue at the rates specified in the applicable note
and the applicable pricing supplement until the principal of the note is paid or
otherwise made available for payment. Except as provided below, the interest
payment dates with respect to floating rate notes will be, in the case of
floating rate notes which reset:
- daily, weekly or monthly -- 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 note and the applicable pricing supplement;
- quarterly -- the third Wednesday of March, June, September and December of
each year;
- semiannually -- the third Wednesday of each of the two months of each year
specified in the applicable note and the applicable pricing supplement;
- annually -- the third Wednesday of the month of each year specified in the
applicable note and the applicable pricing supplement; and
- at Maturity.
If any interest payment date for any floating rate note, other than an
interest payment date on the Maturity, would otherwise be a day that is not a
Business Day, the interest payment date will be postponed to the next succeeding
Business Day. However, in the case of a floating rate note as to which LIBOR is
an applicable Interest Rate Basis, if the next succeeding Business Day falls in
the next succeeding calendar month, the applicable interest payment date will be
the immediately preceding Business Day. If the Maturity 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 will accrue for the period from and after the Maturity.
All percentages resulting from any calculation on floating rate notes will
be rounded to the nearest one hundred-thousandth of a percentage point, with
five one-millionths of a percentage point rounded upwards. For example,
9.876545%, or .09876545, would be rounded to 9.87655%, or .0987655. All dollar
amounts used in or resulting from any calculation on floating rate notes will be
rounded to the nearest cent with one-half cent being rounded upward.
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Interest payments on floating rate notes will equal the amount of interest
accrued from and including the immediately preceding interest payment date in
respect of which interest has been paid or from and including the date of issue,
if no interest has been paid with respect to the applicable floating rate note,
to, but excluding the related interest payment date or Maturity, as the case may
be.
With respect to each floating rate note, accrued interest is calculated by
multiplying its face amount by an accrued interest factor. The accrued interest
factor is computed by adding the interest factor calculated for each day in the
period for which accrued interest is being calculated.
- In the case of notes for which the CD Rate, the Commercial Paper Rate, the
Federal Funds Rate, LIBOR or the Prime Rate is an applicable Interest Rate
Basis, the interest factor for each day will be computed by dividing the
interest rate applicable to each day by 360.
- In the case of notes for which the CMT Rate or the Treasury Rate is an
applicable Interest Rate Basis, the interest factor for each day will be
computed by dividing the interest rate applicable to each day by the
actual number of days in the year.
- The interest factor for notes for which the interest rate is calculated
with reference to two or more Interest Rate Bases will be calculated in
each period in the same manner as if only the applicable Interest Rate
Bases applied.
INTEREST DETERMINATION DATES. The interest rate applicable to each interest
reset period commencing on the Interest Reset Date with respect to that interest
reset period will be the rate determined as of the applicable "Interest
Determination Date."
- The Interest Determination Date with respect to notes for which the CD
Rate, the CMT Rate or the Commercial Paper Rate is an applicable Interest
Rate Basis will be the second Business Day preceding each Interest Reset
Date.
- The Interest Determination Date with respect to notes for which the
Federal Funds Rate or the Prime Rate is an applicable Interest Rate Basis
will be the Business Day immediately preceding each Interest Reset Date.
- The Interest Determination Date with respect to notes for which LIBOR is
an applicable Interest Rate Basis will be the second London Business Day
preceding each Interest Reset Date.
- The Interest Determination Date with respect to notes for which the
Treasury Rate is an applicable Interest Rate Basis will be the day in the
week in which the related Interest Reset Date falls on which day Treasury
Bills having the Index Maturity specified in the applicable pricing
supplement are normally 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 the auction may be held on the preceding Friday; provided, however,
that if an auction is held on the Friday of the week preceding the related
Interest Reset Date, the related Interest Determination Date will be the
preceding Friday; and provided, further, that if an auction falls on any
Interest Reset Date, then the related Interest Reset Date will instead be
the first Business Day following the auction.
- The Interest Determination Date pertaining to a note the interest rate of
which is determined with reference to two or more Interest Rate Bases will
be the latest Business Day which is at least two Business Days before the
applicable Interest Reset Date for the applicable note on which each
Interest Reset Basis is determinable. Each Interest Rate Basis will be
determined on the Interest Determination Date, and the applicable interest
rate will take effect on the related Interest Reset Date.
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<PAGE>
CALCULATION DATE. Citibank, N.A. will be the calculation agent with respect
to the floating rate notes. The calculation agent will notify PFC and the paying
agent of each determination of the interest rate applicable to any floating rate
note promptly after the 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 that note. The
paying agent will not be responsible for determining the interest rate
applicable to any floating rate note. The calculation date, if applicable,
pertaining to any Interest Determination Date will be the earlier of:
- the tenth calendar day after the applicable Interest Determination Date,
or, if the tenth calendar day is not a Business Day, the next succeeding
Business Day or
- the Business Day preceding the applicable Interest Payment Date or
Maturity, as the case may be.
CD RATE. CD Rate Notes will bear interest at the rates, calculated with
reference to the CD Rate and the Spread and/or Spread Multiplier, if any,
specified in the applicable CD Rate Notes and in any applicable pricing
supplement.
"CD Rate" means:
(1) the rate on the applicable Interest Determination Date for negotiable
United States dollar certificates of deposit having the Index Maturity
specified in the applicable CD Rate Note and the applicable pricing
supplement as published in H.15(519) under the caption "CDs (secondary
market)", or
(2) if the rate referred to in clause (1) above is not published by
3:00 P.M., New York City time, on the related calculation date, the rate
on the applicable Interest Determination Date for negotiable United
States dollar certificates of deposit of the Index Maturity specified in
the applicable CD Rate Note and the applicable pricing supplement as
published in H.15 Daily Update, or other recogniled electronic source
used for the purpose of displaying the applicable rate, under the caption
"CDs (secondary market)", or
(3) if the rate referred to in clause (2) is not published by 3:00 P.M., New
York City time, on the related calculation date, the rate on the
applicable Interest Determination Date calculated by the calculation
agent as the arithmetic mean of the secondary market offered rates as of
10:00 A.M., New York City time, on the applicable Interest Determination
Date, of three leading non-bank dealers in negotiable United States
dollar certificates of deposit in The City of New York, which may include
the agents or their affiliates, selected by the calculation agent for
negotiable United States dollar certificates of deposit of major United
States money center banks for negotiable United States dollar
certificates of deposit with a remaining maturity closest to the Index
Maturity specified in the applicable CD Rate Note and the applicable
pricing supplement in an amount that is representative for a single
transaction in that market at that time, or
(4) if the dealers selected by the calculation agent are not quoting as
mentioned in clause (3) above, the CD rate in effect on the applicable
Interest Determination Date.
"H.15(519)" means the weekly statistical release designated as H.15(519), or
any successor publication, published by the Board of Governors of the Federal
Reserve System.
"H.15 Daily Update" means the daily update of H.15(519), available through
the world-wide-web site of the Board of Governors of the Federal Reserve System
at http://www.bog.frb.fed.us/releases/h15/update, or any successor site or
publication.
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<PAGE>
CMT RATE. CMT Rate Notes will bear interest at the rates, calculated with
reference to the CMT Rate and the Spread and/or Spread Multiplier, if any,
specified in the applicable CMT Rate Notes and in any applicable pricing
supplement.
"CMT Rate" means:
(1) if CMT Telerate Page 7051 is specified in the applicable CMT Rate Note
and in the applicable pricing supplement:
(a) the percentage equal to the yield for United States Treasury
securities at "constant maturity" having the Index Maturity specified
in the applicable CMT Rate Note and the applicable pricing supplement
as published in H.15(519) under the caption "Treasury Constant
Maturities", as the yield is displayed on Bridge Telerate, Inc., or
any successor service, on page 7051, or any other page as may replace
page 7051 on that service ("Telerate Page 7051"), for the applicable
Interest Determination Date, or
(b) if the rate referred to in clause (1)(a) does not appear on Telerate
Page 7051, the percentage equal to the yield for United States
Treasury securities at "constant maturity" having the Index Maturity
specified in the applicable CMT Rate Note and the applicable pricing
supplement and for the applicable Interest Determination Date as
published in H.15(519)under the caption "Treasury Constant
Maturities", or
(c) if the rate referred to in clause (1)(b) does not appear in
H.15(519), the rate on the applicable Interest Determination Date for
the period of the Index Maturity specified in the applicable CMT Rate
Note and the applicable pricing supplement as may then be published
by either the Federal Reserve System Board of Governors or the United
States Department of the Treasury that the calculation agent
determines to be comparable to the rate which would otherwise have
been published in H.15(519), or
(d) if the rate referred to in clause (1)(c) is not published, the rate
on the applicable Interest Determination Date calculated by the
calculation agent as a yield to maturity based on the arithmetic mean
of the secondary market bid prices at approximately 3:30 P.M., New
York City time, on the applicable Interest Determination Date of
three leading primary United States government securities dealers in
The City of New York, which may include the agents or their
affiliates (each, a "Reference Dealer"), selected by the calculation
agent from five 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 United States Treasury securities
with an original maturity equal to the Index Maturity specified in
the applicable CMT Rate Note and the applicable pricing supplement, a
remaining term to maturity no more than 1 year shorter than the Index
Maturity specified in the applicable CMT Rate Note and the applicable
pricing supplement and in a principal amount that is representative
for a single transaction in the securities in the market at that
time, or
(e) if fewer than five but more than two of the prices referred to in
clause g(1)(d) are provided as requested, the rate on the applicable
Interest Determination Date calculated by the calculation agent based
on the arithmetic mean of the bid prices obtained and neither the
highest nor the lowest of the quotations shall be eliminated, or
(f) if fewer than three prices referred to in clause (1)(d) are provided
as requested, the rate on the applicable Interest Determination Date
calculated by the calculation agent as a yield to maturity based on
the arithmetic mean of the secondary market bid prices as of
approximately 3:30 P.M., New York City time, on the applicable
Interest
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Determination Date of three Reference Dealers selected by the
calculation agent from five 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 United States Treasury
securities with an original maturity greater than the Index Maturity
specified in the applicable CMT Rate Note and the applicable pricing
supplement, a remaining term to maturity closest to the Index
Maturity specified in the applicable CMT Rate Note and the applicable
pricing supplement and in a principal amount that is representative
for a single transaction in the securities in the market at that
time, or
(g) if fewer than five but more than two prices referred to in
clause (1)(f) are provided as requested, the rate on the applicable
Interest Determination Date calculated by the calculation agent based
on the arithmetic mean of the bid prices obtained and neither the
highest nor the lowest of the quotations will be eliminated, or
(h) if fewer than three prices referred to in clause (1)(f) are provided
as requested, the rate in effect on the applicable Interest
Determination Date.
(2) if CMT Telerate Page 7052 is specified in the applicable CMT Rate Note
and the applicable pricing supplement:
(a) the percentage equal to the one-week or one-month, as specified in
the applicable CMT Rate Note and the applicable pricing supplement,
average yield for United States Treasury securities at "constant
maturity" having the Index Maturity specified in the applicable CMT
Rate Note and the applicable pricing supplement as published in
H.15(519) opposite the caption "Treasury Constant Maturities", as the
yield is displayed on Bridge Telerate, Inc., or any successor
service, on page 7052, or any other page as may replace page 7052 on
that service ("Telerate Page 7052"), for the week or month, as
applicable, ended immediately preceding the week or month, as
applicable, in which the related Interest Determination Date falls,
or
(b) if the rate referred to in clause (2)(a) does not appear on Telerate
Page 7052, the percentage equal to the one-week or one-month, as
specified in the applicable CMT Rate Note and the applicable pricing
supplement, average yield for United States Treasury securities at
"constant maturity" having the Index Maturity specified in the
applicable CMT Rate Note and the applicable pricing supplement and
for the week or month, as applicable, preceding the applicable
Interest Determination Date as published in H.15(519) opposite the
caption "Treasury Constant Maturities," or
(c) if the rate referred to in clause (2)(b) does not appear in
H.15(519), the one-week or one-month, as specified, average yield for
United States Treasury securities at "constant maturity" having the
Index Maturity specified in the applicable CMT Rate Note and the
applicable pricing supplement as otherwise announced by the Federal
Reserve Bank of New York for the week or month, as applicable, ended
immediately preceding the week or month, as applicable, in which the
related Interest Determination Date falls, or
(d) if the Federal Reserve Bank of New York does not publish the rate
referred to in clause (2)(c), the rate on the applicable Interest
Determination Date calculated by the calculation agent as a yield to
maturity based on the arithmetic mean of the secondary market bid
prices at approximately 3:30 P.M., New York City time, on the
applicable Interest Determination Date from five 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
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United States Treasury securities with an original maturity equal to
the Index Maturity specified in the applicable CMT Rate Note and the
applicable pricing supplement, a remaining term to maturity no more
than 1 year shorter than the Index Maturity specified in the
applicable CMT Rate Note and the applicable pricing supplement and in
a principal amount that is representative for a single transaction in
the securities in the market at that time, or
(e) if fewer than five but more than two of the prices referred to in
clause (2)(d) are provided as requested, the rate on the applicable
Interest Determination Date calculated by the calculation agent based
on the arithmetic mean of the bid prices obtained and neither the
highest nor the lowest of the questions shall be eliminated, or
(f) if fewer than three prices referred to in clause (2)(d) are provided
as requested, the rate on the applicable Interest Determination Date
calculated by the calculation agent as a yield to maturity based on
the arithmetic mean of the secondary market bid prices as of
approximately 3:30 P.M., New York City time, on the applicable
Interest Determination Date of three Reference Dealers selected by
the calculation agent from five 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 United States Treasury
securities with an original maturity greater than the Index Maturity
specified in the applicable CMT Rate Note and the applicable pricing
supplement, a remaining term to maturity closest to the Index
Maturity specified in the applicable CMT Rate Note and the applicable
pricing supplement and in a principal amount that is representative
for a single transaction the securities in the market at the time, or
(g) if fewer than five but more than two prices referred to in
clause (2)(f) are provided as requested, the rate will be calculated
by the calculation agent based on the arithmetic mean of the bid
prices obtained and neither the highest or the lowest of the
quotations will be eliminated, or
(h) if fewer than three prices referred to in clause (2)(f) are provided
as requested, the rate in effect on the applicable Interest
Determination Date.
If two United States Treasury securities with an original maturity greater
than the Index Maturity specified in the applicable CMT Rate Note and the
applicable pricing supplement have remaining terms to maturity equally close to
the Index Maturity specified in the applicable CMT Rate Note and the applicable
pricing supplement, the quotes for the United States Treasury security with the
shorter original remaining term to maturity will be used.
COMMERCIAL PAPER RATE. Commercial Paper Rate Notes will bear interest at
the rates, calculated with reference to the Commercial Paper Rate and the Spread
and/or Spread Multiplier, if any, specified in the applicable Commercial Paper
Rate Notes and in any applicable pricing supplement.
"Commercial Paper Rate" means:
(1) the Money Market Yield, as defined, on the applicable Interest
Determination Date of the rate for commercial paper having the Index
Maturity specified in the applicable Commercial Paper Rate Note and the
applicable pricing supplement as published in H.15(519) under the caption
"Commercial Paper-Nonfinancial", or
(2) if the rate described in clause (1) is not published by 3:00 P.M., New
York City time, on the related calculation date, the rate on the applicable
Interest Determination Date for commercial
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paper having the Index Maturity specified in the applicable Commercial Paper
Rate Note and the applicable pricing supplement as published in H.15 Daily
Update, or other recognized electronic source used for the purpose of
displaying the applicable rate, under the caption "Commercial
Paper-Nonfinancial", or
(3) if the rate is referred to in clause (2) is not published by
3:00 P.M., New York City time, on the related calculation date, the rate on
the applicable Interest Determination Date calculated by the calculation
agent as the Money Market Yield of the arithmetic mean of the offered rates
at approximately 11:00 A.M., New York City time, on the applicable Interest
Determination Date of three leading dealers of United States dollar
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 specified in the applicable Commercial Paper Rate
Note and the pricing supplement placed for industrial issuers whose bond
rating is "AA", or the equivalent, from a nationally recognized statistical
rating organization, or
(4) if the dealers selected by the calculation agent are not quoting as
mentioned in clause (3), the rate in effect on the applicable Interest
Determination Date.
"Money Market Yield" means a yield calculated in accordance with the
following formula and expressed as a percentage:
<TABLE>
<S> <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. Federal Funds Rate Notes will bear interest at the
rates, calculated with reference to the Federal Funds Rate and the Spread and/or
Spread Multiplier, if any, specified in the applicable Federal Funds Rate Notes
and in any applicable pricing supplement.
"Federal Funds Rate" means:
(1) the rate on the applicable Interest Determination Date for United
States dollar federal funds as published in H.15(519) under the caption
"Federal Funds (Effective)" as displayed on Bridge Telerate, Inc. or any
successor service on page 120 or any other page as may replace the
applicable page on that service ("Telerate Page 120"), or
(2) if the rate referred to in clause (1) does not appear on Telerate Page
120 or is not so published by 3:00 P.M., New York City time, on the related
calculation date, the rate on the applicable Interest Determination Date for
United States dollar federal funds as published in H.15 Daily Update, or
other recognized electronic source used for the purpose of displaying the
applicable rate, under the caption "Federal Funds/Effective Rate", or
(3) if the rate referred to in clause (2) is not published by 3:00 P.M.,
New York City time, on the related calculation date, the rate on the
applicable Interest Determination Date calculated by the calculation agent
as the arithmetic mean of the rates for the last transaction in overnight
United States dollar federal funds arranged by three leading brokers of
United States dollar federal funds transactions in The City of New York,
which may include the agents or their affiliates, selected by the
calculation agent before 9:00 A.M., New York City time, on the applicable
Interest Determination Date, or
(4) if the brokers selected by the calculation agent are not quoting as
mentioned in clause (3), the rate in effect on the applicable Interest
Determination Date.
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LIBOR. LIBOR Notes will bear interest at the rates, calculated with
reference to LIBOR and the Spread and/or Spread Multiplier, if any, specified in
the applicable LIBOR Notes and in any applicable pricing supplement.
"LIBOR" means:
(1) if "LIBOR Telerate" is specified in the applicable LIBOR Note and the
applicable pricing supplement or if neither "LIBOR Reuters" nor "LIBOR
Telerate" is specified in the applicable LIBOR Note and the applicable
pricing supplement as the method for calculating LIBOR, LIBOR will be the
rate for deposits in the LIBOR Currency, as defined below, having the Index
Maturity specified in the applicable LIBOR Note and the applicable pricing
supplement, commencing on the Interest Reset Date immediately following the
applicable Interest Determination Date that appears on the Designated LIBOR
Page as of 11:00 A.M., London time, on the applicable Interest Determination
Date, or
(2) if "LIBOR Reuters" is specified in the applicable LIBOR Note and the
applicable pricing supplement, LIBOR will be the arithmetic mean of the
offered rates for deposits in the LIBOR Currency having the Index Maturity
specified in the applicable LIBOR Note and the applicable pricing
supplement, commencing on the Interest Reset Date immediately following the
applicable Interest Determination Date, that appear, on the Designated LIBOR
Page specified in the applicable LIBOR Note and the applicable pricing
supplement as of 11:00 A.M., London time, on the applicable Interest
Determination Date; if the Designated LIBOR Page by its terms provides only
for a single rate, then the single rate will be used, or
(3) with respect to a LIBOR Interest Determination Date on which fewer than
two offered rates appear, or no rate appears, as the case may be, on the
Designated LIBOR Page as specified in clauses (1) and (2), respectively, the
rate calculated by the calculation agent as the arithmetic mean of at least
two quotations obtained by the calculation agent after requesting the
principal London offices of each of four major reference banks, which may
include affiliates of the agents, in the London interbank market to provide
the calculation agent with its offered quotation for deposits in the LIBOR
Currency for the period of the Index Maturity specified in the applicable
LIBOR Note and the applicable pricing supplement, commencing on the Interest
Reset Date immediately following the applicable Interest Determination Date,
to prime banks in the London interbank market at approximately 11:00 A.M.,
London time, on the applicable Interest Determination Date and in a
principal amount that is representative for a single transaction in the
applicable LIBOR Currency in that market at that time, or
(4) if fewer than two quotations referred to in clause (3) are provided,
the rate on the applicable Interest Determination Date calculated by the
calculation agent as the arithmetic mean of the rates quoted at
approximately 11:00 A.M., in the applicable Principal Financial Center(s),
on the applicable Interest Determination Date by three major banks, which
may include affiliates of the agents, in the applicable Principal Financial
Center selected by the calculation agent for loans in the LIBOR Currency to
leading European banks, having the Index Maturity specified in the
applicable LIBOR Note and the applicable pricing supplement and in a
principal amount that is representative for a single transaction in the
applicable LIBOR Currency in that market at that time, or
(5) if the banks so selected by the calculation agent are not quoting as
mentioned in clause (4), the rate in effect on the applicable Interest
Determination Date.
"LIBOR Currency" means the currency specified in the applicable LIBOR Note
and the applicable pricing supplement as to which LIBOR will be calculated or,
if no currency is specified in the applicable LIBOR Note and the applicable
pricing supplement, United States dollars.
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"Designated LIBOR Page" means either:
- if "LIBOR Telerate" is designated in the applicable LIBOR Note and the
applicable pricing supplement or neither "LIBOR Reuters" nor "LIBOR
Telerate" is specified in the applicable LIBOR Note and the applicable
pricing supplement as the method for calculating LIBOR, the display on
Bridge Telerate, Inc. or any successor service, on the page specified in
the applicable LIBOR Note and the applicable pricing supplement or any
page as may replace the specified page on that service for the purpose of
displaying the London interbank rates of major banks for the applicable
LIBOR Currency, or
- if "LIBOR Reuters" is specified in the applicable LIBOR Note and the
applicable pricing supplement, the display on the Reuter Monitor Money
Rates Service or any successor service on the page specified in the
applicable LIBOR Note and the applicable pricing supplement or any other
page as may replace the specified page on that service for the purpose of
displaying the London interbank rates of major banks for the applicable
LIBOR Currency.
PRIME RATE. Prime Rate Notes will bear interest at the rates, calculated
with reference to the Prime Rate and the Spread and/or Spread Multiplier, if
any, specified in the applicable Prime Rate Notes and any applicable pricing
supplement.
"Prime Rate" means:
(1) the rate on the applicable Interest Determination Date as published in
H.15(519) under the caption "Bank Prime Loan", or
(2) if the rate referred to in clause (1) is not published by 3:00 P.M.,
New York City time, on the related calculation date, the rate on the
applicable Interest Determination Date published in H.15 Daily Update, or
such other recognized electronic source used for the purpose of displaying
the applicable rate under the caption "Bank Prime Loan", or
(3) if the rate referred to in clause (2) is not published by 3:00 P.M.,
New York City time, on the related calculation date, the rate calculated by
the calculation agent as the arithmetic mean of the rates of interest
publicly announced by at least four banks, which may include affiliates of
the agents, that appear on the Reuters Screen US PRIME 1 Page, as defined
below, as the particular bank's prime rate or base lending rate as of
11:00 A.M., New York City time, on the applicable Interest Determination
Date, or
(4) if fewer than four rates described in clause (3) by 3:00 P.M., New York
City time, appear on the related calculation date on Reuters Screen US PRIME
1 Page, the rate on the applicable Interest Determination Date calculated by
the calculation agent as the arithmetic mean of the prime rates or base
lending 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 the applicable
Interest Determination Date by three major banks, which may include
affiliates of the agents, in The City of New York selected by the
calculation agent, or
(5) if the banks selected by the calculation agent are not quoting as
mentioned in clause (4), the rate in effect on the applicable Interest
Determination Date.
"Reuters Screen US PRIME 1 Page" means the display on the Reuter Monitor
Money Rates Service or any successor service on the "US PRIME 1" page or other
page as may replace the US PRIME 1 Page on such service for the purpose of
displaying prime rates or base lending rates of major United States banks.
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TREASURY RATE. Treasury Rate Notes will bear interest at the rates,
calculated with reference to the Treasury Rate and the Spread and/or Spread
Multiplier, if any, specified in the applicable Treasury Rate Notes and in any
applicable pricing supplement.
"Treasury Rate" means:
(1) the rate from the auction held on the applicable Interest Determination
Date (the "Auction") of direct obligations of the United States ("Treasury
Bills") having the Index Maturity specified in the applicable Treasury Rate
Note and the applicable pricing supplement as published under the caption
"INVESTMENT RATE" on the display on Bridge Telerate, Inc. or any successor
service on page 56 or any other page as may replace page 56 on that service
("Telerate Page 56") or page 57 or any other page as may replace page 57 on
that service ("Telerate Page 57"), or
(2) if the rate described in clause (1) is not published by 3:00 P.M., New
York City time, on the related calculation date, the Bond Equivalent Yield,
as defined below, of the rate for the applicable Treasury Bills as published
in H.15 Daily Update, or other recognized electronic source used for the
purpose of displaying the applicable rate, under the caption "U.S.
Government Securities/Treasury Bills/Auction High", or
(3) if the rate described in clause (2) is not published by 3:00 P.M., New
York City time, on the related calculation date, the Bond Equivalent Yield
of the auction rate of the applicable Treasury Bills announced by the United
States Department of the Treasury, or
(4) in the event that the rate referred to in clause (3) is not announced
by the United States Department of the Treasury, or if the Auction is not
held, the Bond Equivalent Yield of the rate on the applicable Interest
Determination Date of Treasury Bills having the Index Maturity specified in
the applicable Treasury Rate Note and in the applicable pricing supplement
as published in H.15(519) under the caption "U.S. Government
Securities/Treasury Bills/Secondary Market", or
(5) if the rate referred to in clause (4) is not published by 3:00 P.M.,
New York City time, on the related calculation date, the rate on the
applicable Interest Determination Date of the applicable Treasury Bills as
published in H.15 Daily Update, or other recognized electronic source used
for the purpose of displaying the applicable rate, under the caption "U.S.
Government Securities/Treasury Bills/Secondary Market", or
(6) if the rate referred to in clause (5) is not published by 3:00 P.M.,
New York City time, on the related Calculation Date, the rate on the
applicable Interest Determination Date calculated by the calculation agent
as the Bond Equivalent Yield of the arithmetic mean of the secondary market
bid rates, as of approximately 3:30 P.M., New York City time, on the
applicable Interest Determination Date, of three 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 specified in
the applicable Treasury Rate Note and the applicable pricing supplement, or
(7) if the dealers selected by the calculation agent are not quoting as
mentioned in clause (6), the rate in effect on the applicable Interest
Determination Date.
"Bond Equivalent Yield" means a yield calculated in accordance with the
following formula and expressed as a percentage:
<TABLE>
<S> <C> <C>
D X N
Bond Equivalent Yield = --------------- X 100
360 - (D X M)
</TABLE>
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<PAGE>
where "D" refers to the applicable per annum rate for Treasury Bills quoted on a
bank discount basis, "N" refers to 365 or 366, as the case may be, and "M"
refers to the actual number of days in the interest period for which interest is
being calculated.
OTHER PROVISIONS; ADDENDA
Any provisions with respect to an issue of notes, including the
determination of one or more Interest Rate Bases, the specification of one or
more Interest Rate Bases, the calculation of the interest rate applicable to a
floating rate note, the applicable interest payment dates, the stated maturity
date, any redemption or repayment provisions or any other matter relating to the
applicable notes may be modified by the terms as specified under "Other
Provisions" on the face of the applicable notes or in an Addendum relating to
the applicable notes, if so specified on the face of the applicable notes and in
the applicable pricing supplement.
ORIGINAL ISSUE DISCOUNT NOTES
PFC may from time to time offer notes at a price less than their redemption
price at Maturity, resulting in the applicable notes being treated as if they
were issued with original issue discount for federal income tax purposes
("Original Issue Discount Notes"). Original Issue Discount Notes may currently
pay no interest or interest at a rate which at the time of issuance is below
market rates. Additional considerations relating to any Original Issue Discount
Notes will be described in the applicable pricing supplement.
AMORTIZING NOTES
PFC may from time to time offer notes ("Amortizing Notes"), with amounts of
principal and interest payable in installments over the term of the notes.
Unless otherwise specified in the applicable pricing supplement, interest on
each Amortizing Note will be computed on the basis of a 360-day year of twelve
30-day months. Payments with respect to Amortizing Notes will be applied first
to interest due and payable on the Amortizing Notes and then to the reduction of
the unpaid principal amount of the Amortizing Notes. 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 included in the
applicable note and the applicable pricing supplement.
LINKED NOTES
PFC may from time to time offer notes ("Linked Notes") the principal value
of which at Maturity will be determined by reference to:
(a) one or more debt securities, including, but not limited to, the
price or yield of such securities,
(b) any statistical measure of economic or financial performance,
including, but not limited to, any currency, consumer price or mortgage
index, or
(c) the price or value of any commodity or any other item or index or
any combination,
(collectively, the "Linked Securities"). The payment or delivery of any
consideration on any Linked Note at Maturity will be determined by the decrease
or increase, as applicable, in the price or value of the applicable Linked
Securities. The terms of and any additional considerations, including any
material tax consequences, relating to any Linked Notes will be described in the
applicable pricing supplement.
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EXTENDIBLE MATURITY NOTES
PFC may from time to time offer notes ("Extendible Maturity Notes") with the
option to extend the maturity of the notes to one or more dates indicated in the
notes and the applicable pricing supplement. The terms of and any additional
considerations relating to any Extendible Maturity Notes will be described in
the applicable pricing supplement.
BOOK-ENTRY NOTES
DESCRIPTION OF THE GLOBAL SECURITIES
Upon issuance, all notes in book-entry form having the same date of issue,
stated maturity date and otherwise having identical terms and provisions will be
represented by one or more fully registered global notes (the "Global Notes").
Each Global Note will be deposited with, or on behalf of, The Depository Trust
Company as depository registered in the name of the depository or a nominee of
the depository. Unless and until it is exchanged in whole or in part for notes
in certificated form, no Global Note may be transferred except as a whole:
- by the depository to a nominee of the depository, or
- by a nominee of the depository to the depository or another nominee of the
depository, or
- by the depository or any such nominee to a successor of the depository or
a nominee of the successor.
DTC PROCEDURES
The following is based on information furnished by the depository:
The depository will act as securities depository for the notes in book-entry
form. The notes in book-entry form will be issued as fully registered securities
registered in the name of Cede & Co., the depository's partnership nominee. One
fully registered Global Note will be issued for each issue of notes in
book-entry form, each in the aggregate principal amount of the issue, and will
be deposited with the depository. If, however, the aggregate principal amount of
any issue exceeds $400,000,000, one Global Note will be issued with respect to
each $400,000,000 of principal amount and an additional Global Note will be
issued with respect to any remaining principal amount of the issue.
The depository 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 depository holds securities that its participants deposit with the
depository. The depository 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 depository include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations.
The depository 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 depository's 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. The rules applicable to the
depository and its participants are on file with the SEC.
Purchasers of notes in book-entry form under the depository's system must be
made by or through direct participants, which will receive a credit for those
notes in book-entry form on the
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depository's records. The ownership interest of each actual purchaser of each
note in book-entry form represented by a Global Note is, in turn, to be recorded
on the records of direct participants and indirect participants. Beneficial
owners in book-entry form will not receive written confirmation from the
depository 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 participants or indirect
participants through which the beneficial owner entered into the transaction.
Transfers of ownership interests in a Global Note representing notes in
book-entry form are to be accomplished by entries made on the books of
participants acting on behalf of beneficial owners. Beneficial owners of a
Global Note representing notes in book-entry form will not receive notes in
certificated form representing their ownership interests therein, except in the
event that use of the book-entry system for such notes in book-entry form is
discontinued.
To facilitate subsequent transfers, all Global Notes representing notes in
book-entry form which are deposited with, or on behalf of, the depository are
registered in the name of the depository's nominee, Cede & Co. The deposit of
Global Notes with, or on behalf of, the depository and their registration in the
name of Cede & Co. effect no change in beneficial ownership. The depository has
no knowledge of the actual beneficial owners of the Global Notes representing
the notes in book-entry form; the depository's records reflect only the identity
of the direct participants to whose accounts such notes in book-entry form 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 depository 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.
Neither the depository nor Cede & Co. will consent or vote with respect to
the Global Notes representing the notes in book-entry form. Under its usual
procedures, the depository mails an omnibus proxy to PFC as soon as possible
after the applicable record date. The omnibus proxy assigns Cede & Co.'s
consenting or voting rights to those direct participants, identified in a
listing attached to the omnibus proxy, to whose accounts the notes in book-entry
form are credited on the applicable record date.
PFC will make principal, premium, if any, and/or interest, if any, payments
on the Global Notes representing the notes in book-entry form in immediately
available funds to the depository. The depository's practice is to credit direct
participants' accounts on the applicable payment date in accordance with their
respective holdings shown on the depository's records unless the depository has
reason to believe that it will not receive payment on the applicable payment
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 the applicable participant and not of the
depository, PFC or the trustee, 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 depository is the
responsibility of PFC or the trustee, disbursement of payments to direct
participants will be the responsibility of the depository, and disbursement of
payments to the beneficial owners will be the responsibility of direct
participants and indirect participants.
If applicable, redemption notices shall be sent to Cede & Co. If less than
all of the notes in book-entry form of like tenor and terms are being redeemed,
the depository's practice is to determine by lot the amount of the interest of
each direct participant in the issue to be redeemed.
A beneficial owner will give notice of any option to elect to have its notes
in book-entry form repaid by PFC, through its participant, to the trustee, and
will effect delivery of the applicable notes
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in book-entry form by causing the direct participant to transfer the
participant's interest in the Global Note notes in book-entry form, on the
depository's records, to the paying agent. The requirement for physical delivery
of notes in book-entry form in connection with a demand for repayment will be
deemed satisfied when the ownership rights in the Global Note or Notes
representing the notes in book-entry form are transferred by direct participants
on the depository's records.
The depository may discontinue providing its services as securities
depository with respect to the notes in book-entry form at any time by giving
reasonable notice to PFC or the trustee. In the event that a successor
securities depository is not obtained, notes in certificated form are required
to be printed and delivered.
PFC may decide to discontinue use of the system of book-entry transfers
through the depository or a successor securities depository. In that event,
notes in certificated form will be printed and delivered.
The laws of some states may require that certain purchasers of securities
take physical delivery of securities in definitive form. Such limits and laws
may impair the ability to own, transfer or pledge beneficial interests in Global
Notes.
So long as the depository, or its nominee, is the registered owner of a
Global Note, the depository or its nominee, as the case may be, will be
considered the sole owner or holder of the notes represented by the Global Note
for all purposes under the Indenture. Except as provided below, beneficial
owners of a Global Note will not be entitled to have the notes represented by a
Global Note registered in their names, will not receive or be entitled to
receive physical delivery of the notes in definitive form and will not be
considered the owners or holders thereof under the Indenture. Accordingly, each
person owning a beneficial interest in a Global Note must rely on the procedures
of the depository and, if that person is not a participant, on the procedures of
the participant through which that person owns its interest, to exercise any
rights of a holder under the Indenture. PFC understands that under existing
industry practices, in the event that PFC requests any action of holders or that
an owner of a beneficial interest in a Global Note desires to give or take any
action which a holder is entitled to give or take under the Indenture, the
depository would authorize the participants holding the relevant beneficial
interests to give or take the desired action, and the participants would
authorize beneficial owners owning through the participants to give or take the
desired action or would otherwise act upon the instructions of beneficial
owners.
EXCHANGE FOR NOTES IN CERTIFICATED FORM
If:
(a) the depository is at any time unwilling or unable to continue as
depository and a successor depository is not appointed by PFC within
90 days, or
(b) PFC determines that the Global Notes shall be exchangeable for notes
in certificated form,
The Global Note or Global Notes will be exchangeable for notes in certificated
form of like tenor and terms and of different authorized denominations
aggregating an equal aggregate principal amount. The certificated notes will be
registered in the name or names as the depository provides to the paying agent.
It is expected that instructions may be based upon directions received by the
depository from participants with respect to ownership of beneficial interests
in Global Notes.
The information in this section concerning the depository and the
depository's system has been obtained from sources that PFC believes to be
reliable, but PFC takes no responsibility for the accuracy of the information.
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A further description of the depository's procedures with respect to Global
Notes representing book-entry notes is in the accompanying prospectus under
"Description of Securities -- Global Securities." The depository has confirmed
to PFC that it intends to follow these procedures.
SPECIAL PROVISIONS RELATING TO FOREIGN CURRENCY NOTES
Except as specified in the applicable pricing supplement, foreign currency
notes (including notes denominated in the Euro) will not be sold in or to
residents of the country or economic community issuing the 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 it is by necessity incomplete with respect to foreign currency
notes. PFC 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 foreign
currency notes. Prospective purchasers of foreign currency notes should consult
their own financial and legal advisors with regard to such matters.
PAYMENT OF PRINCIPAL, ANY PREMIUM AND INTEREST
Except as specified in the applicable pricing supplement, we will pay the
principal, any premium and interest on foreign currency notes in the specified
currency. The Exchange Rate Agent named in the applicable pricing supplement
will, unless otherwise specified below or in the applicable note and the
applicable pricing supplement, convert the payment into United States dollars
for payment to holders. However, unless otherwise indicated in the applicable
note and the applicable pricing supplement, the holder of a foreign currency
note may elect to receive the payments in the specified currency, as described
below.
PFC's payment will be converted into United States dollars based on the
highest bid quotation in The City of New York at approximately 11:00 A.M. on the
second Business Day preceding the applicable payment date for the purchase of
the specified currency for United States dollars for settlement on the
applicable 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 foreign exchange dealer
commits to execute a contract. The bid quotations shall be obtained from three
recognized foreign exchange dealers, one of which may be the Exchange Rate
Agent, selected by the Exchange Rate Agent and approved by PFC. If the 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 note and the applicable pricing
supplement, a holder of a foreign currency note may elect to receive all or a
specified portion of any payment on that note in the specified currency. Any
holder desiring to receive payment in the specified currency must submit a
written request to the corporate trust office of the paying agent in The City of
New York, on or before the applicable record date or at least fifteen calendar
days before Maturity, as the case may be. The written request may be mailed,
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, any premium
and interest payments and need not file a separate election for each payment.
The election will remain in effect until revoked by written notice to the paying
agent, but written notice of any revocation must be received by the paying agent
on or before the relevant record date or at least the fifteenth calendar day
before Maturity, 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, any premium and interest on a foreign currency note paid in
United States dollars will be paid in the manner specified in 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 at Maturity will be paid by check mailed to the address
of the holder entitled to the interest payment as shown on the note register,
subject to the right to receive interest payments by wire transfer of
immediately available funds under the circumstances described under "Description
of Notes -- Terms of the Notes". All checks payable in a specified currency will
be drawn on a bank office located outside the United States. Payments of
principal, any premium and interest on foreign currency notes paid in the
specified currency at Maturity will be made by wire transfer of immediately
available funds to an account with a bank designated by the holder at least
fifteen days before Maturity, provided that the bank has appropriate facilities
to make the wire transfer and that the note is presented and surrendered at the
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 a note in book-entry form denominated in a specified
currency may elect to receive payments of principal or any premium or interest
in the specified currency instead of United States dollars. The beneficial owner
must give the participant through which its interest is held written notice of
its election on or before the applicable record date, in the case of a payment
of interest, and on or prior to the fifteenth day prior to Maturity, in the case
of principal or premium. The participant must notify the depository of such
election on or before the third Business Day after the record date. The
depository will notify the paying agent of the election on or before the fifth
Business Day after the record date or at least ten calendar days before
Maturity, as the case may be. If complete instructions are received by the
participant and forwarded by the participant to the depository and by the
depository to the paying agent, on or before the specified dates, the beneficial
owner of the notes in book-entry form will receive payments in the specified
currency.
AVAILABILITY OF SPECIFIED CURRENCY
If the specified currency for a foreign currency note is not available for
the payment of principal, any premium and interest due to the imposition of
exchange controls or other circumstances beyond the control of PFC, we will be
entitled to satisfy our obligations on the note by making the required payment
in United States dollars on the basis of the Market Exchange Rate, computed by
the Exchange Rate Agent, on the second Business Day before the applicable
payment or, if the Market Exchange Rate is not then available, on the basis of
the most recently available Market Exchange Rate, or as otherwise specified in
the applicable pricing supplement.
The "Market Exchange Rate" for a specified currency other than United States
dollars means the noon dollar buying rate in The City of New York for cable
transfers for the specified currency as certified for customs purposes, or, if
not so certified, as otherwise determined, by the Federal Reserve Bank of New
York. Any payment made in United States dollars under circumstances where the
required payment is in a specified currency other than United States dollars
will not constitute an Event of Default under the Indenture with respect to the
notes.
All determinations referred to above made by 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 foreign currency
notes.
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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 the
judgment in the specified currency, and the foreign currency judgment would be
converted into United States dollars at the exchange rate prevailing on the date
of entry of the judgment. Accordingly, the holder of a foreign currency note
would be subject to exchange rate fluctuations between the date of entry of the
foreign currency judgment and the time the amount of the foreign currency
judgment is paid to the holder in United States dollars and converted by the
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.
PFC will indemnify the holder of any note against any loss incurred by it as
a result of any judgment or order being given or made for any amount due under
the note and judgment or order requiring payment in a 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 currency
in the judgment or order, and (ii) the rate of exchange at which the holder of
the note, on the date of payment of the judgment or order, is able to purchase
the specified currency with the amount actually received under the judgment or
order.
UNITED STATES FEDERAL INCOME TAXATION
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 in this prospectus, the term "U.S. Holder" means a beneficial owner
of a note that is for United States Federal income tax purposes:
(1) a citizen or resident of the United States,
(2) a corporation or a partnership (including an entity treated as a
corporation or a partnership for United States Federal income tax purposes)
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 are adopted that provide otherwise),
(3) an estate whose income is subject to United States Federal income tax
regardless of its source,
(4) 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
(5) 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.
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Certain trusts not described in clause (4) above in existence on August 20, 1996
that elect to be treated as a United States person will also be a U.S. Holder
for purposes of the following discussion. 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
("Discount Notes"). The following summary is based upon final Treasury
regulations (the "OID Regulations") released by the Internal Revenue Service on
January 27, 1994, and subsequently amended under the original issue discount
provisions of the Code.
For United States Federal income tax purposes, original issue discount is
the excess of the stated redemption price at maturity of a note over its issue
price, if such excess equals or exceeds a DE MINIMIS amount (generally 1/4 of 1%
of the note's stated redemption price at maturity multiplied by the number of
complete years to its maturity from its issue date or, in the case of a note
providing for the payment of any amount other than qualified stated interest (as
defined below) prior to maturity, multiplied by the weighted average maturity of
the note). The issue price of each note of an issue of notes equals the first
price at which a substantial amount of the notes has been sold (ignoring sales
to bond houses, brokers, or similar persons or organizations acting in the
capacity of underwriters, placement agents, or wholesalers). The stated
redemption price at maturity of a note is the sum of all payments provided by
the note other than "qualified stated interest" payments. The term "qualified
stated interest" generally means stated interest that is unconditionally payable
in cash or property (other than debt instruments of the issuer) at least
annually at a single fixed rate. In addition, under the OID Regulations, if a
note bears interest for one or more accrual periods at a rate below the rate
applicable for the remaining term of the note (e.g., notes with teaser rates or
interest holidays), and if the greater of either the resulting foregone interest
on the note or any "true" discount on the note (i.e., the excess of the note's
stated principal amount over its issue price) equals or exceeds a specified DE
MINIMIS amount, then the stated interest on the note would be treated as
original issue discount rather than qualified stated interest.
Payments of qualified stated interest on a note are taxable to a U.S. Holder
as ordinary interest income at the time such payments are accrued or are
received (in accordance with the U.S. Holder's regular method of tax
accounting). A U.S. Holder of a Discount Note must include original issue
discount in income as ordinary interest for United States Federal income tax
purposes as it accrues under a constant yield method in advance of receipt of
the cash payments attributable to such income, regardless of the U.S. Holder's
regular method of tax accounting. In general, the amount of original issue
discount included in income by the initial U.S. Holder of a Discount Note is the
sum of the daily portions of original issue discount with respect to the
Discount Note for each day during the taxable year (or portion of the taxable
year) on which the U.S. Holder held the Discount Note. The "daily portion" of
original issue discount on any Discount Note is determined by allocating to each
day in any accrual period a ratable portion of the original issue discount
allocable to that accrual period. An "accrual period" may be of any length and
the accrual periods may vary in length over the term of the Discount Note,
provided that each accrual period is no longer than one year and each scheduled
payment of principal or interest occurs either on the final
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day of an accrual period or on the first day of an accrual period. The amount of
original issue discount allocable to each accrual period is generally equal to
the difference between
- the product of the Discount Note's adjusted issue price at the beginning
of such accrual period and its yield to maturity (determined on the basis
of compounding at the close of each accrual period and appropriately
adjusted to take into account the length of the particular accrual period)
and
- the amount of any qualified stated interest payments allocable to such
accrual period.
The "adjusted issue price" of a Discount Note at the beginning of any
accrual period is the sum of the issue price of the Discount Note plus the
amount of original issue discount allocable to all prior accrual periods minus
the amount of any prior payments on the Discount Note that were not qualified
stated interest payments. Under these rules, U.S. Holders generally will have to
include in income increasingly greater amounts of original issue discount in
successive accrual periods.
A U.S. Holder who purchases a 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 Discount Note after the purchase date
other than payments of qualified stated interest, will be considered to have
purchased the 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 Discount Note for any taxable
year (or portion thereof in which the U.S. Holder holds the 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
(hereinafter "Variable Notes") are subject to special rules whereby a Variable
Note will qualify as a "variable rate debt instrument" if
- 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
- it provides for stated interest, compounded or paid at least annually, at
current values of:
- one or more qualified floating rates,
- a single fixed rate and one or more qualified floating rates,
- a single objective rate, or
- a single fixed rate and a single objective rate that is a qualified
inverse floating rate.
A "qualified floating rate" is any variable rate where variations in the
value of such rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
Variable Note is denominated. Although a multiple of a qualified floating rate
will generally not itself constitute a qualified floating rate, a variable rate
equal to the product of a qualified floating rate and a fixed multiple that is
greater than .65 but not more than 1.35 will constitute a qualified floating
rate. A variable rate equal to the product of a qualified floating rate and a
fixed multiple that is greater than .65 but not more than 1.35, increased or
decreased by a fixed rate, will also constitute a qualified floating rate. In
addition, under the OID Regulations, two or more qualified floating rates that
can reasonably be expected to have approximately the same values throughout the
term of the Variable Note (e.g., two or more qualified floating rates with
values within 25 basis points of each other as determined on the Variable Note's
issue date) will be treated as a single qualified floating rate. Notwithstanding
the foregoing, a variable rate that would otherwise constitute a qualified
floating rate but which is subject to one or more restrictions such as a maximum
numerical limitation (i.e., a cap) or a minimum numerical limitation (i.e., a
floor) may, under certain circumstances, fail to be treated as a qualified
floating
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rate under the OID Regulations unless such cap or floor is fixed throughout the
term of the note. An "objective rate" is a rate that is not itself a qualified
floating rate but which is determined using a single fixed formula that is based
on objective financial or economic information. A rate will not qualify as an
objective rate if it is 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), such as dividends, profits, or the value of the issuer's
stock (although a rate does not fail to be an objective rate merely because it
is based on the credit quality of the issuer). A "qualified inverse floating
rate" is any objective rate where such rate is equal to a fixed rate minus a
qualified floating rate, as long as variations in the rate can reasonably be
expected to inversely reflect contemporaneous variations in the qualified
floating rate. The OID Regulations also provide that if a Variable Note provides
for stated interest at a fixed rate for an initial period of one year or less
followed by a variable rate that is either a qualified floating rate or an
objective rate and if the variable rate on the Variable Note's issue date is
intended to approximate the fixed rate (e.g., the value of the variable rate on
the issue date does not differ from the value of the fixed rate by more than 25
basis points), then the fixed rate and the variable rate together will
constitute either a single qualified floating rate or objective rate, as the
case may be.
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, and if
the interest on a Variable Note is unconditionally payable in cash or property
(other than debt instruments of the issuer) at least annually, then all stated
interest on the Variable Note 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 Variable Note's stated principal amount) in excess
of a specified DE MINIMIS amount. The amount of qualified stated interest and
the amount of original issue discount, if any, that accrues during an accrual
period on such a Variable Note is determined under the rules applicable to fixed
rate debt instruments by assuming that the variable rate is a fixed rate equal
to
(1) 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
(2) 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.
The qualified stated interest allocable to an accrual period is increased
(or decreased) if the interest actually paid during an accrual period exceeds
(or is less than) the interest assumed to be paid during the accrual period
pursuant to the foregoing rules.
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
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qualified inverse floating rate, if the Variable Note provides for a qualified
inverse floating rate). Under such circumstances, the qualified floating rate or
qualified inverse floating rate that replaces the fixed rate must be such that
the fair market value of the Variable Note as of the Variable Note's issue date
is approximately the same as the fair market value of an otherwise identical
debt instrument that provides for either the qualified floating rate or
qualified inverse floating rate rather than the fixed rate. Subsequent to
converting the fixed rate into either a qualified floating rate or a qualified
inverse floating rate, the Variable Note is then converted into an "equivalent"
fixed rate debt instrument in the manner described above.
Once the Variable Note is converted into an "equivalent" fixed rate debt
instrument pursuant to the foregoing rules, the amount of original issue
discount and qualified stated interest, if any, are determined for the
"equivalent" fixed rate debt instrument by applying the general original issue
discount rules to the "equivalent" fixed rate debt instrument and a U.S. Holder
of the Variable Note will account for such original issue discount and qualified
stated interest as if the U.S. Holder held the "equivalent" fixed rate debt
instrument. Each accrual period appropriate adjustments will be made to the
amount of qualified stated interest or original issue discount assumed to have
been accrued or paid with respect to the "equivalent" fixed rate debt instrument
in the event that such amounts differ from the actual amount of interest accrued
or paid on the Variable Note during the accrual period.
If a Variable Note does not qualify as a "variable rate debt instrument"
under the OID Regulations, then the Variable Note would be treated as a
contingent payment debt obligation. On June 11, 1996, the Treasury Department
issued final regulations (the "CPDI Regulations") concerning the proper United
States Federal income tax treatment of contingent payment debt instruments. In
general, the CPDI Regulations would cause the timing and character of income,
gain or loss reported on a contingent payment debt instrument to substantially
differ from the timing and character of income, gain or loss reported on a
contingent payment debt instrument under general principles of current United
States Federal income tax law. Specifically, the CPDI Regulations generally
require a U.S. Holder of such an instrument to include future contingent and
noncontingent interest payments in income as such interest accrues based upon a
projected payment schedule. Moreover, in general, under the CPDI Regulations,
any gain recognized by a U.S. Holder on the sale, exchange, or retirement of a
contingent payment debt instrument will be treated as ordinary income and all or
a portion of any loss realized could be treated as ordinary loss as opposed to
capital loss (depending upon the circumstances). The CPDI Regulations apply to
debt instruments issued on or after August 13, 1996. 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.
PFC may issue notes which;
- may be redeemable at the option of PFC prior to their stated maturity (a
"call option") and/or
- 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
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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 a 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 a 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 the
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 a 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:
- the amount of such payment or realized gain or
- the market discount which has not previously been included in income and
is treated as having accrued on the 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 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, the U.S. Holder will be considered
to have purchased the note with "amortizable bond
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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 obligations then owned and
thereafter acquired by the U.S. Holder 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
the U.S. Holder's adjusted tax basis in the note. A U.S. Holder's adjusted tax
basis in a note generally will equal the 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
the 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 gains of
individuals are subject to reduced capital gain rates while short-term capital
gains are subject to ordinary income rates. The deductibility of capital losses
is subject to certain limitations. Prospective investors should consult their
own tax advisors concerning these tax law provisions.
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
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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 "Accrual Method" above. If a U.S. Holder
receives Foreign Currency on such a sale, exchange or retirement the amount
realized will be based on the U.S. dollar value of the foreign currency on the
date the payment is received or the note is disposed of (or deemed disposed of
as a result of a material change in the terms of the note). In the case of a
note that is denominated in foreign currency and is traded on an established
securities market, a cash basis U.S. Holder (or, upon election, an accrual basis
U.S. Holder) will determine the U.S. dollar value of the amount realized by
translating the foreign currency payment at the spot rate of exchange on the
settlement date of the sale. A U.S. Holder's adjusted tax basis in a note will
equal the cost of the note to such holder, increased by the amounts of any
market discount or original issue discount previously included in income by the
holder with respect to such note and reduced by any amortized acquisition or
other premium and any principal payments received by the holder. A U.S. Holder's
tax basis in a note, and the amount of any subsequent adjustments to such
holder's tax basis will be the U.S. dollar value of the foreign currency amount
paid for such note, or of the foreign currency amount of the adjustment,
determined on the date of such purchase or adjustment.
Gain or loss realized upon the sale, exchange or retirement of a note that
is attributable to fluctuations in currency exchange rates will be ordinary
income or loss which will not be treated as interest income or expense. Gain or
loss attributable to fluctuations in exchange rates will equal the difference
between the U.S. dollar value of the foreign currency principal amount of the
note, determined on the date such payment is received or the note is disposed
of, and the U.S. dollar value of the foreign currency principal amount of the
note, determined on the date the U.S. Holder acquired the note. The 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 a 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 "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
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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 "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 PFC, a controlled foreign corporation related to
PFC 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
(1) is signed by the beneficial owner of the note under penalties of perjury,
(2) certifies that such owner is not a U.S. Holder and (3) 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 issued new regulations (the "New
Regulations") which make certain modifications to the withholding, backup
withholding and information reporting rules. The New Regulations attempt to
unify certification requirements and modify reliance standards. The New
Regulations will generally be effective for payments made after December 31,
2000, subject to certain transition rules. Prospective investors are urged to
consult their own tax advisors regarding the New Regulations.
Generally, a non-U.S. Holder will not be subject to United States Federal
income taxes on any amount which constitutes capital gain upon retirement or
disposition of a note, provided the gain is not effectively connected with the
conduct of a trade or business in the United States by the non-U.S. Holder.
Certain other exceptions may be applicable, and a non-U.S. Holder should consult
its tax advisor in this regard.
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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 PFC 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:
- the broker determines that the seller is a corporation or other exempt
recipient or
- 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:
- the broker determines that the seller is an exempt recipient or
- 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. In addition,
prospective U.S. Holders are strongly urged to consult their own tax advisors
with respect to the New Withholding Regulations. See "United States Federal
Income Taxation-Non-U.S. Holders".
Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.
PLAN OF DISTRIBUTION
PFC and Goldman, Sachs & Co., Banc of America Securities LLC, Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan
Stanley & Co. Incorporated and Salomon Smith Barney Inc. (the "agents") have
entered into a distribution agreement with respect to the notes. Subject to
certain conditions, the agents have agreed to use their best efforts to solicit
purchases of the notes. PFC has the right to accept offers to purchase notes and
may reject any proposed purchase of the notes in whole or in part. The agents
may also reject any offer to purchase notes. PFC will pay the agents a
commission on any notes sold through the agents. The commission will range from
.100% to .650% of the principal amount of the notes, depending on the maturity
of the notes. Commissions with respect to notes with maturities in excess of
30 years that are sold through an agent as an agent of PFC will be negotiated
between the Company and the agent at time of the sale.
S-36
<PAGE>
PFC may also sell notes to the agents who will purchase the notes as
principals for their own accounts. Any such sale will be made at a discount
equal to the discount set forth on the cover page hereof if no other discount is
agreed. Any notes the agents purchase as principal may be resold at the market
price or at other prices determined by the agents at the time of resale. PFC may
also sell notes directly on its own behalf. No commissions will be paid on notes
sold directly by PFC at such discount.
PFC may also enter into separate arrangements with firms other than the
agents which allow such firms to purchase for resale to the public all or a
portion of the notes. The name of any 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 the applicable notes.
The agents may resell any notes they purchase to other brokers or dealers at
a discount which may include all or part of the discount the agents received
from PFC. The agents will purchase the notes at a price equal to 100% of the
principal amount less a discount. Unless otherwise specified in the applicable
pricing supplement, the discount will equal the applicable commission on an
agency sales of notes of the same maturity. If all the notes are not sold at the
initial offering price, the agents may change the offering price and the other
selling terms.
In connection with the offering, the agents may purchase and sell notes in
the open market. These transactions may include short sales, stabilizing
transactions and purchases to cover positions created by short sales. Short
sales involve the sale by the agents of a greater number of notes than they are
required to purchase in the offering. Stabilizing transactions consist of
certain bids or purchases made for the purpose of preventing or retarding a
decline in the market price of the notes while the offering is in progress.
The agents also may impose a penalty bid. This occurs when a particular
agent repays to the agents a portion of the underwriting discount received by it
because the agents have repurchased notes sold by or for the account of such
agent in stabilizing or short covering transactions.
These activities by the agents may stabilize, maintain or otherwise affect
the market price of the notes. As a result, the price of the notes may be higher
than the price that otherwise might exist in the open market. If these
activities are commenced, they may be discontinued by the agents at any time.
These transactions may be effected in the over-the-counter market or otherwise.
The agents, whether acting as agents or principals, may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933 as amended. PFC
has agreed to indemnify the several agents against certain liabilities,
including liabilities under the Securities Act. PFC has agreed to reimburse the
agents for certain expenses.
The agents may sell to dealers who may resell to investors and the agents
may pay all or part of the discount or commission they receive from PFC to the
dealers. Such dealers may be deemed to be "underwriters" within the meaning of
the Act.
From time to time, PFC may also sell notes or other debt securities pursuant
to another prospectus supplement to the accompanying prospectus. Any such sales
will reduce the principal amount of notes that may be offered by this prospectus
supplement and the accompanying prospectus.
No assurance can be given as to the liquidity of the trading market for the
notes.
PFC estimates that its share of the total expenses of the offering,
excluding underwriting discounts and commissions, will be approximately
$2,170,500.
S-37
<PAGE>
Unless otherwise indicated in the applicable pricing supplement, the
purchase price of the notes will be required to be paid in immediately available
funds in New York, New York.
The agents may be customers of, engage in transactions with and perform
services for PFC in the ordinary course of business.
VALIDITY OF THE NOTES
The validity of the notes will be passed upon for PFC by Bruce N. Holliday,
Assistant General Counsel of PACCAR Inc, and counsel for PFC. Certain other
legal matters have been passed upon for PFC by Perkins Coie llp, and for the
agents by Brown & Wood llp, New York, New York.
S-38
<PAGE>
- -----------------------------------------------
-----------------------------------------------
- -----------------------------------------------
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No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained in this prospectus supplement or the
accompanying prospectus. You must not rely on any unauthorized information or
representations. This prospectus supplement and the accompanying prospectus is
an offer to sell only the notes offered hereby, but only under circumstances and
in jurisdictions where it is lawful to do so. The information contained in this
prospectus supplement and the accompanying prospectus is current only as of
their respective dates.
--------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
PROSPECTUS SUPPLEMENT
Risk Factors.............................. S-2
Description of the Notes.................. S-3
Special Provisions Relating to Foreign
Currency Notes.......................... S-25
United States Federal Income Taxation..... S-27
Plan of Distribution...................... S-36
Validity of the Notes..................... S-38
PROSPECTUS
PACCAR Financial Corp..................... 2
Use of Proceeds........................... 2
Ratio of Earnings to Fixed Charges........ 2
Relationship with PACCAR.................. 3
Description of Securities................. 3
Plan of Distribution...................... 10
Where You Can Find More Information....... 11
Incorporation of Information We File With
the SEC................................. 11
Experts................................... 12
</TABLE>
$2,500,000,000
Medium-Term Notes, Series J
-----------
[LOGO]
-----------
GOLDMAN, SACHS & CO.
BANC OF AMERICA SECURITIES LLC
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
SALOMON SMITH BARNEY
- -----------------------------------------------
-----------------------------------------------
- -----------------------------------------------
-----------------------------------------------
<PAGE>
PROSPECTUS
[LOGO]
PACCAR FINANCIAL CORP.
SENIOR DEBT SECURITIES
--------------
- By this prospectus, we may offer from time to time up to $2,500,000,000 of
our senior debt securities.
- When we offer these securities, we will provide you with a prospectus
supplement describing the terms of the specific issue of securities
including the offering price of the securities.
- You should read this prospectus and the prospectus supplement relating to
the specific issue of securities carefully before you invest.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------
The date of this prospectus is March 2, 2000.
<PAGE>
PACCAR FINANCIAL CORP.
We provide financing for dealers and purchasers of Kenworth and Peterbilt
trucks, which are manufactured by PACCAR Inc, our parent corporation. We offer
the following types of financing arrangements:
- installment sales and leases of new Kenworth and Peterbilt trucks;
- installment sales of all brands of used trucks;
- installment sales and leases of all brands of new trailers and installment
sales of used trailers;
- loans to dealers to finance their inventory of new and used trucks and
trailers; and
- loans to dealers for working capital purposes and for facilities
improvements.
Our principal executive offices are located at 777 106th Avenue N.E.,
Bellevue, Washington 98004; our telephone number is (425) 468-7100.
If you want to find more information about us, please see the sections
entitled "Where You Can Find More Information" and "Incorporation of Information
We File with the SEC" in this prospectus.
In this prospectus, "PFC", "we", "us" and "our" refer specifically to PACCAR
Financial Corp., the issuer of the securities offered under this prospectus.
USE OF PROCEEDS
We intend to use the proceeds from the sale of the securities for general
corporate purposes, unless otherwise specified in the prospectus supplement
relating to a specific issue of securities. Our general corporate purposes may
include the repayment of existing indebtedness, including indebtedness to PACCAR
and its subsidiaries, and may include loans to or investments in PACCAR and
PACCAR's other finance and leasing subsidiaries.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
PFC and for PACCAR and all of its subsidiaries, including PFC, for the periods
indicated.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
----------------------- ----------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
PFC....................................... 1.41 1.43 1.36 1.50 1.53 1.52 1.67
PACCAR and subsidiaries................... 5.23 4.57 4.64 4.47 3.27 4.09 4.44
</TABLE>
In the ratio of earnings to fixed charges for PFC, "earnings" consist of
income before income taxes and fixed charges but exclude capitalized interest.
"Fixed charges" consist of interest costs, the interest factor in rentals,
amortization of debt issuance costs and capitalized interest. The ratio of
earnings to fixed charges shown above complies with the SEC's reporting
requirements but differs from the method called for in the support agreement
between PFC and PACCAR. See "Relationship with PACCAR." The ratios computed
pursuant to the support agreement were 1.41, 1.57, 1.62, 1.63 and 1.82 for the
years 1998-1994, respectively, and 1.45 and 1.49 for the first nine months of
1999 and 1998, respectively.
In the ratio of earnings to fixed charges for PACCAR and its subsidiaries,
"earnings" consist of income before income taxes and fixed charges, plus
undistributed net earnings of the subsidiaries.
2
<PAGE>
"Fixed charges" consist of interest costs, the interest factor in rentals,
amortization of debt issuance costs and capitalized interest.
RELATIONSHIP WITH PACCAR
GENERAL
PFC was formed to finance sales of PACCAR products to and by PACCAR's
dealers. Sales of PACCAR products continue to provide PFC's principal source of
financing business. We receive administrative support services from PACCAR. We
have borrowed funds from and loaned funds to PACCAR and PACCAR's other finance
and leasing subsidiaries, and we may do so in the future. Since PACCAR owns all
of PFC's common stock, PACCAR can control the management and policies of PFC.
SUPPORT AGREEMENT
We have a support agreement with PACCAR that obligates PACCAR:
- to provide financial assistance to us when required; and
- to own, directly or indirectly, all of our outstanding voting stock.
PACCAR is required to provide financial assistance to us if our ratio of net
earnings available for fixed charges to fixed charges, as defined in the support
agreement, is less than 1.25 to 1 for any fiscal year. PACCAR must provide
financial assistance as necessary to meet the ratio requirement if this ratio is
not satisfied. We met the required ratios for the years ended December 31,
1994-1998 without assistance from PACCAR.
PFC and PACCAR may amend or cancel the support agreement upon 30 days
notice. The amendment or termination will be effective only if:
- two nationally recognized statistical rating organizations which have
issued ratings with respect to PFC's debt confirm in writing that their
ratings for PFC's debt would remain the same after the amendment or
cancellation, or
- the notice provides that the support agreement will continue in effect
with respect to any of PFC's debt which is rated by a nationally
recognized statistical rating organization until that debt has been paid
or defeased in accordance with its terms, or
- the holders of at least two-thirds of the principal amount of all
outstanding debt of PFC with an original maturity in excess of 270 days
which is rated by a nationally recognized statistical rating organization
consent in writing to the amendment or cancellation. In this situation,
the holders of any debt with an original maturity of 270 days or less
shall continue to have the benefit of the support agreement until the
maturity of their debt.
PACCAR's obligations to PFC do not constitute a guarantee of any
indebtedness or liability of PFC and do not create any rights against PACCAR by
any third person. There are no direct or indirect guarantees by PACCAR for the
payment of the securities to be issued under this prospectus or of any other
indebtedness of the PFC.
DESCRIPTION OF SECURITIES
The senior debt securities will be issued under an Indenture between PFC and
Citibank, N.A., as trustee, dated as of December 1, 1983, and amended by the
first supplemental indenture dated as of June 19, 1989. Securities issued under
the Indenture are unsecured senior indebtedness of PFC and are not limited to
any aggregate amount. A copy of the Indenture including the first supplemental
indenture is filed as an exhibit to the registration statement relating to the
securities.
3
<PAGE>
The summary of the material provisions of the Indenture in the "Provisions of
the Indenture" section below is not complete, and is subject to and qualified in
its entirety by reference to the provisions of the Indenture, including the
definitions of terms.
TERMS OF THE SECURITIES
PFC may issue the securities from time to time and in one or more series.
PFC may issue the securities upon the terms fixed or established in a resolution
of the Board of Directors of PFC, or a committee of the Board of Directors, or
in a certificate of an officer of PFC who has been authorized by the Board of
Directors to take that kind of action. (See Section 301 of the Indenture.) Any
resolution or officer's certificate approving the issuance of any issue of
securities will establish the terms of that issue, including:
- the title of the securities;
- any limit on the aggregate principal amount of the securities;
- the date or dates on which the securities will mature;
- the rate or rates per annum at which the securities will bear interest, if
any, or the manner in which the interest rate or rates are determined, and
the date or dates from which interest, if any, will accrue;
- the dates on which interest, if any, on the securities will be payable and
the related record dates;
- any mandatory or optional sinking fund or analogous provisions;
- whether the securities are to be issued in the form of one or more global
securities and the identity of the depositary for global securities;
- any redemption terms;
- any additional covenants for the benefit of the holders of the securities;
- the currency for payment of principal and interest if other than United
States dollars;
- whether the amount of payments of principal, premium and interest on the
securities may be determined with reference to an index, formula or other
method and the manner in which the amounts shall be determined; and
- other terms, including, but not limited to, PFC's ability to satisfy and
discharge its obligations under the Indenture more than one year prior to
the maturity or redemption of the securities. (See Sections 301 and 401 of
the Indenture).
Please see the accompanying prospectus supplement you have received or will
receive for the terms of the specific securities being offered.
Prospective purchasers of securities should be aware that special U.S.
Federal income tax, accounting and other considerations may be applicable to the
specific securities being offered. The prospectus supplement relating to an
issue of securities will describe these considerations, if they apply.
Transfer of the securities will be registered at the corporate trust office
of the trustee. No service charge will be made for any transfer or exchange of
the securities, but PFC may require payment of a sum sufficient to cover any tax
or other governmental charge payable.
4
<PAGE>
GLOBAL SECURITIES
PFC may issue series of securities in global form that will be deposited
with, or on behalf of, a depositary identified in the prospectus supplement
relating to that series. If any securities are issued in global form, please see
the accompanying prospectus supplement you have received or will receive for the
terms of the specific debt securities being offered. Unless the prospectus
supplement states different terms for the securities being offered, global
securities will have the following terms:
- A global security may not be transferred except as a whole by the
depositary to a nominee or to a successor of the depositary, unless
exchanged for securities in definitive form. (See Sections 303 and 305 of
the Indenture).
- Only persons that have accounts with the depositary or its nominee, which
we refer to as a participant, or that may hold interests through a
participant may own beneficial interests in a global security. These
accounts will be designated by the applicable underwriters or agents or by
PFC if the securities are offered and sold directly by PFC.
- Upon the issuance of a global security, the depositary will credit the
principal amounts of the securities to the participants' accounts on its
book-entry registration and transfer system. Ownership and transfer of the
ownership of a beneficial interest in a global security will be shown on
and effected only through records maintained by the depositary or by the
records of participants (with respect to interests of persons held through
participants). (See Section 308 of the Indenture).
- So long as the depositary is the registered owner of a global security,
the depositary will be considered the sole owner of the securities
represented by the global security for all purposes under the Indenture.
(See Section 303 of the Indenture). Owners of beneficial interests in a
global security will not be entitled to:
- have the securities represented by the global security registered in
their names;
- will not receive physical delivery of the securities in definitive
form; and
- will not be considered the owners of the global security under the
Indenture.
- Payments on global securities registered in the name of the depositary
will be made to the depositary. The depositary will confirm to PFC that
payments made with respect to a global security will immediately be
credited to the participants' accounts according to their interests as
shown on the records of the depositary. The depositary shall be solely
responsible for its records relating to beneficial ownership interests in
the global security and for the allocation and distribution of payments
made by PFC to the depositary. (See Section 308 of the Indenture).
- Each participant is responsible to make payments to the owners of
beneficial interests in the global security held through that participant.
Participants have the same obligation with respect to securities
registered in "street name" and held for the accounts of customers. The
participants shall be solely responsible for their records relating to
beneficial ownership interests in the global security and for the
allocation and distribution of payments made by the depositary to the
participants. (See Section 308 of the Indenture).
- If the depositary for any global security resigns or is unable to continue
as depositary and a successor depositary is not appointed by PFC within
ninety days, PFC will issue securities in definitive form in exchange for
the global security. (See Section 305 of the Indenture).
5
<PAGE>
- PFC may at any time and in its sole discretion determine not to have the
securities represented by a global security. In that event, PFC will issue
securities of the same series in definitive form in exchange for the
global security. (See Section 305 of the Indenture).
The laws of some states may require that certain purchasers of securities
take physical delivery of securities in definitive form. This type of law may
impair the ability to transfer beneficial interests in a global security.
PROVISIONS OF THE INDENTURE
Unless the prospectus supplement states different terms for the securities
being offered, the securities will be covered by the following provisions of the
Indenture:
- principal and interest on the securities will be payable at the corporate
trust office of the trustee, except that payment of interest may be made
at the option of PFC by check mailed to the registered address of the
person entitled to the interest. (See Sections 301 and 1002 of the
Indenture).
- the securities will be issued only in fully registered form without
coupons. (See Section 302 of the Indenture).
- the securities will be denominated in United States dollars and will be
issued in denominations of $1,000 or any integral multiple of $1,000. (See
Sections 301 and 302 of the Indenture).
- the transfer of the securities will be registerable at the corporate trust
office of the trustee. (See Section 305 of the Indenture).
- the securities may be issuable in whole or in part in the form of one or
more global securities, as described in the "Global Securities" section
above. (See Sections 203, 301 and 305 of the Indenture).
- Securities of a single series may be issued at various times, with
different maturity dates and interest rates and may otherwise vary, all as
provided in the Indenture. (See Section 301 of the Indenture).
- 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. (See Section 301 of the Indenture) If any
securities are issued as original issue discount securities, the terms
will be described in the prospectus supplement relating to the securities.
RESTRICTIONS ON SECURED DEBT. PFC will not permit any lien or security
interest on its property or on the property of its majority owned subsidiaries,
except as permitted by the Indenture. (See Section 1005 of the Indenture) The
Indenture allows PFC to incur secured debt, if the debt securities issued under
the Indenture are secured equally and ratably with all other secured debt. The
Indenture also permits PFC to incur secured debt, without providing security for
the securities issued under the Indenture, in the following situations:
- The aggregate amount of all secured debt (excluding secured debt permitted
under any of the other exceptions listed immediately below) would not
exceed 15% of PFC's consolidated net tangible assets.
- Liens or security interests on the stock or property of any corporation
that existed at the time that corporation became a subsidiary of PFC.
- Liens or security interests for debt between PFC and its majority owned
subsidiaries.
6
<PAGE>
- Liens or security interests in favor of any governmental body to secure
progress, advance or other payments pursuant to any contract, statute or
rule of court.
- Liens or encumbrances on property repossessed by PFC or its subsidiaries
in the ordinary course of their business
- Bankers' liens or other rights of offset.
- Liens or security interests on property, and related rentals that
- existed at the time of acquisition of the property, or
- secure debt for the purchase of the property or the construction of
improvements on the property, or
- were created prior to or within 180 days after the acquisition of the
property or the completion of construction, for the purpose of
financing the acquisition of or construction on the property.
- Any extension, renewal or replacement of any lien or security interest
described above that is limited to the same property that secured the
prior lien or security interest.
EVENT RISKS. The Indenture does not prohibit a change of control of PFC or
a recapitalization or highly leveraged transaction, unless the transaction or
change of control includes a merger, consolidation or transfer of all or
substantially all of the assets of PFC. See "Description of Securities--Mergers
and Sales of Assets by PFC." There are no provisions for a right to acquire any
increased interests or any other rights that would afford holders of the
securities additional protection in the event of a change of control of PFC or a
recapitalization or highly leveraged transaction. The support agreement requires
PACCAR to own all outstanding voting stock of PFC and to provide financial
assistance to PFC under certain circumstances. See "Relationship with
PACCAR--Support Agreement."
MERGERS AND SALES OF ASSETS BY PFC. PFC may consolidate or merge with any
other corporation, and it may transfer all or substantially all of its assets to
another corporation, if the following conditions are satisfied (See Article 8 of
the Indenture):
- The surviving corporation:
- shall be organized and existing under the laws of the United States,
any State or the District of Columbia, and
- shall expressly assume payment of the principal of and premium, if any,
and interest on the securities issued under the Indenture and the
performance and observance of the Indenture;
- PFC or the successor corporation shall not immediately after the
transaction be in default under the Indenture; and
- PFC and its property shall not become subject to a lien or security
interest prohibited by the Indenture.
Except as permitted above, PFC has agreed to preserve its corporate existence.
(Section 1004).
7
<PAGE>
SATISFACTION AND DISCHARGE. PFC may discharge its obligations under the
securities of a specific series (See Article Four of the Indenture) when it
satisfies the following requirements with respect to the securities of that
series:
- PFC irrevocably deposits with the trustee in trust,
- sufficient funds to pay the principal of and premium, if any, and
interest to maturity or redemption on the securities, or
- if the securities are payable in United States dollars, the amount of
direct obligations of or fully guaranteed by the United States as will
be sufficient to pay when due the principal of and premium, if any, and
interest to maturity or redemption on the securities;
- PFC pays all other sums payable on the securities, and
- if the deposit identified above occurs more than one year prior to the
maturity or redemption of the securities,
- notice has been given to the holders of the securities, and
- the trustee has received an opinion of recognized tax counsel to the
effect that the deposit and discharge will not result in recognition by
the holders of the securities 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 the deposit,
satisfaction and discharge.
Upon discharge, the holders of the securities of the specific series will no
longer be entitled to the benefits of the Indenture, except for the purposes of
registration of transfer and exchange of the securities. The holders shall be
paid only from the deposited funds or obligations.
EVENTS OF DEFAULT. The following are Events of Default under the Indenture
(See Section 501 of the Indenture) with respect to the securities of any series:
- a default in the payment of principal of or any premium on any security of
that series when due;
- a default in the payment of any interest on any security of that series
when due and continuance of such default for 30 days;
- a default in the deposit of any sinking fund payment when due in respect
of any security of that series;
- a default in the performance of any other covenant of PFC in the Indenture
other than a covenant included in the Indenture solely for the benefit of
a series of securities other than that series, and continuance of that
default for 90 days after written notice;
- an event of bankruptcy, insolvency or reorganization as defined in the
Indenture;
- a default under any mortgage, indenture or instrument evidencing
indebtedness of PFC, including the Indenture, which has resulted in the
acceleration of indebtedness in excess of $10,000,000 in aggregate
principal amount except that this amount shall not apply in respect to a
default on securities of another series covered by the Indenture and the
acceleration shall not have been rescinded or the indebtedness discharged
within a period of 30 days after written notice as provided in the
Indenture; and
- any other event of default provided for that series of securities.
If an Event of Default with respect to the securities of any series occurs
and is continuing, the principal amount of all the securities of that series may
be declared to be due and payable
8
<PAGE>
immediately by written notice as provided in the Indenture. If the securities of
that series are original issue discount securities, the portion of the principal
amount as may be specified in the terms of that series may be declared due and
payable. This declaration may be made by either the trustee or the holders of at
least 25% in aggregate principal amount of the outstanding securities of that
series. The holders of a majority in principal amount of the outstanding
securities of that series may, under the circumstances described in the
Indenture, rescind and annul the acceleration. (See Section 502 of the
Indenture.)
The trustee has the duty to act with the required standard of care during
default. The trustee is not obligated to exercise any of its rights or powers
under the Indenture at the request or direction of any of the holders, unless
the holders have offered to the trustee reasonable indemnity. (See Section 603
of the Indenture.) Subject to the provisions for the indemnification of the
trustee and other conditions specified in the Indenture (See Section 512 of the
Indenture), 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.
The right of a holder of any security to institute a proceeding with respect
to the Indenture is subject to certain conditions specified in the Indenture
(See Section 507 of the Indenture.) Each holder has an absolute right to receive
payment of principal, premium and interest, if any, when due and to institute
suit for the enforcement of any the payment. (See Section 508 of the Indenture.)
The Indenture provides that the trustee is required to give the holders of the
securities of any series written notice of any default within 90 days after the
occurrence of the default, unless previously cured or waived. In the case of
default in the payment of principal, premium or interest, or in the payment of
any sinking fund or redemption installment, the trustee may withhold the notice
of default if it determines it is in the interest of such holders to do so. (See
Section 602 of the Indenture.)
PFC is required to furnish to the trustee annually a statement as to the
performance by PFC of its obligations under the Indenture and as to any default
in its performance. (See Section 1006 of the Indenture.)
MODIFICATION AND WAIVER. PFC and the trustee may amend the Indenture with
the consent of the holders of not less than a majority in principal amount of
the outstanding securities of each series affected by the amendment. (See
Section 902 of the Indenture.) The Indenture may not be amended without the
consent of the holder of each outstanding security adversely affected if the
amendment:
- changes the stated maturity date of the principal or interest on any
security;
- reduces the principal, premium or rate of interest on any security;
- changes the method for determination of the rate of interest on any
security;
- changes the premium payable upon the redemption of any security,
- reduces the amount of principal of an original issue discount security
payable upon acceleration of the maturity of the original issue discount
security,
- changes the place or currency of payment of principal, premium or interest
on any security;
- impairs the right to institute suit for the enforcement of any payment on
any security; or
9
<PAGE>
- reduces the percentage of holders whose consent is required for amendment
of the Indenture, waiver of compliance with the Indenture or waiver of
defaults under the Indenture.
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 compliance by PFC with some restrictive provisions of the Indenture
(See Section 1007 of the Indenture), and
- waive any past default under the Indenture with respect to securities of
that series (See Section 1007 of the Indenture), except for a default
- in the payment of principal, premium or interest, or
- in respect of a covenant or condition which cannot be waived without
the consent of each holder of securities of that series.
REGARDING THE TRUSTEE
PFC 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 PFC's other senior debt securities.
GOVERNING LAW
The Indenture and the securities will be governed by, and construed in
accordance with, the laws of the State of New York.
PLAN OF DISTRIBUTION
PFC may sell the securities:
- to or through agents, or
- to or through underwriters, or
- directly to purchasers.
The prospectus supplement with respect to the securities describes the terms
of the offering of the securities, including:
- the names of the agents or underwriters,
- the public offering price or purchase price for the securities,
- the rate of interest or method of computing the rate of interest,
- the maturity date,
- other terms and conditions of the securities,
- any discounts and commissions to be allowed or paid to the agents,
underwriters, or any dealers and any other items constituting underwriting
compensation, and
- any exchanges on which the securities will be listed.
Only the agents or underwriters named in the prospectus supplement will be
agents or underwriters in connection with the securities being offered.
If so indicated in the prospectus supplement, PFC will authorize
underwriters or agents to solicit offers by certain institutions to purchase
securities from PFC pursuant to delayed delivery
10
<PAGE>
contracts providing for payment and delivery on the date stated in the
prospectus supplement. Each contract will be for an amount not less than, and,
unless PFC otherwise agrees, the aggregate principal amount of securities sold
pursuant to the contracts shall not be more than, the amounts stated in the
prospectus supplement. Institutions with whom the contracts may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions, and other institutions.
PFC has agreed to indemnify the agents and the several underwriters against
certain civil liabilities, including liabilities under the Securities Act of
1933, as amended, or contribute to payments the agent or the underwriters may be
required to make.
WHERE YOU CAN FIND MORE INFORMATION
We file reports and other information with the SEC. Our SEC filings are also
available over the Internet at the SEC's web site at http://www.sec.gov. You may
also read and copy any document we file by visiting the SEC's public reference
rooms in Washington, D.C., New York, New York, and Chicago, Illinois. Please
call the SEC at 1-800-SEC-0330 for further information about the public
reference rooms.
We have filed a registration statement on Form S-3 with the SEC covering the
securities. For further information about PFC and the securities, you should
refer to our registration statement and its exhibits. This prospectus summarizes
material provisions of contracts and other documents that we refer you to.
Because the prospectus may not contain all the information that you may find
important, you should review the full text of these documents. We have included
copies of these documents as exhibits to our registration statement of which
this prospectus is a part.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to incorporate by reference the information we file with
them, which means:
- incorporated documents are considered part of the prospectus;
- we can disclose important information to you by referring you to those
documents; and
- information that we file with the SEC will automatically update and
supersede this incorporated information.
We incorporate by reference the documents listed below which were filed with
the SEC under the Securities Exchange Act of 1934, as amended:
- annual report on Form 10-K for the year ended December 31, 1998; and
- current reports on Form 10-Q for the quarters ended March 31, 1999,
June 30, 1999, and September 30, 1999.
We also incorporate by reference each of the following documents that we
will file with the SEC after the date of this initial registration statement and
before the effectiveness of the registration statement and after the date of
this prospectus until this offering is completed.
- reports filed under Sections 13(a) and (c) of the Exchange Act; and
- any reports filed under Section 15(d) of the Exchange Act.
You should rely only on information contained or incorporated by reference
in this prospectus. We have not authorized any other person to provide you with
different information. If anyone provides you with different or inconsistent
information, you should not rely on it. We are not making an offer to sell the
securities in any jurisdiction where the offer or sale is not permitted.
11
<PAGE>
You should assume that the information appearing in this prospectus is
accurate as of the date of this prospectus only. Our business, financial
condition and results of operations may have changed since that date.
You may request a copy of any filings referred to above, excluding exhibits,
at no cost, by contacting us at the following address: PACCAR Financial Corp.
777 106(th) Avenue N. E., Bellevue, Washington 98004, Attention: Treasury,
Telephone: (425) 468-7185.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our financial
statements (and schedules) included in our Annual report on form 10-K for the
year ended December 31, 1998, as set forth in their report, which is
incorporated by reference in this prospectus and elsewhere in the registration
statement. Our financial statements (and schedules) are incorporated by
reference in reliance on Ernst & Young LLP's report, given on their authority as
experts in accounting and auditing.
12
<PAGE>
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 660,000
Accounting fees and expenses................................ 87,000*
Legal fees and expenses, including those of agents,
underwriters and trustee.................................. 77,000*
Blue Sky qualification fees and expenses.................... 2,000*
Printing and engraving...................................... 17,500*
Trustee and paying agent's fees............................. 56,000*
Rating agency fees.......................................... 1,272,750*
Miscellaneous............................................... 250*
----------
Total................................................... $2,170,500*
==========
</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
II-1
<PAGE>
connection with certain threatened, pending or completed civil, criminal,
administrative or investigative actions, suits or proceedings, in which such
persons were or are parties, or are threatened to be made parties, by reason of
the fact that such persons were or are directors or officers of the registrant.
Article Twelfth of the Certificate of Incorporation of PACCAR contains
provisions consistent with Section 145 with respect to indemnification of the
registrant's officers and directors.
Reference is made to Section 7 of the form of the distribution agreement
filed as exhibit 1.1 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.
II-2
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Act
that is incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or 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 February
, 2000.
<TABLE>
<S> <C> <C>
PACCAR FINANCIAL CORP.
By /s/ P. A. DONOHOE
------------------------------------------
(P. A. Donohoe, TREASURER)
</TABLE>
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 February , 2000.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
(1) Principal Executive Officer and Director
/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/ K. R. GANGL* Director
-------------------------------------------
(K. R. Gangl)
/s/ M. C. PIGOTT* Director
-------------------------------------------
(M. C. Pigott)
/s/ M. A. TEMBREULL* Director
-------------------------------------------
(M. A. Tembreull)
</TABLE>
<TABLE>
<S> <C> <C>
*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
-------------
<C> <S> <C>
1.1. Form of distribution agreement for the Medium-Term Notes,
Series J....................................................
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 J (Fixed-Rate).............
4.2B. Form of Medium-Term Note, Series J (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 B. Robert Crowley, 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, 1998 ("1998
Form 10-K") and to the quarterly report on Form 10-Q for the
quarter ended September 30, 1999)
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 1998 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 1998 Form 10-K and to the quarterly report
on Form 10-Q for the quarter ended September 30, 1999)
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 1998 Form 10-K
23.1. Consent of Ernst & Young LLP, independent public
accountants.................................................
23.2. Consent of B. N. Holliday, Esq. (included in Exhibit 5.1)
23.3. Consent of B. Robert Crowley, 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>
PACCAR FINANCIAL CORP.
Medium-Term Notes, Series J
DISTRIBUTION AGREEMENT
Dated _____, 2000
To the several Agents
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 $2,500,000,000 (or the equivalent based upon the applicable exchange rate at
the time of issuance in such foreign currency as the Company shall designate),
aggregate principal amount of its Medium-Term Notes, Series J (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 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.
1
<PAGE>
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 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
2
<PAGE>
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) there has been no dividend or distribution
of any kind declared, paid or made by the Company on its capital stock,
except as disclosed in the financial statements incorporated by reference
in the Prospectus, (d) there has been no amendment to the support agreement
between the Company and PACCAR Inc ("PACCAR") as amended and restated on
June 19, 1989.
3
<PAGE>
(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 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 currency (or a foreign 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).
(vii) 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 Securities
payable in a foreign currency (or a foreign 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.
(viii) The descriptions of the Securities and the Indenture contained
in the Prospectus fairly present the information required with respect
thereto in all material respects.
(ix) 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.
(x) 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
4
<PAGE>
condition, results of operations, business, property or prospects of the
Company or which is required to be disclosed in the Registration Statement.
(xi) The financial statements filed as part of or incorporated by
reference the Registration Statement, any Preliminary Prospectus or the
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 by reference in the Registration
Statement present fairly the information required to be stated therein.
(xii) 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.
(xiii) 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.
(xiv) 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.
(xv) 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.
(xvi) 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 Limited, 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 principal shall be deemed a representation and
warranty by the Company to such Agent as to the matters covered thereby.
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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, 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 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
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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.
If the Company and two or more Agents enter into an agreement pursuant to
which such Agents agree to purchase Securities from the Company as principal and
one or more of such Agents shall fail on the Closing Date to purchase the
Securities which it or they are obligated to purchase (the "Defaulted
Securities"), then the nondefaulting Agents shall have the right, within
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24 hours thereafter, to make arrangements for one of them or one or more other
Agents or underwriters to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; provided, however, that if such arrangements shall not have been
completed within such 24-hour period, then:
(a) if the aggregate principal amount of Defaulted Securities does not
exceed 10% of the aggregate principal amount of Securities to be so
purchased by all of such Agents on the Closing Date, the nondefaulting
Agents shall be obligated, severally and not jointly, to purchase the full
amount thereof in the proportions that their respective initial
underwriting obligations bear to the underwriting obligations of all
nondefaulting Agents; or
(b) if the aggregate principal amount of Defaulted Securities exceeds 10%
of the aggregate principal amount of Securities to be so purchased by all
of such Agents on the Closing Date, such agreement shall terminate without
liability on the part of any nondefaulting Agent.
No action taken pursuant to this paragraph shall relieve any defaulting
Agent from liability in respect of its default. In the event of any such
default which does not result in a termination of such agreement, either the
nondefaulting Agents or the Company shall have the right to postpone the Closing
Date for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or the Prospectus or in any other
documents or arrangements.
(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, other than Section
3(l) hereof, 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:
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(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.
(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 the Agents and counsel FOR THE AGENTS a
reasonable opportunity to comment thereon and, between the date of delivery of
any Terms Agreement and the Settlement Date with respect to such Terms
Agreement, not to file any such document to which the applicable agent
reasonably objects.
(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)
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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 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
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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 Terms Agreement, between the date of such Terms
Agreement and the Settlement Date with respect to such Terms Agreement, 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 Terms Agreement 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.
(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.
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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:
(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
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authenticated as specified in the Indenture and delivered against payment
therefor in accordance with this Agreement, will be legal, valid and
binding obligations of the Company enforceable in accordance with their
terms (except as enforcement thereof may be limited by bankruptcy,
insolvency, other laws relating to creditor's rights generally or by
general equity principles).
(viii) Such counsel does not know of any litigation or any
governmental proceeding pending or threatened against the Company which
would affect the subject matter of this Agreement or which is required to
be disclosed in the Prospectus and is not disclosed and correctly
summarized therein.
(ix) Such counsel does not know of any contracts or other documents
which are required to be filed as exhibits to the Registration Statement by
the Act or by the Rules and Regulations, or which are required to be filed
by the Exchange Act or the rules and regulations of the Commission
thereunder as exhibits to any document incorporated by reference in the
Prospectus, which have not been filed as exhibits to the Registration
Statement or to such document or incorporated therein by reference as
permitted by the Rules and Regulations or the rules and regulations of the
Commission under the Exchange Act.
(x) To the best of such counsel's knowledge after due inquiry, the
Company is not in violation of its corporate charter or bylaws, or in
default under any material agreement, indenture or instrument, the effect
of which violation or default would be material to the Company.
(xi) The execution, delivery and performance of this Agreement, and
compliance by the Company with the 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
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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.
(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.
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(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.
(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).
15
<PAGE>
(b) Each time that the Registration Statement or the Prospectus shall be
amended or supplemented (other than by an amendment or supplement providing
solely for a change in the interest rates, manner of determining interest rates,
interest payment dates or maturities of the Securities or a change in the
principal amount of Securities remaining to be sold or similar changes or a
supplement to the Prospectus in the form previously furnished to the Agents
relating to a sale of securities otherwise than through an Agent) or the Company
files with the Commission any document incorporated by reference into the
Prospectus or (if required pursuant to the terms of a Terms Agreement) the
Company sells Securities to an Agent pursuant to a Terms Agreement, the Company
shall furnish or cause to be furnished to each Agent promptly a certificate of
the President, a Vice President, the General Manager, the Treasurer or the
Controller of the Company to the effect that the statements contained in the
certificate referred to in Section 5(e) hereof which was last furnished to such
Agent are true and correct at the time of such amendment or supplement or
filing, as the case may be, as though made at and as of such time (except that
such statements shall be deemed to relate to the Registration Statement and the
Prospectus as amended and supplemented to such time) or, in lieu of such
certificate, a certificate of the same tenor as the certificate referred to in
said Section 5(e), modified as necessary to relate to the Registration Statement
and the Prospectus as amended and supplemented to the time of delivery of such
certificate.
(c) Each time that the Registration Statement or the Prospectus shall be
amended or supplemented or the Company files with the Commission any document
incorporated by reference into the Prospectus (other than by an amendment or
supplement providing solely for a change in the interest rates, manner of
determining interest rates, interest payment dates or maturities of the
Securities remaining to be sold or similar changes or a supplement to the
Prospectus in the form previously furnished to the Agents relating to the sale
of securities otherwise than through an Agent) or (if required pursuant to the
terms of a Terms Agreement) the Company sells Securities to an Agent pursuant to
a Terms Agreement, the Company shall cause to be furnished promptly to each
Agent and its counsel the written opinion or opinions of Bruce N. Holliday,
and/or, at the option of the Company, of Perkins Coie 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 or the Closing Date, as
the case may
16
<PAGE>
be, 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 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, ay 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
17
<PAGE>
any liability which the Company may otherwise have to any Agent or any
Participant or any controlling person.
(b) Each Agent shall severally 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 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 thee 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
18
<PAGE>
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 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 file 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.
19
<PAGE>
SECTION 8. ASSISTANCE BY THE AGENTS.
Each Agent will make reasonable efforts to assist the Company in obtaining
performance by each purchaser whose offer to purchase Securities from the
Company has been solicited by the Agent and accepted by the Company, but such
Agent shall have no liability to the Company in the event any such purchase is
not consummated for any reason.
SECTION 9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations and warranties of the Company contained in this
Agreement, or contained in certificates of officers of the Company submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of the termination of this Agreement or any investigation made by or on behalf
of any Agent or any person controlling any Agent or by or on behalf of the
Company, and shall survive each delivery of and payment for any of the
Securities.
SECTION 10. TERMINATION.
(a) TERMINATION OF THIS AGREEMENT. This Agreement shall terminate when
the Agents shall have been advised by the Company that all of the Securities
have been sold and the purchase price therefor has been paid and the Securities
delivered to the purchasers thereof. 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 (xi) 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 (xii) 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 (xiii) 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 (xiv) if the rating
20
<PAGE>
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 orgaization 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 (xv) 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 (xvi) the
Agents shall be entitled to any commission earned in accordance with the fourth
paragraph on Section 2(a) hereof, (xvii) 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 (xviii) the provisions
of Section 4 hereof, the indemnity and contribution agreements set forth in
Section 7 hereof, and the provisions of Sections 9 and 13 hereof shall remain in
effect.
SECTION 11. NOTICES.
Except as otherwise provided herein, all notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to the
Agents shall be directed as set forth below their respective signatures hereto.
Notices to the Company shall be directed to it as follows: PACCAR Financial
Corp., 777 106th Avenue N.E., Bellevue, Washington 98004, attention: Treasurer.
SECTION 12. PARTIES.
This Agreement shall inure to the benefit of and be binding upon the
several Agents and the Company and their respective successors. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the parties hereto and their
respective successors and the controlling persons and officers and directors
referred to in Section 7 and 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.
21
<PAGE>
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
--------------------------
22
<PAGE>
Accepted:
Goldman, Sachs & Co.
By:
------------------------------
Title:
---------------------------
Goldman, Sachs & Co.
85 Broad Street
29th Floor
New York, NY 10004
Attention: Ben Smilchensky
Telephone: (212) 902-1482
Telecopy: (212) 902-0658
Banc of America Securities LLC
By:
------------------------------
Title:
---------------------------
Banc of America Securities
NC1-007-07-01
100 North Tryon Street
7th Floor
Charlotte, NC 28255
Attention: Medium-Term Note Product Management
Telephone: (704) 386-6616
Telecopy: (704) 388-9939
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By:
------------------------------
Title:
---------------------------
23
<PAGE>
15th Floor North Tower
World Financial Center
New York, NY 10281-1315
Attention: MTN Product Management
Telephone: (212) 449-7476
Telecopy: (212) 449-2234
Morgan Stanley & Co. Incorporated
By:
------------------------------
Title:
---------------------------
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, 29th Floor
New York, NY 10036
Attention: Peter Cooper - Investment Banking Information
Center
Telephone: (212) 761-8385
Telecopy: (212) 761-0164
Salomon Smith Barney Inc.
By:
------------------------------
Title:
---------------------------
388 Greenwich Street, 34th Floor
New York, NY 10013
Attention: Medium-Term Note Department
Telephone: (212) 816-8134
Telecopy: (212) 816-7912
24
<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
LIBOR Currency
If CMT Rate:
CMT Telerate Page 7051
CMT Telerate Page 7052
If CMT Telerate Page 7052:
__ Weekly Average
__ Monthly Average
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:
25
<PAGE>
If Repayable at Option of Holder:
Optional Repayment Date:
Date of Maturity:
Purchase Price: _____%
Settlement Date and Time:
Settlement Details:
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
26
<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 .100
From 1 year to less than 18 months .125
From 18 months to less than 2 years . .150
From 2 years to less than 3 years .200
From 3 years to less than 4 years .300
From 4 years to less than 5 years . .350
From 5 years to less than 6 years .400
From 6 years to less than 7 years .450
From 7 years to less than 10 years .500
From 10 years to less than 15 years .550
From 15 years to less than 20 years .600
From 20 years to 30 years .650
</TABLE>
Beyond 30 years- To be agreed upon by the Company and the Agent at the
time of sale.
27
<PAGE>
PACCAR FINANCIAL CORP.
ADMINISTRATIVE PROCEDURES
FOR FIXED AND FLOATING RATE MEDIUM-TERM NOTES, SERIES J
(ATTACHMENT TO THE DISTRIBUTION AGREEMENT
DATED _______________, 2000
Medium-Term Notes, Series J (the "Notes") in the aggregate principal amount
of up to U.S. $2,500,000,000, or the equivalent in one or more foreign
currencies are to be offered on a continuing basis by PACCAR Financial Corp.
(the "Company") through Goldman, Sachs & Co., Banc of America Securities LLC,
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan
Stanley & Co. Incorporated, and Salomon Smith Barney 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, by and among
the Company and the Agents, dated ________, 2000 (the "Distribution Agreement").
The Notes will be issued pursuant to 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").
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.
The Company has appointed Citibank, N.A., as paying agent (the "Paying
Agent") with respect to the Notes. The Company has also appointed Citibank,
N.A., as calculation agent (the
<PAGE>
"Calculation Agent") with respect to Notes bearing interest at rates determined
if reference to selected indices ("Floating Rate Notes").
Administrative procedures and specific terms of the offering are explained
below.
General procedures relating to the issuance of all Notes are set forth in
Part I hereof. Additionally, Notes issued in book-entry form will be issued in
accordance with the procedures set forth in Part II hereof and Notes issued in
certificated form will be used in accordance with the procedures set forth in
Part III hereof. Capitalized terms used herein that are not otherwise defined
shall have the meanings ascribed thereto in the Indenture or the Notes (which in
the case of Notes issued in book-entry form shall be the related Book-Entry
Note), as the case may be.
PART I: PROCEDURES OF GENERAL APPLICABILITY
DATE OF ISSUANCE/AUTHENTICATION:
Each Note will be dated as of the date of its authentication by the
Trustee. Each Note shall also bear an original issue date (the "Original Issue
Date"). The Original Issue Date shall remain the same for all Notes
subsequently issued upon transfer, exchange or substitution of an original Note
regardless of their dates of authentication.
MATURITIES:
Each Note will mature on a date selected by the purchaser and agreed to by
the Company which is nine months or more from its Original Issue Date; provided,
however, that 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 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 its stated 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
2
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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 its stated maturity.
INTEREST:
Each Note will bear interest in accordance with its terms. The Calculation
Agent will advise the Company and the Paying Agent by telecopy of each
determination of the interest rate applicable to each Floating Rate Note
promptly after such determination is made by the Calculation Agent.
ACCEPTANCE AND REJECTION OF OFFERS:
The Company shall have the sole right to accept offers to purchase Notes
from the Company and may reject any such offer in whole or in part. The Agents
shall communicate to the Company, orally or in writing, each reasonable offer to
purchase Notes from the Company received by it. Each Agent shall have the
right, in its discretion reasonably exercised, without notice to the Company, to
reject any offer to purchase Notes in whole or in part, 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. The
Pricing Supplement shall be in substantially the forms attached hereto as
Exhibits A and B. 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;
6) The information with respect to the terms of the Notes set
forth below (whether or not the applicable Note is a 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.
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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 Goldman, Sachs & Co.:
Goldman, Sachs & Co.
85 Broad Street
29th Floor
New York, NY 10004
Attention: Ben Smilchensky
Telephone: (212) 902-1482
Telecopy: (212) 902-0658
If to Banc of America Securities LLC
Banc of America Securities
NC1-007-07-01
100 North Tryon Street
7th Floor
Charlotte, NC 28255
Attention: Medium-Term Note Product Management
Telephone: (704) 386-6616
Telecopy: (704) 388-9939
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
Corporate Park 287
4 Corporate Place
Piscataway, NJ 08854
Attention: Final Prospectus Unit/
Nachman Kimerling
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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, 15th Floor
New York, NY 10281-1315
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, NY 10048
Attention: Norman D. Slonaker
If to Morgan Stanley & Co. Incorporated:
Morgan Stanley & Co. Incorporated
1585 Broadway, 2nd Floor
New York, NY 10036
Attention: Medium-Term Note Trading Desk
If to Salomon Smith Barney Inc.:
Salomon Smith Barney Inc..
Brooklyn Army Terminal
140 58th Street
Brooklyn, NY 11220
Attention: Diane Graham, 5th Floor
Telephone: (718) 765-6736
Telecopy: (718) 765-6734
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.
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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 agreed to by the Agent and the Company and set forth
in 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 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 effect the Company's right to suspend all solicitations of offers to
purchase Notes as set forth in the Distribution Agreement.
SUSPENSION OF SOLICITATION; 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
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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: Goldman, Sachs & Co.,
Goldman, Sachs & Co., 85 Broad Street, 29th Floor, New York, NY, 10004,
Attention: Ben Smilchensky; Banc of America Securities LLC, Banc of America
Securities, NC1-007-07-01, 100 North Tryon Street, 7th Floor, Charlotte, NC
28255, Attention: Medium-Term Note Product Management; MTN Product Management,
Merrill Lynch Money Markets North Tower, World Financial Center, 15th Floor, New
York, NY 10281-1315; Morgan Stanley & Co., Broadway, New York, NY 10036,
Attention: Manager-Continuously Offered Products; or Salomon Smith Barney Inc.,
388 Greenwich Street, 34th Floor, New York, NY, Attention: Medium-Term Note
Department. 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. 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.
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<PAGE>
BUSINESS DAY:
"Business Day" means, unless otherwise stated in the applicable Pricing
Supplement, any day other than a Saturday or Sunday, that is neither a legal
holiday nor a day on which commercial banks are authorized or required by law,
regulation or executive order to close in The City of New York provided,
however, that, with respect to foreign currency notes, the day is also not a day
on which commercial banks are authorized or required by law, regulation or
executive order to close in the Principal Financial Center, as defined below, of
the country issuing the specified currency or, if the specified currency is
Euro, the day is also a day on which the Trans-European Automated Real-time
Gross Settlement Express Transfer (TARGET) System is open; provided, further,
that, with respect to notes as to which LIBOR is an applicable Interest Rate
Basis, the day is also a London Business Day. "London Business Day" means a day
on which commercial banks are open for business, including dealings in the LIBOR
Currency, in London.
"Principal Financial Center" means, unless otherwise specified in the
applicable pricing supplement,
(1) the capital city of the country issuing the specified currency, except
that with respect to United States dollars, Australian dollars, Canadian
dollars, Deutsche marks, Dutch guilders, South African rand and Swiss
francs, the "Principal Financial Center" will be The City of New York,
Sydney and Melbourne, Toronto, Frankfurt, Amsterdam, Johannesburg and
Zurich, respectively, or
(2) the capital city of the country to which the LIBOR Currency relates,
except that with respect to United States dollars, Canadian dollars,
Deutsche marks, Dutch guilders, Portuguese escudos, South African rand and
Swiss francs, the "Principal Financial Center" will be The City of New
York, Toronto, Frankfurt, Amsterdam, London, Johannesburg and Zurich,
respectively.
TRUSTEE NOT TO RISK FUNDS:
Nothing herein shall be deemed to require the Trustee or the Paying Agent
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 or the Paying Agent 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 or the Paying Agent, as the case may be, for
such purpose.
PART II: PROCEDURES FOR NOTES ISSUED IN BOOK-ENTRY FORM
In connection with the qualification of Notes issued in book-entry form for
eligibility in the book-entry system maintained by DTC, the Trustee will perform
the custodial, document control and administrative functions described below, in
accordance with its respective obligations under a Letter of Representations
from the Company and the Trustee to DTC, and a Medium-Term Note Certificate
Agreement, with respect to the Notes dated October 31, 1988,
8
<PAGE>
between the Trustee and DTC (the "Certificate Agreement"), and its obligations
as a participant in DTC, including DTC's Same-Day Funds Settlement System
("SDFS").
ISSUANCE:
All Fixed Rate Notes issued in book-entry form having the same Original
Issue Date, redemption terms and/or repayment, specified currency, interest
rate, and Stated Maturity (collectively, the "Fixed Rate Terms") will be
represented initially by a single global security in fully registered form
without coupons (each, a "Book-Entry Note"); and all Floating Rate Notes issued
in book-entry form having the same Original Issue Date, specified currency,
redemption and/or repayment terms, base rate upon which interest may be
determined (each, a "Base Rate"), which may be the CD Rate, the CMT Rate, the
Commercial Paper Rate, the Federal Funds Rate, LIBOR, the Prime Rate, the
Treasury 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 $400,000,000 (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 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
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<PAGE>
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 Book-Entry Notes,
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 date, the Trustee will deliver to the CUSIP Service Bureau written
notice setting forth such exchange date and the new CUSIP number and stating
that, as of such exchange date, the CUSIP numbers of the Book-Entry Notes to be
exchanged will no longer be valid. On the specified exchange date, the Trustee
will exchange such Book-Entry Notes for a single Book-Entry Note bearing the new
CUSIP number and the CUSIP numbers of the exchanged Book-Entry Notes will, in
accordance with CUSIP Services Bureau procedures, be canceled and not
immediately reassigned. Notwithstanding the foregoing, if the Book-Entry Notes
to be exchanged exceed $400,000,000 (or 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 $400,000,000 (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).
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<PAGE>
DENOMINATIONS:
Unless otherwise provided in the applicable Pricing Supplement, notes will
be issued in denominations of $1,000 and integral multiples in excess of $1,000.
Book-Entry Notes will be denominated in principal amounts not in excess of
$400,000,000 (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 $400,000,000 (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
$400,000,000 (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 an Interest Payment Date coinciding
with the Maturity Date) 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 as Paying Agent in immediately available funds, and the
Trustee as Paying Agent 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 as Paying Agent 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.
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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 as Paying Agent in immediately available
funds, and the Trustee as Paying Agent 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
as Paying Agent shall make payment of the principal, premium, if any, and
interest to be paid at maturity of such Book-Entry Notes that Participants have
elected to receive in foreign 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 as
Paying Agent in funds available for use by the Trustee as Paying Agent 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 as Paying Agent 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 as Paying Agent and DTC. Thereafter on each such date, DTC
will pay, in accordance with its SDFS operating procedures then in effect, such
amounts in funds available for immediate use to the respective Participants in
whose names such Notes are recorded in the book-entry system maintained by DTC.
Neither the Company nor the Trustee shall have any responsibility or liability
for the payment in U. S. dollars by DTC to such Participants of the principal of
premium, if any, or interest on, the Book-Entry Notes. The Trustee shall make
all payments of principal, premium, if any, and interest on each Book-Entry Note
that Participants have elected to receive in foreign 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
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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 reset dates;
e) interest rate reset period;
f) interest payment dates;
g) interest payment period;
h) record dates;
i) index maturity, if any;
j) calculation agent;
k) maximum interest rate, if any;
l) minimum interest rate, if any;
m) calculation date; and
n) interest determination dates.
4) Price to public of the Note.
5) Trade date.
6) Settlement Date (Original Issue Date).
7) Maturity Date.
8) Redemption provisions, if any, including: Initial Redemption
Date, Initial Redemption Percentage and Annual Redemption
Percentage Reduction.
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9) Holder's 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:
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 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.
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DTC will arrange for each pending deposit message described above to
be transmitted to Standard & Poor's Corporation, 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 Corporation.
(D) The Company will complete and deliver to the Trustee a Book-Entry Note
representing such Note in a form that has been approved by the
Company, the Agents and the Trustee.
(E) The Trustee will authenticate the Book-Entry Note representing such
Note.
(F) DTC will credit such Note to the participant account of the Trustee
maintained by DTC.
(G) The Trustee will enter an SDFS deliver order through DTC's Participant
Terminal System instructing DTC (i) to debit such Note to the
Trustee's participant account and credit such Note to the participant
account of the Presenting Agent maintained by DTC and (ii) to debit
the settlement account of the Presenting Agent and credit the
settlement account of the Trustee maintained by DTC, in an amount
equal to the price of such Note less such Presenting Agent's
commission or 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.
15
<PAGE>
(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 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
--------- ----
<S> <C>
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 date
C No later than the close of business on the trade date
D 3:00 p.m. on the Business Day following the trade date
E 9:00 a.m. on Settlement Date
F 10:00 a.m. on Settlement Date
G-H No later than 2:00 p.m. on Settlement Date
I 4:00 p.m. on Settlement Date
J-L 5:00 p.m. on Settlement Date
</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 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.
16
<PAGE>
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.
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 as Paying Agent and mailed
17
<PAGE>
by the Trustee as Paying Agent to the person entitled thereto as provided in the
Indenture and Certificated Note. However, holders of $1,000,000, or the
equivalent amount in a specified currency, 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 Paying Agent not less
than 15 days prior to the applicable Interest Payment Date. Any wire transfer
instructions received by the Paying Agent shall remain in effect until revoked
by the Holder of the Note. 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.
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 as Paying Agent 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 Paying Agent at maturity for payment
will be canceled by the Paying Agent. All canceled Certificated Notes held by
the Paying Agent shall be destroyed, and the Paying Agent 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.
Floating Rate Notes:
a) Interest rate basis or bases;
b) Initial interest rate;
c) Spread or spread multiplier, if any;
d) Interest reset dates;
18
<PAGE>
e) Interest rate reset period;
f) Interest payment dates;
g) Interest payment period;
h) Record dates;
i) Index maturity, if any;
j) Calculation agent;
k) Maximum interest rate, if any;
l) Minimum interest rate, if any;
m) Calculation date; and
n) Interest determination dates.
4) Price to public of the Certificated Note.
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
Percentage Reduction.
9) Net proceeds to the Company.
10) Holder's 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.
(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.
19
<PAGE>
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: Goldman, Sachs & Co., 85 Broad Street, 29th Floor,
New York, NY 10004, Attention: Ben Smilchensky; Banc of America
Securities Banc of America Securities, NC1-007-07-01, 100 North Tryon
Street, 7th Floor, Charlotte, NC 28255, Attention: Medium-Term Note
Product Management; 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; or Salomon Smith Barney Inc., at the New York Window,
The Depository Trust Company, Mezzanine Level, 3rd Floor., New York,
NY 10001, For the Account of SSB. 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
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:
20
<PAGE>
<TABLE>
<CAPTION>
Settlement
Procedure Time
--------- ----
<S> <C>
A-B 3:00 p.m. on Business Day prior
to Settlement Date
C-D 2:15 p.m. on Settlement Date
E 3:00 p.m. on Settlement Date
F 5:00 p.m. on Settlement Date
</TABLE>
FAILURE TO SETTLE:
In the event that a purchaser of a Note from the Company shall either fail
to accept delivery of or make payment for a Certificated Note on the date fixed
for settlement, the Presenting Agent will forthwith notify the Trustee and the
Company by telephone, confirmed in writing, and return the Certificated Note to
the Trustee. The Trustee, upon receipt of the Certificated Note from the
Presenting Agent, will immediately advise the Company and the Company will
promptly arrange to credit the account of the Presenting Agent in an amount of
immediately available funds equal to the amount previously paid by such
Presenting Agent in settlement for the Certificated Note. Such credits will be
made on the Settlement Date if possible, and in any event not later than the
Business Day following the Settlement Date; Provided that the Company has
received notice on the same day. If such failure shall have occurred for any
reason other than failure by such Presenting Agent to perform its obligations
hereunder or under the Distribution Agreement, the Company will reimburse such
Presenting Agent on an equitable basis for its loss of the use of funds during
the period when the funds were credited to the account of the Company. Upon
receipt of the 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.
21
<PAGE>
EXHIBIT A
Pricing Supplement Dated ____________ Rule 424(b) (3)
(To Prospectus dated ____________ and File No._____
Prospectus Supplement dated ___________)
PACCAR FINANCIAL CORP.
Medium-Term Notes - Fixed Rate
We are hereby offering to sell Notes having the terms specified below to
you with the assistance of:
/ / Goldman, Sachs & Co.
/ / Banc of America Securities LLC
/ / Merrill Lynch & Co.
/ / Morgan Stanley Dean Witter
/ / Salomon Smith Barney
/ / Other: ______________________,
/ / acting as: / / principal / / agent
at: / / varying prices related to prevailing market prices at the time of resale
/ / a fixed initial public offering price of __% of the Principal Amount.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal Amount: Original Issue Date:
Agent's Discount or Commission: Maturity Date:
Nets Proceeds to Company: Interest Payment Date(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Interest Rate: ___% per annum
Redemption:
/ / The Notes may not be redeemed prior to the Maturity Date.
/ / The Notes may be redeemed at the option of the Company prior
to the Maturity Date.
Initial Redemption Date:
Initial Redemption Percentage: ____%
Annual Redemption Percentage Reduction: ___% until Redemption Percentage
is 100% of the Principal Amount.
/ / The Notes shall be redeemed by the Company prior to the
Maturity Date (see attached).
Repayment:
/ / The Notes may not be repaid prior to the Maturity Date.
/ / The Notes may be repaid prior to the Maturity Date at the option of the
holder of the Notes.
Optional Repayment Date(s):
Currency:
Specified Currency: ___________ (If other than U.S. dollars, see attached)
Minimum Denominations: ___________ (Applicable only if Specified Currency is
other than U.S. dollars)
Exchange Rate Agent: ___________ (Applicable only if Specified Currency is
other than U.S. dollars)
If Discount Note, check / /
Issue Price: ____%
Form: / / Book-Entry / / Certificated
Other Provisions:
A-1
<PAGE>
EXHIBIT B
Pricing Supplement dated ___________ Rule 424(b) (3)
(To Prospectus dated ____________ and File No.______
Prospectus Supplement dated ____________ )
PACCAR FINANCIAL CORP.
Medium-Term Notes - Floating Rate
We are hereby offering to sell Notes having the terms specified below to
you with the assistance of:
/ / Goldman, Sachs & Co.
/ / Banc of America Securities LLC
/ / Merrill Lynch & Co.
/ / Morgan Stanley Dean Witter
/ / Salomon Smith Barney
/ / Other: ______________________,
/ / acting as: / / principal / / agent
at: / / varying prices related to prevailing market prices at the time of resale
/ / a fixed initial public offering price of __% of the Principal Amount.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal Amount: Original Issue Date:
Agent's Discount or Commission: Maturity Date:
Net Proceeds to Company: Interest Payment Date(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Calculation Agent:
Interest Calculation:
/ / Regular Floating Rate Note / / Floating Rate/Fixed Rate Note
/ / Inverse Floating Rate Note Fixed Rate Commencement Date:
Fixed Interest Rate: Fixed Interest Rate:
/ / Other Floating Rate Note (see attached)
Initial Interest Rate:
Initial Interest Reset Date:
Interest Reset Date(s):
<TABLE>
<S> <C> <C>
Interest Rate Basis:
/ / CD Rate / / Federal Funds Rate / / Prime Rate
/ / Commercial Paper Rate / / LIBOR / / Treasury Rate
/ / CMT Rate Designated LIBOR Page: / / Other (see attached)
/ / CMT Telerate Page 7051 / / LIBOR Reuters Page
/ / CMT Telerate Page 7052 / / LIBOR Telerate
If CMT Telerate Page 7052: LIBOR Currency:
/ / Weekly Average
/ / Monthly Average
</TABLE>
Index Maturity:
Spread (+/-):
Spread Multiplier:
Maximum Interest Rate:
Minimum Interest Rate:
Day Count Convention:
/ / 30/360 for the period from to .
B-1
<PAGE>
/ / Actual/360 for the period from to .
/ / Actual/Actual for the period from to .
Redemption:
/ / The Notes may not be redeemed prior to the Maturity Date.
/ / The Notes may be redeemed at the option of the Company prior to
Maturity Date.
Initial Redemption Date:
Initial Redemption Percentage: ___%
Annual Redemption Percentage Reduction: ___% until Redemption
Percentage is 100% of the Principal Amount.
/ / The Notes shall be redeemed by the Company prior to the Maturity Date
(see attached).
Repayment:
/ / The Notes may not be repaid prior to the Maturity Date.
/ / The Notes may be repaid prior to the Maturity Date at the option of
the holder of the Notes. Optional Repayment Date(s):
Currency:
Specified Currency:_____ (If other than U.S. dollars, see attached)
Minimum Denominations:_____(Applicable only if Specified Currency is other
than U.S. dollars)
Exchange Rate Agent: _____________ (Applicable only if Specified Currency
is other than U.S. dollars)
If Discount Note, check / /
Issue Price: ___%
Form: / / Book-Entry / / Certificated
Other Provisions:
B-2
<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. J PACCAR FINANCIAL CORP. Principal Amount
Medium-Term Note, Series J
(Fixed Rate) $
CUSIP: ORIGINAL ISSUE DATE:
INTEREST RATE:
MATURITY DATE: INITIAL REDEMPTION DATE:
HOLDER'S OPTIONAL REPAYMENT DATE(S): INITIAL REDEMPTION PERCENTAGE:
[ ] CHECK IF DISCOUNT NOTE ANNUAL REDEMPTION PERCENTAGE
Issue Price ___% REDUCTION:
OTHER PROVISIONS:
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:
1
<PAGE>
or registered assigns, the principal sum of DOLLARS on the
Maturity Date shown above, and to pay interest thereon at the rate per annum
shown above (computed on the basis of a 360-day year of twelve 30-day months)
until the principal hereof is paid or made available for payment. The Company
will pay interest semi-annually on March 15 and September 15, commencing with
the March 15 or September 15 immediately following the Original Issue Date shown
above, and at Maturity; provided, however, that if the Original Issue Date shown
above is after March 1 and on or before the immediately following March 15 or
after September 1 and on or before the immediately following September 15,
interest payments will commence on the next succeeding September 15 or March 15,
as the case may be. Interest on this Note will accrue from the most recent date
to which interest has been paid or duly provided for or, if no interest has been
paid or duly provided for, from the Original Issue Date shown above. If any
Interest Payment Date would fall on a day that is not a Business Day, the
payment of principal or interest shall be postponed to the next day that is a
Business Day, and no interest on such payment shall accrue from and after such
Interest Payment Date. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the Person in whose name this Note (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the March 1 or the September 1 (whether or not
a Business Day), as the case may be, next preceding such Interest Payment Date,
and interest payable at Maturity shall be payable to the Person to whom the
principal hereof is payable. Any such interest not so punctually paid or duly
provided for shall forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Note (or one
or more Predecessor Securities) is registered on a Special Record Date for the
payment of such Defaulted Interest to be fixed by the Trustee, notice whereof
shall be given to the Holder of this Note not less than 10 days prior to such
Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange upon which the
Securities of the series shown above may be listed, and upon such notice as may
be required by such exchange, all as more fully provided in the Indenture.
Payment of principal and interest payable at Maturity of this Note will be made
at the office or agency of the Company maintained for that purpose in the
Borough of Manhattan, The City of New York, New York, in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts, and will be made in immediately available
funds if this Note is presented in time for payment to be made in such funds in
accordance with normal procedures of Citibank, N.A., as paying agent (the
"Paying Agent", which term includes any successor paying agent under the
Indenture). 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
neither a legal nor a day on which commercial banks are authorized or required
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 will 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 will 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.
2
<PAGE>
Dated: PACCAR FINANCIAL CORP.
CERTIFICATE OF AUTHENTICATION By
------------------------------
President
This is one of the Securities of the series
designated herein issued under the within-
mentioned Indenture.
ATTEST:
By -------------------------------
Secretary
CITIBANK, N.A., as Trustee
By --------------------------------
Authorized Signatory
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 Optional 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 Optional 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
3
<PAGE>
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 Paying Agent 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.
If the Discount Note box is checked above, the amount payable to the
Holder of this Note in the event of redemption, repayment or acceleration of
maturity will be equal to the sum of (i) the Issue Price specified above
(increased by any accruals of Discount, as defined below, and reduced by any
amounts of principal previously paid) and, in the event of any redemption of
this Note (if applicable), multiplied by the Initial Redemption Percentage
Reduction, specified above (as adjusted by the Annual Redemption Percentage
Reduction specified above) and (ii) any unpaid interest accrued hereon to the
date of such redemption, repayment or acceleration of maturity, as the case may
be. The difference between the Issue Price specified above and the Principal
Amount of this Note is referred to herein as the "Discount".
For purposes of determining the amount of Discount that has accrued as
of any date on which a redemption, repayment or acceleration of maturity occurs
for this Note, such Discount will be accrued using a constant yield method. The
constant yield will be calculated using a 30-day month, 360-day year convention,
a compounding period that, except for the Initial Period (as defined below),
corresponds to the shortest period between Interest Payment Dates specified
above (with ratable accruals within a compounding period), an interest rate
equal to the Initial Interest Rate specified above and an assumption that the
maturity of this Note will not be accelerated. If the period from the Original
Issue Date specified above to the initial Interest Payment Date (the "Initial
Period") is shorter than the compounding period for this Note, a proportionate
amount of the yield for an entire compounding period will be accrued. If the
Initial Period is longer than the compounding period, then such period will be
divided into a regular compounding period and a short period with the short
period being treated as provided in the preceding sentence.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series under the
Indenture to be affected at any time by the Company with the consent of the
Holders of a majority in principal amount of the Securities at the time
Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of a majority in principal amount of the
Securities of each series at the time Outstanding, on behalf of the Holders of
all Securities of such ^ series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note shall
be conclusive and binding upon such Holder and upon all future Holders of this
Note and of any Note issued upon the registration of transfer hereof or in
exchange herefor or in lieu hereof, whether or not notation of such consent or
waiver is made upon this Note.
4
<PAGE>
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 premium, if any, 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 premium, if any, 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.
5
<PAGE>
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, without regard to principles of conflicts of
laws.
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.
6
<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. FRJ PACCAR Financial Corp. Principal Amount
Medium-Term Note, Series J
CUSIP: (Floating Rate) $
ORIGINAL ISSUE DATE: MATURITY DATE:
INITIAL INTEREST RATE: SPREAD:
INDEX MATURITY: SPREAD MULTIPLIER:
INTEREST RATE BASIS:
IF LIBOR: IF CMT RATE:
[ ] LIBOR Reuters [ ] CMT Telerate Page 7051
Page: [ ] CMT Telerate Page 7052:
[ ] LIBOR Telerate [ ] Weekly Average
Page: [ ] Monthly Average
Designated LIBOR
Currency:
INTEREST CATEGORY: DAY COUNT CONVENTION:
[ ] Regular Floating Rate Note [ ] 30/360 for the period
[ ] Floating Rate/Fixed Rate Note from to .
Fixed Rate Commencement Date: [ ] Actual/360 for the period
Fixed Interest Rate: % from to .
[ ] Inverse Floating Rate Note [ ] Actual/Actual for the period
Fixed Interest Rate: % from to .
Applicable Interest Rate Basis:
MAXIMUM INTEREST RATE: INTEREST PAYMENT PERIOD:
MINIMUM INTEREST RATE: INTEREST RATE RESET PERIOD:
INITIAL INTEREST RESET DATE:
INTEREST RESET DATES: INTEREST PAYMENT DATES:
INTEREST DETERMINATION DATES:
(if different than provided below)
[ ] CHECK IF DISCOUNT NOTE
Issue Price:
HOLDER'S OPTIONAL REPAYMENT DATE(S):
-1-
<PAGE>
OTHER PROVISIONS:
INITIAL REDEMPTION DATE: CALCULATION AGENT:
INITIAL REDEMPTION PERCENTAGE:
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
will 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 will be the fifteenth calendar day (whether or not a Business
Day), next preceding such Interest Payment Date, and interest payable at
Maturity wilL 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 will
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 will 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 Citibank, N.A., as paying agent (the "Paying Agent", which
term includes any successor paying agent under the Indenture). 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 will appear in the Security Register.
Reference is hereby made to the further provisions of this Note set
forth below, which further provisions will 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 will 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
-2-
<PAGE>
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 Signatory
References herein to "the Note," "hereof," "herein" and comparable
terms will 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 Optional 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 Optional Repayment Date, this Note will 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 Paying Agent at its office at 111 Wall
Street, 5th Floor, New York, New York, 10043; Attention: Securities Services, or
such address which the Company will 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 will be
irrevocable. In the event of payment of this Note in part only, a new Note for
the unpaid portion hereof will 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 will 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 will 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 will be
postponed to the next SUCCEEDING 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 will 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
will 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 will 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.
-1-
<PAGE>
The interest rate borne by this Note will be determined as follows:
(i) Unless the Interest Category of this Note is specified above as a
"Floating Rate/Fixed Rate Note" or an "Inverse Floating Rate Note" or
otherwise specified herein, this Note will be designated as a "Regular
Floating Rate Note" and, except as set forth herein or specified above,
will bear interest at the rate determined by reference to the
applicable Interest Rate Basis or Bases (a) plus or minus the Spread,
if any, and/or (b) multiplied by the Spread Multiplier, if any, in each
case as specified above. Commencing on the Initial Interest Reset Date,
the rate at which interest on this Note will be payable will be reset
as of each Interest Reset Date specified above; provided, however, that
the interest rate in effect for the period, if any, from the Original
Issue Date to the Initial Interest Reset Date will be the Initial
Interest Rate.
(ii) If the Interest Category of this Note is specified above as a
"Floating Rate/Fixed Rate Note", then, except as set forth herein or
specified above, this Note will bear interest at the rate determined by
reference to the applicable Interest Rate Basis or Bases (a) plus or
minus the Spread, if any, and/or (b) multiplied by the Spread
Multiplier, if any, in each case as specified above. Commencing on the
Initial Interest Reset Date, the rate at which interest on this Note
will be payable will be reset as of each Interest Reset Date; provided,
however, that (y) the interest rate in effect for the period, if any,
from the Original Issue Date to the Initial Interest Reset Date will be
the Initial Interest Rate and (z) the interest rate in effect for the
period commencing on the Fixed Rate Commencement Date specified on the
face hereof to the Maturity Date will be the Fixed Interest Rate
specified above or, if no such Fixed Interest Rate is specified, the
interest rate in effect hereon on the day immediately preceding the
Fixed Rate Commencement Date.
(iii) If the Interest Category of this Note is specified above as an
"Inverse Floating Rate Note", then, except as set forth herein or
specified above, this Note will bear interest at the Fixed Interest
Rate minus the rate determined by reference to the applicable Interest
Rate Basis or Bases (a) plus or minus the Spread, if any, and/or (b)
multiplied by the Spread Multiplier, if any, in each case as specified
above; provided, however, that, unless otherwise specified above or
herein, the interest rate hereon will not be less than zero. Commencing
on the Initial Interest Reset Date, the rate at which interest on this
Note will be payable will be reset as of each Interest Reset Date;
provided, however, that the interest rate in effect for the period, if
any, from the Original Issue Date to the Initial Interest Reset Date
will be the Initial Interest Rate.
Determination of CD Rate. If the Interest Reset Basis specified above
is the CD Rate, the interest rate with respect to this Note will 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
in H.15(519) (as defined below) under the caption "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 in
H.15 Daily Update (as defined below), or other recognized electronic source used
for the purpose of displaying the applicable rate, under the caption "CDs
(secondary market)". If such rate is not yet published in H.15(519), H.15 Daily
Update or other recognized electronic source 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 non-bank dealers in negotiable United
States dollar certificates of deposit in The City of New York selected by the
Calculation Agent for negotiable United States dollar certificates of deposit of
major United States money center 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 determined as of such Interest Determination Date will be
the CD Rate in effect on such Interest Determination Date.
"H.15(519)" means the weekly statistical release designated as
H.15(519), or any successor publication, published by the Board of Governors of
the Federal Reserve System.
"H.15 Daily Update" means the daily update of H.15(519), available
through the world-wide-web site of the Board of Governors of the Federal Reserve
System at http://www.bog.frb.fed.us/releases/h15/update, or any successor site
or publication.
Determination of CMT Rate. If the Interest Reset Basis specified above
is the CMT Rate, the interest rate with respect to this Note will 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:
-2-
<PAGE>
(i) If CMT Telerate Page 7051 is specified above, the percentage equal
to the yield for United States Treasury securities at "constant
maturity" having the Index Maturity specified above as published in
H.15(519) under the caption "Treasury Constant Maturities", as the
yield is displayed on Bridge Telerate, Inc., or any successor service,
on page 7051, or any other page as may replace page 7051 on that
service ("Telerate Page 7051"), for such Interest Determination Date.
If such rate does not appear on Telerate Page 7051, the CMT Rate on
such Interest Determination Date will be the percentage equal to the
yield for United States Treasury securities at "constant maturity"
having the Index Maturity specified above and for such Interest
Determination Date as published in H.15(519) under the caption
"Treasury Constant Maturities". If such rate does not appear in
H.15(519), the CMT Rate on such Interest Determination Date will be the
rate on such Interest Determination Date for the period of the Index
Maturity specified above as may then be published by either the Federal
Reserve System Board of Governors or the United States Department of
the Treasury that the Calculation Agent determines to be comparable to
the rate which would otherwise have been published in H.15(519). If the
Federal Reverse System Board of Governors or the United States
Department of the Treasury does not publish a yield on United States
Treasury securities at "constant maturity" having the Index Maturity
specified above for such Interest Determination Date, 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 bid prices at approximately 3:30 P.M., New York
City time, on such Interest Determination Date of three leading primary
United States government securities dealers in The City of New York
(each, a "Reference Dealer") selected by the Calculation Agent from
five Reference Dealers 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 United States
Treasury securities with an original maturity equal to the Index
Maturity specified above, a remaining term to maturity no more than 1
year shorter than the Index Maturity specified above and in a principal
amount that is representative for a single transaction in such
securities in such market at such time. If fewer than five but more
than two such prices are provided as requested, the CMT Rate on such
Interest Determination Date will be calculated by the Calculation Agent
and will be based on the arithmetic mean of the bid prices obtained and
neither the highest nor the lowest of such quotations will be
eliminated. If fewer than three prices are provided as requested, 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 bid prices as of approximately
3:30 P.M., New York City time, on such Interest Determination Date of
three Reference Dealers selected by the Calculation Agent from five
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 United States Treasury securities with an original maturity
greater than the Index Maturity specified above, a remaining term to
maturity closest to the Index Maturity specified above, and in a
principal amount that is representative for a single transaction in
such securities in such market at such time. If fewer than five but
more than two such prices are provided as requested, the CMT Rate on
such Interest Determination Date will be calculated by the Calculation
Agent and will be based on the arithmetic mean of the bid prices
obtained and neither the highest nor the lowest of the quotations will
be eliminated; provided, however, that if fewer than three such prices
are provided as requested, the CMT Rate determined as of such Interest
Determination Date will be the CMT Rate in effect on such Interest
Determination Date. If two such United States Treasury securities with
an original maturity greater than the Index Maturity specified above
have remaining terms to maturity equally close to the Index Maturity
specified above, the quotes for the Treasury security with the shorter
original term to maturity will be used.
(ii) If CMT Telerate Page 7052 is specified above, the percentage equal
to the one-week or one-month, as specified above, average yield for
United States Treasury securities at "constant maturity" having the
Index Maturity specified above as published in H.15(519) opposite the
caption "Treasury Constant Maturities", as such yield is displayed on
Bridge Telerate, Inc., or any successor service, on page 7052, or any
other page as may replace page 7052 on that service ("Telerate Page
7052"), for the week or month, as applicable, ended immediately
preceding the week or month, as applicable, in which such Interest
Determination Date falls. If such rate does not appear on Telerate Page
7052, the CMT Rate on such Interest Rate Determination Date will be the
percentage equal to the one-week or one-month, as specified above,
average yield for United States Treasury securities at "constant
maturity" having the Index Maturity specified above and for the week or
month, as applicable, preceding such Interest Determination Date as
published in H.15(519) opposite the caption "Treasury Constant
Maturities". If such rate does not appear in H.15(519), the CMT Rate on
such Interest Determination Date will be the one-week or one-month, as
specified above, average yield for United States Treasury securities at
"constant maturity" having the Index Maturity specified above as
otherwise announced by the Federal Reserve Bank of New York for the
week or month, as applicable, ended immediately preceding the week or
month, as applicable, in which such Interest Determination Date falls.
If the Federal Reserve Bank of New York does not publish a one-week or
one-month, as specified above, average yield on United States Treasury
securities at "constant maturity" having the Index Maturity specified
above for the applicable week or month, 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 bid prices at approximately 3:30 P.M., New York City time, on
such Interest Determination Date of three Reference Dealers selected by
the Calculation Agent from five such Reference Dealers
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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 United
States Treasury securities with an original maturity equal to the Index
Maturity specified above, a remaining term to maturity no more than 1
year shorter than the Index Maturity specified above and in a principal
amount that is representative for a single transaction in such
securities in such market at such time. If fewer than five but more
than two such prices are provided as requested, the CMT Rate on such
Interest Determination Date will be calculated by the Calculation Agent
and will be based on the arithmetic mean of the bid prices obtained and
neither the highest nor the lowest of such quotations will be
eliminated. If fewer than three prices are provided as requested, 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 bid prices as of approximately
3:30 P.M., New York City time, on such Interest Determination Date of
three Reference Dealers selected by the Calculation Agent from five
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 United States Treasury securities with an original maturity
greater than the Index Maturity specified above, a remaining term to
maturity closest to the Index Maturity specified above and in a
principal amount that is representative for a single transaction in
such securities in such market at such time. If fewer than five but
more than two such prices are provided as requested, the CMT Rate on
such Interest Determination Date will be calculated by the Calculation
Agent and will be based on the arithmetic mean of the bid prices
obtained and neither the highest or the lowest of such quotations will
be eliminated; provided, however, that if fewer than three such prices
are provided as requested, the CMT Rate determined as of such Interest
Determination Date will be the CMT Rate in effect on such Interest
Determination Date. If two United States Treasury securities with an
original maturity greater than the Index Maturity specified above have
remaining terms to maturity equally close to the Index Maturity
specified above, the quotes for the United States Treasury security
with the shorter original remaining term to maturity will be used.
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 will 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 Interest
Determination Date for commercial paper having the Index Maturity specified
above as published in H.15(519) under the caption "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 (as defined below) pertaining to
such Interest Determination Date, then the Commercial Paper Rate will be the
rate on such Interest Determination Date for commercial paper having the Index
Maturity specified above as published in H.15 Daily Update, or other recognized
electronic source used for the purpose of displaying the applicable rate, under
the caption "Commercial Paper-Nonfinancial." 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), H.15 Daily Update or other recognized electronic source, the
Commercial Paper Rate for such Interest Determination Date will be calculated by
the Calculation Agent and will be the Money Market Yield of the arithmetic mean
of the offered rates at approximately 11:00 A.M., New York City time, on that
Interest Determination Date, of three leading dealers of United States dollar
commercial paper in The City of New York selected by the Calculation Agent for
commercial paper having the Index Maturity specified above placed for industrial
issuers 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 determined as of such
Interest Determination Date will be the Commercial Paper Rate in effect on such
Interest Determination Date.
"Money Market Yield" means a yield (expressed as a percentage)
calculated in accordance with the following formula:
Money Market Yield = D X 360 x 100
--------------------
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper, quoted
on a bank discount basis and expressed as a decimal; and "M" refers to the
actual number of days in the interest period for which interest is being
calculated.
Determination of Federal Funds Rate. If the Interest Rate Basis
specified above is the Federal Funds Rate, the interest rate with respect to
this Note will 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 dollar federal funds as published in H.15(519) under the
caption "Federal Funds (Effective)" as displayed on Bridge Telerate, Inc. or any
successor service on page 120 or any other page as may replace the applicable
page on that service ("Telerate Page 120") or, if such rate does not appear on
Telerate Page 120 or is 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
H.15 Daily Update, or other recognized electronic source used for the purpose of
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<PAGE>
displaying the applicable rate, under the caption "Federal Funds/Effective
Rate." If such rate is not yet published in H.15(519), H.15 Daily Update or
other recognized electronic source 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 United States dollar federal funds transactions in The City
of New York selected by the Calculation Agent prior to 9:00 A.M., New York City
time, on such Interest Determination Date; provided, however, that if the
brokers selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the Federal Funds Rate will be the Federal Funds
Rate determined as of such Interest Determination Date 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 will 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 any Interest Determination Date, LIBOR will be
either: (a) if "LIBOR Telerate" is specified above, the rate for deposits in the
LIBOR Currency (as defined below) having the Index Maturity specified above
commencing on the Interest Reset Date immediately following such Interest
Determination Date that appears on the Designated LIBOR Page (as defined below)
as of 11:00 A.M., London time, on that Interest Determination Date, or (b) if
"LIBOR Reuters" is specified above, the arithmetic mean of the offered rates
(unless the specified Designated LIBOR Page by its terms provides only for a
single rate, in which case such single rate will be used) for deposits in the
LIBOR Currency having the Index Maturity specified above, commencing on the
Interest Reset Date 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 such 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
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 LIBOR
Currency for the period of the Index Maturity specified above, commencing on the
Interest Reset Date 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 LIBOR Currency in such market at
such time. If at least two such quotations are provided, LIBOR determined on
such Interest Determination Date will be calculated by the Calculation Agent and
will be the arithmetic mean of such quotations. If fewer than two quotations are
provided, LIBOR determined on such Interest Determination Date will be
calculated by the Calculation Agent and 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 LIBOR 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 LIBOR 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.
"LIBOR Currency" means the currency specified above as the currency for
which LIBOR will be calculated. If no such currency is specified above, the
LIBOR Currency will be United States dollars.
"Designated LIBOR Page" means either (a) if "LIBOR Telerate" is
specified above, the display on Bridge Telerate, Inc. (or any successor
service), on the page specified above, (or any page as may replace the specified
page on that service) for the purpose of displaying the London interbank rates
of major banks for such applicable LIBOR Currency, or (b) if "LIBOR Reuters" is
specified above, the display on the Reuters Monitor Money Rates Service (or any
successor service) on the page specified above (or any page as may replace the
specified page on that service) for the purpose of displaying the London
interbank rates of major banks for such LIBOR Currency. If neither LIBOR
Telerate nor LIBOR Reuters is specified above, LIBOR for the applicable LIBOR
Currency will be determined as if LIBOR Telerate had been specified.
"Principal Financial Center" will generally be the capital city of the
country to which the LIBOR Currency relates, except that with respect to United
States dollars, Canadian dollars, Deutsche marks, Dutch guilders, Portuguese
escudos, South African rand and Swiss francs, the "Principal Financial Center"
will be The City of New York, Toronto, Frankfurt, Amsterdam, London,
Johannesburg and Zurich, respectively.
Determination of Prime Rate. If the Interest Rate Basis specified above
is the Prime Rate, the interest rate with respect to this Note will be the Prime
Rate plus or minus the Spread, if any, or multiplied by the Spread Multiplier,
if any, as specified above.
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<PAGE>
"Prime Rate" means, with respect to any Interest Determination Date, the rate on
such Interest Determination Date as published in H.15(519) under the caption
"Bank Prime Loan." If such rate is not published by 3:00 P.M., New York City
time, on the Calculation Date pertaining to such Interest Determination Date,
the Prime Rate for such Interest Determination Date will be the rate published
in H.15 Daily Update, or such other recognized electronic source used for the
purpose of displaying the applicable rate under the caption "Bank Prime Loan."
If such rate is not published by 3:00 P.M., New York City time, in H.15(519),
H.15 Daily Update or such other recognized electronic source on the related
Calculation Date, the Prime Rate for such Interest Determination Date will be
calculated by the Calculation Agent and will be the arithmetic mean of the rates
of interest publicly announced by at least four banks that appear on the Reuters
Screen US PRIME 1 Page (as defined below) as such bank's prime rate or base
lending rate as of 11:00 A.M., New York City time, on such Interest
Determination Date, or, if fewer than four such rates appear by 3:00 P.M., New
York City time, on the related Calculation Date on Reuters Screen US PRIME 1
Page for such Interest Determination Date, the rate will be calculated by the
Calculation Agent and will be the arithmetic mean of the prime rates or base
lending 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 by three major banks in The City of New York selected by the
Calculation Agent; provided, however, that if the banks 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 US PRIME 1 Page" means the display on the Reuters
Monitor Money Rates Service (or any successor service) on the "US PRIME 1" page
(or such other page as may replace the "US PRIME 1" 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 will 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 (the "Auction") of direct obligations of the United States
("Treasury Bills") having the Index Maturity specified above as published under
the caption "INVESTMENT RATE" on the display on Bridge Telerate, Inc. or any
successor service on page 56 or any other page as may replace page 56 on that
service ("Telerate Page 56") or page 57 or any other page as may replace page 57
on that service ("Telerate Page 57"), 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 Bond Equivalent Yield (as defined below) of the rate for
such Treasury Bills as published in H.15 Daily Update, or other recognized
electronic source used for the purpose of displaying such rate, under the
caption "U.S. Government Securities/Treasury Bills/Auction High". If such rate
is not so published by 3:00 P.M., New York City time in Telerate Page 56,
Telerate Page 57, H.15 daily Update or other recognized electronic source, on
the related Calculation Date, the Treasury Rate on such Interest Determination
Date will be the Bond Equivalent Yield of the auction rate of such Treasury
Bills as announced by the United States Department of the Treasury. In the event
that such auction rate is not so announced by the United States Department of
the Treasury on such Calculation Date, or if the Auction is not held, the
Treasury Rate on such Interest Determination Date will be the Bond Equivalent
Yield of the rate on such Interest Determination Date of Treasury Bills having
the Index Maturity specified above as published in H.15(519) under the caption
"U.S. Government Securities/Treasury Bills/Secondary Market", or if such rate is
not published by 3:00 P.M., New York City time, on the related Calculation Date,
the rate on such Interest Determination Date of such Treasury Bills as published
in H.15 Daily Update, or other recognized electronic source used for the purpose
of displaying the rate, under the caption "U.S. Government Securities/Treasury
Bills/Secondary Market". If such rate is not published in H.15(519), H.15 Daily
Update, or other recognized electronic source by 3:00 P.M., New York City time,
on such Calculation Date, the Treasury Rate on such Interest Determination Date
will be calculated by the Calculation Agent and will be the Bond Equivalent
Yield 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 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 determined as of such Interest
Determination Date will be the Treasury Rate in effect on such Interest
Determination Date.
"Bond Equivalent Yield" means a yield (expressed as a percentage)
calculated in accordance with the following formula:
Bond Equivalent Yield = D X N
------------------------------ X 100
360 - (D X M)
where "D" refers to the applicable per annum rate for Treasury Bills quoted on a
bank discount basis and expressed as a decimal, N refers to 365 or 366, as the
case may be, and "M" refers to the actual number of days in the applicable
Interest Reset Period.
Notwithstanding the determination of the interest rate as provided
above, the interest rate on this Note for any interest period will not be
greater than the Maximum Interest Rate, if any, or less than the Minimum
Interest Rate, if any, specified above.
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<PAGE>
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 will calculate the interest rate on
this Note in accordance with the foregoing on or before each Calculation 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.
The Paying Agent will notify the Company 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, 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 will 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 will be the immediately 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 commercial banks are authorized or
required 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 day on which
commercial banks are open for business including dealings in the LIBOR currency
in London.
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 the 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; provided, however, that if an auction is held
on the Friday of the week preceding the Interest Reset Date, the Interest
Determination Date will be the preceding Friday; and provided, further, that if
an auction falls on any Interest Reset Date, then such Interest Reset Date will
instead be the first Business Day following the auction 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 will be 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.
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 CMT Rate or the Treasury Rate.
If an Event of Default (as defined in the Indenture) with respect to
the Notes will 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.
If the Discount Note box is checked above, the amount payable to the
Holder of this Note in the event of redemption, repayment or acceleration of
maturity will be equal to the sum of (i) the Issue Price specified above
(increased by any accruals of
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<PAGE>
Discount, as defined below, and reduced by any amounts of principal previously
paid) and, in the event of any redemption of this Note (if applicable),
multiplied by the Initial Redemption Percentage Reduction, specified above (as
adjusted by the Annual Redemption Percentage Reduction specified above) and (ii)
any unpaid interest accrued hereon to the date of such redemption, repayment or
acceleration of maturity, as the case may be. The difference between the Issue
Price specified above and the Principal Amount of this Note is referred to
herein as the "Discount".
For purposes of determining the amount of Discount that has accrued as
of any date on which a redemption, repayment or acceleration of maturity occurs
for this Note, such Discount will be accrued using a constant yield method. The
constant yield will be calculated using a 30-day month, 360-day year convention,
a compounding period that, except for the Initial Period (as defined below),
corresponds to the shortest period between Interest Payment Dates specified
above (with ratable accruals within a compounding period), an interest rate
equal to the Initial Interest Rate specified above and an assumption that the
maturity of this Note will not be accelerated. If the period from the Original
Issue Date specified above to the initial Interest Payment Date (the "Initial
Period") is shorter than the compounding period for this Note, a proportionate
amount of the yield for an entire compounding period will be accrued. If the
Initial Period is longer than the compounding period, then such period will be
divided into a regular compounding period and a short period with the short
period being treated as provided in the preceding sentence.
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 will
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 will 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 premium, if any, and interest to the Maturity Date("Stated Maturity" in
the Indenture) 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 premium, if any, 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 will no longer be entitled to the benefits of the
Indenture, except for the purposes of registration of transfer and exchange of
Notes, and will 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 will 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 will 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
-8-
<PAGE>
in writing, and thereupon one or more new Notes of the same series in authorized
denominations and for the same aggregate principal amount will be issued to the
designated transferee or transferees.
The Notes are issuable only in registered form without coupons and, if
payable in 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 will 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 will 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 will
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 will
have the meanings assigned to them in the Indenture.
This note will be governed by and construed in accordance with the laws
of the State of New York, without regard to principles of conflicts of laws.
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
| |
| |
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(Name and address of assignee, including zip code, must be printed or
typewritten)
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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.
-9-
<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)
PACCAR Financial Corp.
- -------------------------------------------------------------------------------
[Name of Issuer]
Citibank, N.A. 2790
- -------------------------------------------------------------------------------
[Name and DTC Participant Number of Issuing Agent]
Citibank, N.A. 2790
- -------------------------------------------------------------------------------
[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
PACCAR Financial Corporation Medium Term Notes
Re: -----------------------------------------------------------------------
$1 Billion Series I
-----------------------------------------------------------------------
-----------------------------------------------------------------------
[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 SEPTEMBER 10, 1998.
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
- 3 -
<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
- 4 -
<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 PACCAR Financial Corp.
DTC, the method of effecting book- ---------------------------------
entry transfers of securities distri- (Issuer)
buted through DTC, and certain
related matters. By:
---------------------------------
(Authorized Officer's Signature)
Citibank, N.A.
-----------------------------------
(Issuing Agent)
By:
---------------------------------
(Authorized Officer's Signature)
Citibank, N.A.
-----------------------------------
(Paying Agent)
By:
---------------------------------
(Authorized Officer's Signature)
Received and Accepted:
THE DEPOSITORY TRUST COMPANY
By:
---------------------------------
- 5 -
<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
- 6 -
<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
- 7 -
<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>
Exhibit 5.1
[PACCAR LOGO]
Dated ________, 2000
PACCAR Financial Corp.
777 - 106th Avenue, N.E.
Bellevue, Washington 98004
Re: Registration Statement on Form S-3
Registration of Senior Debt Securities
$2,500,000,000 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
$2,500,000,000 (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
<PAGE>
securities laws, the Debt Securities will constitute legal, valid and
binding obligations of the Company entitled to the benefits of the
Indenture.
PACCAR Financial Corp.
_____________, 2000
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>
Exhibit 8.1
[PACCAR LOGO]
March 1, 2000
PACCAR Financial Corp.
P.O. Box 1518
Bellevue, WA 98009
Gentlemen:
Reference is made to the Registration Statement on Form S-3 dated March 1, 2000
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") $2,500,000,000 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,
B. Robert Crowley, Esq.
Tax Counsel to PACCAR Inc
Attachment
<PAGE>
EXHIBIT A
UNITED STATES FEDERAL INCOME TAXATION
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 in this prospectus, the term "U.S. Holder" means a beneficial
owner of a note that is for United States Federal income tax purposes:
(1) a citizen or resident of the United States,
(2) a corporation or a partnership (including an entity treated as a
corporation or a partnership for United States Federal income tax
purposes) 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 are adopted that provide
otherwise),
(3) an estate whose income is subject to United States Federal income
tax regardless of its source,
(4) 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
(5) 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.
Certain trusts not described in clause (4) above in existence on August 20, 1996
that elect to be treated as a United States person will also be a U.S. Holder
for purposes of the following discussion. 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).
1
<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
("Discount Notes"). The following summary is based upon final Treasury
regulations (the "OID Regulations") released by the Internal Revenue Service on
January 27, 1994, and subsequently amended, under the original issue discount
provisions of the Code.
For United States Federal income tax purposes, original issue discount
is the excess of the stated redemption price at maturity of a note over its
issue price, if such excess equals or exceeds a DE MINIMIS amount (generally 1/4
of 1% of the note's stated redemption price at maturity multiplied by the number
of complete years to its maturity from its issue date or, in the case of a note
providing for the payment of any amount other than qualified stated interest (as
defined below) prior to maturity, multiplied by the weighted average maturity of
the note). The issue price of each note of an issue of notes equals the first
price at which a substantial amount of the notes has been sold (ignoring sales
to bond houses, brokers, or similar persons or organizations acting in the
capacity of underwriters, placement agents, or wholesalers). The stated
redemption price at maturity of a note is the sum of all payments provided by
the note other than "qualified stated interest" payments. The term "qualified
stated interest" generally means stated interest that is unconditionally payable
in cash or property (other than debt instruments of the issuer) at least
annually at a single fixed rate. In addition, under the OID Regulations, if a
note bears interest for one or more accrual periods at a rate below the rate
applicable for the remaining term of the note (e.g., notes with teaser rates or
interest holidays), and if the greater of either the resulting foregone interest
on the note or any "true" discount on the note (i.e., the excess of the note's
stated principal amount over its issue price) equals or exceeds a specified DE
MINIMIS amount, then the stated interest on the note would be treated as
original issue discount rather than qualified stated interest.
Payments of qualified stated interest on a note are taxable to a U.S.
Holder as ordinary interest income at the time such payments are accrued or are
received (in accordance with the U.S. Holder's regular method of tax
accounting). A U.S. Holder of a Discount Note must include original issue
discount in income as ordinary interest for United States Federal income tax
purposes as it accrues under a constant yield method in advance of receipt of
the cash payments attributable to such income, regardless of the U.S. Holder's
regular method of tax accounting. In general, the amount of original issue
discount included in income by the initial U.S. Holder of a Discount Note is the
sum of the daily portions of original issue discount with respect to the
Discount Note for each day during the taxable year (or portion of the taxable
year) on which the U.S. Holder held the Discount Note. The "daily portion" of
original issue discount on any Discount Note is determined by allocating to each
day in any accrual period a ratable portion of the original issue discount
allocable to that accrual period. An "accrual period" may be of any length and
the accrual periods may vary in length over the term of the Discount Note,
provided that each accrual period is no longer than one year and each scheduled
payment of principal or interest occurs either on the final day of an accrual
period or on the first day of an accrual period. The amount of original issue
discount allocable to each accrual period is generally equal to the difference
between
- the product of the Discount Note's adjusted issue price at the
beginning of such accrual period and its yield to maturity (determined
on the basis of compounding at the close of each accrual period and
appropriately adjusted to take into account the length of the
particular accrual period) and
- the amount of any qualified stated interest payments allocable to
such accrual period.
2
<PAGE>
The "adjusted issue price" of a Discount Note at the beginning of any
accrual period is the sum of the issue price of the Discount Note plus the
amount of original issue discount allocable to all prior accrual periods minus
the amount of any prior payments on the Discount Note that were not qualified
stated interest payments. Under these rules, U.S. Holders generally will have to
include in income increasingly greater amounts of original issue discount in
successive accrual periods.
A U.S. Holder who purchases a 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 Discount Note after the purchase
date other than payments of qualified stated interest, will be considered to
have purchased the 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 Discount Note for
any taxable year (or portion thereof in which the U.S. Holder holds the 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
(hereinafter "Variable Notes") are subject to special rules whereby a Variable
Note will qualify as a "variable rate debt instrument" if
- 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
- it provides for stated interest, compounded or paid at least
annually, at current values of:
- one or more qualified floating rates,
- a single fixed rate and one or more qualified floating
rates,
- a single objective rate, or
- a single fixed rate and a single objective rate that is a
qualified inverse floating rate.
A "qualified floating rate" is any variable rate where variations in
the value of such rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
Variable Note is denominated. Although a multiple of a qualified floating rate
will generally not itself constitute a qualified floating rate, a variable rate
equal to the product of a qualified floating rate and a fixed multiple that is
greater than .65 but not more than 1.35 will constitute a qualified floating
rate. A variable rate equal to the product of a qualified floating rate and a
fixed multiple that is greater than .65 but not more than 1.35, increased or
decreased by a fixed rate, will also constitute a qualified floating rate. In
addition, under the OID Regulations, two or more qualified floating rates that
can reasonably be expected to have approximately the same values throughout the
term of the Variable Note (e.g., two or more qualified floating rates with
values within 25 basis points of each other as determined on the Variable Note's
issue date) will be treated as a single qualified floating rate. Notwithstanding
the foregoing, a variable rate that would otherwise constitute a qualified
floating rate but which is subject to one or more restrictions such as a maximum
numerical limitation (i.e., a cap) or a minimum numerical limitation (i.e., a
floor) may, under certain circumstances, fail to be treated as a qualified
floating rate under the OID Regulations unless such cap or floor is fixed
3
<PAGE>
throughout the term of the note. An "objective rate" is a rate that is not
itself a qualified floating rate but which is determined using a single fixed
formula that is based on objective financial or economic information. A rate
will not qualify as an objective rate if it is 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), such as dividends, profits, or
the value of the issuer's stock (although a rate does not fail to be an
objective rate merely because it is based on the credit quality of the issuer).
A "qualified inverse floating rate" is any objective rate where such rate is
equal to a fixed rate minus a qualified floating rate, as long as variations in
the rate can reasonably be expected to inversely reflect contemporaneous
variations in the qualified floating rate. The OID Regulations also provide that
if a Variable Note provides for stated interest at a fixed rate for an initial
period of one year or less followed by a variable rate that is either a
qualified floating rate or an objective rate and if the variable rate on the
Variable Note's issue date is intended to approximate the fixed rate (e.g., the
value of the variable rate on the issue date does not differ from the value of
the fixed rate by more than 25 basis points), then the fixed rate and the
variable rate together will constitute either a single qualified floating rate
or objective rate, as the case may be.
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, and if
the interest on a Variable Note is unconditionally payable in cash or property
(other than debt instruments of the issuer) at least annually, then all stated
interest on the Variable Note 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 Variable Note's stated principal amount) in excess
of a specified DE MINIMIS amount. The amount of qualified stated interest and
the amount of original issue discount, if any, that accrues during an accrual
period on such a Variable Note is determined under the rules applicable to fixed
rate debt instruments by assuming that the variable rate is a fixed rate equal
to
(1) 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
(2) 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.
The qualified stated interest allocable to an accrual period is increased (or
decreased) if the interest actually paid during an accrual period exceeds (or is
less than) the interest assumed to be paid during the accrual period pursuant to
the foregoing rules.
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
4
<PAGE>
qualifies as a "variable rate debt instrument" and provides for stated interest
at a fixed rate in addition to either one or more qualified floating rates or a
qualified inverse floating rate, the fixed rate is initially converted into a
qualified floating rate (or a qualified inverse floating rate, if the Variable
Note provides for a qualified inverse floating rate). Under such circumstances,
the qualified floating rate or qualified inverse floating rate that replaces the
fixed rate must be such that the fair market value of the Variable Note as of
the Variable Note's issue date is approximately the same as the fair market
value of an otherwise identical debt instrument that provides for either the
qualified floating rate or qualified inverse floating rate rather than the fixed
rate. Subsequent to converting the fixed rate into either a qualified floating
rate or a qualified inverse floating rate, the Variable Note is then converted
into an "equivalent" fixed rate debt instrument in the manner described above.
Once the Variable Note is converted into an "equivalent" fixed rate
debt instrument pursuant to the foregoing rules, the amount of original issue
discount and qualified stated interest, if any, are determined for the
"equivalent" fixed rate debt instrument by applying the general original issue
discount rules to the "equivalent" fixed rate debt instrument and a U.S. Holder
of the Variable Note will account for such original issue discount and qualified
stated interest as if the U.S. Holder held the "equivalent" fixed rate debt
instrument. Each accrual period appropriate adjustments will be made to the
amount of qualified stated interest or original issue discount assumed to have
been accrued or paid with respect to the "equivalent" fixed rate debt instrument
in the event that such amounts differ from the actual amount of interest accrued
or paid on the Variable Note during the accrual period.
If a Variable Note does not qualify as a "variable rate debt
instrument" under the OID Regulations, then the Variable Note would be treated
as a contingent payment debt obligation. On June 11, 1996, the Treasury
Department issued final regulations (the "CPDI Regulations") concerning the
proper United States Federal income tax treatment of contingent payment debt
instruments. In general, the CPDI Regulations would cause the timing and
character of income, gain or loss reported on a contingent payment debt
instrument to substantially differ from the timing and character of income, gain
or loss reported on a contingent payment debt instrument under general
principles of current United States Federal income tax law. Specifically, the
CPDI Regulations generally require a U.S. Holder of such an instrument to
include future contingent and noncontingent interest payments in income as such
interest accrues based upon a projected payment schedule. Moreover, in general,
under the CPDI Regulations, any gain recognized by a U.S. Holder on the sale,
exchange, or retirement of a contingent payment debt instrument will be treated
as ordinary income and all or a portion of any loss realized could be treated as
ordinary loss as opposed to capital loss (depending upon the circumstances). The
CPDI Regulations apply to debt instruments issued on or after August 13, 1996.
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.
PFC may issue notes which;
- may be redeemable at the option of PFC prior to their stated
maturity (a "call option") and/or
- may be repayable at the option of the holder prior to their stated
maturity (a "put option").
5
<PAGE>
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 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 a
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 a 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 the 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 a 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:
- the amount of such payment or realized gain or
- the market discount which has not previously been included in
income and is treated as having accrued on the 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
6
<PAGE>
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 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, the 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 obligations then owned and thereafter
acquired by the U.S. Holder 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 the U.S. Holder's adjusted tax basis in the note. A U.S. Holder's
adjusted tax basis in a note generally will equal the 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 the 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 gains of individuals are subject to reduced capital gain rates
while short-term capital gains are subject to ordinary income rates. The
deductibility of capital losses is subject to certain limitations. Prospective
investors should consult their own tax advisors concerning these tax law
provisions.
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
7
<PAGE>
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 "Accrual Method" 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
8
<PAGE>
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. The 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 a 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 "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 "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 PFC, a controlled foreign corporation
related to PFC 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
9
<PAGE>
either of the two preceding calendar years, a statement that (1) is signed by
the beneficial owner of the note under penalties of perjury, (2) certifies that
such owner is not a U.S. Holder and (3) 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 issued new regulations (the "New
Regulations") which make certain modifications to the withholding, backup
withholding and information reporting rules. The New Regulations attempt to
unify certification requirements and modify reliance standards. The New
Regulations will generally be effective for payments made after December 31,
2000, subject to certain transition rules. Prospective investors are urged to
consult their own tax advisors regarding the New Regulations.
Generally, a non-U.S. Holder will not be subject to United States
Federal income taxes on any amount which constitutes capital gain upon
retirement or disposition of a note, provided the gain is not effectively
connected with the conduct of a trade or business in the United States by the
non-U.S. Holder. 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 PFC
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:
- the broker determines that the seller is a corporation or other
exempt recipient or
- 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).
10
<PAGE>
Such a sale must also be reported by the broker to the IRS, unless
either:
- the broker determines that the seller is an exempt recipient or
- 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. In addition,
prospective U.S. Holders are strongly urged to consult their own tax advisors
with respect to the New Withholding Regulations. See " United States Federal
Income Taxation-Non-U.S. Holders".
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.
11
<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 $2,500,000,000 of Medium Term Notes, Series J and
to the incorporation by reference therein of our report dated February 16, 1999,
with respect to the financial statements of PACCAR Financial Corp. included in
its Annual Report (Form 10-K) for the year ended December 31, 1998, filed with
the Securities and Exchange Commission.
Ernst & Young LLP
Seattle, Washington
March 1, 2000
<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,
K. R. Gangl, A. J. Wold 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 __ day of February 2000.
/s/ M. T. Barkley
Controller
- ----------------------------
(M. T. Barkley)
/s/ P. A. Donohoe
Treasurer
- ----------------------------
(P. A. Donohoe
/s/ A. J. Wold
President and Director
- ----------------------------
(A. J. Wold)
/s/ K. R. Gangl
Vice Chairman and Director
- ----------------------------
(K. R. Gangl)
/s/ D. J. Hovind
Director
- ----------------------------
(D. J. Hovind)
/s/ M. A. Tembreull
Vice Chairman and Director
- ----------------------------
(M. A. Tembreull)
/s/ M. C. Pigott
Chairman and Director
- ----------------------------
(M. C. Pigott)
<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)
Exhibit 5 - Not applicable.
<PAGE>
Exhibit 6 - The consent of the Trustee required by Section 321(b) of
the Trust Indenture Act of 1939. (Exhibit 6 to T-1 to Registration
Statement No. 33-19227.)
Exhibit 7 - Copy of the latest Report of Condition of Citibank, N.A.
(as of September 30, 1999 - 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 day of
___________, 2000.
CITIBANK, N.A.
By /s/Nancy Forte
---------------------------------
Nancy Forte
Senior 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 September 30,
1999, 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 ............................... $ 8,353,000
Interest-bearing balances ........................................................ 12,917,000
Held-to-maturity securities ....................................................... 0
Available-for-sale securities ..................................................... 38,392,000
Federal funds sold and securities purchased under agreements to resell ............ 9,122,000
Loans and lease financing receivables:
Loans and Leases, net of unearned income .......................................... $ 197,977,000
LESS: Allowance for loan and lease losses
........................................ 4,671,000
Loans and leases, net of unearned income, allowance, and reserve ................. 193,306,000
Trading assets .................................................................... 26,919,000
Premises and fixed assets (including capitalized leases) .......................... 3,957,000
Other real estate owned ........................................................... 388,000
Investments in unconsolidated subsidiaries and associated companies ............... 1,179,000
Customers' liability to this bank on acceptances outstanding ...................... 1,193,000
Intangible assets ................................................................. 4,368,000
Other assets ...................................................................... 12,514,000
TOTAL ASSETS ...................................................................... $ 312,608,000
LIABILITIES
Deposits:
In domestic offices .............................................................. $ 40,703,000
Noninterest-bearing ............................................................ $ 13,139,000
Interest-bearing ............................................................... 27,564,000
In foreign offices, Edge and Agreement subsidiaries, and IBFs .................... 184,168,000
Noninterest-bearing ............................................................ 11,869,000
Interest-bearing ............................................................... 172,299,000
Federal funds purchased and securities sold under agreements to repurchase ........ 7,586,000
Trading liabilities ............................................................... 23,220,000
Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
With a remaining maturity of one year or less .................................... 10,700,000
With a remaining maturity of more than one year through three years .............. 1,294,000
With a remaining maturity of more than three years ............................... 2,551,000
Bank's liability on acceptances ex-ecuted and outstanding ......................... 1,228,000
Subordinated notes and debentures ................................................. 6,600,000
Other liabilities ................................................................. 13,858,000
TOTAL LIABILITIES ................................................................. $ 291,908,000
Perpetual preferred stock and related surplus ..................................... 0
Common stock ...................................................................... $ 751,000
Surplus ........................................................................... 9,681,000
Undivided profits and capital reserves ............................................ 10,997,000
Net unrealized holding gains (losses) on available-for-sale securities ............ (19,000)
Accumulated net gains (losses) on cash flow hedges ................................ 0
Cumulative foreign currency translation adjustments ............................... 710,000)
TOTAL EQUITY CAPITAL .............................................................. $ 20,700,000
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED STOCK, AND EQUITY CAPITAL ............... $ 312,608,000
</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.
JOHN S. REED
WILLIAM R. RHODES
PAUL J. COLLINS
DIRECTORS
EQUITY CAPITAL
