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Filed Pursuant to Rule 424b(5)
Registration No. 333-35460
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED MAY 11, 2000
$4,000,000,000
Caterpillar Financial Services Corporation
Medium-Term Notes, Series F
With Maturities of 9 Months or More from Date of Issue
We plan to offer and sell notes with various terms, which may include the
following:
. Maturity of 9 months or more from the date of issue
. Interest at fixed or floating rates, or no interest at all. The floating
interest rate may be based on one or more of the following indices, plus
or minus a spread and/or spread multiplier:
. CD Rate . Treasury Rate
. Commercial Paper Rate . Any other rate specified by us in
the pricing supplement
. Federal Funds Rate . Any combination of rates specified
by us in the pricing supplement
. LIBOR
. Prime Rate
. A currency in which the notes will be denominated, which may be U.S.
dollars or any foreign currency
. An interest payment date or dates (the interest payment dates for fixed
rate notes will be April 1 and October 1 of each year)
. Book-entry (through The Depository Trust Company) or certificated form
. Minimum denominations of U.S. $1,000 increased in multiples of $1,000 or
other specified denominations for foreign currencies
. Redemption and/or repayment provisions, if applicable, whether mandatory
or at our option or the option of the holder
We will specify the final terms for each note, which may be different from
the terms described in this prospectus supplement, in the applicable pricing
supplement.
You must pay for the notes in the currency specified in the applicable
pricing supplement by delivering the purchase price to an agent or, if we sell
directly to you, to us, unless you make other payment arrangements.
Investing in the notes involves certain risks. See "Risk Factors" on page
S-3.
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We may sell notes to the agents as principal for resale at varying or fixed
offering prices or through the agents as agent on our behalf. If we sell all
of the notes, we expect to receive proceeds from such sales of between
$3,976,000,000 and $3,998,000,000, after paying the agents' discounts and
commissions of between $2,000,000 and $24,000,000. However, the agents'
discounts and commissions may exceed these amounts with respect to sales of
notes with stated maturities in excess of 30 years. We may also sell notes
without the assistance of the agents (whether acting as principal or as
agent). Out of our proceeds, we expect to incur approximately $1,980,000 in
expenses.
-------------------------
These securities have not been approved by the Securities and Exchange
Commission or any state securities commission, nor have these organizations
determined that this prospectus supplement, the prospectus or any pricing
supplement is accurate or complete. Any representation to the contrary is a
criminal offense.
Chase Securities Inc.
Goldman, Sachs & Co.
Merrill Lynch & Co.
Salomon Smith Barney
-------------------------
June 1, 2000
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TABLE OF CONTENTS
Prospectus Supplement
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About this Prospectus Supplement and Pricing Supplements................... S-3
Risk Factors............................................................... S-3
Structure and Market Risks............................................... S-3
Exchange Rates and Exchange Controls..................................... S-4
Description of Notes....................................................... S-5
Legal Ownership.......................................................... S-5
General Features of the Notes............................................ S-7
Payment of Principal and Interest........................................ S-9
Interest Rate............................................................ S-11
Other Provisions Applicable to Notes..................................... S-21
Currency Indexed Notes................................................... S-21
Other Indexed Notes...................................................... S-21
Dual Currency Notes...................................................... S-22
Amortizing Notes......................................................... S-22
Reopened Issues.......................................................... S-22
Interest Rate Reset...................................................... S-22
Extension of Maturity.................................................... S-23
Book-Entry System........................................................ S-24
Redemption and Repurchase................................................ S-27
Repayment at Option of Holder............................................ S-27
Special Provisions Relating to Foreign Currency Notes...................... S-27
Payment Currency......................................................... S-28
Governing Law and Judgments.............................................. S-28
Certain United States Federal Income Tax Consequences...................... S-29
United States Holders.................................................... S-29
Non-United States Holders................................................ S-38
Supplemental Plan of Distribution.......................................... S-39
Prospectus
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Caterpillar Financial Services Corporation................................. 3
Use of Proceeds............................................................ 3
Ratios of Profit to Fixed Charges.......................................... 3
Description of Debt Securities We May Offer................................ 3
Plan of Distribution....................................................... 9
Validity of Debt Securities We May Offer................................... 10
Experts.................................................................... 10
Where You Can Find More Information........................................ 10
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You should rely only on the information contained in this prospectus
supplement, the accompanying prospectus and any pricing supplement. We have not
authorized anyone to provide you with information different from that contained
in this prospectus supplement, the accompanying prospectus and any pricing
supplement. We are offering to sell the notes, and seeking offers to buy the
notes, only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus supplement, the accompanying
prospectus and any pricing supplement is accurate only as of their respective
dates, regardless of the time of their delivery or any sale of the notes.
S-2
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ABOUT THIS PROSPECTUS SUPPLEMENT
AND PRICING SUPPLEMENTS
This prospectus supplement sets forth certain terms of the Medium-Term
Notes, Series F (the "notes"), that we may offer and supplements the prospectus
that is attached to the back of this prospectus supplement. This prospectus
supplement supersedes the prospectus to the extent it contains information that
is different from the information in the prospectus.
Each time we offer notes, we will attach a pricing supplement to this
prospectus supplement. The pricing supplement will contain the specific
description of the notes we are offering and the terms of the offering. The
pricing supplement will supersede this prospectus supplement or the prospectus
to the extent it contains information that is different from the information
contained in this prospectus supplement or the prospectus.
It is important for you to read and consider all information contained in
this prospectus supplement and the accompanying prospectus and pricing
supplement in making your investment decision. You should also read and
consider the information contained in the documents identified in "Where You
Can Find More Information" in the prospectus.
In this prospectus supplement, the terms "Caterpillar Financial," "we,"
"us" and "our" mean Caterpillar Financial Services Corporation and its wholly
owned subsidiaries.
RISK FACTORS
Your investment in the notes will involve certain risks. This prospectus
supplement does not describe all of those risks, including those that result
from the denomination of or payment on any notes in a foreign currency or that
result from the calculation of any amounts payable under any notes by reference
to one or more interest rates, currencies or other indices or formulas. Neither
we nor the agents will be responsible for advising you of these risks now or as
they may change in the future.
In consultation with your own financial and legal advisors, 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 elements of the notes or financial matters. In
particular, those notes denominated or payable in a foreign currency are not
suitable for you if you are unsophisticated with respect to foreign currency
transactions, and those notes with payments calculated by reference to one or
more interest rates, currencies or other indices or formulas are not suitable
for you if you are unsophisticated with respect to transactions involving the
applicable interest rate index or currency index or other indices or formulas.
Structure and Market Risks
Investment in indexed notes and foreign currency notes entails significant
risks not associated with similar investments in conventional fixed rate or
floating rate debt securities.
If you invest in notes indexed to one or more interest rates, currencies
or composite currencies, including exchange rates and swap indices between
currencies or composite currencies, commodities or other indices or formulas,
there will be significant risks that are not associated with similar
investments in a conventional fixed rate or floating rate debt security. These
risks include fluctuation of the indices or formulas and the possibility that
you will receive a lower or no amount of principal, premium or interest, and 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
S-3
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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 the index or formula
will be magnified. In recent years, values of certain indices and formulas have
been highly 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.
Redemption--We may choose to redeem notes when prevailing interest rates
are relatively low.
If your notes are redeemable, we may choose to redeem your notes from time
to time. In the event that prevailing interest rates are relatively low, you
would not be able to reinvest the redemption proceeds in a comparable security
at an effective interest rate as high as the interest rate on the notes being
redeemed.
Uncertain Trading Markets--We cannot assure that a trading market for your
notes will ever develop or be maintained.
We cannot assure you that a trading market for your notes will ever
develop or be maintained. Many factors independent of our creditworthiness
affect the trading market and market value of your notes. These factors
include:
. the complexity and volatility of any index or formula applicable to the
notes;
. the method of calculating the principal, premium and interest for 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 debt securities linked to any index or formula applicable
to the notes; and
. the level, direction and volatility of market interest rates generally.
In addition, certain notes may have a more limited trading market and
experience more price volatility because they were designed for specific
investment objectives or strategies. There may be a limited number of buyers
when you decide to sell your notes. This may affect the price you receive for
your notes or your ability to sell your notes at all. You should not purchase
notes unless you understand and know you can bear the foregoing investment
risks.
Exchange Rates and Exchange Controls
Investment in foreign currency notes entails significant risks that are
not associated with an investment in a debt security denominated and payable in
U.S. dollars.
If you invest in notes denominated and/or payable in a currency other than
U.S. dollars (foreign currency notes), there will be significant risks that are
not associated with an investment in a debt security denominated and payable in
U.S. dollars. These risks include the possibility of material changes in the
exchange rate between U.S. dollars and your payment currency and the
possibility that either the United States or foreign governments will impose or
modify foreign exchange controls.
We have no control over the factors that generally affect these risks,
such as economic, financial and political events and the supply and demand for
the applicable currencies. Moreover, if payments on your foreign currency notes
are determined by reference to a formula containing a multiplier or leverage
factor, the effect of any change in the exchange rates between the applicable
currencies will be magnified. In recent years, the exchange rates between
certain currencies have been highly volatile, and volatility between these
currencies or with other currencies may be expected in the future. However,
fluctuations between
S-4
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currencies in the past are not necessarily indicative of fluctuations that may
occur in the future. Depreciation of your payment currency would result in a
decrease in the U.S. dollar equivalent yield of your foreign currency notes, in
the U.S. dollar equivalent value of the principal and any premium payable at
maturity or earlier redemption of your foreign currency notes and, generally,
in the U.S. dollar equivalent market value of your foreign currency notes.
Governmental exchange controls could affect exchange rates and the
availability of your payment currency on a required payment date. Even if there
are no exchange controls, it is possible that your payment currency will not be
available on a required payment date due to circumstances beyond our control or
because the payment currency is no longer in use. In such cases, we will be
allowed to satisfy our obligations on your foreign currency notes in U.S.
dollars.
DESCRIPTION OF NOTES
The notes we are offering by this prospectus supplement constitute a
series of debt securities for purposes of the indenture dated as of April 15,
1985, as supplemented from time to time. The notes will be on a parity in all
respects with all debt securities issued under the indenture. For a description
of the indenture and the rights of the holders of securities under the
indenture, including the notes, see "Description of Debt Securities We May
Offer" in the accompanying prospectus attached to this prospectus supplement.
The following description of the particular terms of the notes we are
offering supplements, and to the extent inconsistent replaces, the description
of the general terms and provisions of debt securities described in the
accompanying prospectus, and we refer you to that description. The terms and
conditions described in this section "Description of Notes" will apply to each
note unless we otherwise specify in the applicable pricing supplement. Certain
terms used in this prospectus supplement have the meanings given to those terms
in the prospectus.
Unless we otherwise indicate in the applicable pricing supplement,
currency amounts in this prospectus supplement, the accompanying prospectus and
any pricing supplement are stated in U.S. dollars.
Legal Ownership
"Street Name" and Other Indirect Holders
Investors who hold notes in accounts at banks or brokers will generally
not be recognized by us as legal holders of notes. This is called holding in
"street name." Instead, we would recognize only the bank or broker, or the
financial institution the bank or broker uses to hold its notes. These
intermediary banks, brokers and other financial institutions pass along
principal, interest and other payments on the notes, either because they agree
to do so in their customer agreements or because they are legally required to.
If you hold notes in "street name," you should check with your own institution
to find out:
. How it handles securities payments and notices.
. Whether it imposes fees or charges.
. How it would handle voting if ever required.
. Whether and how you can instruct it to send you notes registered in your own
name so you can be a direct holder as described below.
. How it would pursue rights under the notes if there were a default or other
event triggering the need for holders to act to protect their interests.
Direct Holders
Our obligations, as well as the obligations of the trustee and those of
any third parties employed by us or the trustee,
S-5
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run only to those persons who are registered as holders of notes. As noted
above, we do not have obligations to you if you hold in "street name" or
through other indirect means, either because you choose to hold notes in that
manner or because the notes are issued in the form of "global securities" as
described below. For example, once we make payment to the registered holder, we
have no further responsibility for the payment even if that holder is legally
required to pass the payment along to you as a "street name" customer but does
not do so.
Global Securities
What Is a Global Security? A "global security" is a special type of
indirectly held security, as described above under "Street Name' and Other
Indirect Holders." The ultimate beneficial owners can only be indirect holders
of those notes we issue in the form of global securities. We do this by
requiring that the global security be registered in the name of a financial
institution we select and by requiring that the notes included in the global
security not be transferred to the name of any other direct holder unless the
special circumstances described below occur. The financial institution that
acts as the sole direct holder of the global security is called the
"depositary." Any person wishing to own a note must do so indirectly by virtue
of an account with a broker, bank or other financial institution that in turn
has an account with the depositary. In general, as described further under
"Book-Entry System" below, each series of notes will be issued only in the form
of global securities.
Special Investor Considerations for Global Securities. As an indirect
holder, an investor's rights relating to a global security will be governed by
the account rules of the investor's financial institution and of the
depositary, as well as general laws relating to securities transfers. We do not
recognize this type of investor as a holder of notes and instead deal only with
the depositary that holds the global security.
An investor should be aware that if notes are issued only in the form of
global securities:
. The investor cannot get notes registered in his or her own name.
. The investor cannot receive physical certificates for his or her interest in
the notes.
. The investor will be a "street name" holder and must look to his or her own
bank or broker for payments on the notes and protection of his or her legal
rights relating to the notes. See "Street Name' and Other Indirect Holders"
above.
. The investor may not be able to sell interests in the notes to some insurance
companies and other institutions that are required by law to own their
securities in the form of physical certificates.
. The depositary's policies will govern payments, transfers, exchange and other
matters relating to the investor's interest in the global security. We and
the trustee have no responsibility for any aspect of the depositary's actions
or for its records of ownership interests in the global security. We and the
trustee also do not supervise the depositary in any way.
. The depositary will require that interests in a global security be purchased
or sold within its system using same-day funds for settlement.
Special Situations When Global Security will be Terminated. In a few
special situations, the global security will terminate and interests in it will
be exchanged for physical certificates representing notes (called "certificated
notes"). After that exchange, the choice of whether to hold notes directly or
in "street name" will be up to the investor. Investors must consult their own
banks or brokers to find out how to have their interests in notes transferred
to their own name, so that they will be direct holders. The rights of "street
name" investors and direct holders in the notes have been previously described
in the subsections entitled "Street Name' and Other Indirect
S-6
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Holders" and "Direct Holders" above. The special situations for termination of
a global security are described under "Book-Entry System" below. When a global
security terminates, the depositary (and not us or the trustee) is responsible
for deciding the names of the institutions that will be the initial direct
holders.
General Features of the Notes
The notes will be unsecured obligations of Caterpillar Financial and will
be issued only in the form of one or more global securities registered in the
name of a nominee of The Depository Trust Company, as depositary, except for
foreign currency notes and except as specified in "Book-Entry System" below.
Foreign currency notes may be represented either by global notes or by
certificated notes, as specified in the applicable pricing supplement. As used
in this prospectus supplement, the term "holder" means those who own notes
registered in their own names and not those who own beneficial interests in
notes registered in "street name" or in notes represented by a global note or
notes issued in "book-entry" form through the depository. For more information
on certificated and global notes, see "Legal Ownership" above and "Book-Entry
System" below.
We may offer from time to time up to $4,000,000,000 aggregate principal
amount, including in such amount the offering price of any such notes sold at a
discount, of its notes or the equivalent in other currencies, including
composite currencies. However, we may increase this limit, if in the future we
determine that we may wish to sell additional notes. The U.S. dollar equivalent
of foreign currency notes, called the market exchange rate, will be determined
by the exchange rate agent, as identified below, on the basis of the noon
buying rate for cable transfers in The City of New York, as determined by the
Federal Reserve Bank of New York for such currencies on the business day
immediately preceding the applicable issue dates. The term "business day" has a
special meaning described below. Special tax considerations apply to foreign
currency notes and are described below under "Certain United States Federal
Income Tax Consequences--United States Holders--Nonfunctional Currency Notes."
The notes will be offered on a continuous basis and will mature nine
months or more from the date of issue, as selected by the initial purchaser and
agreed to by us.
The notes may be issued as original issue discount notes. An original
issue discount note is a note, including any zero-coupon note, which is issued
at a price lower than its principal amount and provides that, upon redemption
or acceleration of its maturity, an amount less than its principal amount will
be payable. For additional information regarding payments upon acceleration of
the maturity of an original issue discount note and regarding the United States
federal tax considerations of original issue discount notes, see "Payment of
Principal and Interest" and "Certain United States Federal Income Tax
Consequences--United States Holders--Original Issue Discount." Original issue
discount notes will be treated as original issue discount securities for
purposes of the indenture.
Unless we otherwise specify in the applicable pricing supplement,
purchasers are required to pay for foreign currency notes in U.S. dollars, a
foreign currency or such other composite currency unit specified in the
applicable pricing supplement. Such foreign currency or other composite
currency unit is called the specified currency. At the present time there are
limited facilities in the United States for the conversion of U.S. dollars into
foreign currencies and vice versa, and banks generally do not offer non-U.S.
dollar checking or savings account facilities in the United States. However, if
a purchaser of notes requests the agent who presented the offer to purchase
foreign currency notes to us, on or prior to the fifth business day preceding
the date of delivery of these foreign currency notes, or by such other day as
determined by the agent, the agent is
S-7
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prepared to arrange for the conversion of U.S. dollars into the specified
currency described in the applicable pricing supplement to enable the
purchasers to pay for the notes. Each such conversion will be made by the
applicable agent on terms and subject to conditions, limitations and charges as
the applicable 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 notes. See "Special Provisions Relating to Foreign Currency
Notes."
The notes may be registered for transfer or exchanged at the principal
office of the Corporate Trust Department of U.S. Bank Trust National
Association (formerly First Trust of New York, National Association) (the
"trustee") in The City of New York. The transfer or exchange of global notes
will be effected as specified in "Book-Entry System" below.
Except as described in "Certain Restrictions--Restrictions on Liens and
Encumbrances" in the accompanying prospectus, the indenture does not contain
any provision which will restrict us from incurring, assuming or becoming
liable with respect to any indebtedness or other obligations. In addition,
although the support agreement between Caterpillar Inc. and us does provide
that Caterpillar Inc. will ensure that we will maintain a tangible net worth of
at least $20 million and will maintain a ratio of earnings and interest expense
to interest expense of not less than 1.15 to 1, the indenture does not contain
any provision which would afford holders of the notes other protection upon the
occurrence of a highly leveraged transaction involving Caterpillar Financial
which may adversely affect the creditworthiness of the notes. See "Description
of Debt Securities We May Offer--Certain Restrictions" in the accompanying
prospectus.
As used in this prospectus supplement, business day means, with respect to
any note, 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; however
. if the note is denominated in a specified currency other than U.S. dollars,
the day must also not be a day on which commercial banks are authorized or
required by law, regulation or executive order to close in the principal
financial center of the country issuing the specified currency (but if the
specified currency is Euro, the day must also be a day on which the Trans-
European Automated Real-Time Gross Settlement Express Transfer (TARGET)
System is open), and
. with respect to only LIBOR notes, as described below, the day must also be a
London business day.
As used in the preceding sentence, principal financial center means, the
capital city of the country issuing the specified currency, or the capital city
of the country to which the LIBOR currency relates, except that with respect to
the following currencies, the financial center shall be the city listed next to
each currency:
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Currency Financial Center
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U.S. dollars The City of New York
Australian dollars Sydney (and, solely in
the case of the LIBOR
currency, Melbourne)
Canadian dollars Toronto
Deutsche marks Frankfurt
Dutch guilders Amsterdam
Italian lire Milan
Portuguese escudos London (solely in the
case of the Libor
currency)
South African rand Johannesburg
Swiss Francs Zurich
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Unless otherwise specified in the applicable pricing supplement, London
business day means any day on which commercial banks are open for business,
including dealings in the LIBOR currency, in London.
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Payment of Principal and Interest
Unless we otherwise specify in the applicable pricing supplement, payments
of principal of, and premium, if any, and interest on all notes will be made in
the applicable specified currency, provided, however, that payments of
principal of, and premium, if any, and interest on foreign currency notes will
nevertheless be made in U.S. dollars:
. if the foreign currency notes are certificated notes, at the option of the
holders of these notes under the procedures described below, and
. if the foreign currency notes are global notes, unless the depositary has
received notice from any of its participants of their election to receive
payment in the specified currency as provided in "Book-Entry System" below,
and
. at our option if the specified currency is unavailable, in our good faith
judgment, due to the imposition of exchange controls or other circumstances
beyond our control.
See "Special Provisions Relating to Foreign Currency Notes--Payment Currency,"
for further information regarding payment of foreign currency notes.
Where payments of principal and premium, if any, and interest at maturity
are to be made in U.S. dollars, payments will be made in immediately available
funds, provided that the note is presented to the trustee in time for the
trustee to make the payments in such funds in accordance with its normal
procedures. Payments of interest, other than interest payable at maturity, to
be made in U.S. dollars with respect to global notes will be paid in
immediately available funds to the depositary or its nominee. The depositary
will allocate payments relating to a global note and make payments to the
owners or holders of the global notes in accordance with its existing operating
procedures. Neither we nor the trustee shall have any responsibility or
liability for these payments by the depositary. So long as the depositary or
its nominee is the registered owner of any global note, the depositary or its
nominee will be considered the sole owner or holder of such note for all
purposes under the indenture.
Where payments of interest and, in the case of amortizing notes, principal
and premium, if any, with respect to any certificated note, other than amounts
payable at maturity, are to be made in U.S. dollars, the payments will be paid
by check mailed to the address of the person entitled to the payments as it
appears in the security register. However, unless otherwise specified in the
pricing supplement, a holder of U.S. $10,000,000 or more in aggregate principal
amount of certificated notes having the same provisions shall be entitled to
receive such payment of interest in U.S. dollars by wire transfer of
immediately available funds to such account with a bank located in the United
States as such holder designates in writing, but only if appropriate payment
instructions have been received in writing by the trustee on or prior to the
regular record date for such certificated notes.
Unless we otherwise indicate in the applicable pricing supplement,
payments of principal and premium, if any, and interest with respect to any
note to be made in a specified currency other than U.S. dollars will be paid in
immediately available funds by wire transfer to such account maintained by the
holder with a bank designated by the holder, which in the case of global notes
will be the depositary or its nominee, on or prior to the regular record date
or at least 15 days prior to maturity, as the case may be, provided that such
bank has the appropriate facilities for such a payment in the specified
currency. However, it is also necessary that with respect to payments of
principal and premium, if any, and interest at maturity the note is presented
to the trustee in time for the trustee to make such payment in accordance with
its normal procedures, which shall require presentation no later than two
business days prior to maturity in order to ensure the availability of
immediately available funds in the specified currency at
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maturity. A holder must make such designation by filing the appropriate
information with the trustee and, unless revoked, any such designation made
with respect to any note will remain in effect with respect to any further
payments payable to such holder with respect to such note.
Unless we otherwise specify in the applicable pricing supplement, if we
redeem any original issue discount note as described below under "Redemption
and Repurchase," or we repay any such note at the option of the holder as
described below under "Repayment at Option of Holder," or if the principal of
any such note is declared to be due and payable immediately as described in the
accompanying prospectus under "Description of Debt Securities We May Offer--
Events of Default and Notices," the amount of principal due and payable with
respect to such note shall be limited to the sum of the aggregate principal
amount of such note multiplied by the issue price, expressed as a percentage of
the aggregate principal amount, plus the original issue discount accrued from
the date of issue to the date of redemption, repayment or declaration, as
applicable, which accrual shall be calculated using the "interest method,"
computed in accordance with generally accepted accounting principles, in effect
on the date of redemption, repayment or declaration, as applicable.
If we so specify in the applicable pricing supplement, payments of
principal and premium, if any, and interest with respect to any foreign
currency note which is a certificated note will be made in U.S. dollars if the
holder of such note elects to receive all such payments in U.S. dollars by
delivery of a written request to the trustee either on or prior to the regular
record date for such certificated note or at least 15 days prior to maturity.
Such election may be in writing, mailed or hand delivered, or by cable, telex
or other form of facsimile transmission. A holder of a foreign currency note
which is a certificated note may elect to receive payment in U.S. dollars for
all principal, premium, if any, and interest payments and need not file a
separate election for each payment. Such election will remain in effect until
revoked by written notice to the trustee, but written notice of such revocation
must be received by the trustee either on or prior to the regular record date
or at least 15 days prior to maturity.
Holders of foreign currency notes whose notes are 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 U.S. dollars may be made. Holders of
foreign currency notes which are global notes will receive payments in U.S.
dollars unless they notify the depositary of their election to receive payments
in the specified currency. See "Book-Entry System" for further information
regarding payment arrangements with respect to such notes.
The U.S. dollar amount to be received by a holder of a foreign currency
note will be based upon the exchange rate as determined by the exchange rate
agent based on the highest firm bid quotation for U.S. dollars received by such
exchange rate agent at approximately 11:00 a.m., New York City time, on the
second business day preceding the applicable payment date from three recognized
foreign exchange dealers in The City of New York selected by the exchange rate
agent and approved by us, one of which may be the exchange rate agent, for the
purchase by the quoting dealer, for settlement on such payment date, of the
aggregate amount of the specified currency payable on such payment date in
respect of all notes denominated in such specified currency. If no such bid
quotations are available, payments will be made in the specified currency,
unless such specified currency is unavailable due to the imposition of exchange
controls or to other circumstances beyond our control, in which case payment
will be made as described below under "Foreign Currency Risks--Payment
Currency." All currency exchange costs will be borne by the holders of such
notes by deductions from such payments.
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Unless we otherwise specify in the applicable pricing supplement, U.S. Bank
Trust National Association, formerly First Trust of New York, National
Association, will be the exchange rate agent for the notes.
Interest Rate
Each note, other than a zero-coupon note, will bear interest from and
including the date of issue, or in the case of notes issued upon registration
of transfer or exchange from and including the most recent interest payment
date to which interest on such note has been paid or duly provided for. Such
interest will be payable at the fixed rate per annum, or at the rate per annum
determined pursuant to the interest rate formula or formulas, stated in such
note and in the applicable pricing supplement until the principal of such note
is paid or made available for payment. Interest will be payable on each
interest payment date and at maturity. Interest will be payable to the person
in whose name a note is registered at the close of business on the regular
record date next preceding each interest payment 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 regular record date and an interest payment date will be made on the
interest payment date following the next succeeding regular record date to the
registered owner of such note on such next succeeding regular record date.
The regular record date with respect to floating rate notes, as such notes
are further described in the last paragraph of this subsection, shall be the
date 15 calendar days prior to such interest payment date, whether or not such
date shall be a business day. The regular record dates with respect to fixed
rate notes, as such notes are further described in the last paragraph of this
subsection, shall be the March 15 and September 15 next preceding the April 1
and October 1 interest payment dates.
Interest rates we offer on the notes may differ depending upon, among
other things, the aggregate principal amount of notes purchased in any single
transaction. Interest rates, interest rate formulas and other variable terms of
the notes are subject to change by us from time to time, but no such change
will affect any note already issued or as to which an offer to purchase has
been accepted by us.
Unless otherwise specified in the applicable pricing supplement, each
note, other than a zero-coupon note, will bear interest at either (a) a fixed
rate, in which case the note is a fixed rate note, or (b) a variable rate, in
which case the note is a floating rate note.
Fixed Rate Notes
The applicable pricing supplement relating to a fixed rate note will
designate a fixed rate of interest per annum payable on such fixed rate note,
which rate will also be stated on the face of such note. Each fixed rate note
will bear interest from the date of issue, or in the case of notes issued upon
registration or transfer or exchange, from the most recent interest payment
date to which interest on such note has been paid or duly provided for, at such
per annum rate. The date on which interest is payable, called the interest
payment dates, for the fixed rate notes will be April 1 and October 1 of each
year until the principal of such note is paid or made available for payment.
Unless we otherwise specify in the applicable pricing supplement, interest
payments, if any, on a fixed rate note will be the amount of interest accrued
from and including the last date in respect of which interest has been paid or
duly provided for, or from and including the date of issue if no interest has
been paid or provided for with respect to such note, to but excluding the
interest payment date or the date of maturity. 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
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will be payable generally to the person in whose name such a note is registered
at the close of business on the regular record date.
If the interest payment date or the maturity for any fixed rate note falls
on a day that is not a business day, the payment of principal, premium, if any,
and interest may be made on the next succeeding business day, and no interest
on such payment shall accrue for the period from and after such interest
payment date or maturity, as the case may be.
Floating Rate Notes
Unless we otherwise specify in the applicable pricing supplement, each
floating rate note will bear interest at a variable rate determined by
reference to an interest rate formula or formulas, which may be adjusted by
adding or subtracting the spread and/or multiplying by the spread multiplier,
each as described below. A floating rate note may also have either or both of
the following: (a) a maximum numerical interest rate limitation, or ceiling, on
the rate of interest which may accrue during any interest period; and (b) a
minimum numerical interest rate limitation, or floor, on the rate of interest
which may accrue during any interest period. The spread is the number of basis
points to be added to or subtracted from the related interest rate basis or
bases applicable to a floating rate note. The spread multiplier is the
percentage of the related interest rate basis or bases applicable to a floating
rate note by which the interest rate basis or bases will be multiplied to
determine the applicable interest rate. The index maturity is the period to
maturity of the instrument or obligation with respect to which the related
interest rate basis or bases will be calculated.
The applicable pricing supplement relating to a floating rate note will
designate an interest rate basis or bases for such floating rate note. Such
basis or bases may be:
. the Commercial Paper Rate, in which case such note will be a Commercial Paper
Rate note,
. the Federal Funds Rate, in which case such note will be a Federal Funds Rate
note,
. the CD Rate, in which case such note will be a CD Rate note,
. the Prime Rate, in which case such note will be a Prime Rate note,
. LIBOR, in which case such note will be a LIBOR note,
. the Treasury Rate, in which case such note will be a Treasury Rate note, or
. such other interest rate formula or formulas (which may include a combination
of more than one of the interest rate bases described above) as may be
described in such pricing supplement.
We will also specify in the applicable pricing supplement for a floating
rate note the spread and/or spread multiplier, if any, and the maximum or
minimum interest rate limitation, if any, applicable to each note. In addition,
in such pricing supplement we will define or particularize for each note the
following terms, if applicable: initial interest rate, interest payment dates,
index maturity, LIBOR currency and interest reset date with respect to such
note.
Index maturity means, with respect to a floating rate note, the period to
maturity of the instrument or obligation on which the interest rate formula is
based, as specified in the applicable pricing supplement.
Change of Interest Rate. Unless we otherwise specify in the applicable
pricing supplement, the rate of interest on each floating rate note will be
reset daily, weekly, monthly, quarterly, semi-annually or annually, each an
interest reset date, as specified in the applicable pricing supplement. Unless
otherwise indicated in the applicable pricing supplement, the interest reset
date will be as follows:
. in the case of floating rate notes which reset daily, each business day;
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. in the case of floating rate notes, other than the Treasury Rate notes, which
reset weekly, the Wednesday of each week;
. in the case of Treasury Rate notes which reset weekly, the Tuesday of each
week;
. in the case of floating rate notes which reset monthly, the third Wednesday
of each month;
. in the case of floating rate notes which reset quarterly, the third Wednesday
of March, June, September and December;
. in the case of floating rate notes which reset semi-annually, the third
Wednesday of two months of each year, as specified in the applicable pricing
supplement; and
. in the case of floating rate notes which reset annually, the third Wednesday
of one month of each year, as specified in the applicable pricing supplement.
In any event, the interest rate in effect from the date of issue to the
first interest reset date with respect to a floating rate note will be the
initial interest rate, as described in the applicable pricing supplement. If
any interest reset date for any floating rate note would otherwise be a day
that is not a business day for such floating rate note, the interest reset date
for such floating rate note shall be postponed to the next day that is a
business day for such floating rate note. However, in the case of LIBOR notes,
if such business day is in the next succeeding calendar month, such interest
reset date shall be the immediately preceding business day.
Date Interest Rate Is Determined. Unless we otherwise specify in the
applicable pricing supplement, the interest determination date pertaining to an
interest reset date for a Federal Funds Rate note or a Prime Rate note will be
the business day preceding the interest reset date with respect to such note
and the interest reset date for a Commercial Paper Rate note and a CD Rate note
will be the second business day preceding the interest reset date with respect
to such note.
Unless we otherwise specify in the applicable pricing supplement, the
interest determination date pertaining to an interest reset date for a LIBOR
note will be the second London business day preceding such interest reset date,
unless the LIBOR currency is British pounds sterling, in which case the LIBOR
interest determination date will be the applicable interest reset date.
Unless we otherwise specify in the applicable pricing supplement, the
interest determination date pertaining to an interest reset date for a Treasury
Rate note will be the day of the week in which such interest reset date falls
on which Treasury bills would normally be auctioned. Treasury bills are usually
sold at auction on Monday of each week, unless that day is a legal holiday, in
which case the auction is usually held on the following Tuesday, except that
such auction may be held on the preceding Friday. If, as the result of a legal
holiday, an auction is so held on the preceding Friday, such Friday will be the
Treasury Rate note interest determination date pertaining to the interest reset
date occurring in the next succeeding week. If an auction date shall fall on
any interest reset date for a Treasury Rate note, then such interest reset date
shall instead be the first business day immediately following such auction
date.
Payment of Interest. Unless we otherwise indicate in the applicable
pricing supplement and except as provided below, interest will be payable as
follows:
. in the case of floating rate notes which reset daily, weekly or monthly, on
the third Wednesday of each month or on the third Wednesday of March, June,
September and December of each year, as indicated in the applicable pricing
supplement;
. in the case of floating rate notes which reset quarterly, on the third
Wednesday of March, June, September and December of each year;
. in the case of floating rate notes which reset semi-annually, on the third
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Wednesday of the two months of each year specified in the applicable pricing
supplement;
. in the case of floating rate notes which reset annually, on the third
Wednesday of the month specified in the applicable pricing supplement (each
of the foregoing is an interest payment date); and
. in each case, at maturity.
If an interest payment date with respect to any floating rate note would
otherwise fall on a day that is not a business day with respect to such note,
such interest payment date will be postponed to the following day that is a
business day with respect to such note, except that in the case of a LIBOR
note, if such day falls in the next calendar month, such interest payment date
will be the preceding day that is a business day with respect to such LIBOR
note. If the maturity of any floating rate note falls on a day that is not a
business day, the payment of principal, premium, if any, and interest may be
made on the next succeeding business day, and no interest on such payment shall
accrue for the period from and after maturity.
Unless we otherwise specify in the applicable pricing supplement, interest
payments, if any, on a floating rate note will be the amount of interest
accrued from and including the last date in respect of which interest has been
paid or duly provided for, or from and including the date of issue if no
interest has been paid or provided for with respect to such note, to but
excluding the interest payment date or the date of maturity.
With respect to a floating rate note, accrued interest is calculated by
multiplying its principal amount by an accrued interest factor. The accrued
interest factor is computed by adding the interest factor calculated for each
day from the date of issue, or from the last date to which interest has been
paid, to the date for which accrued interest is being calculated.
The interest factor for each day is computed by dividing the interest rate
applicable to such day by 360, in the case of Commercial Paper Rate notes,
Federal Funds Rate notes, CD Rate notes, Prime Rate notes or LIBOR notes, or by
the actual number of days in the year, in the case of Treasury Rate notes. The
interest factor for floating rate notes as to 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 basis
specified in the applicable pricing supplement applied.
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, in the case of United states dollars, to the nearest cent or, in
the case of a foreign currency, to the nearest unit (with one-half cent or unit
being rounded upwards).
In addition to any maximum interest rate which may be applicable to any
floating rate note pursuant to the above provisions, the interest rate on the
floating rate notes will in no event be higher than the maximum rate permitted
by New York law, as the same may be modified by United States law of general
application. Under present New York law the maximum rate of interest is 25% per
annum on a simple interest basis. The limit may not apply to floating rate
notes in which $2,500,000 or more has been invested.
Unless we otherwise specify in the applicable pricing supplement, the
calculation date pertaining to any interest determination date, other than with
respect to LIBOR notes, shall be the earlier of (i) the tenth day after such
interest determination date or, if any such day is not a business day, the next
succeeding business day or (ii) the business day preceding the applicable
interest
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payment date or maturity, as the case may be.
Upon the request of the holder of any floating rate note, the calculation
agent, as described below, will provide the interest rate then in effect and,
if different, the interest rate which will become effective as a result of a
determination made on the most recent interest determination date with respect
to such floating rate note. Unless otherwise provided in the applicable pricing
supplement, U.S. Bank Trust National Association, formerly First Trust of New
York, National Association, will be the calculation agent with respect to the
floating rate notes.
The interest rate(s) on the floating rate notes that are Commercial Paper
Rate notes, Federal Funds Rate notes, CD Rate notes, Prime Rate notes, LIBOR
notes or Treasury Rate notes will be determined as described under the
following captions, as applicable.
Commercial Paper Rate Notes
Commercial Paper Rate notes will bear interest at the interest rates,
calculated with reference to the Commercial Paper Rate and the spread and/or
spread multiplier, if any, and will be payable on the dates that we specify on
the face of the Commercial Paper Rate note and in the applicable pricing
supplement.
Unless we otherwise indicate in the applicable pricing supplement,
"Commercial Paper Rate" means, with respect to any interest determination date
relating to a Commercial Paper Rate note (a commercial paper interest
determination date) the money market yield, calculated as described below, of
the rate on such date for commercial paper having the index maturity specified
by us in the applicable pricing supplement as published by the Board of
Governors of the Federal Reserve System in "Statistical Release H.15(519),
Selected Interest Rates" or any successor publication of the Board of Governors
of the Federal Reserve System ("H.15(519)") under the heading "Commercial
Paper--Nonfinancial."
The following procedures will be followed if the Commercial Paper Rate
cannot be determined as described above:
. If the above rate is not published by 9:00 a.m., New York City time, on the
calculation date pertaining to such Commercial Paper interest determination
date, then the Commercial Paper Rate will be the money market yield of the
rate on such commercial paper interest determination date for commercial
paper having the index maturity specified by us in the applicable pricing
supplement as published in the daily update of H.15(519), available through
the world wide website 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, the H.15 Daily Update, under the heading "Commercial
Paper--Nonfinancial" or another recognized electronic source used for the
purpose of displaying the applicable rate.
. If by 3:00 p.m., New York City time, on such calculation date such rate is
not yet published either in H.15(519) or in H.15 Daily Update or another
recognized electronic source, then the calculation agent will determine the
Commercial Paper Rate to be the money market yield of the arithmetic mean
(rounded, if necessary, to the nearest one-hundred thousandth of a percentage
point, with five-millionths of a percentage point rounded upwards) of the
offered rates as of 11:00 a.m., New York City time, on such commercial paper
interest determination date of three leading dealers of commercial paper in
The City of New York selected by the calculation agent for commercial paper
of the index maturity specified in the applicable pricing supplement placed
for an industrial issuer whose bond rating is "AA," or the equivalent, from a
nationally recognized statistical rating agency.
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. If the dealers selected by the calculation agent are not quoting as mentioned
above, the Commercial Paper Rate will remain the Commercial Paper Rate then
in effect on such commercial paper interest determination date.
The money market yield shall be a yield, expressed as a percentage
rounded, if necessary, to the nearest one-hundred-thousandth of a percentage
point, with five-millionths of a percentage point rounded upwards, calculated
in accordance with the following formula:
<TABLE>
<S> <C> <C>
money market yield = D X 360 X 100
-------------
360 - (D X M)
</TABLE>
where "D" refers to the per annum rate for commercial paper quoted on a bank
discount basis and expressed as a decimal; and "M" refers to the actual number
of days in the interest period for which interest is being calculated.
Federal Funds Rate Notes
Federal Funds Rate notes will bear interest at the interest rates,
calculated with reference to the Federal Funds Rate and the spread and/or
spread multiplier, if any, and will be payable on the dates, that we specify on
the face of the Federal Funds Rate note and in the applicable pricing
supplement.
Unless we otherwise indicate in the applicable pricing supplement,
"Federal Funds Rate" means, with respect to any interest determination date
relating to a Federal Funds Rate note (a federal funds interest determination
date) the rate on such date for U.S. dollar federal funds as published in
H.15(519) under the heading "Federal Funds (Effective)," as such rate is
displayed on Bridge Telerate, Inc., or any successor service, on page 120, or
any other page as may replace such page on such service.
The following procedures will be followed if the Federal Funds Rate cannot
be determined as described above:
. If the above rate is not published by 9:00 a.m., New York City time, on the
calculation date pertaining to such federal funds interest determination
date, the Federal Funds Rate will be the rate on such federal funds interest
determination date as published in H.15 Daily Update under the heading
"Federal Funds/(Effective)" or another recognized electronic source used for
the purpose of displaying the applicable rate.
. If such rate is not yet published either in H.15(519) or in H.15 Daily Update
or another electronic source by 3:00 p.m., New York City time, on such
calculation date, the calculation agent will determine the Federal Funds Rate
to be the arithmetic mean (rounded, if necessary, to the nearest one-hundred
thousandth of a percentage point, with five-millionths of a percentage point
rounded upwards) of the rates for the last transaction in overnight U.S.
dollar federal funds arranged by each of three leading brokers of Federal
Funds transactions in The City of New York selected by the calculation agent
prior to 9:00 a.m., New York City time, on such federal funds interest
determination date.
. If the brokers selected by the calculation agent are not quoting as mentioned
above, the Federal Funds Rate will remain the Federal Funds Rate then in
effect on such federal funds interest determination date.
CD Rate Notes
CD Rate notes will bear interest at the interest rates, calculated with
reference to the CD Rate and the spread and/or spread multiplier, if any, and
will be payable on the dates, that we specify on the face of the CD Rate note
and in the applicable pricing supplement.
Unless we otherwise indicate in the applicable pricing supplement, "CD
Rate" means, with respect to any interest determination date relating to a CD
Rate note (a CD interest determination date) the rate on such date for
negotiable certificates
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of deposit having the index maturity designated by us in the applicable pricing
supplement as published in H.15(519) under the heading "CDs (Secondary
Market)."
The following procedures will be followed if the CD Rate cannot be
determined as described above:
. If the above rate is not published in H.15(519) by 9:00 a.m., New York City
time, on the calculation date pertaining to such CD interest determination
date, the CD Rate will be the rate on such CD interest determination date
described in the H.15(519) Daily Update for the day in respect of
certificates of deposit having the index maturity specified by us in the
applicable pricing supplement under the caption "CDs (Secondary Market)" or
another recognized electronic source used for the purpose of displaying the
applicable rate.
. If such rate is not yet published either in H.15(519) or in H.15 Daily Update
or another recognized electronic source by 3:00 p.m., New York City time, on
such calculation date, the calculation agent will determine the CD Rate to be
the arithmetic mean (rounded, if necessary, to the nearest one-hundred
thousandth of a percentage point, with five-millionths of a percentage point
rounded upwards) of the secondary market offered rates as of 10:00 a.m., New
York City time, on such CD interest determination date, of three leading
nonbank dealers in negotiable U.S. dollar certificates of deposit in The City
of New York selected by the calculation agent for negotiable certificates of
deposit of major United States money center banks of the highest credit
standing in the market for negotiable certificates of deposit with a
remaining maturity closest to the index maturity specified in the applicable
pricing supplement in a denomination of $5,000,000.
. If the dealers selected by the calculation agent are not quoting as mentioned
above, the CD Rate will remain the CD Rate then in effect on such CD interest
determination date.
Prime Rate Notes
Prime Rate notes will bear interest at the interest rates, calculated with
reference to the Prime Rate and the spread and/or spread multiplier, if any,
and will be payable, on the dates specified on the face of the Prime Rate note
and in the applicable pricing supplement.
Unless we otherwise indicate in the applicable pricing supplement, "Prime
Rate" means, with respect to any interest determination date relating to a
Prime Rate note (a prime rate interest determination date) the rate for the
relevant prime rate interest determination date as published in H.15(519) under
the heading "Bank Prime Loan."
The following procedures will be followed if the Prime Rate cannot be
determined as described above:
. If the rate is not published prior to 9:00 a.m., New York City time, on the
calculation date pertaining to the prime rate interest determination date,
then the Prime Rate will be the rate on such prime rate interest
determination date as published in H.15 Daily Update opposite the caption
"Bank Prime Loan" or another recognized electronic source used for the
purpose of displaying the applicable rate.
. If the rate is not published prior to 3:00 p.m., New York City time, on such
calculation date, either in H.15(519) or in H.15 Daily Update or another
recognized electronic source, then the calculation agent will determine the
Prime Rate to be the arithmetic mean (rounded, if necessary, to the nearest
one-hundred thousandth of a percentage point, with five-millionths of a
percentage point rounded upwards) of the rates of interest publicly announced
by each bank that appears on the Reuters Screen USPRIME1 Page, as defined
below, as
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such bank's prime rate or base lending rate as in effect for that prime rate
interest determination date.
. If fewer than four such rates but more than one such rate appear on the
Reuters Screen USPRIME1 Page for the prime rate interest determination date,
the calculation agent will determine the Prime Rate to be the arithmetic mean
(rounded, if necessary, to the nearest one-hundred thousandth of a percentage
point, with five-millionths of a percentage point rounded upwards) of the
prime rates quoted on the basis of the actual number of days in the year
divided by a 360 day year as of the close of business on such prime rate
interest determination date by at least three major money center banks in The
City of New York selected by the calculation agent.
. If fewer than two such rates appear on the Reuters Screen USPRIME1 Page, the
calculation agent will determine the Prime Rate on the basis of the rates
furnished in The City of New York by the appropriate number of substitute
banks or trust companies organized and doing business under the laws of the
United States, or any State thereof, in each case having total equity capital
of at least $500 million and being subject to supervision or examination by
Federal or State authority, selected by the calculation agent to provide such
rate or rates.
. If the banks or trust companies selected are not quoting as mentioned above,
the Prime Rate will remain the Prime Rate in effect on such prime rate
interest determination date.
The Reuters Screen USPRIME1 Page is the display designated as page
"USPRIME1" on the Reuters Monitor Money Rates Service, or such other page as
may replace the USPRIME1 page on that service for the purpose of displaying
prime rates or base lending rates of major United States banks.
LIBOR Notes
LIBOR notes will bear interest at the interest rates, calculated with
reference to LIBOR and the spread and/or spread multiplier, if any, and will be
payable on the dates, we specify on the face of the LIBOR note and in the
applicable pricing supplement.
Unless we otherwise indicate in the applicable pricing supplement, LIBOR
for each interest determination date relating to a LIBOR note (a LIBOR interest
determination date) will be determined by the calculation agent as follows:
. If "LIBOR Reuters" is specified in the applicable pricing supplement, the
arithmetic mean rounded, if necessary, to the nearest one-hundred-thousandth
of a percentage point, with five-millionths of a percentage point rounded
upwards) of the offered rates (unless the specified Designated LIBOR Page, as
described below, by its terms provides only for a single rate, in which case
such single rate shall be used) for deposits in the LIBOR currency having the
index maturity designated by us in the applicable pricing supplement,
commencing on the second London business day immediately following such LIBOR
interest determination date, that appear on the designated LIBOR page as of
11:00 a.m., London time, on that LIBOR interest determination date, if at
least two such offered rates appear, unless, as mentioned, only a single rate
is required, on such designated LIBOR page.
. If we specify LIBOR Telerate in the applicable pricing supplement, the rate
for deposits in the LIBOR currency having the index maturity designated in
the applicable pricing supplement, commencing on the second London business
day immediately following such LIBOR interest determination date, that
appears on such designated LIBOR page as of 11:00 a.m., London time, on such
LIBOR interest determination date.
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If neither LIBOR Reuters nor LIBOR Telerate is specified by us in the
applicable pricing supplement, LIBOR for the applicable LIBOR currency will be
determined as if LIBOR Telerate had been specified.
If fewer than two offered rates appear, if LIBOR Reuters is specified in the
applicable pricing supplement, or no rate appears, if LIBOR Telerate is
specified in the applicable pricing supplement, the calculation agent will
determine LIBOR in respect of the related LIBOR interest determination date as
follows:
. 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 designated in the applicable pricing supplement, commencing on the
second London business day immediately following such LIBOR interest
determination date, to prime banks in the London interbank market at
approximately 11:00 a.m., London time, on such LIBOR interest determination
date and in a principal amount of not less than $1,000,000, or the
equivalent in the LIBOR currency, if the LIBOR currency is not the U.S.
dollar, that is representative of 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 LIBOR
interest determination date will be the arithmetic mean (rounded, if
necessary, to the nearest one-hundred-thousandth of a percentage point, with
five-millionths of a percentage point rounded upwards) of such quotations.
. If fewer than two quotations are provided, LIBOR determined on such LIBOR
interest determination date will be the arithmetic mean (rounded, if
necessary, to the nearest one-hundred-thousandth of a percentage point, with
five-millionths of a percentage point rounded upwards) of the rates quoted
at approximately 11:00 a.m., or such other time specified in the applicable
pricing supplement, in the applicable principal financial center for the
country of the LIBOR currency on such LIBOR 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 designated in the applicable pricing supplement
and in a principal amount of not less than $1,000,000, or the equivalent in
the LIBOR currency, if the LIBOR currency is not the U.S. dollar, commencing
on the second London business day immediately following such LIBOR interest
determination date that is representative for a single transaction in such
LIBOR currency in such market at such time.
. If the banks so selected by the calculation agent are not quoting as
mentioned above, LIBOR will remain LIBOR in effect on such LIBOR interest
determination date.
The LIBOR currency is the currency, including composite currencies,
specified by us in the applicable pricing supplement as the currency for which
LIBOR shall be calculated. If we do not specify any such currency in the
applicable pricing supplement, the LIBOR currency shall be U.S. dollars.
The designated LIBOR page means either (a) if we designate LIBOR Reuters
in the applicable pricing supplement, the display on the Reuters Monitor Money
Rates Service, or any successor service, for the purpose of displaying the
London interbank rates of major banks for the applicable LIBOR currency, or
(b) if we designate LIBOR Telerate in the applicable pricing supplement, the
display on Bridge Telerate, Inc., or any successor service, for the purpose of
displaying the London interbank rates of major banks for the applicable LIBOR
(currency, if the U.S. dollar is the LIBOR currency, LIBOR will be determined
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as if Page 3750 had been specified). Page 3750 means the display designated as
page "3750" on Bridge Telerate, Inc., or such other page as may replace the
3750 page on that service or such other service or services as may be
nominated by the British Bankers' Association for the purposes of displaying
London interbank offered rates for U.S. dollar deposits.
Treasury Rate Notes
Treasury Rate notes will bear interest at the interest rates, calculated
with reference to the Treasury Rate and the spread and/or spread multiplier,
if any, and will be payable on the dates, specified by us on the face of the
Treasury Rate note and in the applicable pricing supplement.
Unless we otherwise indicate in the pricing supplement, "Treasury Rate"
means, with respect to any interest determination date relating to a Treasury
Rate note (a Treasury interest determination date), the following:
(1) the rate from the auction held on the Treasury Rate interest determination
date of direct obligations of the United States, known as Treasury bills,
having the index maturity specified in the applicable pricing supplement
under the caption "INVESTMENT RATE" on the display on Bridge Telerate,
Inc. (or any successor service) on page 56 (of any other page as may
replace that page on that service) ("Telerate Page 56") or page 57 (or any
other page as may replace that page on that service) ("Telerate Page 57"),
or
(2) if the rate referred to in clause (1) is not so 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 another 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 referred to in clause (2) is not so 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 as announced by
the United States Department of the Treasury, or
(4) if the rate referred to in clause (3) is not so 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 particular interest determination date
of the applicable Treasury bills 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 so published by 3:00 P.M.,
New York City time, on the related calculation date, the rate on the
particular interest determination date of the applicable Treasury bills as
published in H.15 Daily Update, or another recognized electronic course
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 so published by 3:00 P.M.,
New York City time, on the related calculation date, the rate on the
particular 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 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 pricing supplement, or
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(7) if the dealers so selected by the calculation agent are not quoting as
mentioned in clause (6), the Treasury Rate in effect on the particular
interest determination date.
The bond equivalent yield shall be a yield, expressed as a percentage,
calculated in accordance with the following formula:
<TABLE>
<S> <C> <C>
bond equivalent yield = D X N X 100
-------------
360 - (D X M)
</TABLE>
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 Applicable to Notes
Any provisions with respect to the notes, including the determination
and/or specification of an interest rate basis or the calculation of the
interest rate applicable to a floating rate note, the interest payment dates,
the maturity or any other matter relating to such note, may be modified by the
terms specified under "Other Terms" on the face of the note or in an addendum
relating to such note, if so specified on the face of the note and in the
applicable pricing supplement.
Currency Indexed Notes
We may from time to time offer currency indexed notes, the principal
amount payable at maturity and/or the interest rate of which is determined by
reference to the rate of exchange between the specified currency and the other
currency or composite currency we specify as the indexed currency in the
applicable pricing supplement, or as determined in such other manner as we may
specify in the applicable pricing supplement.
Unless we specify otherwise in the applicable pricing supplement, holders
of currency indexed notes will be entitled to receive (i) an amount of
principal exceeding the stated face amount of the principal of, and/or an
amount of interest at an interest rate exceeding the stated rate of interest
on, their currency indexed notes if, at maturity or upon the relevant interest
payment date, as the case may be, the rate at which the specified currency can
be exchanged for the indexed currency exceeds the rate of such exchange
designated as the base exchange rate, expressed in units of the indexed
currency per one unit of the specified currency, in the applicable pricing
supplement or (ii) an amount of principal less than such stated face amount
and/or an amount of interest at an interest rate less than such stated interest
rate if, at maturity or upon the relevant interest payment date, as the case
may be, the rate at which the specified currency can be exchanged for the
indexed currency is less than such base exchange rate, in each case determined
as described above under "Payment of Principal and Interest."
Information as to the payment of principal and interest, the relative
historical value, which information is not necessarily indicative of relative
future value, of the applicable specified currency against the applicable
indexed currency, any exchange controls applicable to such specified currency
or indexed currency and certain tax consequences to holders of currency indexed
notes will be described in the applicable pricing supplement. See "Risk
Factors--Exchange Rates and Exchange Controls."
Other Indexed Notes
In addition to currency indexed notes, notes may be issued where the
principal amount payable at maturity and/or the interest rate or premium to be
paid on such notes are to be determined by reference to the relationship
between two or more currencies, to the price of one or more specified
securities or commodities, to one or more securities or commodities exchange
indices or other indices or by other similar
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methods or formulas. Such notes are called indexed notes. In the pricing
supplement relating to such an indexed note, we will describe, as applicable,
the method by which the amount of interest payable on any interest payment date
and the amount of principal payable at maturity in respect of such indexed note
will be determined, certain special tax consequences of the purchase, ownership
or disposition of such indexed notes, certain risks associated with an
investment in such indexed notes and other information relating to such indexed
notes.
Dual Currency Notes
We may from time to time offer notes, called dual currency notes, as to
which we have a one-time option, exercisable on any one of the option election
dates specified in the applicable pricing supplement in whole, but not in part,
with respect to all dual currency notes issued on the same day and having the
same terms (known as a tranche), of thereafter making all payments of
principal, premium, if any, and interest, which payments would otherwise be
made in the specified currency of such notes, in the optional payment currency,
we specify in the applicable pricing supplement. Information concerning
additional terms and conditions of any issue of dual currency notes, including
the relative value of the specified currency compared to the optional payment
currency, will be described in the applicable pricing supplement. See "Risk
Factors--Exchange Rates and Exchange Controls."
Amortizing Notes
We may from time to time offer amortizing notes. Unless we otherwise
specify 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 such notes and then to the reduction of the unpaid principal
amount of such 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 pricing supplement and
described on such notes.
Reopened Issues
We may "reopen" certain issues at any time by offering additional notes
with terms identical (other than issue date and issue price) to those of
existing notes.
Interest Rate Reset
If we have the option under any note to reset the interest rate, in the
case of a fixed rate note, or to reset the spread and/or spread multiplier, in
the case of a floating rate note, we will indicate such option in the pricing
supplement relating to such note, and, if so, (i) the date or dates on which
such interest rate or such spread and/or spread multiplier, as the case may be,
may be reset (each an optional reset date) and (ii) the basis or formula, if
any, for such resetting.
The rate derived from the applicable interest rate basis will be
determined in accordance with the related provisions below. The interest rate
in effect on each day will be based on:
. if that day is an interest reset date, the rate determined as of the interest
determination date (as described below) immediately preceding that interest
reset date, or
. if that day is not an interest reset date, the rate determined as of the
interest determination date immediately preceding the most recent interest
reset date.
We may exercise such option with respect to a note by notifying the
trustee of such exercise at least 45 but not more than 60 days prior to an
optional reset date for such note. Not later than 40 days prior to
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such optional reset date, the trustee will mail to the holder of such note a
notice, called the reset notice, first class, postage prepaid, setting forth:
. our election to reset the interest rate, in the case of a fixed rate note, or
the spread and/or spread multiplier, in the case of a floating rate note,
. such new interest rate or such new spread and/or spread multiplier and
. the provisions, if any, for redemption during the period from such optional
reset date to the next optional reset date or, if there is no such next
optional reset date, to the stated maturity of such note (each such period is
called a subsequent interest period) including the date or dates on which or
the period or periods during which and the price or prices at which such
redemption may occur during such subsequent interest period.
Notwithstanding the foregoing, not later than 20 days prior to an optional
reset date for a note, we may, at our option, revoke the interest rate, in the
case of a fixed rate note, or the spread and/or spread multiplier, in the case
of a floating rate note, in either case provided for in the reset notice and
establish a higher interest rate, in the case of a fixed rate note, or a higher
spread and/or spread multiplier, in the case of a floating rate note, for the
subsequent interest period commencing on such optional reset date by mailing or
causing the trustee to mail notice of such higher interest rate or higher
spread and/or spread multiplier, as the case may be, first class, postage
prepaid, to the direct holder of such note. Such notice shall be irrevocable.
All notes with respect to which the interest rate or spread and/or spread
multiplier is reset on an optional reset date will bear such higher interest
rate, in the case of a fixed rate note, or higher spread and/or spread
multiplier, in the case of a floating rate note.
If we elect to reset the interest rate or the spread and/or spread
multiplier of a note, the holder of such note will have the option to elect
repayment of such note by us on any optional reset date at a price equal to the
principal amount of such note plus any accrued interest to such optional reset
date. In order for a note to be so repaid on an optional reset date, the holder
must follow the procedures described below under "Repayment at Option of
Holder" for optional repayment, except that the period for delivery of such
note or notification to the trustee shall be at least 25 but not more than 35
days prior to such optional reset date and except that a holder who has
tendered a note for repayment pursuant to a reset notice may, by written notice
to the trustee, revoke any such tender for repayment until the close of
business on the tenth day prior to such optional reset date.
Extension of Maturity
If we have provided in any note the option for us to extend the stated
maturity for one or more periods, each an extension period, up to but not
beyond the final maturity date described in the pricing supplement relating to
such note, such pricing supplement will indicate such option and the basis or
formula, if any, for setting the interest rate, in the case of a fixed rate
note, or the spread and/or spread multiplier, in the case of a floating rate
note, applicable to any such extension period, and such pricing supplement will
describe any special tax consequences to holders of such notes.
We may exercise such option with respect to a note by notifying the
trustee of such exercise at least 45 but not more than 60 days prior to the
original stated maturity of such note in effect prior to the exercise of such
option. No later than 40 days prior to the original stated maturity, the
trustee will mail to the holder of such note an extension notice relating to
such extension period, first class, postage prepaid, setting forth:
. our election to extend the stated maturity of such note,
. the new stated maturity,
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. in the case of a fixed rate note, the interest rate applicable to the
extension period or, in the case of a floating rate note, the spread and/or
spread multiplier applicable to the extension period, and
. the provisions, if any, for redemption during the extension period, including
the date or dates on which or the period or periods during which and the
price or prices at which such redemption may occur during the extension
period.
When the trustee has mailed an extension notice to the holder of a note, the
stated maturity of such note shall be extended automatically as described in
the extension notice, and, except as modified by the extension notice and as
described in the next paragraph, such note will have the same terms as prior to
the mailing of such extension notice.
Notwithstanding the foregoing, not later than 20 days prior to the
original stated maturity for a note, we may, at our option, revoke the interest
rate, in the case of a fixed rate note, or the spread and/or spread multiplier,
in the case of a floating rate note, provided for in the extension notice and
establish a higher interest rate, in the case of a fixed rate note, or a higher
spread and/or spread multiplier, in the case of a floating rate note, for the
extension period by mailing or causing the trustee to mail notice of such
higher interest rate or higher spread and/or spread multiplier, as the case may
be, first class, postage prepaid, to the holder of such note. Such notice shall
be irrevocable. All notes with respect to which the stated maturity is extended
will bear such higher interest rate, in the case of a fixed rate note, or
higher spread and/or spread multiplier, in the case of a floating rate note,
for the extension period.
If we elect to extend the stated maturity of a note, the direct holder of
such note will have the option to elect repayment of such note by us at the
original stated maturity at a price equal to the principal amount of such note
plus any accrued interest to such date. In order for a note to be so repaid on
the original stated maturity, the direct holder must follow the procedures
described below under "Repayment at Option of Holder" for optional repayment,
except that the period for delivery of such note or notification to the trustee
shall be at least 25 but not more than 35 days prior to the original stated
maturity and except that a direct holder who has tendered a note for repayment
pursuant to an extension notice may, by written notice to the trustee, revoke
any such tender for repayment until the close of business on the tenth day
prior to the original stated maturity.
Book-Entry System
Upon issuance, all fixed rate notes, except foreign currency notes issued
as certificated notes, having the same original issuance date, interest rate,
specified currency and stated maturity and other terms, if any, will be
represented by a single global note. In addition, upon issuance, all floating
rate notes, except foreign currency notes issued as certificated notes, having
the same following original terms will be represented by a single global note:
. issuance date,
. interest rate basis,
. initial interest rate,
. interest reset dates,
. interest payment dates,
. index maturity,
. maximum interest rate (if any),
. minimum interest rate (if any),
. spread (if any),
. spread multiplier (if any),
. specified currency,
. LIBOR currency (if any),
. stated maturity,
. other terms (if any).
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Each global note will be deposited with, or on behalf of the depositary,
The Depository Trust Company, New York, New York, and registered in the name of
the depositary's nominee. Except as described below, global notes may be
transferred, in whole and not in part, only 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.
The depositary has advised the agents and us as follows: the depositary is
a limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934, as amended. The depositary holds securities that its participants deposit
with the depositary. The depositary also facilitates the settlement among
participants ("participants") of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized book-entry
changes in participants' accounts, 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. The depositary is owned by a number of its direct participants
and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and
the National Association of Securities Dealers, Inc. Access to the depositary's
system is also available to others such as securities 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 the depositary and its
participants are on file with the Securities and Exchange Commission.
Purchases of interests in the global notes under the depositary's system
must be made by or through direct participants, which will receive a credit for
such interests on the depositary's records. The ownership interest of each
actual purchaser of interests in the global notes, each called a beneficial
owner, is in turn to be recorded on the direct and indirect participants'
records. Beneficial owners will not receive written confirmation from the
depositary of their purchase, but beneficial owners are expected to receive
written confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the direct or indirect participant through
which the beneficial owner entered into the transaction. Transfers of ownership
interests in the global notes are to be accomplished by entries made on the
books of participants acting on behalf of beneficial owners. Beneficial owners
will not receive certificates representing their ownership interests in the
global notes, except as described below.
To facilitate subsequent transfers, all global notes deposited by
participants with the depositary are registered in the name of the depositary's
partnership nominee, Cede & Co. The deposit of global notes with the depositary
and their registration in the name of Cede & Co. effect no change in beneficial
ownership. The depositary has no knowledge of the actual beneficial owners of
the interests in the global notes; the depositary's records reflect only the
identity of the direct participants to whose accounts interests in the global
notes are credited, which may or may not be the beneficial owners. The
participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by the depositary to direct
participants, by direct participants to indirect participants, and by direct
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.
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Redemption notices shall be sent to Cede & Co. If less than all of the
interests in a global note are being redeemed, the depositary's practice is to
determine by lot the amount of the interest of each direct participant in such
global note to be redeemed.
Neither the depositary nor Cede & Co. will consent or vote with respect to
the global notes. Under its usual procedures, the depositary 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 interests in the global notes are credited on
the record date (identified in a listing attached to the omnibus proxy).
Principal and interest payments on the global notes will be made to the
depositary. The depositary's practice is to credit direct participants'
accounts on the payment date in accordance with their respective holdings shown
on the depositary's records unless the depositary has reason to believe that it
will not receive payment on the 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
such participant and not of the depositary, the trustee or us, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment of principal and interest to the depositary is the responsibility of us
or the trustee, disbursement of such payments to direct participants shall be
the responsibility of the depositary, and disbursement of such payments to the
beneficial owners shall be the responsibility of direct and indirect
participants.
All payments of principal and any interest on foreign currency notes which
are global notes will be made in U.S. dollars unless the depositary has
received notice in accordance with its procedures from any participants of
their election to receive all or a specified portion of such payments in the
specified currency, in which case payments in the specified currency will be
made directly to such participants.
The notes represented by one or more global notes are exchangeable for
certificated notes of like tenor as such notes if:
. the depositary for such global notes notifies us that it is unwilling or
unable to continue as depositary for such global notes or if at any time such
depositary ceases to be a clearing agency registered under the Securities
Exchange Act of 1934, as amended,
. we in our discretion at any time determine not to have all of the notes of
such series represented by one or more global note or notes and notify the
trustee of such determination, or
. an event of default, as described in the accompanying prospectus, has
occurred and is continuing with respect to the notes of such series.
Any note that is exchangeable pursuant to the preceding sentence is
exchangeable for certificated notes issuable in authorized denominations and
registered in such names as the depositary holding such global notes shall
direct. The authorized denominations of the notes denominated in U.S. dollars
will be $1,000 or any greater amount that is an integral multiple of $1,000.
The authorized denominations of notes denominated in a specified currency other
than U.S. dollars will be described in the applicable pricing supplement.
Subject to the foregoing, a global note is not exchangeable, except for a
global note or global notes of the same aggregate denominations to be
registered in the name of such depositary or its nominee.
The information in this section concerning the depositary and the
depositary's book-entry system has been obtained from sources that we believe
to be reliable, but we take no responsibility for the accuracy of such
information.
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Redemption and Repurchase
If we indicate in the pricing supplement relating to a note, such note
will be redeemable at our option on a date or dates specified prior to the
stated maturity at a price or prices described in the applicable pricing
supplement, together with accrued interest to the date of redemption. The notes
will not be subject to any sinking fund. We may redeem any of the notes which
are redeemable and remain outstanding either in whole or from time to time in
part, upon not less than 30 nor more than 60 days' notice.
We may at any time purchase notes at any price in the open market or
otherwise. Notes we purchase in this manner may, at our discretion, be held,
resold or surrendered to the trustee for cancellation.
Repayment at Option of Holder
If we indicate in the pricing supplement relating to a note, such note
will be repayable at the option of the holder on a date or dates specified
prior to the stated maturity at a price or prices described in the applicable
pricing supplement, together with accrued interest to the date of repayment.
In order for a note to be repaid, the trustee must receive at the
principal office of the Corporate Trust Department of the trustee in The City
of New York at least 30 days, but not more than 45 days, prior to the specified
repayment date notice of the holder's exercise of its repayment option as
specified in the note. Exercise of the repayment option by the holder of a note
shall be irrevocable, except as otherwise described under "Interest Rate Reset"
and "Extension of Maturity." The repayment option may be exercised by the
holder of a note for less than the entire principal amount of the note provided
that the principal amount of the note remaining outstanding after repayment, if
any, is an authorized denomination.
The depositary or its nominee will be the holder of global notes and
therefore will be the only entity that can exercise a right to repayment with
respect to such notes. In order to ensure that the depositary or its nominee
will timely exercise a right to repayment with respect to a particular global
note, the beneficial owner of such note must instruct the broker or other
direct or indirect participant through which it holds an interest in such note
to notify the depositary of its desire to exercise a right to repayment.
Different firms have different cut-off times for accepting instructions from
their customers and, accordingly, each beneficial owner should consult the
broker or other direct or indirect participant through which it holds an
interest in a note in order to ascertain the cut-off time by which such an
instruction must be given in order for timely notice to be delivered to the
depositary.
SPECIAL PROVISIONS RELATING TO
FOREIGN CURRENCY NOTES
Foreign currency notes will not be sold in, or to residents of, the
country issuing the specified currency in which particular notes are
denominated. The information described in this prospectus supplement is
directed to prospective purchasers who are United States residents, and we
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
interest on the notes. Such persons should consult their own counsel with
regard to such matters. See "Risk Factors--Exchange Rates and Exchange
Controls."
The pricing supplement relating to notes that are denominated in, or the
payment of which is determined with reference to, a specified currency other
than U.S. dollars or relating to currency indexed notes will contain
information concerning historical exchange rates for such specified currency
against the U.S. dollar or other relevant currency (including, in the case of
currency indexed notes, the applicable indexed currency), a description of such
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currency or currencies and any exchange controls affecting such currency or
currencies. Information concerning exchange rates is furnished as a matter of
information only and should not be regarded as indicative of the range of or
trend in fluctuations in currency exchange rates that may occur in the future.
Payment Currency
Except as described in the applicable pricing supplement, if payment on a
note is required to be made in a specified currency other than U.S. dollars and
such currency is unavailable in the good faith judgment due to the imposition
of exchange controls or other circumstances beyond our control, or is no longer
used by the government of the country issuing such currency or for the
settlement of transactions by public institutions of or within the
international banking community, then all payments with respect to such note
shall be made in U.S. dollars until such currency is again available or so
used. The amount so payable on any date in such foreign currency shall be
converted into U.S. dollars at a rate determined by the exchange rate agent on
the basis of the market exchange rate on the second business day prior to such
payment, or, if the market exchange rate is not then available, the most
recently available market exchange rate or as otherwise determined by us in
good faith if the foregoing is impracticable. Any payment in respect of such
note made under such circumstances in U.S. dollars will not constitute an event
of default under the indenture.
The notes that are denominated in, or the payment of which is determined
by reference to, a specified currency other than U.S. dollars, will provide
that, in the event of an official redenomination of a foreign currency,
including, without limitation, an official redenomination of a foreign currency
that is a composite currency, our obligations with respect of payments on notes
denominated in such currency shall, in all cases, be regarded immediately
following such redenomination as providing for the payment of that amount of
redenominated currency representing the amount of such obligations immediately
before such redenomination. Such notes will not provide for any adjustment to
any amount payable under the notes as a result of (a) any change in the value
of a foreign currency relative to any other currency due solely to fluctuations
in exchange rates or (b) any redenomination of any component currency of any
composite currency (unless such composite currency is itself officially
redenominated).
If the official unit of any component currency is altered by way of
combination or subdivision, the number of units of that currency as a component
shall be divided or multiplied in the same proportion. If two or more component
currencies are consolidated into a single currency, the amounts of those
currencies as components shall be replaced by an amount in such single
currency. If any component currency is divided into two or more currencies, the
amount of that original component currency as a component shall be replaced by
the amounts of such two or more currencies having an aggregate value on the
date of division equal to the amount of the former component currency
immediately before such division.
All determinations referred to above made by the exchange rate agent shall
be at its sole discretion, except to the extent expressly provided herein that
any determination is subject to our approval. In the absence of manifest error,
such determinations shall be conclusive for all purposes and binding on holders
of the notes and the exchange rate agent shall have no liability therefor.
Governing Law and Judgments
The notes will be governed by and construed in accordance with the laws of
the State of New York. Courts in the United States have not customarily
rendered judgments for money damages denominated in any currency other than the
U.S. dollar. New York statutory law provides, however, that a court shall
render a judgment or
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decree in the foreign currency of the underlying obligation and that the
judgment or decree shall be converted into U.S. dollars at the rate of exchange
prevailing on the date of the entry of the judgment or decree.
CERTAIN UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES
In the opinion of Orrick, Herrington & Sutcliffe LLP, our counsel, the
following summary correctly describes certain United States federal income tax
consequences of the ownership of notes as of the date of this prospectus
supplement. This summary is based on the Internal Revenue Code of 1986 as well
as final, temporary and proposed Treasury regulations and administrative and
judicial decisions. Legislative, judicial and administrative changes may occur,
possibly with retroactive effect, that could affect the accuracy of the
statements described in this prospectus supplement. This summary generally is
addressed only to original purchasers of the notes, deals only with notes held
as capital assets and does not purport to address all United States federal
income tax matters that may be relevant to investors in special tax situations,
such as:
. life insurance companies,
. tax-exempt organizations,
. dealers in securities or currencies, or traders in securities that elect to
mark to market,
. notes held as a hedge or as part of a hedging, straddle or conversion
transaction, or
. holders whose functional currency is not the U.S. dollar (called a
nonfunctional currency).
This summary deals only with notes that are due to mature 30 years or less
from the date on which they are issued. The United States federal income tax
consequences of the ownership of notes that are due to mature more than 30
years from the date of issue will be discussed in the applicable pricing
supplement. Persons considering the purchase of notes should consult their own
tax advisors concerning the application of United States federal income tax
laws, as well as the laws of any state, local or foreign taxing jurisdictions,
to their particular situations. The applicable pricing supplement may contain a
discussion of the special United States federal income tax consequences
applicable to particular notes, including currency or other indexed notes, dual
currency notes, amortizing notes and notes as to which we have the option to
extend the stated maturity.
United States Holders
This section describes the tax consequences to a United States holder. A
United States holder is a beneficial owner of a note that is:
. a citizen or resident of the United States,
. a domestic corporation,
. an estate whose income is subject to United States federal income tax
regardless of its source, or
. a trust if a United States court can exercise primary supervision over the
trust's administration and one or more United States persons are authorized
to control all substantial decisions of the trust.
If you are not a United States holder, this section does not apply to you.
See "Non-United States Holders" below.
Payment of Interest
Except as described below, interest on a note will be taxable to a United
States holder as ordinary interest income at the time it accrues or is
received, in accordance with the United States holder's method of accounting
for tax purposes. Special rules governing the treatment of notes issued at an
original issue discount are described under "Original Issue Discount" below.
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Original Issue Discount
General Treatment. The following is a summary of the principal United
States federal income tax consequences of the ownership of notes issued with
original issue discount. A note that has an issue price of less than its stated
redemption price at maturity generally will be issued with original issue
discount for federal income tax purposes in the amount of such difference. The
issue price of a note generally is the first price at which a substantial
amount of the issue of notes is sold to the public (excluding bond houses,
brokers or similar persons acting in the capacity of underwriters or
wholesalers). The stated redemption price at maturity is the total amount of
all payments provided by the note other than qualified stated interest
payments; qualified stated interest generally is stated interest that is
unconditionally payable at least annually either at a single fixed rate, or, to
the extent described below, at a qualifying variable rate. Qualified stated
interest will be taxable to a United States holder when accrued or received in
accordance with the United States holder's method of tax accounting.
A note will be considered to have de minimis original issue discount if
the excess of its stated redemption price at maturity over its issue price is
less than the product of .25 percent of the stated redemption price at maturity
and the number of complete years to maturity (or the weighted average maturity
in the case of a note that provides for payment of an amount other than
qualified stated interest before maturity). United States holders of notes
having de minimis original issue discount generally must include a
proportionate amount of each payment of stated principal in income as a payment
received in retirement of the note.
United States holders of notes issued with original issue discount that is
not de minimis original issue discount and that mature more than one year from
the date of issuance will be required to include such original issue discount
in gross income for federal income tax purposes as it accrues (regardless of
such holder's method of accounting), in advance of receipt of the cash
attributable to such income. Original issue discount accrues based on a
compounded, constant yield to maturity; accordingly, United States holders of
notes issued at an original issue discount will generally be required to
include in income increasingly greater amounts of original issue discount in
successive accrual periods.
The annual amount of original issue discount includable in income by the
initial United States holder of a note issued at an original issue discount
will equal the sum of the daily portions of the original issue discount with
respect to the note for each day on which such holder held the note during the
taxable year. Generally, the daily portions of the original issue discount are
determined by allocating to each day in an accrual period the ratable portion
of the original issue discount allocable to such accrual period. The term
accrual period means an interval of time with respect to which the accrual of
original issue discount is measured, and which may vary in length over the term
of the note provided that each accrual period is no longer than one year and
each scheduled payment of principal or interest occurs on either the first or
final day of an accrual period.
The amount of original issue discount allocable to an accrual period will
be the excess of (i) the product of the adjusted issue price of the note at the
commencement of such accrual period and its yield to maturity over (ii) the
amount of any qualified stated interest payments allocable to the accrual
period. The adjusted issue price of the note at the beginning of the first
accrual period is its issue price, and, on any day thereafter, it is the sum of
the issue price and the amount of the original issue discount previously
includable in the gross income of any holder (without regard to any acquisition
premium), reduced by the amount of any payment other than a payment of
qualified stated interest previously made with respect to the note. There is a
special rule for determining the original issue discount
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allocable to an accrual period if an interval between payments of qualified
stated interest contains more than one accrual period. The yield to maturity of
the note is the yield to maturity computed on the basis of a constant interest
rate, compounding at the end of each accrual period; such constant yield,
however, must take into account the length of the particular accrual period. If
all accrual periods are of equal length except for an initial or an initial and
final shorter accrual period(s), the amount of original issue discount
allocable to the initial period may be computed using any reasonable method;
the original issue discount allocable to the final accrual period is in any
event the difference between the amount payable at maturity (other than a
payment of qualified stated interest) and the adjusted issue price at the
beginning of the final accrual period.
If a portion of the initial purchase price of a note is attributable to
pre-issuance accrued interest, the first stated interest payment on the note is
to be made within one year of the note's issue date, and the payment will equal
or exceed the amount of pre-issuance accrued interest, then the United States
holder may elect to decrease the issue price of the note by the amount of pre-
issuance accrued interest. In that event, a portion of the first stated
interest payment will be treated as a return of the excluded pre-issuance
accrued interest and not as an amount payable on the note.
If a note provides for an alternative payment schedule or schedules
applicable upon the occurrence of a contingency or contingencies (other than a
remote or incidental contingency), whether such contingency relates to payments
of interest or of principal, if the timing and amount of the payments that
comprise each payment schedule are known as of the issue date and if one of
such schedules is significantly more likely than not to occur, the yield and
maturity of the note are determined by assuming that the payments will be made
according to that payment schedule. If there is no single payment schedule that
is significantly more likely than not to occur (other than because of a
mandatory sinking fund), the note will be subject to the general rules that
govern contingent payment obligations. These rules will be discussed in the
applicable pricing supplement.
For purposes of calculating the yield and maturity of a note subject to an
issuer or holder right to accelerate principal repayment (respectively, a call
option or put option), such call option or put option is presumed exercised if
the yield on the note would be less or more, respectively, than it would be if
the option were not exercised. The effect of this rule generally may be to
accelerate or defer the inclusion of original issue discount in the income of a
United States holder whose note is subject to a put option or a call option, as
compared to a note that does not have such an option. If any such option
presumed to be exercised is not in fact exercised, the note is treated as
reissued on the date of presumed exercise for an amount equal to its adjusted
issue price on that date for purposes of redetermining such note's yield and
maturity and any related subsequent accruals of original issue discount.
Variable Rate Debt Instruments. Certain notes that provide for a variable
rate of interest may be treated as variable rate debt instruments. A note will
be treated as a variable rate debt instrument if:
. the debt instrument does not provide for contingent principal payments,
. the issue price of the debt instrument does not exceed the total
noncontingent principal payments by more than the product of such principal
payments and the lesser of (i) 15 percent or (ii) the product of 1.5 percent
and the number of complete years in the debt instrument's term (or its
weighted average maturity in the case of an installment obligation), and
. the debt instrument does not provide for any stated interest other than
stated interest paid or compounded at least annually at a qualifying variable
rate which is (i) one or more qualified floating rates,
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(ii) a single fixed rate and one or more qualified floating rates, (iii) a
single objective rate or (iv) a single fixed rate and a single objective rate
that is a qualified inverse floating rate.
A qualified floating rate or objective rate must be set at a current value
of that rate; a current value is the value of the variable rate on any day that
is no earlier than three months prior to the first day on which that value is
in effect and no later than one year following that day. A qualified floating
rate is a variable rate whose variations can reasonably be expected to measure
contemporaneous variations in the cost of newly borrowed funds in the currency
in which the debt instrument is denominated. A qualified floating rate may be
multiplied by a fixed, positive multiple that is greater than .65 but not more
than 1.35, and may be increased or decreased by a fixed rate. Certain
combinations of rates constitute a single qualified floating rate, including
(i) interest stated at a fixed rate for an initial period of one year or less
followed by a qualified floating rate if the value of the floating rate at the
issue date is intended to approximate the fixed rate, and (ii) two or more
qualified floating rates that can reasonably be expected to have approximately
the same values throughout the term of the debt instrument. A combination of
such rates is conclusively presumed to be a single qualified floating rate if
the values of all rates on the issue date are within .25 percentage points of
each other. A variable rate that is subject to an interest rate cap, floor,
governor or similar restriction on rate adjustment may be a qualified floating
rate only if such restriction is fixed throughout the term of the debt
instrument, or is not reasonably expected as of the issue date to cause the
yield on the debt instrument to differ significantly from its expected yield
absent the restriction.
An objective rate is defined as a rate (other than a qualified floating
rate) that is determined using a single fixed formula and that is based on
objective financial or economic information (other than a rate based on
information that is within the control of the issuer (or a related party) or
that is unique to the circumstances of the issuer (or a related party)). The
Internal Revenue Service (IRS) may designate other variable rates that will be
treated as objective rates. However, a variable rate is not an objective rate
if it is reasonably expected that the average value of the rate during the
first half of the debt instrument's term will differ significantly from the
average value of such rate during the final half of its term. A combination of
interest stated at a fixed rate for an initial period of one year or less
followed by an objective rate is treated as a single objective rate if the
value of the objective rate at the issue date is intended to approximate the
fixed rate; such a combination of rates is conclusively presumed to be a single
objective rate if the objective rate on the issue date does not differ from the
fixed rate by more than .25 percentage points. An objective rate is a qualified
inverse floating rate if it is equal to a fixed rate reduced by a qualified
floating rate, the variations in which can reasonably be expected to inversely
reflect contemporaneous variations in the qualified floating rate (disregarding
permissible rate caps, floors, governors and similar restrictions such as are
discussed above).
Under these rules, Commercial Paper Rate notes, Prime Rate notes, LIBOR
notes, Treasury Rate notes, CD Rate notes and Federal Funds Rate notes
generally will be treated as bearing interest at a qualifying variable rate.
If a note is a variable rate debt instrument, special rules apply to
determine the amount of qualified stated interest and the amount and accrual of
any original issue discount. If the note bears interest that is unconditionally
payable at least annually at a single qualified floating rate or objective
rate, all stated interest is treated as qualified stated interest. The accrual
of any original issue discount is determined by assuming the note bears
interest at a fixed interest rate equal to the issue date value of the
qualified floating rate or qualified inverse floating rate,
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or equal to the reasonably expected yield for the note in the case of any other
objective rate. 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.
If the note bears interest at a qualifying variable rate other than a
single qualified floating rate or objective rate, the amount and accrual of
original issue discount generally are determined by (i) determining a fixed
rate substitute for each variable rate as described in the preceding sentence,
(ii) determining the amount of qualified stated interest and original issue
discount by assuming the note bears interest at such substitute fixed rates and
(iii) making appropriate adjustments to the qualified stated interest and
original issue discount so determined for actual interest rates under the note.
However, if such qualifying variable rate includes a fixed rate, the note first
is treated for purposes of applying clause (i) of the preceding sentence as if
it provided for an assumed qualified floating rate (or qualified inverse
floating rate if the actual variable rate is such) in lieu of the fixed rate;
the assumed variable rate would be a rate that would cause the note to have
approximately the same fair market value.
Variable rate notes that do not bear interest at a qualifying variable
rate or that have contingent principal payments or an issue price that exceeds
the noncontingent principal payments by more than the allowable amount will be
treated as contingent payment debt instruments. The pricing supplement
applicable to any such debt instrument will describe the material federal
income tax consequences of the ownership of such instrument
Short-Term Notes. A note that matures one year or less from the date of
its issuance is called a short-term note. In general, an individual or other
cash method United States holder of a short-term note is not required to accrue
original issue discount for federal income tax purposes unless it elects to do
so. United States holders who report income for United States federal income
tax purposes on the accrual method and certain other holders, including banks,
common trust funds, holders who holds the note as part of certain identified
hedging transactions, regulated investment companies and dealers in securities,
are required to include original issue discount on such notes on a straight-
line basis, unless an election is made to accrue the original issue discount
according to a constant interest method based on daily compounding.
In the case of a United States holder who is not required and does not
elect to include original issue discount in income currently, any gain realized
on the sale, exchange or retirement of such a note will be ordinary income to
the extent of the original issue discount accrued on a straight-line basis (or,
if elected, according to a constant interest method based on daily compounding)
through the date of sale, exchange or retirement. In addition, such non-
electing holders who are not subject to the current inclusion requirement
described in this paragraph will be required to defer deductions for any
interest paid on indebtedness incurred or continued to purchase or carry such
notes in an amount not exceeding the deferred interest income, until such
deferred interest income is realized.
For purposes of determining the amount of original issue discount subject
to these rules, all interest payments on a short-term note, including stated
interest, are included in the short-term note's stated redemption price at
maturity.
Premium and Market Discount
If a United States holder purchases a note, other than a short-term note,
for an amount that is less than the note's stated redemption price at maturity,
or, in the case of a note issued at an original issue discount, less than its
revised issue price (which is the
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sum of the issue price of the note and the aggregate amount of the original
issue discount previously includable in the gross income of any holder (without
regard to any acquisition premium)) as of the date of purchase, the amount of
the difference generally will be treated as market discount for United States
federal income tax purposes; however, a note acquired at its original issue
will not have market discount unless the note is purchased at less than its
issue price. Market discount generally will be de minimis and hence
disregarded, however, if it is less than the product of .25 percent of the
stated redemption price at maturity of the note and the number of remaining
complete years to maturity (or weighted average maturity in the case of notes
paying any amount other than qualified stated interest prior to maturity).
Under the market discount rules, a United States holder is required to
treat any principal payment on, or any gain on the sale, exchange, retirement
or other disposition of, a note as ordinary income to the extent of any accrued
market discount which has not previously been included in income. If such note
is disposed of in a nontaxable transaction (other than certain specified
nonrecognition transactions), accrued market discount will be includable as
ordinary income to the United States holder as if such holder had sold the note
at its then fair market value. In addition, the United States holder may be
required to defer, until the maturity of the note or its earlier disposition in
a taxable transaction, the deduction of all or a portion of the interest
expense on any indebtedness incurred or continued to purchase or carry such
note.
Market discount is considered to accrue ratably during the period from the
date of acquisition to the maturity of a note, unless the United States holder
elects to accrue on a constant yield basis. A United States holder of a note
may elect to include market discount in income currently as it accrues (on
either a ratable or constant yield basis), in which case the rule described
above regarding deferral of interest deductions will not apply. This election
to include market discount currently applies to all market discount obligations
acquired during or after the first taxable year to which the election applies,
and may not be revoked without the consent of the IRS.
A United States holder who purchases a note issued at an original issue
discount for an amount exceeding its adjusted issue price (as defined above)
and less than or equal to the sum of all amounts payable on the note after the
purchase date other than payments of qualified stated interest will be
considered to have purchased such note with acquisition premium. The amount of
original issue discount which such holder must include in gross income with
respect to such note will be reduced in the proportion that such excess bears
to the original issue discount remaining to be accrued as of the note's
acquisition.
A United States holder who acquires 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 will be considered to have purchased
such note at a premium, and will not be required to include any original issue
discount in income. A United States holder generally may elect to amortize such
premium using a constant yield method over the remaining term of the note. The
amortized premium will be treated as a reduction of the interest income from
the note. Any such election shall apply to all debt instruments (other than
debt instruments the interest on which is excludable from gross income) held at
the beginning of the first taxable year to which the election applies or
thereafter acquired, and is irrevocable without the consent of the IRS. Special
rules may apply if a note is subject to call prior to maturity at a price in
excess of its stated redemption price at maturity.
Constant Yield Election
A United States holder of a note may elect to include in income all
interest and discount, as adjusted by any premium with
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respect to such note based on a constant yield method, as described above. The
election is made for the taxable year in which the United States holder
acquired the note, and it may not be revoked without the consent of the IRS. If
such election is made with respect to a note having market discount, such
holder will be deemed to have elected currently to include market discount on a
constant interest basis with respect to all debt instruments having market
discount acquired during the year of election or thereafter. If made with
respect to a note having amortizable bond premium, such holder will be deemed
to have made an election to amortize premium generally with respect to all debt
instruments having amortizable bond premium held by the taxpayer during the
year of election or thereafter.
Sale and Retirement of the Notes
Upon the sale, exchange or retirement of a note, a United States holder
will recognize taxable gain or loss equal to the difference between the amount
realized from the sale, exchange or retirement and the United States 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 (see "Premium
and Market Discount" above) and accrued but unpaid interest. Such capital gain
or loss will be long-term capital gain or loss if the note has been held for
more than one year. A United States holder's adjusted tax basis in a note will
equal the cost of the note, increased by any original issue discount or market
discount previously included in taxable income by the United States holder with
respect to such note, and reduced by any amortizable bond premium applied to
reduce interest on a note, any principal payments received by the United States
holder and in the case of notes issued at an original issue discount, any other
payments not constituting qualified stated interest (as defined above).
Special rules regarding the treatment of gain realized with respect to
short-term notes issued at an original issue discount are described under
"Original Issue Discount" above.
Nonfunctional Currency Notes
The following is a summary of the principal United States federal income
tax consequences to a United States holder of the ownership of a foreign
currency note or a note determined by reference to a specified currency other
than the U.S. dollar, which are collectively referred to as nonfunctional
currency notes. Persons considering the purchase of nonfunctional currency
notes should consult their own tax advisors with regard to the application of
the United States federal income tax laws to their particular situations, as
well as any consequences arising under the laws of any other taxing
jurisdictions.
In general, if a payment of interest with respect to a note is made in (or
determined by reference to the value of) nonfunctional currency, the amount
includable in the income of the United States holder will be, in the case of a
cash basis United States holder, the U.S. dollar value of the nonfunctional
currency payment based on the exchange rate in effect on the date of receipt
or, in the case of an accrual basis United States holder, based on the average
exchange rate in effect during the interest accrual period (or, with respect to
an accrual period that spans two taxable years, the partial period within the
taxable year), in either case regardless of whether the payment is in fact
converted into U.S. dollars. Upon receipt of an interest payment (including a
payment attributable to accrued but unpaid interest upon the sale or retirement
of the nonfunctional currency note) in (or determined by reference to the value
of) nonfunctional currency, an accrual basis United States holder will
recognize ordinary income or loss measured by the difference between such
average exchange rate and the exchange rate in effect on the date of receipt.
Accrual basis United States holders may determine the U.S. dollar value of any
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interest income accrued in a nonfunctional currency under an alternative
method, described below as the spot accrual convention.
A United States holder will have a tax basis in any nonfunctional currency
received as payment of interest on, or on the sale, exchange or retirement of,
the nonfunctional currency note equal to the U.S. dollar value of such
nonfunctional currency, determined at the time of payment, or the disposition
of the nonfunctional currency note. Any gain or loss realized by a United
States holder on a sale or other disposition of nonfunctional currency
(including its exchange for U.S. dollars or its use to purchase nonfunctional
currency notes) will be ordinary income or loss.
A United States holder's tax basis in a nonfunctional currency note, and
the amount of any subsequent adjustments to such holder's tax basis, will be
the U.S. dollar value of the nonfunctional currency amount paid for such
nonfunctional currency note, or the nonfunctional currency amount of the
adjustment, determined using the spot rate on the date of such purchase or
adjustment and increased by the amount of any original issue discount included
in the United States holder's income (and accrued market discount, in the case
of a United States holder who has elected to currently include market discount,
as described above) with respect to the nonfunctional currency note and reduced
by the amount of any payments on the nonfunctional currency note that are not
qualified stated interest payments and by the amount of any amortizable bond
premium applied to reduce interest on the nonfunctional currency note.
A United States holder who converts U.S. dollars to a nonfunctional
currency and immediately uses that currency to purchase a nonfunctional
currency note denominated in the same currency normally will not recognize gain
or loss in connection with such conversion and purchase. However, a United
States holder who purchases a nonfunctional currency note with previously owned
nonfunctional currency will recognize gain or loss in an amount equal to the
difference, if any, between such holder's tax basis in the nonfunctional
currency and the U.S. dollar value of the nonfunctional currency on the date of
purchase.
For purposes of determining the amount of any gain or loss recognized by a
United States holder on the sale, exchange or retirement of a nonfunctional
currency note (as described above in the section "Sale and Retirement of the
Notes"), the amount realized upon such sale, exchange or retirement will be the
U.S. dollar value of the nonfunctional currency received (or that was payable,
in the case the payment was made in U.S. dollars), determined using the spot
rate on the date of the sale, exchange or retirement.
Gain or loss realized upon the sale, exchange or retirement of a
nonfunctional currency note that is attributable to fluctuations in currency
exchange rates will be treated as ordinary income or loss. Gain or loss
attributable to fluctuations in exchange rates will be calculated by
multiplying the original purchase price paid by the United States holder
(expressed in the relevant nonfunctional currency) by the change in the
relevant exchange rate (expressed in dollars per unit of relevant nonfunctional
currency) between the date on which the United States holder acquired the
nonfunctional currency note and the date on which the United States holder
received payment in respect of the sale, exchange or retirement of the
nonfunctional currency note. Such nonfunctional currency gain or loss will be
recognized only to the extent of the total gain or loss realized by a United
States holder on the sale, exchange or retirement of the nonfunctional currency
note.
Original issue discount on a note which is also a nonfunctional currency
note is to be determined for any accrual period in the relevant nonfunctional
currency and then translated into the United States holder's functional
currency on the basis of the average exchange rate in effect during such
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accrual period. If the interest accrual period spans two taxable years, the
original issue discount accruing within each year's portion of the accrual
period is to be translated into U.S. dollars on the basis of the average
exchange rate for the partial period within the taxable year.
A United States holder may elect to translate original issue discount
(and, in the case of an accrual basis United States holder, accrued interest)
into U.S. dollars at the exchange rate in effect on the last day of an accrual
period for the original issue discount or interest, or in the case of an
accrual period that spans two taxable years, at the exchange rate in effect on
the last day of the partial period within the taxable year (the spot accrual
convention). Additionally, if a payment of original issue discount or interest
is actually received within five business days of the last day of the accrual
period or taxable year, an electing United States holder may instead translate
such original issue discount or accrued interest into U.S. dollars at the
exchange rate in effect on the day of actual receipt. Any such election will
apply to all debt instruments held by the United States holder at the beginning
of the first taxable year to which the election applies or thereafter acquired
by the United States holder, and will be irrevocable without the consent of the
IRS.
Because exchange rates may fluctuate, a United States holder of a note
with original issue discount denominated in a nonfunctional currency may
recognize a different amount of original issue discount income in each accrual
period than would the United States holder of a similar note with original
issue discount denominated in U.S. dollars. Also, as described above, exchange
gain or loss will be recognized when the original issue discount is paid or the
United States holder disposes of the note.
If the United States holder of a nonfunctional currency note has not
elected to include market discount in income currently as it accrues, the
amount of accrued market discount must be determined in the nonfunctional
currency and translated into U.S. dollars using the spot exchange rate in
effect on the date principal is paid or the nonfunctional currency note is
sold, exchanged, retired or otherwise disposed of. No part of such accrued
market discount is treated as exchange gain or loss. If the United States
holder has elected to include market discount in income currently as it
accrues, the amount of market discount which accrues during any accrual period
will be required to be determined in units of nonfunctional currency and
translated into U.S. dollars on the basis of the average exchange rate in
effect during such accrual period. Such an electing United States holder will
recognize exchange gain or loss with respect to accrued market discount under
the same rules that apply to the accrual of interest payments on a
nonfunctional currency note by a United States holder on the accrual basis.
Backup Withholding and Information Reporting
A 31 percent backup withholding tax and certain information reporting
requirements may apply to payments of principal, premium and interest
(including any original issue discount) made to, and the proceeds of
disposition of a note by, certain United States holders. Backup withholding
will apply only if (i) the United States holder fails to furnish its Taxpayer
Identification Number to the payor, (ii) the IRS notifies the payor that the
United States holder has furnished an incorrect Taxpayer Identification Number,
(iii) the IRS notifies the payor that the United States holder has failed to
report properly payments of interest and dividends or (iv) under certain
circumstances, the United States holder fails to certify, under penalty of
perjury, that it has both furnished a correct Taxpayer Identification Number
and not been notified by the IRS that it is subject to backup withholding for
failure to report interest and dividend payments. Backup withholding will not
apply with respect to payments made to certain exempt recipients,
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such as corporations and financial institutions. United States holders should
consult their tax advisors regarding their qualification for exemption from
backup withholding and the procedure for obtaining such an exemption.
The amount of any backup withholding from a payment to a United States
holder will be allowed as a credit against the holder's federal income tax
liability and may entitle the holder to a refund, provided that the required
information is furnished to the IRS.
Non-United States Holders
This section describes the tax consequences to a non-United States
holder. You are a non-United States holder if you are the beneficial owner of
a note and are, for United States federal income tax purposes:
. a nonresident alien individual,
. a foreign corporation,
. a foreign partnership, or
. an estate or trust that in either case is not subject to United States
federal income tax on a net income basis on income or gain in respect of a
note.
A non-United States holder generally will not be subject to United States
federal withholding tax with respect to payments of principal, premium (if
any) and interest (including original issue discount) on notes, provided that
(i) the holder does not actually or constructively own 10 percent or more of
the total combined voting power of all classes of our stock entitled to vote,
(ii) the holder is not for United States federal income tax purposes a
controlled foreign corporation related to us through stock ownership, (iii)
the beneficial owner of the note certifies to us or our agent under penalties
of perjury as to its status as a non-United States holder and complies with
applicable identification procedures and (iv) the payment is not a payment of
contingent interest (generally a payment based on or determined by reference
to income, profits, cash flow, sales, dividends or other comparable attributes
of the obligor or a party related to the obligor). The applicable pricing
supplement will indicate if a note pays this contingent interest.
In certain circumstances, the above-described certification can be
provided by a bank or other financial institution. Recently finalized Treasury
regulations, that are generally effective with respect to payments made after
December 31, 2000, would provide alternative methods for satisfying the above-
described certification requirements. Those recently finalized Treasury
regulations also generally would require, in the case of notes held by a
foreign partnership, that (i) the certification described above be provided by
the partners rather than by the foreign partnership and (ii) the partnership
provide certain information, including a United States taxpayer identification
number. A look-through rule generally would apply in the case of tiered
partnerships.
In addition, a non-United States holder of a note generally will not be
subject to United States federal income tax on any gain realized upon the
sale, retirement or other disposition of a note, unless the holder is an
individual who is present in the United States for 183 days or more during the
taxable year of sale, retirement or other disposition and certain other
conditions are met. If a non-United States holder of a note is engaged in a
trade or business in the United States and income or gain from the note is
effectively connected with the conduct of such trade or business, the non-
United States holder will be exempt from withholding tax if appropriate
certification has been provided, but will generally be subject to regular
United States income tax on such income and gain in the same manner as if it
were a United States holder. In addition, if such non-United States holder is
a foreign corporation, it may be subject to a branch profits tax equal to 30
percent of its effectively connected earnings and profits for the taxable
year, subject to adjustments.
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<PAGE>
A note held by an individual who is a non-United States holder at the time
of death will not be subject to United States federal estate tax upon such
individual's death if at the time of death (i) such holder does not actually or
constructively own 10 percent or more of the total combined voting power of all
classes of our stock entitled to vote, (ii) payments with respect to the note
would not have been effectively connected with a United States trade or
business of such individual and (iii) payments with respect to the note would
not be considered to be a payment of contingent interest as described above.
Backup withholding and information reporting will not apply to payments of
principal, premium, if any, and interest made to a non-United States holder by
us on a note with respect to which the holder has provided the required
certification under penalties of perjury of its non-United States holder status
or has otherwise established an exemption, provided in each case that we or our
paying agent, as the case may be, do not have actual knowledge that the payee
is a United States person. Payments on the sale, exchange or other disposition
of a note by a non-United States holder effected outside the United States to
or through a foreign office of a broker will not be subject to backup
withholding. However, if such broker is a United States person, a controlled
foreign corporation for United States tax purposes or a foreign person 50
percent or more of whose gross income is derived from its conduct of a United
States trade or business for a specified three-year period (or, in addition,
for payments made after December 31, 2000, a foreign partnership engaged in a
United States trade or business or in which United States persons hold more
than 50 percent of the income or capital interests, or certain United States
branches of foreign banks or insurance companies), information reporting will
be required unless the beneficial owner has provided certain required
information or documentation to the broker to establish its non-United States
status or otherwise establishes an exemption. Payments to or through the United
States office of a broker will be subject to backup withholding and information
reporting unless the holder certifies under penalties of perjury to its non-
United States holder status or otherwise establishes an exemption.
Non-United States holders should consult their tax advisors regarding the
application of United States federal income tax laws, including information
reporting and backup withholding, to their particular situations.
SUPPLEMENTAL PLAN OF DISTRIBUTION
The notes are being offered from time to time by us through Chase
Securities Inc., Goldman, Sachs & Co., Merrill Lynch, Pierce, Fencer & Smith
Incorporated and Salomon Smith Barney Inc., as agents, who have severally
agreed to use their reasonable best efforts to solicit offers to purchase the
notes. We may also sell notes to any agent, as principal, and such agent may
resell such notes as further described below. We will have the sole right to
accept offers to purchase notes and may reject any proposed purchase of notes
as a whole or in part. The agents shall have the right, in their discretion
reasonably exercised, to reject any proposed purchase of notes as a whole or in
part. We will pay each agent a commission (or grant a discount) ranging from
.050% to .600%, depending upon the maturity, of the principal amount of notes
sold through such agent. Commissions and discounts with respect to notes with
maturities in excess of 30 years will be negotiated between us and such agent
at the time of sale.
No termination date for the offering of the notes has been established. We
reserve the right to withdraw, cancel or modify this offer without notice.
Unless otherwise indicated in the applicable pricing supplement, any note
sold to an agent as principal will be purchased by such agent at a price equal
to 100% of the principal amount thereof less a percentage
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<PAGE>
equal to the commission applicable to any agency sale of a note of identical
maturity. Such notes may be resold by the agent to investors and other
purchasers from time to time in one or more transactions, including negotiated
transactions, or at varying prices relating to prevailing market prices
determined at the time of sale or, if so agreed, at a fixed public offering
price. After the initial public offering of notes to be resold to investors and
other purchasers, the public offering price (in the case of notes to be resold
at a fixed public offering price) and any concession or discount, may be
changed. In addition, the agents may resell notes they have purchased as
principal to other dealers. Such resales may be at a discount and, unless
otherwise specified in the applicable pricing supplement, such discount allowed
to any dealer will not exceed the discount to be received by such agent from
us. Such dealers may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933.
No note will have an established trading market when issued. We do not
intend to list the notes on a national securities exchange. The agents have
informed us that they intend to establish a trading market for the notes.
However, the agents are not obligated to make such a market and may discontinue
any market making at any time without notice. No assurance can be given as to
the liquidity of the trading market for any notes.
During and after offerings of notes, the agents may purchase and sell the
offered notes in the open market. These transactions may include overallotment
and stabilizing transactions and purchases to cover short positions created in
connection with such offerings. Stabilizing transactions consist of certain
bids or purchases to prevent or retard a decline in the market price of the
notes. Short positions involve the sale by the agents of notes in an aggregate
principal amount exceeding that described in the applicable pricing supplement.
The agents also may impose penalty bids, whereby selling concessions allowed to
other broker-dealers in respect of the notes sold in such offerings for their
account may be reclaimed by the agents if the notes are repurchased by the
agents in stabilizing or covering transactions. These activities may stabilize,
maintain or otherwise affect the market prices of such notes, which may be
higher than the prices that might otherwise prevail in the open market. These
transactions may be effected in the over-the-counter market or otherwise, and
these activities, if commenced, may be discontinued at any time.
The agents, as agents or principals, may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933. We have agreed to indemnify
the agents against certain liabilities, including liabilities under the
Securities Act of 1933.
We reserve the right to sell notes directly to investors on our own
behalf, in which case no discount will be allowed or commission paid.
The agents and/or their affiliates may engage in various general financing
and banking transactions with us and/or our affiliates.
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PROSPECTUS
Caterpillar Financial Services Corporation
Debt Securities
-------------------------
We may from time to time sell up to $4,000,000,000 aggregate initial
offering price of our debt securities. The debt securities may consist of
debentures, notes or other types of unsecured debt. We will provide the
specific terms of these securities in supplements to this prospectus. The debt
securities are solely our obligations and are not guaranteed by Caterpillar
Inc. You nor we may use this prospectus to carry out sales of debt securities
unless it is accompanied by a prospectus supplement.
-------------------------
These securities have not been approved by the Securities and Exchange
Commission or any state securities commission, nor have these organizations
determined that this prospectus is accurate or complete. Any representation to
the contrary is a criminal offense.
-------------------------
May 11, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Caterpillar Financial Services Corporation................................. 3
Use of Proceeds............................................................ 3
Ratios of Profit to Fixed Charges.......................................... 3
Description of Debt Securities We May Offer................................ 3
Plan of Distribution....................................................... 9
Validity of Debt Securities We May Offer................................... 10
Experts.................................................................... 10
Where You Can Find More Information........................................ 10
</TABLE>
<PAGE>
CATERPILLAR FINANCIAL SERVICES CORPORATION
Caterpillar Financial Services Corporation is a wholly owned finance
subsidiary of Caterpillar Inc. We provide retail financing alternatives to
customers and dealers around the world for Caterpillar Inc. and non-
competitive related equipment, provide wholesale financing to Caterpillar Inc.
dealers and purchase short-term dealer receivables from Caterpillar Inc. We
emphasize prompt and responsive service and offer various financing plans to
meet customer requirements, increase Caterpillar Inc. sales and generate
financing income.
We are a Delaware corporation that was incorporated in 1981 and are the
successor to a company formed in 1954. Our principal executive office is
located at 2120 West End Avenue, Nashville, Tennessee 37203-0001 and our
telephone number is (615) 341-1000. Unless the context otherwise indicates,
the terms "Caterpillar Financial," "we," "us" or "our" mean Caterpillar
Financial Services Corporation and its wholly owned subsidiaries, and the term
"Caterpillar" means Caterpillar Inc. and its consolidated subsidiaries.
USE OF PROCEEDS
We will use net proceeds from the sale of the debt securities for the
financing of future sales and leasing transactions, for customer and dealer
loans and for other corporate purposes. We expect to incur additional
indebtedness in connection with our financing operations. However, the amount,
timing and precise nature of such indebtedness have not yet been determined
and will depend upon the volume of our business, the availability of credit
and general market conditions.
RATIOS OF PROFIT TO FIXED CHARGES
Our ratios of profit to fixed charges for each of the years ended
December 31, 1995 through 1999 and for the quarters ended March 31, 1999 and
2000 are as follows:
<TABLE>
<CAPTION>
Quarter Ended
March 31, Year Ended December 31,
--------------------- ---------------------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
1.36 1.41 1.35 1.35 1.39 1.36 1.34
</TABLE>
For the purpose of calculating this ratio, profit consists of income
before income taxes plus fixed charges. Profit is reduced by our equity in
profit of certain partnerships in which we participate. Fixed charges consist
of interest on borrowed funds (including any amortization of debt discount,
premium and issuance expense) and a portion of rentals representing interest.
DESCRIPTION OF DEBT SECURITIES WE MAY OFFER
As required by Federal law for all bonds and notes of companies that are
publicly offered, the debt securities are governed by a document called the
"indenture." The indenture is a contract, dated as of April 15, 1985, as
supplemented, between us and U.S. Bank Trust National Association (formerly
First Trust of New York, National Association), which acts as trustee. The
trustee has two main roles. First, the trustee can enforce your rights against
us if we default. There are some limitations on the extent to which the
trustee acts on your behalf, described later under "Events of Default and
Notices." Second, the trustee performs administrative duties for us, such as
sending you interest payments, transferring your debt securities to a new
buyer if you sell and sending you notices.
The indenture and its associated documents contain the full legal text of
the matters described in this section. The indenture is an exhibit to our
registration statement. See "Where You Can Find More Information" for
information on how to obtain a copy.
We may issue as many distinct series of debt securities under the
indenture as we
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wish. The indenture does not limit the aggregate principal amount of debt
securities which we may issue. This section summarizes all the material terms
of the debt securities that are common to all series (unless otherwise
indicated in the prospectus supplement relating to a particular series).
Because this section is a summary, it does not describe every aspect of the
debt securities and is subject to and qualified in its entirety by reference to
all the provisions of the indenture, including definitions of certain terms
used in the indenture. We describe the meaning for only the more important of
those terms. We also include references in parentheses to certain sections of
the indenture. Whenever we refer to particular sections or defined terms of the
indenture in this prospectus or in the prospectus supplement, such sections or
defined terms are incorporated by reference here or in the prospectus
supplement.
Our obligations, as well as the obligations of the trustee, run only to
persons who are registered as holders of debt securities. Investors who hold
debt securities in accounts at banks, brokers, or other financial
intermediaries or depositaries will not be recognized by us as registered
holders of debt securities. Accordingly, any right that holders may have under
the indenture must be exercised through such intermediaries or depositaries.
We may issue the debt securities as "original issue discount securities,"
which will be offered and sold at a substantial discount below their stated
principal amount. (section 101) The prospectus supplement relating to such
original issue discount securities will describe federal income tax
consequences and other special considerations applicable to them. The debt
securities may also be issued as indexed securities or securities denominated
in foreign currencies or currency units, as described in more detail in the
prospectus supplement relating to the debt securities being offered. The
prospectus supplement relating to the debt securities being offered will also
describe any special considerations and certain special United States federal
tax considerations applicable to such debt securities.
In addition, certain material financial, legal and other terms of the
offered debt securities are described in the prospectus supplement relating to
the debt securities being offered. Those terms may vary from the terms
described here. Thus, this summary also is subject to and qualified by
reference to the description of the particular terms of the offered debt
securities described in the prospectus supplement. The prospectus supplement
relating to the offered debt securities is attached to the front of this
prospectus.
Terms
The prospectus supplement relating to the series of debt securities being
offered will provide the following terms:
. the title of the offered debt securities;
. any limit on the aggregate principal amount of the offered debt securities;
. the date or dates on which the principal of the offered debt securities will
be payable;
. the rate or rates per annum at which the offered debt securities will bear
interest, if any, or the formula pursuant to which such rate or rates shall
be determined, and the date or dates from which such interest will accrue;
. the dates on which such interest, if any, will be payable and the regular
record dates for such interest payment dates;
. the place or places where principal of (and premium, if any) and interest on
offered debt securities shall be payable;
. any mandatory or optional sinking fund or analogous provisions;
. if applicable, the price at which, the periods within which and the terms and
conditions upon which the offered debt securities may, pursuant to any
optional or
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mandatory redemption provisions, be redeemed at our option;
. if applicable, the terms and conditions upon which the offered debt
securities may be repayable prior to final maturity at the option of the
holder (which option may be conditional);
. the portion of the principal amount of the offered debt securities, if other
than the principal amount thereof, payable upon acceleration of maturity
thereof;
. the currency or currencies, including composite currencies, in which
principal of (and premium, if any) and interest may be payable (which may be
other than those in which the offered debt securities are stated to be
payable);
. any index pursuant to which the amount of payments of principal of (and
premium, if any) or interest may be determined;
. whether all or any part of the offered debt securities will be issued in the
form of a global security or securities and, if so, the depositary for, and
other terms relating to, such global security or securities; and
. any other terms of the offered debt securities. (section 301)
Unless otherwise indicated in the attached prospectus supplement, the
offered debt securities are to be issued as registered securities without
coupons in denominations of $1,000 or any integral multiple of $1,000. (section
302) No service charge will be made for any transfer or exchange of the offered
debt securities, but we may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection with such transfer or
exchange. (section 305)
The debt securities are not secured by any of our property or assets.
Certain Restrictions
Support Agreement. We have a support agreement with Caterpillar which
provides, among other things, that Caterpillar will:
. remain directly or indirectly, our sole owner;
. ensure that we will maintain a tangible net worth of at least $20 million;
. permit us to use (and we are required to use) the name "Caterpillar" in the
conduct of our business; and
. ensure that we maintain a ratio of earnings and interest expense (as defined)
to interest expense of not less than 1.15 to 1.
The indenture provides that we:
. will observe and perform in all material respects all of our covenants or
agreements contained in the support agreement;
. to the extent possible, will cause Caterpillar to observe and perform in all
material respects all covenants or agreements of Caterpillar contained in the
support agreement; and
. will not waive compliance under, amend in any material respect or terminate
the support agreement; provided, however, that the support agreement may be
amended if such amendment would not have a material adverse effect on the
holders of any outstanding debt securities of any series or if the holders of
at least 66-2/3% in principal amount of the outstanding debt securities of
each series so affected (excluding from the amount so outstanding and from
such holders, the holders of such series who are not so affected) shall waive
compliance with the provisions of this section insofar as it relates to such
amendment. (section 1004)
Restrictions on Liens and Encumbrances. We will not create, assume or
guarantee any secured debt without making effective provision for securing the
debt securities (and, if we shall so determine, any other indebtedness of ours
or guaranteed by us), equally and ratably with such secured debt. The term
"secured debt" shall mean
5
<PAGE>
indebtedness for money borrowed which is secured by a mortgage, pledge, lien,
security interest or encumbrance on any of our property of any character. This
covenant does not apply to debt secured by:
. certain mortgages, pledges, liens, security interests or encumbrances in
connection with the acquisition, construction or improvement of any fixed
asset or other physical or real property by us;
. mortgages, pledges, liens, security interests or encumbrances on property
existing at the time of acquisition thereof, whether or not assumed by us;
. mortgages, pledges, liens, security interests or encumbrances on property of
a corporation existing at the time such corporation is merged into or
consolidated with us or at the time of a sale, lease or other disposition of
the properties of a corporation or firm as an entirety or substantially as an
entirety to us;
. mortgages, including mortgages, pledges, liens, security interests or
encumbrances, on our property in favor of the United States of America, any
state thereof or any other country, or any agency, instrumentality or
political subdivision thereof, to secure certain payments pursuant to any
contract or statute or to secure indebtedness incurred for the purpose of
financing all or any part of the purchase price or the cost of construction
or improvement of the property subject to such mortgages;
. any extension, renewal or replacement (or successive extensions, renewals or
replacements), in whole or in part, of any mortgage, pledge, lien or
encumbrance referred to in the foregoing four items; or
. any mortgage, pledge, lien, security interest or encumbrance securing
indebtedness owing by us to one or more of our wholly owned subsidiaries.
Notwithstanding the above, we may, without securing the debt securities,
create, assume or guarantee secured debt which would otherwise be subject to
the foregoing restrictions, provided that, after giving effect thereto, the
aggregate amount of all secured debt then outstanding (not including secured
debt permitted under the foregoing exceptions) at such time does not exceed 5%
of the consolidated net tangible assets. (sections 101 and 1005)
The indenture provides that we shall not consolidate or merge with, and
shall not convey, transfer or lease our property, substantially as an entirety,
to, another corporation if as a result thereof any of our properties or assets
would become subject to a lien or mortgage not permitted by the terms of the
indenture unless effective provision shall be made to secure the debt
securities equally and ratably with (or prior to) all indebtedness thereby
secured. (section 801)
The term "consolidated net tangible assets" means, as of any particular
time, the aggregate amount of assets after deducting therefrom (a) all current
liabilities (excluding any such liability that by its terms is extendable or
renewable at the option of the obligor thereon to a time more than 12 months
after the time as of which the amount thereof is being computed) and (b) all
goodwill, excess of cost over assets acquired, patents, copyrights, trademarks,
tradenames, unamortized debt discount and expense and other like intangibles,
all as shown in our and our subsidiaries' most recent consolidated financial
statements prepared in accordance with generally accepted accounting
principles. The term "subsidiary," as used in this section, means any
corporation of which more than 50% of the outstanding stock having ordinary
voting power to elect directors is owned directly or indirectly by us or by one
or more other corporations more than 50% of the outstanding stock of which is
similarly owned or controlled. (section 101)
The Trustee
The indenture contains certain limitations on the right of the trustee, as
a
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<PAGE>
creditor of ours, to obtain payment of claims in certain cases or to realize on
certain property received in respect of any such claim as security or
otherwise. (section 613) In addition, the trustee may be deemed to have a
conflicting interest and may be required to resign as trustee if at the time of
a default under the indenture the trustee is a creditor of ours.
Events of Default and Notices
The following events are defined in the indenture as "events of default"
with respect to debt securities of any series:
. failure to pay principal of or premium, if any, on any debt security of that
series when due;
. failure to pay any interest on any debt security of that series when due,
continued for 60 days;
. failure to deposit any sinking fund payment, when due, in respect of any debt
security of that series;
. default in the performance, or breach, of any term or provision of those
covenants contained in the indenture that are described under "Certain
Restrictions--Support Agreement";
. failure to perform any of our other covenants in the indenture (other than a
covenant included in the indenture solely for the benefit of a series of debt
securities other than that series), continued for 60 days after written
notice given to us by the trustee or the holders of at least 25% in principal
amount of the debt securities outstanding and affected thereby;
. Caterpillar or one of its wholly owned subsidiaries shall at any time fail to
own all of the issued and outstanding shares of our capital stock;
. default in payment of principal in excess of $10,000,000 or acceleration of
any indebtedness for money borrowed in excess of $10,000,000 by us (including
a default with respect to debt securities of any series other than that
series), if such indebtedness has not been discharged or become no longer due
and payable or such acceleration has not been rescinded or annulled, within
10 days after written notice given to us by the trustee or the holders of at
least 10% in principal amount of the outstanding debt securities of such
series;
. certain events in bankruptcy, insolvency or reorganization of us;
. certain events in bankruptcy, insolvency or reorganization of Caterpillar or
one of its subsidiaries if such events affect any significant part of our
assets or those of any of our subsidiaries; and
. any other event of default provided with respect to debt securities of such
series. (section 501)
If an event of default with respect to debt securities of any series at
the time outstanding shall occur and be continuing, either the trustee or the
holders of at least 25% in principal amount of the outstanding debt securities
of that series may declare the principal amount (or, if the debt securities of
that series are original issue discount securities, such portion of the
principal amount as may be specified in the terms of that series) of all debt
securities of that series to be due and payable immediately; provided, however,
that under certain circumstances the holders of a majority in aggregate
principal amount of outstanding debt securities of that series may rescind and
annul such declaration and its consequences. (section 502)
Reference is made to the prospectus supplement relating to any series of
offered debt securities which are original issue discount securities for the
particular provisions relating to the principal amount of such original issue
discount securities due on acceleration upon the occurrence of an event of
default and its continuation.
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The indenture provides that the trustee, within 90 days after the
occurrence of a default with respect to any series of debt securities, shall
give to the holders of debt securities of that series notice of all uncured
defaults known to it (the term default to mean the events specified above
without grace periods), provided that, except in the case of default in the
payment of principal of (or premium, if any) or interest, if any, on any debt
security, the trustee shall be protected in withholding such notice if it in
good faith determines that the withholding of such notice is in the interest of
the holders of debt securities. (section 602)
We will be required to furnish to the trustee annually a statement by
certain of our officers to the effect that to the best of their knowledge we
are not in default in the fulfillment of any of our obligations under the
indenture or, if there has been a default in the fulfillment of any such
obligation, specifying each such default. (section 1006)
The holders of a majority in principal amount of the outstanding debt
securities of any series affected will have the right, subject to certain
limitations, to direct the time, method and place of conducting any proceeding
for any remedy available to the trustee, exercising any trust or power
conferred on the trustee with respect to the debt securities of such series,
and to waive certain defaults. (sections 512 and 513)
Under the indenture, record dates may be set for certain actions to be
taken by the holders with respect to events of default, declaring an
acceleration, or rescission and annulment thereof, the direction of the time,
method and place of conducting any proceeding for any remedy available to the
trustee, exercising any trust or power conferred on the trustee or waiving any
default. (sections 501, 502, 512 and 513)
The indenture provides that in determining whether the holders of the
requisite principal amount of the outstanding debt securities have given any
request, demand, authorization, direction, notice, consent or waiver
thereunder,
. the principal amount of an original issue discount security that shall be
deemed to be outstanding shall be the amount of the principal thereof that
would be due and payable as of the date of such determination upon
acceleration of the maturity thereof; and
. the principal amount of a debt security denominated in a foreign currency or
a composite currency shall be the U.S. dollar equivalent, determined on the
basis of the rate of exchange on the business day immediately preceding the
date of our original issuance of such debt security in good faith, of the
principal amount of such debt security (or, in the case of an original issue
discount security, the U.S. dollar equivalent, determined based on the rate
of exchange prevailing on the business day immediately preceding the date of
original issuance of such debt security, of the amount determined as provided
in the first item above). (section 101)
The indenture provides that in case an event of default shall occur and be
continuing, the trustee shall exercise such of its rights and powers under the
indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs. (section 601) Subject to such provisions, the trustee will be
under no obligation to exercise any of its rights or powers under the indenture
at the request of any of the holders of debt securities unless they shall have
offered to the trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request. (section 603)
The occurrence of an event of default under the indenture may give rise to
a cross-default under other series of debt securities issued under the
indenture and other indebtedness of ours which may be outstanding from time to
time.
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Modification of the Indenture
Modifications and amendments of the indenture may be made by us and the
trustee, with the consent of the holders of not less than 66-2/3% in aggregate
principal amount of each series of the outstanding debt securities issued under
the indenture which are affected by the modification or amendment, provided
that no such modification or amendment may, without a consent of each holder of
such debt securities affected thereby:
. change the stated maturity date of the principal of (or premium, if any) or
any installment of interest, if any, on any such debt security;
. reduce the principal amount of (or premium, if any) or the interest, if any,
on any such debt security or the principal amount due upon acceleration of an
original issue discount security;
. change the place or currency of payment of principal or (or premium, if any)
or interest, if any, on any such debt security;
. impair the right to institute suit for the enforcement of any such payment on
or with respect to any such debt security;
. reduce the above-stated percentage of holders of debt securities necessary to
modify or amend the indenture; or
. modify the foregoing requirements or reduce the percentage of outstanding
debt securities necessary to waive compliance with certain provisions of the
indenture or for waiver of certain defaults.
A record date may be set for certain actions of the holders with respect to
consenting to any amendment. (Section 902)
PLAN OF DISTRIBUTION
We may sell the debt securities through underwriters or dealers or
directly to one or more purchasers. Any such underwriter or agent involved in
the offer and sale of the debt securities will be named in the related
prospectus supplement. The underwriters or agents may include one or more of
Chase Securities Inc., Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated and Salomon Smith Barney Inc.
Underwriters or agents may offer and sell the debt securities at a fixed
price or prices, which may be changed, or from time to time at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. In connection with the sale of the debt
securities, underwriters or agents may be deemed to have received compensation
from us in the form of underwriting discounts or commissions and may also
receive commissions in the form of discounts, concessions or commissions from
the underwriters or commissions from the purchasers for whom they may act as
agent.
The debt securities, when first issued, will have no established trading
market. Any underwriters or agents to or through whom we sell debt securities
for public offering and sale may make a market in such debt securities, but
such underwriters or agents will not be obligated to do so and may discontinue
any market making at any time without notice. No assurance can be given as to
the liquidity of the trading market for the debt securities.
Any underwriters or agents participating in the distribution of the debt
securities may be underwriters as defined in the Securities Act of 1933, as
amended, and any discounts and commissions they receive and any profit on their
resale of the debt securities may be treated as underwriting discounts and
commissions under the Securities Act. We may have agreements with the
underwriters or agents to indemnify them against or provide contribution toward
certain civil liabilities, including liabilities under the Securities Act.
In addition certain of the underwriters or agents and their associates may
be
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customers of, engage in transactions with, lend money to and perform services
for, us in the ordinary course of their businesses.
VALIDITY OF DEBT SECURITIES WE MAY OFFER
The validity of debt securities will be passed upon by Orrick, Herrington
& Sutcliffe LLP, 400 Sansome Street, San Francisco, California 94111, our
counsel, and, unless otherwise indicated in a prospectus supplement relating to
the offered debt securities, by Sullivan & Cromwell, 125 Broad Street, New
York, New York 10004, counsel for the underwriters or agents.
EXPERTS
The financial statements incorporated in this prospectus by reference to
our Annual Report on Form 10-K for the year ended December 31, 1999 have been
so incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We and Caterpillar each file annual, quarterly and special reports, proxy
statements (Caterpillar only) and other information with the SEC. You may read
and copy any of these documents at 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 on the public reference rooms. Our
SEC filings (file number 001-11241) and the filings of Caterpillar (file number
001-00768) are also available to the public at the SEC's web site at
http://www.sec.gov. You may also read any copy of these documents concerning us
at the offices of the New York Stock Exchange and these documents concerning
Caterpillar at the offices of the New York, Chicago or Pacific Stock Exchanges.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus and later information that we file
with the SEC will automatically update or supersede this information. We
incorporate by reference our Annual Report on Form 10-K for the fiscal year
ended December 31, 1999, as amended, our Quarterly Report on Form 10-Q for the
quarter ended March 31, 2000, and any future filings made with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended, until such time as all of the securities covered by this prospectus
have been sold.
You may request a copy of these filings, at no cost, by writing or
telephoning as follows:
Caterpillar Financial Services Corporation
2120 West End Avenue
Nashville, Tennessee 37203-0001
Attn: Legal Department
Telephone: (615) 341-1000
You should not assume that the information in this prospectus and the
accompanying prospectus supplement is accurate as of any date other than the
date on the front of those documents regardless of the time of delivery of this
prospectus and the accompanying prospectus supplement or any sale of the debt
securities. Additional updating information with respect to the matters
discussed in this prospectus and the accompanying prospectus supplement may be
provided in the future by means of appendices or supplements to this prospectus
and the accompanying prospectus supplement or other documents including those
incorporated by reference.
10
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$4,000,000,000
Caterpillar Financial Services Corporation
Medium-Term Notes, Series F
-------------------------
Prospectus Supplement
-------------------------
Chase Securities Inc.
Goldman, Sachs & Co.
Merrill Lynch & Co.
Salomon Smith Barney
