<PAGE>
<PAGE>
PRICING SUPPLEMENT
(TO PROSPECTUS SUPPLEMENT AND PROSPECTUS DATED MAY 5, 1998)
$1,050,000,000
[LOGO]
GUARANTEED AS TO PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST BY
[LOGO]
$750,000,000 6.25% Notes due 2001
ISSUE PRICE: 99.947%
$300,000,000 6.60% Notes due 2005
ISSUE PRICE: 99.920%
Interest payable May 15 and November 15
Interest on the 6.25% Medium-Term Notes, Series F due 2001 (the '2001 Notes')
and on the 6.60% Medium-Term Notes, Series F due 2005 (the '2005 Notes')
(collectively, the 'Notes') of AT&T Capital Corporation (the 'Company') offered
hereby is payable semiannually on May 15 and November 15 of each year,
commencing November 15, 1998. The Notes are not redeemable and will not be
subject to any sinking fund. The Notes will be represented by one or more global
securities registered in the name of a nominee of The Depository Trust Company
as Depositary (the 'Depositary'). Beneficial interests in the Notes will be
shown on and transfers thereof will be effected only through records maintained
by the Depositary and its participants. Except as described herein, Notes will
not be issued in definitive form. The Notes will trade in the Same-Day Funds
Settlement System of the Depositary until maturity, and secondary market trading
activity for the Notes will therefore settle in same-day funds. See 'Description
of Notes' in this Pricing Supplement and 'Description of Medium-Term Notes,
Series F' in the accompanying Prospectus Supplement and 'Description of the
Guarantee' in the accompanying Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PRICING SUPPLEMENT OR THE PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) THE COMPANY(2)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per 2001 Note 99.947% .350% 99.597%
- ------------------------------------------------------------------------------------------------------------------
Total $749,602,500 $2,625,000 $746,977,500
- ------------------------------------------------------------------------------------------------------------------
Per 2005 Note 99.920% .625% 99.295%
- ------------------------------------------------------------------------------------------------------------------
Total $299,760,000 $1,875,000 $297,885,000
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Company and Newcourt have agreed to indemnify the Underwriters against
certain liabilities under the Securities Act of 1933. See 'Underwriting'.
(2) Before deducting expenses payable by the Company estimated at $1,000,000.
The Notes are offered, subject to prior sale, when, as and if accepted by the
Underwriters and subject to approval of certain legal matters by Winston &
Strawn, counsel for the Underwriters. It is expected that delivery of the Notes
will be made on or about May 8, 1998 through the facilities of the Depositary
against payment therefor in same-day funds.
J.P. MORGAN & CO.
CHASE SECURITIES INC.
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
SALOMON SMITH BARNEY
May 5, 1998
<PAGE>
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR OTHERWISE.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
No person has been authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
Pricing Supplement, the Prospectus Supplement or the Prospectus in connection
with the offer made by this Pricing Supplement, the Prospectus Supplement and
the Prospectus and, if given or made, such information or representations must
not be relied upon as having been authorized by the Company, Newcourt or the
Underwriters. This Pricing Supplement, the Prospectus Supplement and the
Prospectus do not constitute an offer to sell or the solicitation of an offer to
buy such securities in any circumstances in which such offer or solicitation is
unlawful. Neither the delivery of this Pricing Supplement, the Prospectus
Supplement or the Prospectus nor any sale made hereunder and thereunder shall,
under any circumstances, create any implication that there has been no change in
the affairs of the Company or Newcourt since the date thereof or hereof or that
the information contained therein or herein is correct as of any time subsequent
to their respective dates.
DESCRIPTION OF NOTES
The Notes will be issued as a part of a series of debt securities
designated as Medium-Term Notes, Series F (the 'Medium-Term Notes') and issued
under an Indenture, dated as of April 1, 1998 (the 'Indenture'), by and among
the Company, Newcourt Credit Group Inc. ('Newcourt') and The Chase Manhattan
Bank, as trustee (the 'Trustee'). The Medium-Term Notes are currently limited to
$5,000,000,000 aggregate principal amount. The following summary of certain
provisions of the Notes, of the Medium-Term Notes and of the Indenture does not
purport to be complete and is qualified in its entirety by reference to the
Indenture, a copy of which has been filed an as exhibit to the Registration
Statement of which this Pricing Supplement and the accompanying Prospectus
Supplement and Prospectus are a part. Capitalized terms used but not defined
herein generally are defined in the accompanying Prospectus Supplement or
Prospectus. Capitalized terms used but not defined herein or in the accompanying
Prospectus Supplement or Prospectus have the meanings given to them in the
Indenture. The term 'Securities,' as used under this caption, refers to all
Securities issuable from time to time under the Indenture and includes the
Notes. The term 'Medium-Term Notes' includes the Notes.
GENERAL
All Securities, including the Notes, issued and to be issued under the
Indenture will be unsecured obligations of the Company, and will rank pari passu
with all other unsecured indebtedness of the Company from time to time
outstanding. The Indenture does not limit the aggregate principal amount of
Securities which may be issued thereunder, and Securities may be issued
thereunder from time to time as a single series or in two or more separate
series up to the aggregate principal amount from time to time authorized by the
Company for each series. The Company may, from time to time, without the consent
of the holders of the Notes, provide for the issuance of additional Medium-Term
Notes or other Securities under the Indenture in addition to the $5,000,000,000
aggregate principal amount of Securities authorized as of the date of this
Pricing Supplement.
Newcourt will provide an irrevocable unconditional guarantee of payment of
principal, premium, if any, and interest on the Notes. Such guarantee will be an
unsecured obligation of Newcourt and will rank pari passu with all other
unsecured and unsubordinated indebtedness of Newcourt.
The 2001 Notes will mature on May 15, 2001 and the 2005 Notes will mature
on May 15, 2005, and will bear interest from the date of issuance payable
semiannually in arrears on May 15 and November 15 (each an 'Interest Payment
Date') beginning November 15, 1998. If any Interest Payment Date would otherwise
be a day that is not a Business Day, such Interest Payment Date will be
2
<PAGE>
<PAGE>
postponed to the next succeeding Business Day. Payments of principal of premium,
if any, and interest on the Notes will be made by the Company through the
Trustee to the Depositary. See 'Description of Medium-Term Notes, Series F' in
the accompanying Prospectus Supplement and 'Description of the Guarantee' in the
accompanying Prospectus. The Notes will pay interest at the rates set forth on
the cover of this Pricing Supplement. Reference is hereby made to 'Description
of Medium-Term Notes, Series F' in the accompanying Prospectus Supplement and
'Description of the Guarantee' in the accompanying Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, dated the date hereof (the 'Underwriting Agreement'), among the
Company, Newcourt and the underwriters named below (the 'Underwriters'), the
Company has agreed to sell to each of the Underwriters, and each of the
Underwriters has severally agreed to purchase from the Company, the principal
amount of the Notes set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
----------------------------
UNDERWRITER 2001 NOTES 2005 NOTES
- --------------------------------------------------------------------------------- ------------ ------------
<S> <C> <C>
J.P. Morgan Securities Inc. ..................................................... $125,000,000 $ 50,000,000
Chase Securities Inc............................................................. 125,000,000 50,000,000
Credit Suisse First Boston Corporation........................................... 125,000,000 50,000,000
Goldman, Sachs & Co.............................................................. 125,000,000 50,000,000
Lehman Brothers Inc.............................................................. 125,000,000 50,000,000
Salomon Brothers Inc............................................................. 125,000,000 50,000,000
------------ ------------
Total....................................................................... $750,000,000 $300,000,000
------------ ------------
------------ ------------
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will be obligated to take and pay for all the Notes if any are
taken.
The Underwriters have advised the Company that they propose initially to
offer the Notes directly to the public at the public offering price set forth on
the cover page of this Pricing Supplement and to certain dealers at such price
less a concession not in excess of .20% of the principal amount of the 2001
Notes and .375% of the principal amount of the 2005 Notes. The Underwriters may
allow, and such dealers may reallow, a discount not in excess of .15% of the
principal amount of the 2001 Notes and .25% of the principal amount of the 2005
Notes to certain other dealers. After the initial public offering, the public
offering price and such concessions may be changed.
The Company does not intend to apply for listing of the Notes on a national
securities exchange, but has been advised by the Underwriters that they intend
to make a market in the Notes. The Underwriters are not obligated, however, to
make a market in the Notes and may discontinue market making at any time without
notice. No assurance can be given as to the liquidity of any trading market for
the Notes.
The Company and Newcourt have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended.
In the ordinary course of their respective businesses, affiliates of the
Underwriters have engaged and may in the future engage in commercial and
investment banking transactions with the Company and the Guarantor.
3
<PAGE>
<PAGE>
PROSPECTUS SUPPLEMENT
(To Prospectus Dated May 5, 1998)
U.S. $5,000,000,000
[LOGO]
MEDIUM-TERM NOTES, SERIES F
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
GUARANTEED AS TO PAYMENT OF PRINCIPAL, PREMIUM, IF ANY,
AND INTEREST BY
[LOGO]
---------------------------
AT&T Capital Corporation (the 'Company'), an indirect wholly-owned
subsidiary of Newcourt Credit Group Inc. ('Newcourt'), may offer from time to
time its medium-term notes, which are issuable in one or more series. The
Medium-Term Notes, Series F (the 'Notes') offered by this Prospectus Supplement
are offered in the United States with an aggregate offering price not exceeding
U.S. $5,000,000,000 or the equivalent thereof in other currencies or currency
units, as such amount shall be reduced by the aggregate offering price of any
other debt securities and the aggregate purchase price of any warrants issued by
the Company, whether inside or outside of the United States (the 'Other
Securities'), pursuant to the Registration Statement of which the accompanying
Prospectus is a part (see 'Plan of Distribution'). The Notes may be denominated
in U.S. dollars or other currencies or currency units as may be designated by
the Company (the 'Specified Currency'). See 'Important Currency Exchange
Information'. The Notes will be offered in varying maturities nine months or
more from their dates of issue and may be subject to redemption at the option of
the Company or repayment at the option of the Holder, in each case, in whole or
in part prior to the maturity date thereof, as set forth in the applicable
pricing supplement to this Prospectus Supplement (a 'Pricing Supplement'). The
Notes will be unconditionally guaranteed as to payment of principal, premium, if
any, and interest by Newcourt. See 'The Company -- Relationship with Newcourt'.
THE NOTES ARE NOT GUARANTEED OR SUPPORTED IN ANY WAY BY AT&T CORP.
('AT&T').
The interest rate on each Note will be either a fixed rate (a 'Fixed Rate
Note'), which may be zero in the case of certain Notes issued at a price
representing a substantial discount from the principal amount payable upon
maturity, or a floating rate (a 'Floating Rate Note') determined by reference to
one or more of the Commercial Paper Rate, the Federal Funds Rate, the CD Rate,
LIBOR, the Treasury Rate, the Prime Rate, the CMT Rate or any other Base Rate
(each as defined below) or interest rate formula set forth in the applicable
Pricing Supplement, as adjusted by the Spread and/or Spread Multiplier (each as
defined below), if any, applicable to such Note. A Fixed Rate Note may pay a
level amount in respect of both interest and principal amortized over the life
of the Note (an 'Amortizing Note'). A Note may be issued as an indexed note (an
'Indexed Note'), the principal amount payable at maturity of which, or premium
or interest on which, will be determined by reference to the level of a
designated stock index or a designated currency or commodity or other prices or
indices or will otherwise be determined by application of a formula. See
'Description of Medium-Term Notes, Series F -- Indexed Notes'.
The Specified Currency, interest rate or interest rate formula, reset
provisions, issue price, maturity, interest payment dates, redemption,
repayment, and amortization provisions and certain other terms with respect to
each Note will be established at the time of issuance and set forth in the
applicable Pricing Supplement. Except as otherwise indicated herein or in the
applicable Pricing Supplement, interest on each Fixed Rate Note (other than an
Amortizing Note) is payable each May 15 and November 15 and at maturity.
Interest on each Floating Rate Note is payable on the dates set forth therein
and in the applicable Pricing Supplement.
---------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EX CHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, ANY PRICING
SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
[CAPTION]
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------
Price to Agent's Discount and Proceeds to
Public(1)(2) Commission(2)(3) the Company(2)(3)(4)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note....................... 100.000% .05% - .75% 99.95% - 99.25%
- ----------------------------------------------------------------------------------------------------------------------------
Total.......................... U.S.$5,000,000,000 U.S.$2,500,000 - $37,500,000 US$4,997,500,000 - $4,962,500,000
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Unless otherwise indicated in a Pricing Supplement, the Notes will be
issued at 100% of their principal amount.
(2) Or, in the case of Notes not denominated in U.S. dollars, the equivalent
thereof in the Specified Currency.
(3) The Company will pay a commission to certain investment banking firms
(collectively, the 'Agents'), in the form of a discount of the principal
amount of any Note sold through the Agents, depending upon the maturity of
the Note, except that the commission payable by the Company to the Agents
with respect to Notes with maturities of greater than thirty years will be
negotiated at the time the Company issues such Notes. An Agent, acting as
principal, or a group of underwriters for whom one or more Agents are
acting as representatives, may also purchase Notes at a discount, to be
agreed upon at the time of sale, for resale to one or more investors, or
one or more broker-dealers (acting as principal for purposes of resale) at
varying prices related to prevailing market prices at the time of resale,
as determined by such Agent, or, if so agreed, at a fixed public offering
price. See 'Plan of Distribution'.
(4) Before deducting expenses payable by the Company estimated at U.S.
$2,300,000, including reimbursement of the Agents' expenses.
---------------------------
The Notes are being offered on a continual basis by the Company through the
Agents, who have agreed to use their reasonable best efforts to solicit
purchases of the Notes. The Company also may arrange for the Notes to be sold
through other agents, dealers or underwriters or may sell the Notes directly to
investors on its own behalf in those jurisdictions where it is authorized to do
so. The Notes will not be listed on any securities exchange, and there can be no
assurance that the Notes will be sold or that there will be a secondary market
for the Notes. The Company reserves the right to withdraw, cancel or modify the
offer made hereby without notice. The Company, or the Agents which solicit any
offer, may reject such offer in whole or in part. See 'Plan of Distribution'.
---------------------------
The date of this Prospectus Supplement is May 5, 1998.
<PAGE>
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE AGENTS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE 'PLAN OF DISTRIBUTION'.
IMPORTANT CURRENCY EXCHANGE INFORMATION
Purchasers are required to pay for the Notes in the Specified Currency, and
payments of principal of, premium, if any, and any interest on, such Notes will
be made in the Specified Currency, unless otherwise provided in the applicable
Pricing Supplement. Currently, there are limited facilities in the United States
for the conversion of U.S. dollars into foreign currencies or currency units,
and vice versa, and few banks offer non-U.S. dollar denominated checking or
savings account facilities in the United States. However, if requested by a
prospective purchaser of Notes denominated in a Specified Currency other than
U.S. dollars, the Agent soliciting the offer to purchase will arrange for the
conversion of U.S. dollars into such Specified Currency to enable the purchaser
to pay for such Notes. Such request must be made on or before the third Business
Day (as defined below) preceding the date of delivery of the Notes, or by such
other date as determined by such Agent. Each such conversion will be made by the
relevant Agent on such terms and subject to such conditions, limitations and
charges as such Agent may from time to time establish in accordance with its
regular foreign exchange practice. All costs of exchange will be borne by
purchasers of the Notes.
References herein to 'U.S. dollars' or 'U.S. $' or '$' are to the currency
of the United States of America.
DESCRIPTION OF MEDIUM-TERM NOTES, SERIES F
The information herein concerning the Notes should be read in conjunction
with the statements under 'Description of the Debt Securities' in the Prospectus
dated May 5, 1998. The following description of the Notes will apply unless
otherwise specified in the applicable Pricing Supplement.
GENERAL
The Notes are to be issued under Registration Statement No. 333-48415 (the
'Registration Statement'), pursuant to which the Company has registered debt
securities, warrants to purchase debt securities, currency warrants, index
warrants and interest rate warrants having an aggregate purchase price of
$5,000,000,000 (or the equivalent thereof in other currencies or currency
units). The Medium-Term Notes, Series F, constitute a single series and are to
be issued under an Indenture dated as of April 1, 1998, as amended (the
'Indenture'), between the Company and The Chase Manhattan Bank, as trustee (the
'Trustee'). Under this Prospectus Supplement, Notes may be issued with an
aggregate offering price of up to U.S. $5,000,000,000 (or the equivalent thereof
in other currencies or currency units), as such amount may be reduced by any
Other Securities issued by the Company pursuant to the Registration Statement
(see 'Plan of Distribution').
The Notes will be offered on a continuous basis. The Notes will mature on
any day nine months or more from the date of issue, as selected by the purchaser
and agreed to by the Company and specified in the applicable Pricing Supplement.
'Business Day' means any day, other than a Saturday or Sunday, that is neither a
legal holiday nor a day on which banking institutions are authorized or required
by law or regulation (including any executive order) to close in The City of New
York and (i) with respect to Notes denominated in a Specified Currency other
than U.S. dollars or Euros (as defined below), in the Principal Financial Center
(as defined below) of the country of the Specified Currency or (ii) with respect
to Notes denominated in Euros, in Brussels, Belgium or (iii) with respect to
LIBOR Notes (as defined below), that is also a London Banking Day. 'London
Banking Day' means any day on which dealings in deposits in the Index Currency
(as defined below) are transacted in the London interbank market. 'Principal
Financial Center' means the principal financial center of such country, which is
generally the capital city of the country of the Specified Currency, except that
with respect to U.S.
S-2
<PAGE>
<PAGE>
dollars and Deutsche marks, the Principal Financial Center shall be The City of
New York and Frankfurt, respectively.
A Note may be issued as a zero coupon Note or at a price which is at a
substantial discount from its principal amount (a 'Discount Note'), in which
event such Note will provide that upon redemption or repayment prior to maturity
or acceleration of maturity thereof an amount less than the principal amount
thereof shall become due and payable. If a bankruptcy proceeding is commenced in
respect of the Company, the claim of the holders of Discount Notes may be
limited under section 502(b) of Title 11 of the United States Code to the
initial public offering price of such Notes, plus that portion of the original
issue discount that is amortized from the date of issue to the commencement of
the bankruptcy proceeding plus accrued interest. Accordingly, the holders of
Discount Notes under such circumstances may receive a lesser amount than they
would be entitled to under the express terms of such Notes.
Notwithstanding anything in the Prospectus Supplement to the contrary,
unless otherwise specified in the applicable Pricing Supplement, if a Note is a
Discount Note, the amount payable on such Note in the event of redemption or
repayment prior to its maturity shall be the Amortized Face Amount of such Note
as of the date of redemption or the date of repayment, as the case may be. The
'Amortized Face Amount' of a Discount Note shall be the amount equal to (i) the
issue price set forth in the applicable Pricing Supplement plus (ii) the portion
of the difference between the issue price and the principal amount of such Note
that has accrued at the yield to maturity set forth in the Pricing Supplement
(computed in accordance with generally accepted United States bond yield
computation principles) to such date of redemption or repayment, but in no event
shall the Amortized Face Amount of a Discount Note exceed its principal amount.
The Pricing Supplement relating to each Note will describe the following
terms: (1) the Specified Currency (and, if such Specified Currency is other than
U.S. dollars, certain other terms relating to such Note); (2) whether such Note
is a Fixed Rate Note, an Amortizing Note, or a Floating Rate Note; (3) whether
such Note is an Original Issue Discount Note; (4) whether such Note is an
Indexed Note and, if so, the special terms thereof; (5) if other than 100%, the
price (generally expressed as a percentage of the aggregate principal amount
thereof) at which such Note will be issued; (6) the date on which such Note will
be issued; (7) the date on which such Note will mature; (8) if such Note is a
Fixed Rate Note, the rate per annum at which such Note will bear interest; (9)
if such Note is a Floating Rate Note, the Base Rate, the Initial Interest Rate,
the Interest Reset Dates, the Interest Payment Dates, the Index Maturity, the
Maximum and Minimum Interest Rates, if any, and the Spread or Spread Multiplier,
if any (all as defined below), and any other terms relating to the method of
calculating interest on such Note; (10) if such Note is an Amortizing Note,
whether payments of principal thereof and interest thereon will be made
quarterly or semiannually, and the repayment information in respect thereof;
(11) the terms of redemption at the option of the Company, repayment at the
option of the holder, or amortization provisions, if any; and (12) any other
terms of such Note not inconsistent with the provisions of the Indenture.
Notes will be issued in fully registered form only. Each Note to be issued
will initially be represented by either a global security (a 'Book-Entry Note')
registered in the name of a nominee of The Depository Trust Company, as
depositary (the 'Depositary'), or a certificate issued in definitive form (a
'Certificated Note'). Except as set forth under 'Book-Entry System' below,
Book-Entry Notes will not be issuable as Certificated Notes. Unless otherwise
specified in the applicable Pricing Supplement, Notes denominated in U.S.
dollars will be issued in denominations that are integral multiples of U.S.
$1,000 and Notes denominated in a Specified Currency other than U.S. dollars
will be issued in denominations of the Specified Currency approximately
equivalent to U.S. $1,000 based upon the noon buying rate in New York City for
cable transfers of such Specified Currency, as determined by the Federal Reserve
Bank of New York (or in the case of Euros, based upon the rate of exchange
determined by the Commission of the European Communities (or any successor
thereto) as published in the Official Journal of the European Communities, or
any successor publication), on the Business Day immediately preceding the trade
date for such Notes, rounded to the nearest integral multiple of 1,000 units of
such Specified Currency, or any amount in excess thereof which is an integral
multiple of 1,000 units of such Specified Currency.
S-3
<PAGE>
<PAGE>
The Company has initially designated The Chase Manhattan Bank, acting
through its principal corporate trust office in New York, New York, as the
registrar and transfer agent for the Notes (the 'Registrar', which term includes
any additional or successor Registrar appointed by the Company), as the paying
agent for the Notes (the 'Paying Agent', which term includes any additional or
successor Paying Agent appointed by the Company), and as the authenticating
agent for the Notes (the 'Authenticating Agent', which term includes any
additional or successor Authenticating Agent appointed by the Company).
The Notes will constitute unsecured and unsubordinated indebtedness of the
Company and will rank on a parity with the Company's other unsecured and
unsubordinated indebtedness. Unless otherwise specified in the applicable
Pricing Supplement, the Notes are not subject to redemption at the option of the
Company or repayment at the option of the holder prior to maturity. The Notes
will not be subject to any sinking fund, except to the extent otherwise provided
in the applicable Pricing Supplement.
In the case of Notes denominated in, and with respect to which principal,
premium, if any, and interest is payable in, U.S. dollars, principal, premium,
if any, and interest will be payable, and the Notes will be transferable, at the
office of the Paying Agent, The Chase Manhattan Bank, 450 West 33rd Street, New
York, New York, or at such other place or places as may be designated pursuant
to the Indenture, provided that the Company, at its option, may pay interest
other than interest due at maturity by check mailed to registered holders
(which, in the case of Book-Entry Notes represented by a global security, will
be a nominee of the Depositary). Unless otherwise specified in the applicable
Pricing Supplement, interest on Notes (other than interest due at maturity)
payable in a Specified Currency other than U.S. dollars will be paid by mailing
a check or draft in the Specified Currency drawn on an account at a bank outside
of the United States. If any Notes are denominated in a Specified Currency other
than U.S. dollars or if the principal of, premium, if any, or interest on any
Notes is payable in a Specified Currency other than U.S. dollars, the applicable
Pricing Supplement will provide additional information pertaining to the terms
of such Notes and other matters of interest to the holders thereof. At the
maturity of any Note, the principal thereof, together with accrued interest
thereon, will be payable in immediately available funds upon surrender thereof
at the office of the Trustee at the above address or at such other place or
places as may be designated pursuant to the Indenture.
Interest rates and interest rate formulas are subject to change by the
Company, but no change will affect any Note theretofore issued or as to which an
offer to purchase has been accepted by the Company. Interest rates offered by
the Company with respect to the Notes may differ depending upon, among other
things, the aggregate principal amount of the Notes purchased in any single
transaction.
PAYMENT CURRENCY
If the principal of, premium, if any, or interest on, any Note is payable
in a Specified Currency other than U.S. dollars and such Specified Currency is
not available to the Company for making payments thereof due to the imposition
of exchange controls or other circumstances beyond the control of the Company,
the Company will be entitled to satisfy its obligations to holders of the Notes
by making such payments in U.S. dollars on the basis of the noon buying rate in
New York City for cable transfers of such Specified Currency as determined by
the Federal Reserve Bank of New York (the 'Market Exchange Rate') on the date of
such payment, or if such rate of exchange is not then available, on the basis of
the Market Exchange Rate as of the most recent Record Date (as defined below).
Any payment made under such circumstances in U.S. dollars where the required
payment is in a Specified Currency other than U.S. dollars will not constitute
an Event of Default under the Indenture.
Under the treaty establishing the European Economic and Monetary Union (the
'EMU'), it is provided that at or before January 1, 1999, and subject to the
fulfilment of certain conditions, a single currency (the 'Euro'), will become a
currency in its own right. The Euro may replace all or some of the currencies of
the 15 member states of the EMU (Austria, Belgium, Denmark, Finland, France,
Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain,
Sweden and the United Kingdom). If, pursuant to such treaty, all or some of the
currencies of the member states of the EMU are replaced by the Euro as a
currency in its own right, or by an alternative single European currency,
S-4
<PAGE>
<PAGE>
the payment of principal, premium, if any, or interest on, the Notes denominated
in such currencies shall, unless otherwise specified in the applicable Pricing
Supplement, be effected in Euro or such alternative European currency in
conformity with legally applicable measures taken pursuant to, or by virtue of,
such treaty, and such currency so replaced shall not be deemed to be unavailable
to the Company for purposes of the immediately preceding paragraph.
PAYMENT OF PRINCIPAL AND INTEREST
Each Floating Rate Note will bear interest from the date of issue at the
rate per annum stated or the interest rate formula set forth therein and in the
applicable Pricing Supplement, until the principal thereof is paid or made
available for payment. Each Fixed Rate Note will bear interest from the date of
issue at the rate or rates per annum stated (calculated on the basis of a year
of twelve thirty-day months) therein and in the applicable Pricing Supplement,
until the principal thereof is paid or made available for payment. Interest, if
any, will be payable on each Interest Payment Date. Interest will be payable to
the person in whose name a Note is registered at the close of business on the
Record Date with respect to the Interest Payment Date (which, in the case of
Book-Entry Notes represented by a global security, will be a nominee of the
Depositary); provided, however, that interest payable at maturity (whether or
not the maturity date is an Interest Payment Date) will be payable to the person
to whom principal shall be payable. Interest on any Note (or, in the case of an
Amortizing Note, principal and interest) originally issued between a Record Date
and an Interest Payment Date will first be payable on the Interest Payment Date
following the next succeeding Record Date to the registered holder on such next
succeeding Record Date of such Note. Unless otherwise specified in the
applicable Pricing Supplement, the 'Record Date' with respect to any Interest
Payment Date shall be the date fifteen calendar days prior to such Interest
Payment Date, whether or not such date shall be a Business Day.
Unless otherwise specified in the applicable Pricing Supplement, interest
on Fixed Rate Notes (other than an Amortizing Note) will be payable on May 15
and November 15 of each year (except as provided above with respect to Notes
issued between a Record Date and an Interest Payment Date) and at maturity.
Unless otherwise specified in the applicable Pricing Supplement, payments of
principal and interest on each Amortizing Note will be made semi-annually each
May 15 and November 15, and at maturity. See also ' -- Amortizing Notes' below.
Except as provided below, unless otherwise specified in the applicable Pricing
Supplement, interest on Floating Rate Notes will be payable: (i) in the case of
Notes with a daily, weekly or monthly Interest Reset Date, on the third
Wednesday of each month or on the third Wednesday of February, May, August and
November, as specified in the applicable Pricing Supplement; (ii) in the case of
Notes with a quarterly Interest Reset Date, on the third Wednesday of February,
May, August and November; (iii) in the case of Notes with a semiannual Interest
Reset Date, on the third Wednesday of the two months specified in the applicable
Pricing Supplement; (iv) in the case of Notes with an annual Interest Reset
Date, on the third Wednesday of the month specified in the applicable Pricing
Supplement and (v) in each case, at maturity.
Each date on which interest is payable on a Note is referred to herein as
an 'Interest Payment Date'. Unless otherwise specified in the applicable Pricing
Supplement, interest payments on Notes shall be the amount of interest accrued
from, and including, the date of issue or the last date to which interest has
been paid to, but excluding, the next succeeding Interest Payment Date or
maturity date, as the case may be. If any Interest Payment Date or the maturity
date of a Fixed Rate Note would otherwise be a day that is not a Business Day,
the required payment of principal, premium, if any, and/or interest will be made
on the next succeeding Business Day as if made on the date such payment was due,
and no interest will accrue on such payment for the period from and after such
Interest Payment Date or the maturity date, as the case may be, to the date of
such payment on the next succeeding Business Day. If any Interest Payment Date
for any Floating Rate Note (other than the maturity date) would otherwise be a
day that is not a Business Day such Interest Payment Date will be postponed to
the next succeeding day that is a Business Day, except that in the case of a
LIBOR Note, if such Business Day falls in the next succeeding calendar month,
such Interest Payment Date will be the immediately preceding Business Day. If
the maturity date of a Floating Rate Note falls on a day that is not a Business
Day, the required payment of principal, premium, if any, and/or interest will be
made
S-5
<PAGE>
<PAGE>
on the next succeeding Business Day as if made on the date such payment was due,
and no interest shall accrue on such payment for the period from and after the
maturity date to the date of such payment on the next succeeding Business Day.
Unless otherwise specified in the applicable Pricing Supplement, the
interest rate on each Floating Rate Note will be calculated by reference to a
specified interest rate (the 'Base Rate') (i) plus or minus the Spread, if any,
and/or (ii) multiplied by the Spread Multiplier, if any. The 'Spread' is the
number of basis points (one one-hundredth of a percentage point) specified in
the applicable Pricing Supplement as being applicable to the interest rate for
such Floating Rate Note, and the 'Spread Multiplier' is the percentage specified
in the applicable Pricing Supplement as being applicable to the interest rate
for such Floating Rate Note. The applicable Pricing Supplement will designate
one or more of the following Base Rates as applicable to each Floating Rate
Note: (a) the Commercial Paper Rate (a 'Commercial Paper Rate Note'), (b) the
Federal Funds Rate (a 'Federal Funds Rate Note'), (c) the Certificate of Deposit
Rate (a 'CD Rate Note'), (d) LIBOR (a 'LIBOR Note'), (e) the Treasury Rate (a
'Treasury Rate Note'), (f) the Prime Rate (a 'Prime Rate Note'), (g) the
Constant Maturity Treasury Rate (a 'CMT Rate Note') or (h) such other Base Rate
or interest rate formula as is set forth in such Pricing Supplement and in such
Floating Rate Note. The 'Index Maturity' for any Floating Rate Note is the
period of maturity of the instrument or obligation from which the Base Rate is
calculated and will be specified in the applicable Pricing Supplement.
As specified in the applicable Pricing Supplement, a Floating Rate Note may
also have either or both of the following: (i) a maximum limitation, or ceiling,
on the rate of interest that may accrue during any interest period (a 'Maximum
Interest Rate'); and (ii) a minimum limitation, or floor, on the rate of
interest that may accrue during any interest period (a 'Minimum Interest Rate').
In addition to any Maximum Interest Rate which may be applicable to any Floating
Rate Note, the interest rate on a Floating Rate Note will in no event be higher
than the maximum rate permitted by New York law, as the same may be modified by
United States law of general application.
The rate of interest on each Floating Rate Note will be reset daily,
weekly, monthly, quarterly, semi-annually or annually (such period being the
'Interest Reset Period' for such Note and the first date of each Interest Reset
Period, on which such interest rate becomes effective, being an 'Interest Reset
Date'), as specified in the applicable Pricing Supplement. Unless otherwise
specified in the Pricing Supplement, the Interest Reset Date will be, in the
case of Floating Rate Notes which reset daily, each Business Day; in the case of
Floating Rate Notes (other than Treasury Rate Notes) which reset weekly, the
Wednesday of each week; in the case of Treasury Rate Notes which reset weekly,
the Tuesday of each week (except as provided below); 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 February,
May, August and November; in the case of Floating Rate Notes which reset
semiannually, 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; provided, however, that 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 set forth in the
applicable Pricing Supplement). If any Interest Reset Date for any Floating Rate
Note is not a Business Day, such Interest Reset Date shall be postponed to the
next succeeding Business Day, except that in the case of a LIBOR Note, if such
Business Day is in the next succeeding calendar month, such Interest Reset Date
shall be the immediately preceding Business Day. Each adjusted rate shall be
applicable on and after the Interest Reset Date to which it relates, to, but not
including, the next succeeding Interest Rate Date or the maturity date or the
date of redemption, as the case may be.
Unless otherwise specified in the applicable Pricing Supplement, Fixed Rate
Notes will bear interest from the date of issue and will be calculated on the
basis of a year of twelve thirty-day months. With respect to a Floating Rate
Note, accrued interest shall be calculated by multiplying the principal amount
of such Floating Rate Note (or, in the case of an Indexed Note, unless otherwise
specified in the applicable Pricing Supplement, the Face Amount (as defined
below under 'Indexed Notes') of such Indexed Note) by an accrued interest
factor. Such accrued interest factor will be computed by adding
S-6
<PAGE>
<PAGE>
the interest factors calculated for each day in the Interest Reset Period or
from the last date from which accrued interest is being calculated.
Unless otherwise specified in the applicable Pricing Supplement, the
interest factor for each such day is computed by dividing the interest rate
applicable to such day by 360, in the cases of Commercial Paper Rate Notes,
Federal Funds Rate Notes, CD Rate Notes, LIBOR Notes and Prime Rate Notes, or by
the actual number of days in the year, in the case of Treasury Rate Notes and
CMT Rate Notes. The interest rate applicable to any day that is an Interest
Reset Date is the applicable rate as reset on such date. The interest rate
applicable to any other day is the interest rate for the immediately preceding
Interest Reset Date (or, if none, the Initial Interest Rate, as described
below).
Unless otherwise provided in the applicable Pricing Supplement, The Chase
Manhattan Bank will be the calculation agent (the 'Calculation Agent') with
respect to any issue of Floating Rate Notes. Upon the request of the holder of
any Floating Rate Note, the Calculation Agent will provide the interest rate
then in effect and, if determined, the interest rate which will become effective
on the next Interest Reset Date with respect to such Floating Rate Note.
All percentages resulting from any calculation of the rate of interest on a
Floating Rate Note will be rounded, if necessary, to the nearest
one-hundred-thousandth of a percentage point (.0000001), with five
one-millionths of a percentage point rounded upward, and all dollar amounts used
in or resulting from such calculation on Floating Rate Notes will be rounded to
the nearest cent (with one-half cent rounded upward).
The interest rate in effect with respect to a Floating Rate Note from the
Issue Date to the first Interest Reset Date (the 'Initial Interest Rate') will
be specified in the applicable Pricing Supplement. The interest rate for each
subsequent Interest Reset Date will be determined by the Calculation Agent as
follows. Unless otherwise specified in the applicable Pricing Supplement, the
'Calculation Date' pertaining to any Commercial Paper Interest Determination
Date, Federal Funds Interest Determination Date, CD Interest Determination Date,
Treasury Rate Determination Date, Prime Rate Interest Determination Date and CMT
Rate Interest Determination Date (each as hereinafter defined) will be the
earlier of (i) the tenth calendar day after such date, or, if such tenth day is
not a Business Day, the next succeeding Business Day and (ii) the Business Day
preceding the applicable Interest Payment Date or date of maturity, as the case
may be.
COMMERCIAL PAPER RATE NOTES
Commercial Paper Rate Notes will bear interest at the interest rate
(calculated with reference to the Commercial Paper Rate and the Spread and/or
Spread Multiplier, if any) specified in the Commercial Paper Rate Notes and in
the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
'Commercial Paper Rate' for each Interest Reset Date will be determined on the
Calculation Date by the Calculation Agent as of the second Business Day prior to
such Interest Reset Date (a 'Commercial Paper Interest Determination Date') and
shall be the Money Market Yield (as defined below) on such Commercial Paper
Interest Determination Date of the rate for commercial paper having the Index
Maturity specified in the applicable Pricing Supplement, as such rate shall be
published by the Board of Governors of the Federal Reserve System in
'Statistical Release H.15(519), Selected Interest Rates', or any successor
publication ('H.15(519)'), under the heading 'Commercial Paper -- Financial'. In
the event that such rate is not published prior to 9:00 A.M., New York City
time, on the Calculation Date, then the Commercial Paper Rate shall be the Money
Market Yield on such Commercial Paper Interest Determination Date of the rate
for commercial paper of the specified Index Maturity as published by the Federal
Reserve Bank of New York in its daily statistical release 'Composite 3:30 P.M.
Quotations for U.S. Government Securities' ('Composite Quotations') under the
heading 'Commercial Paper'. If by 3:00 P.M., New York City time, on such
Calculation Date such rate is not yet published in either H.15(519) or Composite
Quotations, then the Commercial Paper Rate shall be the Money Market Yield of
the arithmetic mean (each as rounded to the nearest one-hundred-thousandth of a
percentage point) 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
S-7
<PAGE>
<PAGE>
the Calculation Agent for commercial paper of the specified Index Maturity,
placed for an industrial issuer whose bond rating is 'Aa', or the equivalent,
from a nationally recognized rating agency; provided, however, that if the
dealers selected as aforesaid by the Calculation Agent are not quoting offered
rates as mentioned in this sentence, the rate of interest determined as of such
Commercial Paper Interest Determination Date will be the rate of interest in
effect on such Commercial Paper Interest Determination Date.
'Money Market Yield' shall be a yield (expressed as a percentage rounded to
the nearest one hundred-thousandth of a percentage point) calculated in
accordance with the following formula:
Money Market Yield = D X 360 X 100
--------------
360 - (D X M)
where 'D' refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and 'M' refers to the actual
number of days in the period for which interest is being calculated.
FEDERAL FUNDS RATE NOTES
Federal Funds Rate Notes will bear interest at the interest rate
(calculated with reference to the Federal Funds Rate and the Spread and/or
Spread Multiplier, if any) specified in the Federal Funds Rate Notes and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
'Federal Funds Rate' for each Interest Reset Date will be determined on the
Calculation Date by the Calculation Agent as of the second Business Day prior to
such Interest Reset Date (a 'Federal Funds Interest Determination Date') and
shall be the effective rate for Federal Funds on such Federal Funds Interest
Determination Date as published in H.15(519) under the heading 'Federal Funds
(Effective)' or, if not so 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 interest rate on such Federal Funds Interest
Determination Date as published in Composite Quotations under the heading
'Federal Funds/Effective Rate'. If such rate is not yet published by 3:00 P.M.,
New York City time, on the Calculation Date pertaining to such Federal Funds
Interest Determination Date, the Federal Funds Rate for such Federal Funds
Interest Determination Date will be calculated by the Calculation Agent and will
be the arithmetic mean of the rates for the last transaction in overnight United
States dollar federal funds arranged by three leading brokers of federal funds
transactions in The City of New York (which may include an Agent or its
affiliates) selected by the Calculation Agent prior to 9:00 A.M., New York City
time, on such Federal Funds Interest Determination Date; provided, however, that
if the brokers so selected by the Calculation Agent are not quoting as mentioned
in this sentence, the rate of interest determined as of such Federal Funds
Interest Determination Date will be the rate of interest 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)
specified in the CD Rate Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the 'CD
Rate' for each Interest Reset Date will be determined on the Calculation Date by
the Calculation Agent as of the second Business Day prior to the Interest Reset
Date (a 'CD Interest Determination Date') and shall be the rate for negotiable
certificates of deposit having the Index Maturity designated in the applicable
Pricing Supplement on such CD Interest Determination Date, as such rate is
published in H.15(519) under the heading 'CDs (Secondary Market)'. If such rate
is not so published 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 for negotiable certificates of deposit of
the Index Maturity specified in the applicable Pricing Supplement as published
in Composite Quotations under the heading 'Certificates of Deposit'. If by 3:00
P.M., New York City time, on such Calculation Date such rate is not yet
published in Composite Quotations, the CD Rate for such CD Interest
S-8
<PAGE>
<PAGE>
Determination Date will be calculated by the Calculation Agent and will be the
arithmetic mean of the secondary market offered rates as of 10:00 A.M., New York
City time, on such CD 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 (in the market for negotiable
certificates of deposit) with a remaining maturity closest to the Index Maturity
specified in the applicable Pricing Supplement in the denomination of
$5,000,000. However, if such dealers are not so quoting such rates, the rate of
interest determined as of such CD Interest Determination Date will be the rate
of interest in effect on such CD Interest Determination Date.
LIBOR NOTES
LIBOR Notes will bear interest at the interest rate (calculated with
reference to LIBOR and the Spread and/or Spread Multiplier, if any) specified in
the LIBOR Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, 'LIBOR'
for each Interest Reset Date will be determined by the Calculation Agent as
follows:
(i) With respect to the second London Banking Day prior to such
Interest Reset Date (a 'LIBOR Determination Date'), LIBOR will be either:
(a) if 'LIBOR Reuters' is specified as the reporting service in the
applicable Pricing Supplement, the arithmetic mean of the offered rates
(unless the specified Designated LIBOR Page (as defined below) by its terms
provides only for a single rate, in which case such single rate shall be
used) for deposits in the Index Currency (as defined below) having the
Index Maturity designated in the applicable Pricing Supplement, commencing
on such Interest Reset Date, that appear on the Designated LIBOR Page as of
11:00 A.M., London time, on that LIBOR Determination Date, if at least two
such offered rates appear (unless, as aforesaid, only a single rate is
required) on such Designated LIBOR Page, or (b) if 'LIBOR Telerate' is
specified as the reporting service in the applicable Pricing Supplement,
the rate for deposits in the Index Currency having the Index Maturity
designated in the applicable Pricing Supplement, commencing on such
Interest Reset Date, that appears on the Designated LIBOR Page as of 11:00
A.M., London time, on that LIBOR Determination Date. If fewer than two
offered rates appear, or no rate appears, as applicable, LIBOR in respect
of the related LIBOR Determination Date will be determined as if the
parties had specified the rate described in clause (ii) below.
(ii) With respect to a LIBOR Determination Date on which fewer than
two offered rates appear (unless, as aforesaid, only a single rate is
required), or no rate appears, as the case may be, on the applicable
Designated LIBOR Page as specified in clause (i) above, the Calculation
Agent will request the principal London offices of each of four major
reference banks in the London interbank market, as selected by the
Calculation Agent, to provide the Calculation Agent with its offered
quotation for deposits in the Index Currency for the period of the Index
Maturity designated in the applicable Pricing Supplement, commencing on
such Interest Reset Date, to prime banks in the London interbank market at
approximately 11:00 A.M., London time, on such LIBOR Determination Date and
in a principal amount of not less than $1,000,000 (or the equivalent in the
Index Currency, if the Index Currency is not the U.S. dollar) that is
representative for a single transaction in such Index Currency in such
market at such time. If at least two such quotations are provided, LIBOR
determined on such LIBOR Determination Date will be the arithmetic mean of
such quotations. If fewer than two quotations are provided, LIBOR
determined on such LIBOR Determination Date will be the arithmetic mean 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 Index Currency on such LIBOR
Determination Date, by three major banks in such Principal Financial Center
selected by the Calculation Agent for loans in the Index Currency to
leading European banks, having the Index Maturity designated in the
applicable Pricing Supplement and in a principal amount of not less than
$1,000,000 (or the equivalent in the Index Currency, if the Index Currency
is not the U.S. dollar) that is representative for a single transaction in
such Index Currency in such market at such time;
S-9
<PAGE>
<PAGE>
provided, however, that if the banks so selected by the Calculation Agent
are not quoting as mentioned in this sentence, the rate of interest
determined on such LIBOR Determination Date will be the rate of interest
otherwise in effect on such LIBOR Determination Date.
'Index Currency' means the currency (including composite currencies)
specified in the applicable Pricing Supplement as the currency for which LIBOR
shall be calculated. If no such currency is specified in the applicable Pricing
Supplement, the Index Currency shall be U.S. dollars.
'Designated LIBOR Page' means either (a) if 'LIBOR Reuters' is designated
in the applicable Pricing Supplement, the display designated as page 'LIBO' with
respect to the applicable Index Currency on the Reuters Monitor Money Rates
Service (or such other page as may replace page 'LIBO' on such service for the
purpose of displaying the London interbank rates of major banks for the
applicable Index Currency), or (b) if 'LIBOR Telerate' is designated in the
applicable Pricing Supplement, the display designated as page '3750' with
respect to the applicable Index Currency on the Dow Jones Telerate Service (or
such other page as may replace page '3750' on such service or such other service
as may be nominated by the British Bankers' Association for the purpose of
displaying the London interbank rates of major banks for the applicable Index
Currency). If neither LIBOR Reuters nor LIBOR Telerate is specified in the
applicable Pricing Supplement, LIBOR for the applicable Index Currency will be
determined as if LIBOR Telerate (and, if the U.S. dollar is the Index Currency,
Page 3750) had been specified.
TREASURY RATE NOTES
Treasury Rate Notes will bear interest at the interest rate (calculated
with reference to the Treasury Rate and the Spread and/or Spread Multiplier, if
any) specified in the Treasury Rate Notes and in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
'Treasury Rate' for each Interest Reset Date will be determined on the
Calculation Date by the Calculation Agent as of the Treasury Rate Determination
Date (as defined below) pertaining to such Interest Reset Date and shall be the
rate for the auction held on such Treasury Rate Determination Date of direct
obligations of the United States ('Treasury bills') having the Index Maturity
designated in the applicable Pricing Supplement, as published in H.15(519) under
the heading 'U.S. Government Securities-Treasury bills-auction average
(investment)', or, if not so published by 9:00 A.M., New York City time, on the
Calculation Date pertaining to such Treasury Rate Determination Date, the
auction average rate (expressed as a bond equivalent, on the basis of a year of
365 or 366 days, as applicable, and applied on a daily basis) as otherwise
announced by the United States Department of the Treasury. In the event that the
results of the auction of Treasury bills having the Index Maturity designated in
the applicable Pricing Supplement are not published or reported as provided
above by 3:00 P.M., New York City time, on such Calculation Date or if no such
auction is held on such Treasury Rate Determination Date, then the Treasury Rate
shall be calculated by the Calculation Agent and shall be a yield to maturity
(expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) of the arithmetic mean of the
secondary market bid rates, as of approximately 3:30 P.M., New York City time,
on such Treasury Rate Determination Date, of three leading primary United States
government securities dealers selected by the Calculation Agent for the issue of
Treasury bills with a remaining maturity closest to the Index Maturity
designated in the applicable Pricing Supplement; provided, however, that if the
dealers selected as aforesaid by the Calculation Agent are not quoting bid rates
as mentioned in this sentence, the rate of interest for such Interest Reset Date
will be the rate of interest in effect on such Interest Reset Date.
The 'Treasury Rate Determination Date' pertaining to an Interest Reset Date
will be the day of the week in which such Interest Reset Date falls on which
Treasury bills would normally be auctioned. Treasury bills are normally sold at
auction on Monday of each week, unless that day is a legal holiday, in which
case the auction is normally held on the following Tuesday, except that such
auction may be held on the preceding Friday. If, as the result of a legal
holiday, an auction is so held on the preceding Friday, such Friday will be the
Treasury Rate Determination Date pertaining to the Interest Reset Date occurring
in the next succeeding week. If an auction date shall fall on any day that would
otherwise be
S-10
<PAGE>
<PAGE>
an Interest Reset Date for a Treasury Rate Note, then such Interest Reset Date
shall instead be the Business Day immediately following such auction date.
PRIME RATE NOTES
Prime Rate Notes will bear interest at the interest rate (calculated with
reference to the Prime Rate and the Spread and/or Spread Multiplier, if any)
specified in the Prime Rate Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the 'Prime
Rate' for each Interest Reset Date will be determined on the Calculation Date by
the Calculation Agent as of the second Business Day prior to such Interest Reset
Date (a 'Prime Rate Interest Determination Date') and shall be the rate on such
date as published in H.15(519) under the heading 'Bank Prime Loan'. If such rate
is not published by 9:00 A.M., New York City time, on the Calculation Date
pertaining to such Prime Rate Interest Determination Date, the Prime Rate will
be determined by the Calculation Agent and will be the arithmetic mean of the
rates of interest publicly announced by each bank named on the 'Reuters Screen
USPRIME1' (as defined below) as such bank's prime rate or base lending rate as
in effect for such Prime Rate Interest Determination Date. 'Reuters Screen
USPRIME1' means the display designated as page 'USPRIME1' on the Reuters Monitor
Money Rates Service (such term to include such other page as may replace the
page USPRIME1 on that Service for the purpose of displaying prime rates or base
lending rates of major United States banks). If fewer than four such rates
appear on the Reuters Screen USPRIME1 for such Prime Rate Interest Determination
Date, the Prime Rate will be determined by the Calculation Agent and will be the
arithmetic mean of the prime rates quoted on the basis of the actual number of
days elapsed divided by 360 as of the close of business on such Prime Rate
Interest Determination Date by at least two major money center banks in The City
of New York selected by the Calculation Agent from a list of at least three such
banks approved by the Company. If fewer than two such rates are quoted as
aforesaid the Prime Rate will be calculated by the Calculation Agent and will be
determined as the arithmetic mean of the prime rates furnished in The City of
New York by an appropriate number (in the judgment of the Calculation Agent) 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 U.S.$500,000,000 and being subject to supervision or
examination by federal or state authority, selected by the Calculation Agent
from a list approved by the Company to provide such rate or rates; provided that
if the banks or trust companies selected as aforesaid by the Calculation Agent
from a list approved by the Company are not quoting as mentioned in this
sentence, the rate of interest determined as of such Prime Rate Interest
Determination Date will be the rate of interest in effect on such Prime Rate
Interest Determination Date.
CMT RATE NOTES
CMT Rate Notes will bear interest at the rates (calculated with reference
to the Constant Maturity Treasury Rate and the Spread and/or Spread Multiplier,
if any) specified in such CMT Rate Notes and in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the 'CMT
Rate' for each Interest Reset Date will be determined on the Calculation Date by
the Calculation Agent as of the related CMT Rate Interest Determination Date (as
hereinafter defined) and shall be the rate displayed on the Designated CMT
Telerate Page (as hereinafter defined) under the caption '. . . Treasury
Constant Maturities . . . Federal Reserve Board Release H.15 . . . Mondays
Approximately 3:45 P.M.,' under the column for the Designated CMT Maturity Index
(as hereinafter defined) for (i) if the Designated CMT Telerate Page is 7055,
such CMT Rate Interest Determination Date and (ii) if the Designated CMT
Telerate Page is 7052, the week, or the month, as set forth in the Pricing
Supplement, ended immediately preceding the week in which the related CMT Rate
Interest Determination Date occurs. If such rate is no longer displayed on the
relevant page, or if not displayed by 3:00 P.M., New York City time, on the
related Calculation Date, then the CMT Rate for such CMT Rate Interest
Determination Date will be such Treasury Constant Maturity rate for the
Designated CMT Maturity Index as published in H.15(519) for such date. If such
rate is no longer published, or if not published by 3:00
S-11
<PAGE>
<PAGE>
P.M., New York City time, on the related Calculation Date, then the CMT Rate for
such CMT Rate Interest Determination Date will be such Treasury Constant
Maturity rate for the Designated CMT Maturity Index (or other United States
Treasury rate for the Designated CMT Maturity Index) for such CMT Rate Interest
Determination Date as may then be published by either the Board of Governors of
the Federal Reserve System or the United States Department of the Treasury that
the Calculation Agent determines to be comparable to the rate formerly displayed
on the Designated CMT Telerate Page and published in H.15(519). If such
information is not provided by 3:00 P.M., New York City time, on the related
Calculation Date, then the CMT Rate for the CMT Rate Interest Determination Date
will be calculated by the Calculation Agent and will be a yield to maturity,
based on the arithmetic mean of the secondary market offer side prices as of
approximately 3:30 P.M. (New York City time) on the CMT Rate Interest
Determination Date reported, according to their written records, by three
leading primary United States government securities dealers (each, a 'Reference
Dealer') in The City of New York selected by the Calculation Agent (from five
such Reference Dealers selected by the Calculation Agent and eliminating the
highest quotation (or, in the event of equality, one of the highest) and the
lowest quotation (or, in the event of equality, one of the lowest)), for the
most recently issued direct noncallable fixed rate obligations of the United
States ('Treasury Notes') with an original maturity of approximately the
Designated CMT Maturity Index and a remaining term to maturity of not less than
such Designated CMT Maturity Index minus one year. If the Calculation Agent
cannot obtain three such Treasury Note quotations, the CMT Rate for such CMT
Rate Interest Determination Date will be calculated by the Calculation Agent and
will be a yield to maturity based on the arithmetic mean of the secondary market
offer side prices as of approximately 3:30 P.M. (New York City time) on the CMT
Rate Interest Determination Date of three Reference Dealers in The City of New
York (from five such Reference Dealers selected by the Calculation Agent and
eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for Treasury Notes with an original maturity of the number of years
that is the next highest to the Designated CMT Maturity Index and a remaining
term to maturity closest to the Designated CMT Maturity Index and in an amount
of at least $100 million. If three or four (and not five) of such Reference
Dealers are quoting as described above, then the CMT Rate will be based on the
arithmetic mean of the offer prices obtained and neither the highest nor lowest
of such quotes will be eliminated; provided however, that if fewer than three
Reference Dealers selected by the Calculation Agent are quoting as described
herein, the rate of interest determined as of such CMT Rate Interest
Determination Date will be the rate of interest in effect on such CMT Rate
Interest Determination Date. If two Treasury Notes with an original maturity as
described in the second preceding sentence have remaining terms to maturity
equally close to the Designated CMT Maturity Index, the quotes for the CMT Rate
Note with the shorter remaining term to maturity will be used.
'Designated CMT Telerate Page' means the display on the Dow Jones Telerate
Service on the page designated in the applicable Pricing Supplement (or any
other page as may replace such page on that service for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519)), for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519). If
no such page is specified in the applicable Pricing Supplement, the Designated
CMT Telerate Page shall be 7052, for the most recent week.
'Designated CMT Maturity Index' means the original period to maturity of
the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20, or 30 years)
specified in the applicable Pricing Supplement with respect to which the CMT
Rate will be calculated. If no such maturity is specified in the applicable
Pricing Supplement, the Designated CMT Maturity Index shall be 2 years.
The 'CMT Rate Interest Determination Date' pertaining to an Interest Reset
Date for CMT Rate Notes will be the second Business Day prior to such Interest
Reset Date.
AMORTIZING NOTES
The Company may from time to time offer Notes for which payments of
principal and interest are made in installments over the life of the Note
('Amortizing Notes'). Interest on each Amortizing Note will be computed as set
forth in the applicable Pricing Supplement or in the Book-Entry Note
representing such Amortizing Note. Unless otherwise provided in such Pricing
Supplement or in such
S-12
<PAGE>
<PAGE>
Book-Entry Note, payments with respect to Amortizing Notes will be applied first
to interest due and payable thereon and then to the reduction of the unpaid
principal amount thereof. A table setting forth repayment information with
respect to each Amortizing Note will be provided to the original purchaser of
such Note and will be available upon request to the subsequent Holders thereof.
INDEXED NOTES
The Company may from time to time offer Indexed Notes the principal amount
payable at maturity (the 'Indexed Principal Amount') of which, or premium or
interest on which, is determined by reference to a measure (the 'Index') which
will be related to (i) the rate of exchange between the Specified Currency for
such Note and the other currency or composite currency (the 'Indexed Currency')
specified in the applicable Pricing Supplement (such Indexed Notes, 'Currency
Indexed Notes'); (ii) the difference in the price of a specified commodity (the
'Indexed Commodity') on specified dates; (iii) the difference in the level of a
specified stock index (the 'Stock Index'), which may be based on U.S. or foreign
stocks, on specified dates; or (iv) such other objective price or economic
measures as are described in the applicable Pricing Supplement. The manner of
determining the Indexed Principal Amount of, and interest and premium, if any,
on an Indexed Note, and historical and other information concerning the Indexed
Currency, Indexed Commodity, Stock Index or other price or economic measures
used in such determination, will be set forth in the applicable Pricing
Supplement, together with information concerning tax consequences to the holders
of such Indexed Notes.
If the determination of the Indexed Principal Amount of, and interest and
premium, if any, on an Indexed Note is based on an Index calculated or announced
by a third party and such third party either suspends the calculation or
announcement of such Index or changes the basis upon which such Index is
calculated (other than changes consistent with policies in effect at the time
such Indexed Note was issued and permitted changes described in the applicable
Pricing Supplement), then such Index shall be calculated for purposes of such
Indexed Note by an independent calculation agent named in the applicable Pricing
Supplement on the same basis, and subject to the same conditions and controls,
as applied to the original third party. If for any reason such Index cannot be
calculated on the same basis and subject to the same conditions and controls as
applied to the original third party, then the Indexed Principal Amount of such
Indexed Note shall be calculated in the manner set forth in the applicable
Pricing Supplement. Any determination of such independent calculation agent
shall in the absence of manifest error be binding on all parties.
Unless otherwise specified in the applicable Pricing Supplement, interest
on an Indexed Note will be payable by the Company based on the amount designated
in the applicable Pricing Supplement as the 'Face Amount' of such Indexed Note.
The applicable Pricing Supplement will describe whether the principal amount of
the related Indexed Note that would be payable upon redemption or repayment
prior to maturity will be the Face Amount of such Indexed Note, the Indexed
Principal Amount of such Indexed Note at the time of redemption or repayment, or
another amount described in such Pricing Supplement.
REDEMPTION AND REPURCHASE
Unless otherwise specified in the Pricing Supplement relating to a Note,
such Note cannot be redeemed prior to maturity. If any Note will be redeemable
at the option of the Company, the applicable Pricing Supplement will indicate
the date or dates for redemption prior to such maturity and the price or prices
payable upon such redemption, together with accrued interest to the date of
redemption. The Company may redeem any of the Notes that 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. If less than all Notes with like tenor
and terms are to be redeemed, the Notes to be redeemed shall be selected by the
Trustee by such method as the Trustee shall deem fair and appropriate. Unless
otherwise indicated in the Pricing Supplement relating to each Note, the Notes
will not be subject to any sinking fund.
The Company may at any time purchase Notes at any price in the open market
or otherwise. Notes so purchased by the Company may, at its discretion, be held,
resold or surrendered to the Trustee for cancellation.
S-13
<PAGE>
<PAGE>
REPAYMENT AT OPTION OF THE HOLDER
Unless otherwise specified in the Pricing Supplement relating to a Note,
the holder of such Note will not have the right to require the Company to repay
such Note prior to maturity. If any Note will be repayable at the option of the
holder the applicable Pricing Supplement will indicate the date or dates for
repayment prior to maturity, and the price or prices, together with accrued
interest to the date of repayment, payable upon such repayment.
In order for any repayment option applicable to a Note to be exercised, the
Trustee must receive at least 30 days but no more than 45 days prior to the
repayment date (i) the Note with the form entitled 'Option to Elect Repayment'
on the reverse of the Note duly completed or (ii) a telegram, telex, facsimile
transmission or a letter from a member of a national securities exchange or the
National Association of Securities Dealers, Inc. or a commercial bank or trust
company in the United States setting forth the name of the holder of the Note,
the principal amount of the Note, the principal amount of the Note to be repaid,
the certificate number or a description of the tenor and terms of the Note, and
containing a statement that the option to elect repayment is being exercised
thereby and a guarantee that the Note to be repaid with the form entitled
'Option to Elect Repayment' on the reverse of the Note duly completed will be
received by the Trustee not later than three Business Days after the date of
such telegram, telex, facsimile transmission or letter and such Note and form
duly completed are received by the Trustee by such third Business Day. A
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 is an authorized denomination.
BOOK-ENTRY SYSTEM
Upon issuance, all Book-Entry Notes having the same Issue Date, maturity
date, redemption or repayment provisions, interest payment dates and, in the
case of Fixed Rate Notes, interest rate and amortization schedule or, in the
case of Floating Rate Notes, Base Rate, Initial Interest Rate, Interest Payment
Dates, Index Maturity, Interest Reset Dates, Spread or Spread Multiplier, if
any, Minimum Interest Rate, if any, and Maximum Interest Rate, if any, will be
represented by a single global security (a 'Global Security'). Each Global
Security representing Book-Entry Notes will be deposited with, or on behalf of,
the Depositary and registered in the name of a nominee of the Depositary. Except
under circumstances described below, Book-Entry Notes will not be exchangeable
for Certificated Notes and will not otherwise be issuable in definitive form.
The Depositary has advised the Company that it 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 ('Participants') deposit with
the Depositary. The Depositary also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities. Direct Participants ('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 Security Dealers (the 'NASD').
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.
The rules applicable to the Depositary and its Participants are on file with the
Securities and Exchange Commission.
Upon the issuance of a Global Security, the Depositary will credit on its
book-entry registration and transfer system its Participants' accounts with
their respective principal amounts of the Notes represented by such Global
Security. Such accounts shall be designated by the Agent with respect to such
Notes or by the Company if such Notes are offered and sold directly by the
Company. Ownership of beneficial interests in a Global Security will be limited
to Participants or persons that hold interests through Participants. Ownership
of beneficial interests in such Global Security will be shown on, and
S-14
<PAGE>
<PAGE>
the transfer of that ownership will be effected only through, records maintained
by the Depositary or its nominee (with respect to interests of Participants) and
on the records of Participants (with respect to interests of persons other than
Participants). The laws of some states may require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and laws may impair the ability of a purchaser of an interest in a
Book-Entry Note to transfer such interest.
So long as the Depositary or its nominee is the registered owner of such
Global Security, the Depositary or such nominee, as the case may be, will be
considered the sole owner or holder of the Notes represented by such Global
Security for all purposes under the Indenture. Except as provided below or as
the Company may otherwise agree in its sole discretion, owners of beneficial
interests in a Global Security will not be entitled to have Notes represented by
such Global Security registered in their names, will not receive or be entitled
to receive physical delivery of Notes in definitive form and will not be
considered the owners or holders thereof under the Indenture.
Principal, premium, if any, and interest payments on Notes registered in
the name of the Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner of the Global Security
representing such Notes. None of the Company, the Trustee, any paying agent or
the registrar for such Notes will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
interests in such Global Security for such Notes or for maintaining, supervising
or reviewing any records relating to such beneficial interests.
The Company expects that the Depositary for the Notes or its nominee, upon
receipt of any payment of principal, premium or interest, will credit
immediately Participants' accounts with payments in amounts proportionate to
their respective beneficial interests in the principal amount of the Global
Security for such Notes as shown on the records of the Depositary or its
nominee. The Company also expects that payments by Participants to owners of
beneficial interest in such Global Security held through such Participants will
be governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in 'street name' (i.e., the name of a securities broker or dealer), and will be
the responsibility of such Participants.
If the Depositary is at any time unwilling or unable to continue as
depositary and a successor depositary is not appointed by the Company within 90
days, the Company will issue Notes in definitive form in exchange for the entire
Global Security representing such Notes. In addition, the Company may at any
time and in its sole discretion determine not to have the Notes represented by
Global Securities and, in such event, will issue Notes in definitive form in
exchange for the Global Securities representing such Notes. In any such
instance, an owner of a beneficial interest in a Global Security will be
entitled to physical delivery in definitive form of Notes represented by such
Global Security equal in principal amount to such beneficial interest and to
have such Notes registered in its name. Notes so issued in definitive form will
be issued as registered Notes in denominations that are integral multiples of
$1,000 (or of 1,000 units of the applicable Specified Currency, as the case may
be), unless otherwise specified by the Company.
DESCRIPTION OF GUARANTEE
Newcourt will unconditionally guarantee the due and punctual payment of the
principal, premium, if any, and interest on the Notes when and as the same shall
become due and payable, whether at maturity, upon redemption, or otherwise. The
Guarantee will rank equally with all other unsecured and unsubordinated
obligations of Newcourt. The right of Newcourt and, hence, the right of
creditors of Newcourt (including the holders of the Notes, as beneficiaries of
the Guarantee) to participate in any distribution of the assets of any
subsidiary of Newcourt, whether upon liquidation, reorganization, or otherwise,
is subject to prior claims of creditors of each such subsidiary, except to the
extent that claims of Newcourt itself as a creditor of a subsidiary may be
allowed.
S-15
<PAGE>
<PAGE>
FOREIGN CURRENCY AND INDEXED NOTE RISKS
FOREIGN CURRENCY RISKS
GENERAL. An investment in Notes that are denominated in a Specified
Currency other than United States dollars entails significant risks that are not
associated with a similar investment in a security denominated in United States
dollars. Such risks include, without limitation, the possibility of significant
changes in rates of exchange between the United States dollar and the various
foreign currencies and the possibility of the imposition or modification of
foreign exchange controls by either the United States or foreign governments.
Such risks generally depend on economic and political events over which the
Company has no control. In recent years, rates of exchange between United States
dollars and certain foreign currencies have been highly volatile and such
volatility may be expected to continue in the future. Fluctuations in any
particular exchange rate that have occurred in the past are not necessarily
indicative, however, of fluctuations in such rate that may occur during the term
of any Note. Depreciation of the currency specified in a Note against the United
States dollar would result in a decrease in the effective yield of such Note
below its coupon rate, and under certain circumstances could result in a loss to
the investor on a United States dollar basis.
THIS PROSPECTUS SUPPLEMENT AND THE ATTACHED PROSPECTUS DO NOT DESCRIBE ALL
THE RISKS OF AN INVESTMENT IN NOTES DENOMINATED IN A FOREIGN CURRENCY OR A
CURRENCY UNIT AND THE COMPANY DISCLAIMS ANY RESPONSIBILITY TO ADVISE PROSPECTIVE
PURCHASERS OF SUCH RISKS AS THEY EXIST AT THE DATE OF THIS PROSPECTUS SUPPLEMENT
OR AS SUCH RISKS MAY CHANGE FROM TIME TO TIME. PROSPECTIVE INVESTORS SHOULD
CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED BY AN
INVESTMENT IN NOTES DENOMINATED IN SPECIFIED CURRENCIES OTHER THAN UNITED STATES
DOLLARS. SUCH NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE
UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS.
Notes denominated in foreign currencies other than Euros will generally not
be sold in, or to residents of, the country of the Specified Currency in which
such Notes are denominated.
The information set forth in this Prospectus Supplement is directed to
prospective purchasers who are United States residents, and the Company
disclaims any responsibility to advise prospective purchasers who are residents
of countries other than the United States with respect to any matters that may
affect the purchase, holding or receipt of payments of principal of and premium
and interest, if any, on the Notes. Such persons should consult their own
counsel or financial advisers with regard to such matters.
GOVERNING LAW AND JUDGMENTS. The Notes will be governed by and construed
in accordance with the laws of the State of New York. In the event an action
based on Notes denominated in a Specified Currency other than United States
dollars were commenced in a New York court, such court would render or enter a
judgment or decree in the Specified Currency. Such judgment would then be
converted into United States dollars at the rate of exchange prevailing on the
date of entry of the judgment or decree. The Indenture provides that the rate of
exchange to be used in determining any such judgment shall be the rate at which,
in accordance with normal banking procedures, the Trustee could purchase such
Specified Currency in The City of New York on the day on which final judgment is
entered, unless such day is not a New York Banking Day (as defined in the
Indenture) in which case on the New York Banking Day preceding the day on which
final judgment is entered.
EXCHANGE CONTROLS AND AVAILABILITY OF SPECIFIED CURRENCY. Governments have
imposed from time to time, and may in the future impose, exchange controls which
could affect exchange rates as well as the availability of a Specified Currency
at the time of payment of principal of, premium, if any, or interest on a Note.
In the case of any Note issued in a Specified Currency that is not currently
subject to exchange controls, there can be no assurance that the absence of
exchange controls will continue to exist. Even if there are no actual exchange
controls, it is possible that the Specified Currency for any particular Note
would not be available at such Note's maturity. In that event, the Company would
make required payments in United States dollars on the basis of the Market
Exchange Rate on the date of
S-16
<PAGE>
<PAGE>
such payment, or if such rate of exchange is not then available, on the basis of
the Market Exchange Rate as of the most recent Record Date. See 'Description of
Medium-Term Notes, Series F -- Payment Currency'.
Information concerning exchange rates for the Specified Currency, if other
than United States dollars, in which principal of, premium, if any, and interest
on the Notes is payable, as against the United States dollar at selected times
during the last five years, as well as any exchange controls affecting such
currencies, will be set forth in the applicable Pricing Supplement.
INDEXED NOTE RISKS
An investment in Notes indexed, as to principal or interest or both, to one
or more values of currencies (including exchange rates between currencies),
commodities or interest rate indices entails significant risks that are not
associated with similar investments in a conventional debt security. If the
interest rate of such a Note is so indexed, it may result in an interest rate
that is less than that payable on a conventional debt security issued at the
same time, including the possibility that no interest will be paid, and, if the
principal amount of such a Note is so indexed, the principal amount payable at
maturity may be less than the original purchase price of such Note if allowed
pursuant to the terms of such Note, including the possibility that no principal
will be paid. The secondary market for such Notes will be affected by a number
of factors, independent of the creditworthiness of the Company and the value of
the applicable currency, commodity or interest rate index, including the
volatility of the applicable currency, commodity or interest rate index, the
time remaining to the maturity of such Notes, the amount outstanding of such
Notes and market interest rates. The value of the applicable currency, commodity
or interest rate index depends on a number of interrelated factors, including
economic, financial and political events, over which the Company has no control.
Additionally, if the formula used to determine the principal amount or interest
payable with respect to such Notes contains a multiple or leverage factor, the
effect of any change in the applicable currency, commodity or interest rate
index may be increased. The historical experience of the relevant currencies,
commodities or interest rate indices should not be taken as an indication of
future performance of such currencies, commodities or interest rate indices
during the term of any Note. ACCORDINGLY, PROSPECTIVE INVESTORS SHOULD CONSULT
THEIR OWN FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT
IN INDEXED NOTES AND THE SUITABILITY OF SUCH NOTES IN LIGHT OF THEIR PARTICULAR
CIRCUMSTANCES.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following summary of the material United States federal income tax
consequences of the purchase, ownership and disposition of Notes constitutes the
opinion of Sidley & Austin, special tax counsel to the Company. This summary is
based on the Internal Revenue Code of 1986, as amended to the date hereof (the
'Code'), administrative pronouncements, judicial decisions and existing and
proposed Treasury Regulations, including final Treasury Regulations concerning
the treatment of debt instruments issued with original issue discount (the 'OID
Regulations'), changes to any of which subsequent to the date of this Prospectus
Supplement may affect the tax consequences described herein. These statements
address only the tax consequences to persons holding Notes as capital assets and
do not address the tax consequences of holding Notes to dealers in securities or
currencies, persons holding Notes as a part of a 'hedging transaction' within
the meaning of Treasury Regulations, or as a hedge against, or that are hedged
against, currency risks, certain financial institutions, insurance companies, or
United States Holders (as defined below) whose 'functional currency', as defined
in section 985 of the Code, is not the U.S. dollar. Any special rules applicable
to Floating Rate Notes, to the extent not discussed in this summary, will be set
forth in an applicable Pricing Supplement, if appropriate. This summary does not
discuss Original Issue Discount Notes which qualify as 'applicable high-yield
discount obligations' under section 163(i) of the Code. Holders of such
obligations may be subject to special rules which will be set forth in an
applicable Pricing Supplement, if appropriate. 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 jurisdictions, to their particular situations.
S-17
<PAGE>
<PAGE>
UNITED STATES HOLDERS
As used herein, a 'United States Holder' means a beneficial owner of a Note
who or which is, for United States federal income tax purposes, either (i) a
citizen or resident of the United States, (ii) a corporation or partnership
created or organized in or under the laws of the United States or of any
political subdivision thereof or (iii) an estate the income of which is subject
to United States federal income taxation regardless of its source or (iv) any
trust if a court within the United States is able to exercise primary
jurisdiction over the administration of the trust and one or more United States
fiduciaries have the authority to control all substantial decisions of the
trust. The term also includes certain holders who are former citizens of the
United States whose income and gain from the Notes are subject to United States
taxation. The term 'non-United States Holder' means a holder that is not a
United States Holder.
PAYMENTS OF INTEREST. Interest on a Note (whether paid in a foreign
currency or in United States dollars) will generally 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 United
States federal income tax purposes. Special rules governing the treatment of
interest received or accrued with respect to certain Floating Rate Notes,
Foreign Currency Notes (as defined below) and Contingent Notes are described
under 'Original Issue Discount Notes', 'Foreign Currency Notes' and 'Contingent
Payment Notes', respectively, below.
SALE, EXCHANGE OR 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 on the sale, exchange or
retirement (not including any amount attributable to accrued but unpaid
interest) and such Holder's adjusted tax basis in the Note. A United States
Holder's adjusted tax basis in a Note will equal the cost of the Note to such
Holder, increased by any amounts of market discount and original issue discount
(each as defined below), if any, previously includible in taxable income by such
Holder with respect to such Note and reduced by any amortized bond premium and
any principal payments received by such Holder and, in the case of an Original
Issue Discount Note, by the amounts of any other payments that do not constitute
qualified stated interest (as defined below).
Any gain or loss recognized upon the sale, exchange or retirement of a Note
will generally be capital gain or loss, except that any such gain will be
treated as ordinary income to the extent that such gain represents accrued
market discount not previously included in the United States Holder's income or,
in the case of a short-term Original Issue Discount Note (as defined below), to
the extent of the ratable share of any original issue discount and except to the
extent of any exchange gain or loss with respect to Foreign Currency Notes (see
'Foreign Currency Notes' below). In addition, under Treasury Regulations
relating to contingent payment debt instruments discussed below under
'Contingent Payment Notes', gain recognized upon the sale, exchange or
retirement of certain Notes that provide for contingent payments is interest
income and any loss is an ordinary loss to the extent the United States Holder's
total interest inclusions exceed the total net negative adjustments with respect
to the Notes.
Under current law, the excess of net long-term capital gains over net
short-term capital losses is taxed at a lower rate than ordinary income for
certain non-corporate taxpayers. The distinction between capital gain or loss
and ordinary income or loss is also relevant for purposes of, among other
things, the limitations on the deductibility of capital losses.
MARKET DISCOUNT AND PREMIUM. If a United States Holder acquires a Note
having a maturity date of more than one year from the date of its issuance and
has a tax basis in the Note that is, in the case of a Note other than an
Original Issue Discount Note, less than its 'stated redemption price at
maturity' (as defined below), or, in the case of an Original Issue Discount
Note, less than its 'revised issue price', the amount of the difference will be
treated as 'market discount' for United States federal income tax purposes,
unless such difference is less than a specified de minimis amount. Under the
market discount rules of the Code, a United States Holder is required to treat
any principal payment (or, in the case of an Original Issue Discount Note, any
payment that does not constitute a payment of qualified stated interest) on, or
any gain on the sale, exchange, retirement or other disposition of, a Note as
ordinary income to the extent of the market discount that has not previously
been included in income and is treated as having accrued on such Note at the
time of such payment or disposition. If such Note is
S-18
<PAGE>
<PAGE>
disposed of in certain otherwise nontaxable transactions, accrued market
discount will be includible as ordinary income to the United States Holder as if
such Holder had sold the Note at its then fair market value. A United States
Holder may not be allowed to deduct immediately a portion of the interest
expense on any indebtedness incurred or continued to purchase or to carry such
Note.
Any market discount will be considered to accrue on a straight-line basis
during the period from the date of acquisition to the maturity date of the Note,
unless the United States Holder makes an irrevocable election to compute the
accrual on a constant yield basis. A United States Holder may elect to include
market discount in income currently as it accrues (on either a straight-line or
a constant yield basis), in which case the interest deferral rule set forth in
the last sentence of the preceding paragraph will not apply. Such an election
will apply to all bonds acquired by the United States Holder on or after the
first day of the first taxable year to which such election applies, and may not
be revoked without the consent of the Internal Revenue Service.
In lieu of the foregoing rules, different rules apply in the case of Notes
that provide for contingent payments where a United States Holder's tax basis in
such a Note is less than the Note's adjusted issue price (determined under
special rules set out in Treasury Regulations relating to contingent payment
debt instruments). Accordingly, prospective purchases of Notes that provide for
contingent payments should consult with their tax advisors with respect to the
application of such rules to such Notes.
If a United States Holder acquires a Note for an amount that is greater
than its stated redemption price at maturity, the United States Holder will be
considered to have purchased such Note at a premium and may elect to amortize
such premium, using a constant yield method, over the remaining term of the
Note. If such Note is callable prior to its maturity date, the amortizable bond
premium is determined with reference to the amount payable on the call date, if
it results in a smaller amortizable bond premium deduction. A United States
Holder that elects to amortize bond premium must reduce its tax basis in the
Note by the amount of the premium amortized in any year. An election to amortize
bond premium applies to all taxable debt obligations then owned and thereafter
acquired by the United States Holder and may be revoked only with the consent of
the Internal Revenue Service. Bond premium on a Note held by a United States
Holder that does not make such an election will decrease the gain or increase
the loss otherwise recognized on disposition of a Note.
On December 31, 1997, the Internal Revenue Service published final
regulations on the amortization of bond premium. The final regulations describe
the constant yield method under which such premium is amortized and provide that
the resulting offset to interest income can be taken into account only as a
United States Holder takes the corresponding interest income into account under
such Holder's regular accounting method. In the case of instruments that may be
redeemed at the option of the Company or repaid at the option of the United
States Holder prior to maturity, such regulations provide that the premium is
calculated by assuming that the Company will exercise or not exercise its
redemption rights in the manner that maximizes the United States Holder's yield
and the United States Holder will exercise or not exercise its repayment option
in a manner that maximizes the United States Holder's yield. Such regulations
are generally effective for debt instruments acquired on or after March 2, 1998.
In lieu of the foregoing rules, different rules apply in the case of Notes
that provide for contingent payments where a United States Holder's tax basis in
such Note is greater than the Note's adjusted issue price (determined under
special rules set out in the Treasury Regulations relating to contingent payment
debt instruments). Accordingly, prospective purchasers of Notes that provide for
contingent payments should consult with their tax advisors with respect to the
applications of such rules to such Notes.
A United States Holder that purchases an Original Issue Discount Note for
an amount that is greater than its adjusted issue price but less than or equal
to its stated redemption price at maturity will be considered to have purchased
such Note at an 'acquisition premium'. Rules applicable to such a Holder are set
forth under 'Original Issue Discount Notes' below.
S-19
<PAGE>
<PAGE>
ORIGINAL ISSUE DISCOUNT NOTES
The following discussion is a summary of the principal United States
federal income tax consequences to United States Holders of the ownership of
Notes issued at an original issue discount for United States federal income tax
purposes ('Original Issue Discount Notes'). The principal United States federal
income tax consequences to non-United States Holders of the ownership of
Original Issue Discount Notes are described under 'Non-United States Holders'
below. Additional rules applicable to Original Issue Discount Notes that are
denominated in a currency other than the U.S. dollar are described under
'Foreign Currency Notes' below.
Under the Code and the OID Regulations, a Note whose 'issue price' is less
than its 'stated redemption price at maturity' will generally be considered to
have been issued at an original issue discount for United States federal income
tax purposes. United States Holders of Original Issue Discount Notes that mature
more than one year from the date of issuance generally will be required to
include original issue discount in gross income for United States federal income
tax purposes as it accrues, in accordance with a constant yield method based on
a compounding of interest, in advance of receipt of the cash payments
attributable to such income. However, if the difference between a Note's stated
redemption price at maturity and its issue price is less than 1/4 of 1 percent
of the stated redemption price at maturity multiplied by the number of complete
years to maturity (or, in the case of a Note providing for payments prior to
maturity other than payments of 'qualified stated interest', the weighted
average maturity), the Note will not be considered to have original issue
discount. United States Holders of Notes with a de minimis amount of original
issue discount will be required to include such original issue discount in
income, as capital gain, on a pro rata basis as principal payments are made on
the Notes. Notwithstanding the foregoing, United States Holders may elect to
include in gross income all interest that accrues on the Notes, including any
stated interest, acquisition discount, original issue discount, market discount,
de minimis original issue discount, de minimis market discount and unstated
interest (as adjusted by amortizable premium and acquisition premium), by using
the constant yield method described below with respect to original issue
discount.
The 'issue price' of a Note will equal the initial offering price to the
public (not including bond houses, brokers or similar persons or organizations
acting in the capacity of underwriters or wholesalers) at which price a
substantial amount of the Notes is sold. A Note's 'stated redemption price at
maturity' is, generally, the principal amount payable at maturity plus any
additional amounts payable under the debt instrument that do not constitute
'qualified stated interest'. 'Qualified stated interest' is defined to include
stated interest that is unconditionally payable in cash or property (other than
debt instruments of the issuer) at least annually during the entire term of the
Note at a single fixed rate. Interest is payable at a single fixed rate only if
the rate takes into account the length of the interval between payments.
If a Floating Rate Note constitutes a 'variable rate debt instrument',
qualified stated interest also includes stated interest that is payable in cash
or property (other than debt instruments of the issuer) at least annually during
the entire term of the Note at a single 'qualified floating rate' or a single
'objective rate' (each as defined below). In order to qualify as a 'variable
rate debt instrument', a Floating Rate Note must not provide for any stated
interest other than stated interest, compounded or paid annually, at (i) one or
more qualified floating rates, (ii) a single fixed rate and one or more
qualified floating rates, (iii) a single objective rate or (iv) a single fixed
rate and a single objective rate that is a 'qualified inverse floating rate' (as
defined below). In each case, a qualified floating rate or objective rate in
effect at any time during the term of the Note must be set at a 'current value'
of that rate, which means the value of the rate on any day during the 15-month
period beginning three months before, and ending one year after, the first day
on which the value is in effect. In addition, the issue price of a variable rate
debt instrument must not exceed the total noncontingent principal payments by
more than a specified amount.
Subject to certain exceptions, a variable rate of interest is a 'qualified
floating rate' if variations in the value of the rate can reasonably be expected
to measure contemporaneous fluctuations in the cost of newly borrowed funds in
the currency in which the Note is denominated. A variable rate will be
considered a qualified floating rate if the variable rate equals (i) the product
of an otherwise qualified floating rate and a fixed multiple (i.e., a Spread
Multiplier) that is greater than .65 but not more than
S-20
<PAGE>
<PAGE>
1.35 or (ii) an otherwise qualified floating rate (or the product described in
clause (i) of this sentence) plus or minus a fixed rate (i.e., a Spread). If the
variable rate equals the product of an otherwise qualified floating rate and a
single fixed multiplier greater than 1.35, however, such rate will generally
constitute an objective rate, described more fully below. A variable rate will
not be considered a qualified floating rate if the variable rate is subject to a
maximum interest rate (a 'cap'), minimum interest rate (a 'floor') or 'governor'
(i.e., a restriction on the amount of increase or decrease in the stated
interest rate) or similar restriction that is reasonably expected as of the
issue date to cause the yield on the Note to be significantly more or less than
the expected yield determined without the restriction (other than a cap, floor
or governor that is fixed throughout the term of the Note).
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 that is not within the control of
the issuer (or related party) or that is unique to the circumstances of the
issuer (or related party). A variable rate of interest on a Note will not be
considered an objective rate if it is reasonably expected that the average value
of the rate during the first half of the Note's term will be either
significantly less than or significantly greater than the average value of the
rate during the final half of the Note's term. A rate is a 'qualified inverse
floating rate' only if (i) the rate is equal to a fixed rate minus a qualified
floating rate and (ii) variations in the rate can reasonably be expected
inversely to reflect contemporaneous variations in the cost of newly-borrowed
funds.
Under these rules, interest paid on Commercial Paper Rate Notes, Federal
Funds Rate Notes, CD Rate Notes, LIBOR Notes, Treasury Rate Notes, Prime Rate
Notes, CMT Rate Notes, other than certain Notes subject to caps, floors or
governors described above, will generally be treated as 'qualified stated
interest'.
If interest on a Note is stated at a fixed rate for an initial period of
one year or less followed by a variable rate that is either a qualified floating
rate or an objective rate for a subsequent period, and the value of the variable
rate on the issue date is intended to approximate the fixed rate, the fixed rate
and the variable rate together constitute a single qualified floating rate or
objective rate.
If a Note provides for (i) more than one qualified floating rate, (ii) a
single fixed rate and one or more qualified floating rates or (iii) in certain
cases a single fixed rate and a single objective rate, then all or a portion of
the Note's stated interest may be treated as qualified stated interest. However,
in certain instances a portion of that Note's stated interest will not be so
treated, but instead will be included in the Note's stated redemption price at
maturity. As a result, such Notes may be treated as being issued with original
issue discount. The Company does not currently expect to issue Notes with the
terms described in the first sentence of this paragraph. In the event such Notes
are issued, the tax consequences to purchasers thereof will be discussed in the
applicable Pricing Supplement.
United States Holders of Original Issue Discount Notes will be required to
include any payments of qualified stated interest in income at the time they are
accrued or received, in accordance with the Holder's method of accounting for
federal income tax purposes. The amount of original issue discount includible in
income during a taxable year by a United States Holder of an Original Issue
Discount Note that matures more than one year from its date of issuance will
equal the sum of the daily portions of the original issue discount with respect
to the Original Issue Discount Note for each day during the taxable year on
which such Holder held the Original Issue Discount Note. The daily portion of
the original issue discount on any Original Issue Discount Note is determined by
allocating to each day in any 'accrual period' a ratable portion of the original
issue discount allocable to such accrual period. A United States Holder of a
Note may use accrual periods that are of any length and that vary in length over
the term of the debt instrument provided that each accrual period is no longer
than one year and that each scheduled payment of principal or interest occurs
either on the final day of an accrual period or on the first day of an accrual
period. The Company will specify the accrual period it intends to use with
respect to Original Issue Discount Notes in the applicable Pricing Supplement.
The original issue discount allocable to any accrual period is equal to the
excess (if any) of (a) the product of the Original Issue Discount Note's
'adjusted issue price' at the beginning of such accrual period and its yield to
maturity (determined on the basis of compounding at the close of each accrual
period and adjusted for the length of the accrual period) over (b) the sum of
all qualified stated interest, if any, payable on such Original Issue Discount
Note during such accrual period or allocable to such accrual period. The
S-21
<PAGE>
<PAGE>
'adjusted issue price' of an Original Issue Discount Note at the beginning of
the first accrual period is its issue price, and the 'adjusted issue price' at
the beginning of a subsequent accrual period is the issue price increased by the
amount of original issue discount includible in the gross income of any holder
(without reduction for any amortized acquisition premium) with respect to the
Original Issue Discount Note for all prior accrual periods, and decreased by the
amount of any payment previously made on such Note other than a payment of
qualified stated interest. Under these rules, United States Holders of Original
Issue Discount Notes generally will be required to include in income
increasingly greater amounts of original issue discount in successive accrual
periods.
A subsequent purchaser of an Original Issue Discount Note that purchases
the Note at a cost lower than the remaining stated redemption price at maturity
but greater than its adjusted issue price (i.e., at an 'acquisition premium')
will also be required to include in gross income the sum of the daily portions
of original issue discount on that Original Issue Discount Note. In computing
the daily portions of original issue discount with respect to an Original Issue
Discount Note for such a purchaser, however, the daily portion for any day is
reduced by the amount that would be the daily portion for such day (computed in
accordance with the rules set forth above) multiplied by a fraction, the
numerator of which is the amount, if any, by which the price paid by the United
States Holder for that Note exceeds the adjusted issue price and the denominator
of which is the sum of the daily portions for that Note for all days beginning
on the date after the purchase date and ending on the stated maturity date.
In the case of an Original Issue Discount Note that matures one year or
less from the date of its issuance (a 'short-term Original Issue Discount
Note'), United States Holders that report income for United States federal
income tax purposes on the accrual method and certain other United States
Holders, including banks and dealers in securities, are required to include
original issue discount on such short-term Original Issue Discount Notes on a
straight-line basis, unless an election is made to accrue the original issue
discount according to a constant yield method based on daily compounding. Any
other United States Holder of a short-term Original Issue Discount Note is not
required to accrue original issue discount for United States federal income tax
purposes, unless it elects to do so. In the case of a United States Holder that
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 the
short-term Original Issue Discount 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 yield method based on daily compounding) through the
date of sale, exchange or retirement. In addition, such non-electing United
States Holders that are not subject to the current inclusion requirement
described in the first sentence of this paragraph will be required to defer
deductions for any interest paid on indebtedness incurred or continued to
purchase or carry short-term Original Issue Discount Notes in an amount not
exceeding the deferred interest income, until such deferred interest income is
realized.
The OID Regulations contain certain language (the 'aggregation rules')
stating in general that, with some exceptions, if more than one type of Note is
issued in connection with the same transaction or related transactions, such
Notes may be treated together as a single debt instrument with a single issue
price, maturity date, yield to maturity and stated redemption price at maturity
for purposes of calculating and accruing any original issue discount. Unless
otherwise provided in the applicable Pricing Supplement, the Company does not
expect to treat different types of Notes as being subject to the aggregation
rules for purposes of computing original issue discount.
NOTES SUBJECT TO CONTINGENCIES INCLUDING OPTIONAL REDEMPTION
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 debt instruments described below under 'Contingent Payment
Notes'.
S-22
<PAGE>
<PAGE>
Notwithstanding the general rules for determining yield and maturity in the
case of a Note subject to contingencies, if the Company or the United States
Holder has an unconditional option or options that, if exercised, would require
payments to be made on the Note under an alternative payment schedule or
schedules, then (i) in the case of an option or options of the Company, the
Company will be deemed to exercise or not exercise an option or combination of
options in the manner that minimizes the yield on the Note and (ii) in the case
of an option or options of the United States Holder, the United States Holder
will be deemed to exercise or not exercise an option or combination of options
in the manner that maximizes the yield on the Note. If both the Company and the
United States Holder have options described in the preceding sentence, those
rules apply to such options in the order in which they may be exercised. For
purposes of those calculations, the yield on the Note is determined by using any
date on which the Note may be redeemed or repurchased as the maturity date and
the amount payable on such date in accordance with the terms of the Note as the
principal amount payable at maturity.
If a contingency (including the exercise of an option) actually occurs or
does not occur contrary to an assumption made according to the above rules (a
'change in circumstances') then, except to the extent that a portion of the Note
is repaid as a result of the change in circumstances and solely for the purposes
of determining the amount and accrual of original issue discount, the yield and
maturity of the Note are redetermined by treating the Note as having been
retired and reissued on the date of the change in circumstances for an amount
equal to the Note's adjusted issue price on that date.
FOREIGN CURRENCY NOTES
The following discussion summarizes the principal United States federal
income tax consequences to a United States Holder of the ownership and
disposition of Notes, payments under which are denominated in or determined by
reference to the value of one or more currency units other than the U.S. dollar
(a 'Foreign Currency Note').
The following summary is based upon the final Treasury Regulations issued
under section 988 of the Code (the 'Section 988 Regulations') and upon Treasury
Regulations proposed on March 17, 1992 (the 'Proposed Amendment to the Section
988 Regulations').
INTEREST INCLUDIBLE IN INCOME UPON RECEIPT. An interest payment on a
Foreign Currency Note that is not required to be included in income by the
United States Holder prior to receipt of such payment will be includible in
income by the United States Holder based on the U.S. dollar value of the foreign
currency payment determined on the date such payment is received, regardless of
whether the payment is in fact converted to U.S. dollars at that time. Such U.S.
dollar value will be the United States Holder's tax basis in the foreign
currency received.
INTEREST INCLUDIBLE IN INCOME PRIOR TO RECEIPT. In the case of interest
income on a Foreign Currency Note that is required to be included in income by
the United States Holder prior to receipt of payment, a United States Holder
will be required to include in income the U.S. dollar value of the amount of
interest income that has accrued and is otherwise required to be taken into
account with respect to a Foreign Currency Note during an accrual period. Unless
the United States Holder makes the election discussed in the next paragraph, the
U.S. dollar value of such accrued income will be determined by translating such
income at the average rate of exchange for the accrual period or, with respect
to an accrual period that spans two taxable years, at the average rate for the
partial period within the taxable year. The average rate of exchange for the
accrual period (or partial period) is the simple average of the exchange rates
for each business day of such period (or other method if such method is
reasonably derived and consistently applied). Such United States Holder will
recognize, as ordinary gain or loss, foreign currency exchange gain or loss with
respect to accrued interest income on the date such income is actually received,
reflecting fluctuations in currency exchange rates between the last day of the
relevant accrual period and the date of payment. The amount of gain or loss
recognized will equal the difference between the U.S. dollar value of the
foreign currency payment received in respect of such accrual period determined
based on the exchange rate on the date such payment is received and the U.S.
dollar value of interest income that has accrued during such accrual period (as
determined above).
S-23
<PAGE>
<PAGE>
Under the so-called 'spot rate convention election', a United States Holder
may, in lieu of applying the rules described in the preceding paragraph, elect
to translate accrued interest income into U.S. dollars at the exchange rate in
effect on the last day of the relevant accrual period for the original issue
discount, market discount or accrued 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 taxable year. Additionally, if a payment of such income 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 income
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 Internal Revenue Service.
PURCHASE, SALE, EXCHANGE OR RETIREMENT. A United States Holder's tax basis
in a Foreign Currency Note, and the amount of any subsequent adjustment to such
Holder's tax basis, will be the U.S. dollar value of the foreign currency amount
paid for such Foreign Currency Note, or of the foreign currency amount of the
adjustment, determined on the date of such purchase or adjustment or, in the
case of an adjustment resulting from accrual of original issue discount or
market discount, at the rate at which such original issue discount or market
discount is translated into U.S. dollars under the rules described above. A
United States Holder that converts U.S. dollars to a foreign currency and
immediately uses that currency to purchase a Foreign 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 that purchases a
Foreign Currency Note with previously owned foreign currency will recognize
ordinary income or loss in an amount equal to the difference, if any, between
such United States Holder's tax basis in the foreign currency and the U.S.
dollar market value of the Foreign Currency Note 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 Foreign Currency
Note, the amount realized upon such sale, exchange or retirement generally will
be the U.S. dollar value of the foreign currency received, determined on the
date of disposition in the case of an accrual basis United States Holder and on
the date payment is received in the case of a cash basis United States Holder.
The portion of any gain or loss realized upon the sale, exchange or
retirement of a Foreign Currency Note that is attributable to fluctuations in
currency exchange rates will be ordinary income or loss. Such portion will equal
the difference between (i) the U.S. dollar value of the foreign currency
principal amount of such Foreign Currency Note determined on the date such Note
is disposed of and (ii) the U.S. dollar value of the foreign currency principal
amount of such Note determined at the exchange rate on the date such United
States Holder acquired such Note. Any portion of the proceeds of such sale,
exchange or retirement attributable to accrued interest will result in exchange
gain or loss under the rules set forth above pertaining to payments of interest
income. The foreign currency principal amount of a Foreign Currency Note
generally equals, in the case of the original purchaser, the issue price in
foreign currency of such Note, and in the case of a subsequent purchaser, the
holder's purchase price in foreign currency. Such foreign 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 Foreign Currency
Note. Any gain or loss recognized by such a United States Holder in excess of
such foreign currency gain or loss will be capital gain or loss (except to the
extent of any accrued market discount or, in the case of a short-term Original
Issue Discount Note, any accrued original issue discount).
A United States Holder will have a tax basis in any foreign currency
received on the sale, exchange or retirement of a Note equal to the U.S. dollar
value of such foreign currency. Any gain or loss realized by a United States
Holder on a sale or other disposition of foreign currency (including its
exchange for U.S. dollars or its use to purchase Foreign Currency Notes) will be
ordinary income or loss.
OTHER MATTERS. Any gain or loss that is treated as ordinary income or
loss, as described above, generally will not be treated as interest income or
expense except to the extent provided in the Section 988 Regulations or by
administrative pronouncements of the Internal Revenue Service.
S-24
<PAGE>
<PAGE>
Market discount, acquisition premium and amortizable bond premium of a
Foreign Currency Note are determined in the relevant foreign currency. The
amount of such market discount or acquisition premium that is included in (or
reduces) income currently is determined for any accrual period in the relevant
foreign currency and then translated into U.S. dollars on the basis of the
average exchange rate in effect during such accrual period or with reference to
the spot rate convention election as described above. Exchange gain or loss
realized with respect to such accrued market discount or acquisition premium is
determined and recognized in accordance with the rules relating to accrued
interest described above. The amount of accrued market discount (other than the
market discount that is included in income currently) taken into account upon
the receipt of any partial principal payment or upon the sale, exchange,
retirement or other disposition of a Foreign Currency Note is the U.S. dollar
value of such accrued market discount, determined on the date of receipt of such
partial principal payment or upon the sale, exchange, retirement or other
disposition, and no portion thereof is treated as exchange gain or loss.
Exchange gain or loss with respect to amortizable bond premium is determined by
treating the portion of premium amortized with respect to any period as a return
of principal. With respect to a United States Holder of a Foreign Currency Note
that does not elect to amortize premium under section 171 of the Code, the
amount of premium, if any, is treated as a capital loss when such Note matures.
CONTINGENT PAYMENT NOTES
If a Note (i) provides for contingent payments of either interest or
principal, (ii) does not qualify as a variable rate debt instrument, (iii) is
not a Note subject to section 988 of the Code, (iv) is not eligible to have its
yield and maturity determined in the manner described above under 'Original
Issue Discount Notes' and 'Notes Subject to Contingencies Including Optional
Redemption' and (v) has a maturity at issue or more than one year (a 'Contingent
Note'), the Contingent Note will generally be subject to special rules, set
forth in Treasury Regulations, governing contingent payment debt instruments.
The general tax treatment of Contingent Notes is as follows. First, the
Company is required to determine, as of the issue date, the comparable yield for
the Contingent Note. The comparable yield is generally the yield at which the
Company would issue a fixed rate debt instrument with terms and conditions
similar to those of the Contingent Note (including the level or subordination,
term, timing of payments and general market conditions, but not taking into
consideration the riskiness of the contingencies or the liquidity of the
Contingent Note), but not less than the applicable federal rate announced
monthly by the Internal Revenue Service (the 'AFR'). In certain cases where
Contingent Notes are marketed or sold in substantial part to tax-exempt
investors or other investors for whom the prescribed inclusion of interest is
not expected to have a substantial effect on their United States tax liability,
the comparable yield for the Contingent Note, without proper evidence to the
contrary, is presumed to be the AFR.
Second, solely for tax purposes, the Company constructs a projected
schedule of payments determined under the OID Regulations for the Contingent
Note (the 'Schedule'). The Schedule is determined as of the issue date and
generally remains in place throughout the term of the Contingent Note. If a
right to a contingent payment is based on market information, the amount of the
projected payment is the forward price of the contingent payment. If a
contingent payment is not based on market information, the amount of the
projected payment is the expected value of the contingent payment as of the
issue date. The Schedule must produce the comparable yield determined as set
forth above. Otherwise, the Schedule must be adjusted under the rules set forth
in the OID Regulations.
Third, under the usual rules applicable to original issue discount and
based on the Schedule, the interest income on the Contingent Note for each
accrual period is determined by multiplying the comparable yield of the
Contingent Note (adjusted for the length of the accrual period) by the
Contingent Note's adjusted issue price at the beginning of the accrual period
(determined under rules set forth in the OID Regulations). The amount so
determined is then allocated on a ratable basis to each day in the accrual
period that the United States Holder held the Contingent Note.
Fourth, appropriate adjustments are made to the interest income determined
under the foregoing rules to account for any differences between the Schedule
and actual contingent payments. Under the
S-25
<PAGE>
<PAGE>
rules set forth in the OID Regulations, differences between the actual amounts
of any contingent payments made in a calendar year and the projected amounts of
such payments are generally aggregated and taken into account, in the case of a
positive difference, as additional interest income, or, in the case of a
negative difference, first as a reduction in interest income for such year and
thereafter, subject to certain limitations, as ordinary loss.
The Company is required to provide each United States Holder of a
Contingent Note with the Schedule described above. If the Company does not
create a Schedule or the Schedule is unreasonable, a United States Holder must
set its own projected payment schedule and explicitly disclose the use of such
schedule and the reason therefor. Unless otherwise prescribed by the Internal
Revenue Service, the United States Holder must make such disclosure on a
statement attached to the United States Holder's timely filed federal income tax
return for the taxable year in which the Contingent Note was acquired.
In general, any gain realized by a United States Holder on the sale,
exchange, redemption, or retirement of a Contingent Note is interest income. In
general, any loss on a Contingent Note accounted for under the method described
above is ordinary loss to the extent it does not exceed such Holder's prior
interest inclusions on the Contingent Note (net of negative adjustments).
Special rules apply in determining the tax basis of a Contingent Note and the
amount realized on the retirement of a Contingent Note.
In the case of certain Contingent Notes, it is possible, depending on the
terms of the Contingent Note, that such Note might not be treated as a debt
instrument for federal income tax purposes but rather as a cash settlement
option, a forward contract or in some other fashion. If such Notes are offered,
the applicable Pricing Supplement will discuss the likely federal income tax
treatment.
NON-UNITED STATES HOLDERS
On October 14, 1997, final Treasury Regulations were issued which affect
the United States taxation of non-United States Holders. The final regulations
are effective for payments after December 31, 1998, regardless of the issue date
of the Note with respect to which such payments are made, subject to certain
transition rules. The discussion under this heading and under ' -- Backup
Withholding and Information Reporting,' below, is not intended to be a complete
discussion of the provisions of such regulations, and prospective purchasers of
Notes are urged to consult their tax advisors with respect to the effect of such
regulations.
Under United States federal income tax law now in effect, and subject to
the discussion of backup withholding in the following section, payments of
principal and interest (including original issue discount) and premium by the
Company or any paying agent to any non-United States Holder of a Note will not
be subject to United States federal withholding tax, provided, in the case of
interest, that (i) such Holder does not actually or constructively own 10% or
more of the total combined voting power of all classes of stock of the Company
entitled to vote, (ii) such Holder is not for United States federal income tax
purposes a controlled foreign corporation related to the Company through stock
ownership, (iii) such Holder is not a bank receiving interest described in
section 881(c)(3)(A) of the Code, and (iv) either (A) the beneficial owner of
the Note certifies, under penalties of perjury, to the Company or paying agent,
as the case may be, that such Holder is a non-United States Holder and provides
such Holder's name and address, and U.S. taxpayer identification number, if any,
or (B) a securities clearing organization, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or business
(a 'financial institution') and holds the Note, certifies, under penalties of
perjury, to the Company or paying agent, as the case may be, that such
certificate has been received from the beneficial owner by it or by a financial
institution between it and the beneficial owner and furnishes the payor with a
copy thereof. A certificate described in this paragraph is effective only with
respect to payments of interest (including original issue discount) made to the
certifying non-United States Holder after the issuance of the certificate in the
calendar year of its issuance and the two immediately succeeding calendar years.
The final regulations provide optional documentation procedures designed to
simplify compliance by withholding agents. Such regulations would not affect
documentation rules described in the
S-26
<PAGE>
<PAGE>
preceding paragraph, but would add 'intermediary certification' options for
certain qualifying withholding agents. Under one such option, a withholding
agent would be allowed to rely on Internal Revenue Service Form W-8 furnished by
a financial institution or other intermediary on behalf of one or more
beneficial owners (or other intermediaries) without having to obtain the
beneficial owner certificate described in the preceding paragraph, provided that
the financial institution or intermediary has entered into a withholding
agreement with the Internal Revenue Service and thus is a 'qualified
intermediary.' Under another option, an authorized foreign agent of a U.S.
withholding agent would be permitted to act on behalf of the U.S. withholding
agent, provided certain conditions are met.
For purposes of establishing entitlement to the withholding exemption
described above, the final regulations treat as the beneficial owners of
payments on a Note those persons that, under United States tax principles, are
the taxpayers with respect to such payments. Thus, for example, the partners of
a foreign partnership, rather than the partnership itself, would be required to
provide the required certifications to qualify for such withholding exemption.
For purposes of determining entitlement to the benefits of an income tax treaty,
however, the tax principles in effect under the laws of the relevant foreign
jurisdiction would control in identifying the beneficial owners of payments on
the Notes, and therefore the persons entitled to claim treaty benefits and
required to provide the relevant certifications.
Notwithstanding the foregoing, interest described in section 871(h)(4) of
the Code will be subject to United States federal withholding tax at a 30% rate
(or such lower rate provided by an applicable treaty). In general, interest
described in section 871(h)(4) of the Code includes (subject to certain
exceptions) any interest the amount of which is determined by reference to
receipts, sales or other cash flow of the Company or related person, any income
or profits of the Company or a related person, any change in the value of any
property of the Company or related person or any dividend, partnership
distributions or similar payment made by the Company or related person. Interest
described in section 871(h)(4) of the Code may include other types of contingent
interest identified by the Internal Revenue Service in future Treasury
Regulations. The Company does not currently expect to issue Notes the interest
on which is described in section 871(h)(4) of the Code, and the United States
federal withholding tax consequences of any such Notes issued by the Company
will be described in the applicable Pricing Supplement.
If a non-United States Holder is engaged in a trade or business in the
United States and interest (including original issue discount) on the Note is
effectively connected with the conduct of such trade or business, the non-United
States Holder, although exempt from the withholding tax discussed in the
preceding paragraphs, will be subject to United States federal income tax on
such interest and original issue discount in the same manner as if it were a
United States Holder. See 'United States Holders' and 'Original Issue Discount
Notes' above. In lieu of the certificate described above, such a Holder will be
required to provide to the Company a properly executed Internal Revenue Service
Form 4224 in order to claim an exemption from withholding tax. In addition, if
such a Holder is a foreign corporation, it may be subject to a branch profits
tax equal to 30% (or such lower rate provided by an applicable treaty) of its
effectively connected earnings and profits for the taxable year, subject to
adjustments. For this purpose, interest (including original issue discount) on a
Note will be included in such effectively connected earnings and profits if such
interest and original issue discount are effectively connected with the conduct
by the non-United States Holder of a trade or business in the United States.
Generally, any gain or income realized upon the sale, exchange, retirement
or other disposition of a Note will not be subject to United States federal
withholding or income tax unless (i) such gain or income is effectively
connected with a trade or business in the United States of the non-United States
Holder or (ii) in the case of a non-United States Holder who is an individual,
the non-United States Holder is present in the United States for 183 days or
more in the taxable year of such sale, retirement or other disposition and
either (a) such individual has a 'tax home' (as defined in section 911(d)(3) of
the Code) in the United States or (b) the gain is attributable to an office or
other fixed place of business maintained by such individual in the United
States.
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 on the Note if
(i) such Holder does not own, actually or constructively, 10% or more of the
total combined voting power of all classes of stock of the Company entitled to
vote, (ii) at the time of such individual's death, the interest payments with
respect to the
S-27
<PAGE>
<PAGE>
Notes would not have been effectively connected with a United States trade or
business of such Holder and (iii) no portion of the value of the Note held by
such estate is attributable to interest described in section 871(h)(4) of the
Code (as described above).
BACKUP WITHHOLDING AND INFORMATION REPORTING
Under current United States federal income tax law, information reporting
requirements apply to interest and principal payments made to, and to the
proceeds of sales before maturity by, non-corporate United States Holders. In
addition, a 31% backup withholding tax will apply if the non-corporate United
States Holder (i) fails to furnish its Taxpayer Identification Number ('TIN'),
which, for an individual, would be its Social Security Number, (ii) furnishes an
incorrect TIN, (iii) is notified by the Internal Revenue Service that it has
failed properly to report payments of interest and dividends or (iv) in certain
circumstances, fails to certify, under penalties of perjury, that it has
furnished a correct TIN and has not been notified by the Internal Revenue
Service 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, such as corporations and tax-exempt
organizations.
In the case of a non-United States Holder, under current Treasury
Regulations, backup withholding and information reporting will not apply to
payments of principal and interest made by the Company or any paying agent
thereof on a Note with respect to which such Holder has provided the required
certification under penalties of perjury of its non-United States Holder status
or has otherwise established an exemption, provided that the Company or paying
agent, as the case may be, does not have actual knowledge that the payee is a
United States person (as defined in section 7701(a)(30) of the Code).
In addition, if principal or interest payments are collected outside the
United States by a foreign office of a custodian, nominee or other agent acting
on behalf of a beneficial owner of a Note, such custodian, nominee or other
agent will not be required to apply backup withholding to such payments made to
such beneficial owner and will not be subject to information reporting. However,
if such custodian, nominee or other agent is a United States person, a
controlled foreign corporation for United States tax purposes, or a foreign
person 50% or more of whose gross income is effectively connected with its
conduct of a United States trade or business for a specified three-year period,
such custodian, nominee or other agent may be subject to certain information
reporting requirements with respect to such payments unless it has in its
records documentary evidence that the beneficial owner is not a United States
person and certain conditions are met or the beneficial owner otherwise
establishes an exemption.
Under applicable Treasury Regulations, payments on the sale, exchange or
retirement of a Note 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% or more of whose gross income is effectively connected with
its conduct of a United States trade or business for a specified three-year
period, information reporting will be required unless the broker has in its
records documentary evidence that the beneficial owner is not a United States
person and certain other conditions are met or the beneficial owner 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 that it is not a United States
person or otherwise establishes an exemption. Furthermore, the final regulations
require backup withholding with respect to the payments described in this
paragraph in the event that the custodian, nominee, agent or broker has actual
knowledge that the beneficial owner is a United States person.
Any amounts withheld from a payment to a holder under the backup
withholding rules will be allowed as a refund or a credit against such holder's
United States federal income tax, provided that the required information is
furnished to the Internal Revenue Service.
Holders should consult their tax advisors regarding the application of
information reporting and backup withholding to their particular situations, the
availability of an exemption therefrom, and the procedure for obtaining such an
exemption, if available.
S-28
<PAGE>
<PAGE>
PLAN OF DISTRIBUTION
Unless otherwise provided in the applicable Pricing Supplement, the Notes
are being offered on a continual basis by the Company through Agents, who have
agreed to use their reasonable best efforts to solicit purchases of the Notes.
The Company will pay an Agent a commission, in the form of a discount ranging
from .050% to .750% of the principal amount of the Note sold through it as
agent, depending upon maturity of the Note, except that the commission payable
by the Company to the Agents with respect to Notes with maturities of greater
than thirty years will be negotiated at the time the Company issues such Notes.
The Company also may sell the Notes to any Agent, acting as principal, or to a
group of underwriters for whom one or more Agents are acting as representatives,
at a discount to be agreed upon at the time of sale (or if no compensation is
indicated therein, in accordance with the agreed schedule of commissions as set
forth on the cover of this Prospectus Supplement), for resale to investors or
dealers at varying prices related to prevailing market prices at the time of
resale, to be determined by the Agents or, if so agreed, at a fixed public
offering price. The Agent, acting as principal, may sell Notes it has purchased
from the Company to other dealers for resale to investors and other purchasers,
and may allow any portion of the discount received in connection with such
purchase from the Company to such dealers. After the initial public offering of
Notes, the public offering price (in the case of Notes to be resold at a fixed
public offering price), the concession and the discount may be changed. In
addition, the Company may arrange for the Notes to be sold through other agents,
dealers or underwriters or may sell the Notes directly to investors on its own
behalf in those jurisdictions where it is authorized to do so. In the case of
sales made directly by the Company, no commission will be payable.
The Company will have the sole right to accept offers to purchase Notes and
may reject any proposed purchase of Notes in whole or in part. The Agents will
have the right, in their reasonable discretion, to reject any offer to purchase
Notes received by them in whole or in part.
The Company has agreed to indemnify the Agents against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments the
Agents may be required to make in respect thereof. The Agents may be deemed to
be 'underwriters' within the meaning of the Securities Act.
The Company may offer an additional series of medium-term notes of the
Company outside the United States to prospective non-United States Holders. Such
other series of medium-term notes may have terms substantially similar to the
terms of the Notes offered hereby (but will constitute a separate series for
purposes of the Indenture), and will be offered in bearer form only. Such other
series of medium-term notes will reduce correspondingly the principal amount of
Notes which may be offered by this Prospectus Supplement and the Prospectus. In
addition, the amount of Notes which may be offered will be reduced by the
aggregate principal amount of any other securities and the purchase price of any
warrants issued by the Company inside or outside the United States under the
Registration Statement.
Each of the Agents may from time to time purchase and sell Notes in the
secondary market, but is not obligated to do so, and there can be no assurance
that there will be a secondary market for the Notes or liquidity in the
secondary market if one develops. From time to time, each of the Agents may make
a market in the Notes.
S-29
<PAGE>
<PAGE>
PROSPECTUS
$5,000,000,000
[LOGO]
DEBT SECURITIES, DEBT WARRANTS, CURRENCY WARRANTS,
INDEX WARRANTS, AND INTEREST RATE WARRANTS
------------------------
AT&T Capital Corporation ('AT&T Capital' or the 'Company'), an indirect
wholly-owned subsidiary of Newcourt Credit Group Inc. ('Newcourt'), directly,
through agents designated from time to time, or through dealers or underwriters
also to be designated, may offer and sell from time to time, one or more series
of (i) debt securities (the 'Debt Securities') of the Company, (ii) warrants to
purchase Debt Securities (the 'Debt Warrants'), (iii) warrants entitling the
holders thereof to receive from the Company, upon exercise, an amount in cash
equal to the cash value of the right to purchase (the 'Currency Call Warrants')
or to sell (the 'Currency Put Warrants' and, together with the Currency Call
Warrants, the 'Currency Warrants') a certain amount of one currency or currency
unit for a certain amount of a different currency or currency unit, all as shall
be designated by the Company at the time of offering, (iv) warrants entitling
the holders thereof to receive from the Company, upon exercise, an amount in
cash determined by reference to decreases (the 'Index Put Warrants') or
increases (the 'Index Call Warrants') in the level of a specified index (an
'Index') which may be based on one or more U.S. or foreign stocks, bonds or
other securities, one or more U.S. or foreign interest rates, one or more
currencies or currency units, or any combination of the foregoing, or determined
by reference to the differential between any two Indices (the 'Index Spread
Warrants' and, together with the Index Put Warrants and the Index Call Warrants,
the 'Index Warrants') or (v) warrants entitling the holders thereof to receive
from the Company, upon exercise, an amount in cash determined by reference to
decreases (the 'Interest Rate Put Warrants') or increases (the 'Interest Rate
Call Warrants' and, together with the Interest Rate Put Warrants, the 'Interest
Rate Warrants' and, together with the Index Warrants, the Currency Warrants and
the Debt Warrants, the 'Warrants') in the yield or closing price of one or more
specified debt instruments issued either by the United States government or by a
foreign government (the 'Sovereign Debt Instrument'), in the interest rate or
interest rate swap rate established from time to time by one or more specified
financial institutions (the 'Rate') or in any specified combination of Sovereign
Debt Instruments and/or Rates, for an aggregate offering price of up to
$5,000,000,000, or the equivalent thereof in one or more foreign currencies or
currency units (such amount being the aggregate proceeds to the Company from all
Debt Securities, Debt Warrants, Currency Warrants, Index Warrants and Interest
Rate Warrants (collectively, the 'Securities') issued and the aggregate exercise
price of any Debt Securities issuable upon the exercise of any Debt Warrants).
Securities may be offered either together or separately and in one or more
series or amounts, at prices and on terms to be determined at the time of sale.
The Securities will receive the benefit of an irrevocable unconditional Newcourt
guarantee. See 'The Company -- Relationship with Newcourt.' If this Prospectus
is being delivered in connection with the offering and sale of Debt Securities,
the specific designation, aggregate principal amount, the currency or currency
unit for which the Debt Securities may be purchased and in which the principal
and interest, if any, is payable, the rate (or method of calculation) and time
of payment of interest, if any, authorized denominations, maturity, any
redemption terms, and any other terms in connection with such offering and sale
are set forth in the accompanying Prospectus Supplement and pricing supplement
(together, the 'Prospectus Supplement'). If this Prospectus is being delivered
in connection with the offering and sale of Warrants, the specific designation
and aggregate number thereof, the currency or currency unit for which the
Warrants may be purchased and/or in which the cash settlement value or the
exercise price, if applicable, is payable, the method of calculation of the cash
settlement value, if applicable, the date on which such Warrants become
exercisable and the expiration date, provisions, if any, for the automatic
exercise and/or cancellation prior to the expiration date, and any other terms
in connection with such offering and sale will be set forth in the Prospectus
Supplement. The Company reserves the sole right to accept and, together with its
agents from time to time, to reject in whole or in part any proposed purchase of
Securities to be made directly or through agents. The Debt Securities and Debt
Warrants may be issued in registered or bearer form (in the case of Debt
Securities, with or without interest coupons) or both or, in the case of Debt
Securities, in uncertificated form. The Currency Warrants, Index Warrants and
Interest Rate Warrants will be issued in registered form only. In addition, all
or a portion of the Securities of a series may be issued in temporary or
permanent global form. Debt Securities in bearer form will be offered only
outside the United States to non-United States persons and to offices located
outside the United States of certain United States institutions. See
'Description of the Debt Securities -- Limitations on Issuance of Bearer Debt
Securities.' The initial public offering price, the agent, dealer or
underwriter, if any, in connection with the offering and sale of the Securities,
a discussion of certain federal income taxation consequences to holders of
Securities and, if applicable, a discussion of certain risks associated with an
investment in Securities will be set forth in the Prospectus Supplement.
THE SECURITIES ARE NOT GUARANTEED OR SUPPORTED IN ANY WAY BY AT&T CORP.
('AT&T').
------------------------
SEE RISK FACTORS ON PAGE 3 FOR CERTAIN CONSIDERATIONS RELEVANT TO AN INVESTMENT
IN THE SECURITIES.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
If an agent of the Company or a dealer or an underwriter is involved in the
sale of the Securities in respect of which this Prospectus is being delivered,
the agent's commission or dealer's or underwriter's discount is set forth in, or
may be calculated from, the Prospectus Supplement, and the net proceeds to the
Company from such sale will be the purchase price of such Securities less such
commission in the case of an agent, the purchase price of such Securities less
such discount in the case of a dealer or the public offering price less such
discount in the case of an underwriter, and less, in each case, the other
attributable issuance expenses. The aggregate proceeds to the Company from all
the Securities will be the purchase price of the Securities sold, less the
aggregate of agents' commissions and dealers' and underwriters' discounts and
other expenses of issuance and distribution. The net proceeds to the Company
from the sale of Securities offered pursuant to a particular Prospectus
Supplement are also set forth in such Prospectus Supplement. See 'Plan of
Distribution' for possible indemnification arrangements for the agents, dealers
and underwriters.
May 5, 1998
<PAGE>
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR
THE PROSPECTUS SUPPLEMENT IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS
AND PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR BY ANY AGENT, DEALER OR UNDERWRITER. THIS PROSPECTUS AND PROSPECTUS
SUPPLEMENT DO NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO
WHICH THEY RELATE.
------------------------
THE GUARANTOR IS A CANADIAN ISSUER THAT IS PERMITTED, UNDER A
MULTIJURISDICTIONAL DISCLOSURE SYSTEM ADOPTED BY THE UNITED STATES, TO PREPARE
THIS PROSPECTUS INSOFAR AS IT RELATES TO THE GUARANTOR AND THE GUARANTEE IN
ACCORDANCE WITH THE DISCLOSURE REQUIREMENTS OF ITS HOME JURISDICTION.
PROSPECTIVE INVESTORS SHOULD BE AWARE THAT SUCH REQUIREMENTS ARE DIFFERENT FROM
THOSE OF THE UNITED STATES. THE FINANCIAL STATEMENTS OF THE GUARANTOR INCLUDED
OR INCORPORATED BY REFERENCE HEREIN, HAVE BEEN PREPARED IN ACCORDANCE WITH
CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, AND ARE SUBJECT TO CANADIAN
AUDITING AND AUDITOR INDEPENDENCE STANDARDS, AND SUCH FINANCIAL STATEMENTS MAY
NOT BE COMPARABLE TO FINANCIAL STATEMENTS OF UNITED STATES COMPANIES.
THE ENFORCEMENT BY INVESTORS OF CIVIL LIABILITIES UNDER THE FEDERAL
SECURITIES LAWS MAY BE AFFECTED ADVERSELY BY THE FACT THAT THE GUARANTOR IS
INCORPORATED AND ORGANIZED UNDER THE LAWS OF THE PROVINCE OF ONTARIO, THAT SOME
OR ALL OF ITS OFFICERS AND DIRECTORS MAY BE RESIDENTS OF CANADA, THAT SOME OR
ALL OF THE EXPERTS NAMED IN THE REGISTRATION STATEMENT MAY BE RESIDENTS OF
CANADA AND THAT A SUBSTANTIAL PORTION OF THE ASSETS OF THE GUARANTOR AND SAID
PERSONS MAY BE LOCATED OUTSIDE THE UNITED STATES.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
'Commission') a Registration Statement on Form S-3, pursuant to the Securities
Act of 1933, as amended (the 'Securities Act'), and the rules and regulations
promulgated thereunder, with respect to the Securities offered hereby. Newcourt
has filed with the Commission a Registration Statement on Form F-9 pursuant to
the Securities Act and the rules and regulations promulgated thereunder with
respect to the Guarantee of the Securities offered hereby. The term
'Registration Statement' means the combined Registration Statement of the
Company on Form S-3 and the Registration Statement of Newcourt on Form F-9 and
includes all amendments, exhibits and schedules thereto. This Prospectus, which
constitutes a part of the Registration Statement, does not contain all the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission, and to
which reference is hereby made.
The Company is subject to the information and reporting requirements of the
Securities Exchange Act of 1934, as amended (the 'Exchange Act'), and in
accordance therewith files periodic reports and other information with the
Commission. The Registration Statement, as well as such reports and other
information filed by the Company with the Commission, may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the regional offices of the Commission located at 7 World Trade Center, 13th
Floor, New York, New York 10048 and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material can be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. The Commission maintains a Web site
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The address
of such Web site is http://www.sec.gov.
Statements made in this Prospectus concerning the provisions of any
contract, agreement or other document referred to herein are not necessarily
complete. With respect to each such statement concerning a contract, agreement
or other document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission, reference is made to such exhibit or other filing for
a more complete description of the matter involved, and each such statement is
qualified in its entirety by such reference.
2
<PAGE>
<PAGE>
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents have been filed by the Company (File No. 001-11237)
with the Commission and are incorporated by reference in the Prospectus that
constitutes a part of the Registration Statement on Form S-3:
(1) The Company's Annual Report on Form 10-K for the year ended December
31, 1997; and
(2) The Company's Current Reports on Form 8-K dated March 9, 1998, March 4,
1998, February 20, 1998, February 9, 1998, January 12, 1998, January 5,
1998, November 19, 1997, May 30, 1997, May 12, 1997 and February 12,
1997, respectively and the Company's Current Reports on Form 8-K/A
dated March 17, 1998 (amending the Report on Form 8-K dated January 12,
1998), February 18, 1998 (amending the Report on Form 8-K dated
February 9, 1998) and February 11, 1998 (amending the Report on Form
8-K dated November 19, 1997).
The following documents have been filed by Newcourt (File No. 001-14604)
with the Commission and are incorporated by reference in the Prospectus that
constitutes a part of the Registration Statement on Form F-9:
(1) the Renewal Annual Information Form of Newcourt dated May 2, 1997
on Form 40-F;
(2) the audited comparative consolidated financial statements of
Newcourt and the auditors' report there on for the fiscal year ended
December 31, 1997 on Form 6-K; and
(3) the Management Information Circular of Newcourt dated February 4,
1998, except the sections entitled 'Compensation and Conduct Review
Committee', 'Report on Executive Compensation', 'Corporate Governance' and
the 'Share Performance Graph' on Form 6-K.
All documents filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Securities shall be deemed to be incorporated
by reference in this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein or in the accompanying Prospectus
Supplement modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
COPIES OF THE ABOVE DOCUMENTS OF THE COMPANY MAY BE OBTAINED UPON REQUEST
WITHOUT CHARGE FROM AT&T CAPITAL CORPORATION, 44 WHIPPANY ROAD, MORRISTOWN, NJ
07962-1983 (TELEPHONE NUMBER 973-397-3000), ATTENTION: TREASURY DEPARTMENT;
COPIES OF THE ABOVE DOCUMENTS OF NEWCOURT MAY BE OBTAINED UPON REQUEST WITHOUT
CHARGE FROM NEWCOURT CREDIT GROUP INC., BCE PLACE, 181 BAY STREET, SUITE 3500,
P.O. BOX 827, TORONTO, ONTARIO, CANADA M5J2T3 (TELEPHONE NUMBER 416-777-6066),
ATTENTION: COMMUNICATIONS DEPARTMENT.
RISK FACTORS
The following risk factors in addition to the other information included in
this Prospectus should be given careful consideration. To the extent any of the
information constitutes a 'forward-looking statement' for purposes of Section
21E(i) of the Exchange Act or Section 27A(i) of the Securities Act, the risk
factors set forth below are meaningful cautionary statements identifying
important factors that could cause actual results to differ materially from
those anticipated in the forward looking statements, and no assurance can be
given that actual results will not in fact differ materially.
RISKS RELATED TO PLANS INVOLVING NEWCOURT
Integration of Business. Both the Company and Newcourt have completed a
number of acquisitions during the past five years. Integration of these two
businesses will require a significant amount of management's time. Diversion of
management attention from the Company's existing business could have a material
adverse impact on the revenues and operating results of the Company.
Guarantee of Certain Newcourt Debt. In connection with the Newcourt
Acquisition (as defined below), on February 20, 1998 the Company entered into an
agreement pursuant to which the Company
3
<PAGE>
<PAGE>
will guarantee (the 'Company Guarantee') the payment of certain indebtedness and
liquidity facilities issued, guaranteed or entered into by Newcourt (as amended,
supplemented, restated or replaced, collectively, the 'Newcourt Debt
Securities') for the timely benefit of the holders of the Newcourt Debt
Securities (collectively, the 'Newcourt Noteholders'). A copy of the Company
Guarantee is filed as Exhibit 10 to the Company's Current Report on Form 8-K
dated February 20, 1998 filed on March 12, 1998.
Because the Company Guarantee is anticipated to cover future indebtedness
under various documents evidencing or relating to the Newcourt Debt Securities,
as well as amendments, supplements, restatements or replacements of or to the
Newcourt Debt Securities, the aggregate outstanding principal amount of the
Newcourt Debt Securities to be covered by the Company Guarantee is expected to
increase in the future.
The Company's obligations under the Company Guarantee represent an
irrevocable and unconditional guarantee of the due and punctual payment to the
Newcourt Noteholders, on demand, whether at stated maturity or otherwise, of all
debts, liabilities and obligations of Newcourt under the Newcourt Debt
Securities, including present and future, direct and indirect, absolute and
contingent and matured and unmatured debts, liabilities and obligations. The
liability of the Company under the Company Guarantee is anticipated to be
unlimited as to amount and to be absolute and unconditional irrespective of any
conditions or circumstances that might otherwise constitute a defense available
to the Company or Newcourt, including any defense based on the lack of validity
or the unenforceability of the Newcourt Debt Securities or any defense or
counterclaim available to Newcourt.
Sensitivity to Ratings on Debt. As a result of the consummation of the
Newcourt Acquisition, each of the four statistical rating organizations that
have been rating the Company's securities maintained or upgraded their
respective ratings on the Company's short-term and (where applicable) long-term
senior unsecured debt. No assurance can be given that any or all of such rating
organizations will not at any future time or from time to time establish
different ratings on the Company's senior unsecured short-term or long-term
debt. To the extent that any of such rating organizations assigns a lower rating
than the existing ratings, such downgrading would result in relatively higher
borrowing costs for the Company, reduce its access to its traditional funding
sources and reduce its competitiveness, particularly if any such assigned rating
is in a generic rating category that signifies that the relevant debt of the
Company is less than investment grade. In addition, certain ratings downgrading
could result in the termination of one or more of the License Agreements with
AT&T and NCR (as defined below) or the 1998 Lucent Agreement (as defined below).
See ' -- Changes in Relationship with AT&T/Lucent/NCR -- Operating and Certain
Other Agreements with AT&T/Lucent/NCR' below. Any such downgrading could have a
material adverse effect on the Company.
Liquidity and Debt Service. The Company's business requires substantial
amounts of cash to support its growth and operations. The Merged Company's (as
defined below) ability to obtain funds and the cost of such funds could be
affected by its credit rating and restrictions contained in existing or future
debt instruments and by other events beyond its control, such as interest rates,
general economic conditions and the perception of its business, results of
operations, leverage, financial condition and business prospects.
Securitization Program. The Company's securitization transactions,
structured as both private conduit programs and the sale of publicly offered
securities, are an important part of the Company's financing to manage its
leverage ratio and to transfer credit risk. Any delay in the securitization of
finance receivables would cause leverage to fluctuate, postpone the recognition
of the gain on such finance receivables and cause the Company's net income to
fluctuate from period to period.
CONTINUITY OF MANAGEMENT
The Merged Company's success depends to a significant extent upon the
continued services of its management. There is no assurance that any of
Newcourt's or the Company's existing officers and key employees will remain in
their current positions for any period of time following the date hereof. The
unavailability of the continued services of such persons could have a material
adverse effect on the Company's business.
4
<PAGE>
<PAGE>
CHANGES IN RELATIONSHIPS WITH AT&T/LUCENT/NCR
RELIANCE ON MAJOR VENDORS. A substantial portion of the Company's net
income is attributable to the financing provided by the Company to customers of
AT&T Corp. ('AT&T'), Lucent Technologies Inc. ('Lucent') and NCR Corporation
('NCR') with respect to products manufactured or distributed by them
('AT&T/Lucent/NCR Products') and, to a lesser extent, to AT&T, Lucent and NCR as
end-users, primarily with respect to the lease of information technology and
other equipment to them as end-users and the administration and management of
certain leased assets on behalf of AT&T, Lucent and NCR. The Company's
commercial relationships with AT&T, Lucent and NCR are currently governed by
certain agreements.
Although the proportion of the Company's total revenues from sources not
attributable to AT&T, Lucent and NCR has grown over the last several years, a
substantial portion of the Company's net income has been generated by the
Company's relationship with AT&T, Lucent and NCR. A significant decrease in the
portion of the sales of the AT&T/Lucent/NCR Products that are financed by the
Company, or in the absolute amount of AT&T, Lucent and/or NCR product sales (in
either case, particularly with respect to Lucent), or in the amount of
transactions effected by the Company with AT&T, Lucent and/or NCR as end-user
(particularly with respect to AT&T) would have a material adverse effect on the
Company's results of operations and financial condition.
Operating and Certain Other Agreements with AT&T/Lucent/NCR. The initial
terms of each of the Operating Agreements (see 'The Company -- Relationship with
AT&T/Lucent/NCR') (pursuant to which, among other things, the Company serves as
preferred provider of financing services and has certain related and other
rights and privileges in connection with the financing of equipment of the
customers of AT&T and NCR) will expire on August 4, 2000, but will be
automatically renewed for successive two-year periods unless either party
thereto gives the other a non-renewal notice at least one year prior to the end
of the initial or renewal term. Neither AT&T nor NCR is required to renew the
term of its Operating Agreement beyond the expiration of the current term on
August 4, 2000.
On March 9, 1998, Newcourt signed a new five-year agreement with Lucent
(the '1998 Lucent Agreement') which expands the global financing program
established to serve Lucent's business systems customers. The term of the 1998
Lucent Agreement is from October 1, 1997 through September 30, 2002. The 1998
Lucent Agreement replaces the Lucent Operating Agreement (as defined below) and
the letter agreements between the Company and Lucent, the initial terms of which
were scheduled to expire on August 4, 2000. See 'The Company -- Relationship
with AT&T/Lucent/NCR' below. In addition to the extended term of the 1998 Lucent
Agreement, other changes from the previous Lucent Operating Agreement include
Newcourt being the preferred provider of financing services for a greater
portion of Lucent's equipment and related product sales, a change in the
methodology in calculating the amount required to be paid to Lucent (based upon
specific financial, service and performance levels tied to compensation) which
is expected to result in an increase in such amount, and a single point of
contact for customers. The 1998 Lucent Agreement also includes certain early
termination provisions and a buy-out option that could have a material impact on
the Company's future operations, if exercised. Lucent is not required to renew
the term of the 1998 Lucent Agreement beyond the current term. In the event of
either (a) an early termination or buy-out or (b) a non-renewal of the 1998
Lucent Agreement by Lucent, Newcourt will have an extended wind-down period with
cost recovery.
The impact of the 1998 Lucent Agreement on the Company's future net income
is at this time unknown. While there is a possibility that the Company's future
net income from Lucent transactions may increase as a result of an anticipated
increase in financing volume arising from Newcourt being the preferred provider
of financing services for a greater portion of Lucent's equipment and related
product sales, there also is a possibility that the Company's future net income
from Lucent transactions may decrease as a result of the increased amounts due
to Lucent under the 1998 Lucent Agreement.
Although the Company intends to seek to maintain and improve its existing
relationships with Lucent, NCR and AT&T, no assurance can be given that the
Operating Agreements or the 1998 Lucent Agreement, will be extended beyond their
respective termination dates or, if extended, that the terms and conditions
thereof will not be modified in a manner adverse to the Company. Failure to
renew the Operating Agreements and the 1998 Lucent Agreement, on terms not
adverse to the Company could have a material adverse effect on the Company.
Moreover, in certain circumstances the Operating
5
<PAGE>
<PAGE>
Agreements and the 1998 Lucent Agreement may be terminated prior to their
respective expiration dates.
CERTAIN INCREASED COSTS AND EXPENSES
As a result of the Newcourt Acquisition and the related integration plan
for the Merged Company, AT&T Capital's net income will be adversely impacted
over the next eighteen months. Such integration plan is expected to result in
additional costs which include, but are not limited to, severance and other
employee benefit costs, systems conversions, location closures and other
restructuring costs.
AT&T Capital is targeting to reduce its ratio of operating expenses to
owned and managed assets over the next few years. These reductions are expected
to result from extensive cost savings programs and economies of scale in
processing operations, administration and centralized services. While it is
anticipated that these savings will be recognized, any unanticipated event in
the integration of the businesses by both Newcourt and AT&T Capital may require
significant management time and cause a delay in recognition of the cost
savings.
COMPETITION
The equipment leasing and finance industry in which the Company operates is
highly competitive and is undergoing a process of consolidation. As a result,
certain of the Company's competitors' relative cost bases have been reduced.
Participants in the industry compete through price (including the ability to
control costs), risk management, innovation and customer services. Principal
cost factors include the cost of funds, the cost of selling to or obtaining new
end-user customers and vendors and the cost of managing portfolios. The
Company's competitors include captive or related leasing companies (such as
General Electric Capital Corporation and IBM Credit Corporation), independent
leasing companies (such as Comdisco, Inc.), certain banks engaged in leasing,
lease brokers and investment banking firms that arrange for the financing of
leased equipment, and manufacturers and vendors which lease their own products
to customers. In addition, the Company competes with all banking and other
financial institutions, manufacturers, vendors and others who extend or arrange
credit for the acquisition of equipment, and in a sense, with end-users'
available cash resources to purchase equipment that the Company may otherwise
finance. Many of the competitors of the Company are large companies that have
substantial capital, technological and marketing resources; some of these
competitors are significantly larger than the Company and have access to debt at
a lower cost than the Company. In addition, the Company may not have, in the
immediate future, access to sufficient U.S. Federal tax capacity to pursue
efficiently U.S. tax based lease financing.
CERTAIN OTHER RISKS
The Company is subject to certain other risks including the risk that its
allowance for credit losses may not prove adequate to cover ultimate losses and
that its estimated residual values will not be realized at the end of the lease
terms. There can be no assurance that such allowance will prove adequate to
cover losses in connection with the Company's investment in finance receivables,
capital leases and operating leases or that such residual values (which have
historically been a significant element of the net income of the Company) will
be realized.
READINESS FOR YEAR 2000
Prior to its acquisition by Newcourt, AT&T Capital had begun addressing the
Year 2000 issue, also known as the 'millennium bug'. This included inventories
of most systems as well as some conversion effort on major systems.
The Merged Company (as defined below) is addressing the Year 2000 issue
from a global perspective. In early 1998, the Merged Company established a
global Year 2000 Program Office to provide oversight from both a business and
technical perspective. The program will coordinate vendors, consultants and
regional Year 2000 resources. The Merged Company, including AT&T Capital, plans
to convert its critical systems by the end of 1998 with conversion of remaining
systems and compliance testing and certification to be completed in 1999. As
part of the integration strategy, the Merged Company plans to aggressively
consolidate onto a limited set of identified Year 2000 compliant systems in
order to achieve operational efficiencies and to minimize the Year 2000
exposures and costs.
Management does not anticipate that the total cost to the Company of these
Year 2000 compliance activities will be material to its financial position or
results of operations in any given year.
6
<PAGE>
<PAGE>
THE COMPANY
GENERAL
AT&T Capital Corporation ('AT&T Capital' or the 'Company') is a
full-service, diversified equipment leasing and finance company that operates
principally in the United States and also has operations in Europe, Canada, the
Asia/Pacific region, Mexico and South America. The Company is one of the largest
equipment leasing and finance companies in the United States and is the largest
lessor of telecommunications equipment in the United States, in each case, based
on the aggregate value of equipment leased or financed.
AT&T Capital's principal executive offices are located at 44 Whippany Road,
Morristown, New Jersey 07962 and its telephone number is (973) 397-3000.
AT&T Capital, through its various subsidiaries, leases and finances a wide
variety of equipment, including telecommunications equipment (such as private
branch exchanges, telephone systems and voice processing units), information
technology equipment (such as personal computers, retail point of sale systems
and automated teller machines), general office, manufacturing and medical
equipment ('General Equipment'), and transportation equipment. In addition, AT&T
Capital provides franchise financing for franchisees and financing
collateralized by real estate. At December 31, 1997, the Company's portfolio
assets (investment in finance receivables, capital leases and operating leases)
were comprised of, or collateralized by, General Equipment (33%), information
technology equipment (22%), telecommunications equipment (22%), loans secured by
real estate (12%) and transportation equipment (11%). The Company's leasing and
financing services are marketed (i) to customers of equipment manufacturers,
distributors and dealers with which the Company has a marketing relationship for
financing services and (ii) directly to end-users of equipment. The Company's
approximately 500,000 customers include large global companies, small and
mid-sized businesses and federal, state and local governments and their
agencies.
During the period since its founding in 1985, the Company has achieved
significant growth in assets, finance volume (total principal amount of loans
and total cost of equipment associated with finance and lease transactions
recorded by the Company and the increase, if any, in outstanding inventory
financing and asset-based lending transactions), revenues and net income. At
December 31, 1997, the Company's total assets were $8.8 billion, an increase of
8.4% over the prior year-end; finance volume for 1997 was $5.7 billion, an
increase of 8.0% over 1996; total revenues for 1997 were $1.8 billion, a
decrease of 7.1% from 1996; and net income of $21.0 million for 1997 was 87.5%
less than the Company's net income for 1996. The 1997 decrease in total revenues
was primarily due to lower capital lease revenue resulting from the Company's
securitization program, introduced by its $3.1 billion asset securitization in
October 1996, and lower securitization gains, net of service fee revenue. The
1997 decrease in net income was due to the decline in total revenues as
previously discussed, higher costs due to increased leverage associated with the
Company's post-1996 merger capital structure and certain restructure charges of
$23.0 million, certain other severance charges of $13.9 million and a net loss
on the December sales of the Company's commercial fleet automotive and inventory
finance businesses and the anticipated sale of the Company's remaining U.S.
consumer automotive business of $12.2 million, all on an after-tax basis. The
restructure charges and net loss on sales of businesses were the result of the
Company's continued objective to streamline costs, improve operating
efficiencies and exit non-strategic businesses.
AT&T Capital provides its financial products and services to its worldwide
customers and clients through three principal market channels: Vendor Finance,
Direct Customer Finance and International Finance. For the year ended December
31, 1997, the percentage of the Company's aggregate finance volume derived from
the Company's Vendor Finance, Direct Customer Finance and International Finance
programs was 40%, 33% and 27%, respectively. See 'The Merged Company' below.
AT&T Capital seeks to implement its strategies by taking advantage of what
it believes are its competitive strengths: (i) high-volume processing
capabilities that enable it to serve a large number of customers in a timely and
efficient manner; (ii) significant experience in structuring and managing
financing programs tailored to specific customer needs; (iii) risk management
skills (including initial credit review and residual value assessment and
continuing portfolio management capabilities); (iv)
7
<PAGE>
<PAGE>
asset management skills (including equipment remarketing skills that enhance the
ability of the Company to realize the residual values of its equipment); and (v)
financial structuring capabilities.
The Company was founded in 1985 by AT&T as a captive finance company to
assist AT&T's equipment marketing and sales efforts by providing its customers
with sophisticated financing. AT&T Capital has operated independently since its
initial public offering in 1993 (the 'IPO').
On October 1, 1996, the Company consummated a merger (the 'Merger') with
Antigua Acquisition Corporation, a Delaware corporation ('Merger Sub'), pursuant
to an Agreement and Plan of Merger (the 'Merger Agreement') among AT&T, the
former indirect owner of approximately 86% of the outstanding common stock of
the Company, Hercules Holdings (Cayman) Limited, a Cayman Islands corporation
('Holdings'), and Merger Sub, a majority-owned subsidiary of Holdings. Pursuant
to the Merger Agreement, Merger Sub was merged with and into the Company, with
the Company continuing its corporate existence under Delaware law as the
surviving corporation.
NEWCOURT ACQUISITION
On November 17, 1997, Newcourt agreed to acquire all of the issued and
outstanding common shares of the Company. On January 12, 1998 the acquisition of
the shares of the Company by Newcourt (the 'Newcourt Acquisition') was completed
and the Company became an indirect wholly-owned subsidiary of Newcourt. The
aggregate purchase price paid by Newcourt on the acquisition closing was
approximately $1.6 billion (C$2.3 billion). Of this amount, approximately $1.0
billion (C$1.5 billion) was paid in cash and the remaining approximately $0.6
billion (C$0.8 billion) was satisfied by the issuance of approximately 17.6
million common shares of Newcourt to Holdings, which is indirectly owned by
Nomura International plc and which owned 97.4% of the outstanding shares of the
Company. Holdings has agreed, subject to certain exceptions, that such Newcourt
common shares shall not be sold, transferred or otherwise disposed of for
periods of six, twelve and eighteen months following the acquisition closing.
THE MERGED COMPANY
The resulting combination of Newcourt and the Company (the 'Merged
Company') has created one of the largest providers of vendor finance in the
world, and one of the world's largest non-bank commercial asset finance
companies. With corporate headquarters in Toronto, Canada, the Merged Company
has approximately $23.5 billion (C$33.7 billion) of owned and managed assets at
December 31, 1997. In addition, the Merged Company remains well capitalized with
equity of $2.7 billion (C$3.9 billion) resulting in a leverage ratio (defined as
total debt to total equity plus preferred securities) of 3.2 times at December
31, 1997.
The Merged Company's international origination and servicing capabilities
now span 24 countries around the globe. The acquisition provides a platform that
enables both Newcourt and the Company to better serve their respective
manufacturing clients in Canada, the U.S. and the U.K. and creates new
opportunities for serving clients in the Asia/Pacific region, Europe, Mexico and
South America.
The businesses of Newcourt and the Company are complementary in many
respects. The Company possesses asset management and processing skills, systems
capabilities, a broad range of clients, a solid credit underwriting performance
and a consistent operating history. Newcourt originates asset finance business
through innovative financing techniques, provides focused client services and
complementary product offerings. In addition, both Newcourt and the Company have
a conservative risk management culture.
The Merged Company will offer its financing services to clients through
three primary business units: Newcourt Financial, Newcourt Capital, and Newcourt
Services. Newcourt Financial, the Merged Company's commercial finance business,
will provide asset-based financing for a variety of equipment to vendors and
customers. Newcourt Capital, the Merged Company's corporate finance business,
will provide structured corporate finance to a growing list of international
clients, including major corporations, governments and agencies. Finally,
Newcourt Services, the Merged Company's control, growth and support services,
will be responsible for the underwriting, funding, administration and risk
management needs of Newcourt Financial and Newcourt Capital.
8
<PAGE>
<PAGE>
Newcourt Financial offers its lending services through select strategic
relationships with equipment manufacturers, dealers and distributors and certain
professional associations and organizations. Newcourt Financial's strategy
focuses on the creation, maintenance and enhancement of vendor programs ensuring
its position as the premier provider of global asset based financial products.
Newcourt Financial focuses on the following sectors: Transportation and
Industrial Finance, Technology Finance, Telecommunications Finance, Business
Finance, Specialty Finance, Technology Services, International/Joint Ventures,
and Operations.
Newcourt Capital is the corporate finance business which provides asset
based financing for high value assets and related advisory services to equipment
manufacturers, corporate clients, governments and public sector agencies.
Newcourt Capital focuses on the following sectors: Aerospace Finance, Rail
Finance, Public Sector Finance, Project Finance, Structured Finance,
Telecommunication and Media Finance, Business Finance, and Underwriting and
Syndication.
Newcourt Services is the service business unit responsible for providing
cost effective control and support services to Newcourt Financial and Newcourt
Capital. Newcourt Services consists of the following corporate functions:
Treasury, Credit and Risk Management, Financial Reporting and Administration,
Human Resources, Communications & Marketing, Tax Planning and Compliance,
Systems Development, and Quality Assurance.
A successful integration is key to the Merged Company's future performance,
which makes it imperative that the Company be quickly and effectively
integrated. To this end, the Merged Company has established an integration
office to oversee the implementation of the merger. The integration office
consists of 6 full time senior management members and 11 task forces staffed by
90 employees of the Company and Newcourt.
Going forward, the Merged Company will focus a great deal of attention on
the significant cost saving opportunities created by geographic and business
segment synergies. The Merged Company plans to achieve substantial cost
reductions through the consolidation of facilities, systems and functions in
Canada, the U.S. and the U.K.
The Company has provided an irrevocable unconditional guarantee of payment
of certain of Newcourt's outstanding and future debt instruments as well as a
subordinated guarantee of certain affiliate debentures and certain distribution,
redemption and liquidation payments in connection with the issuance and sale by
the Company of certain affiliate preferred securities. Likewise Newcourt will
provide an irrevocable unconditional guarantee of all Securities.
RELATIONSHIP WITH NEWCOURT
Newcourt is an independent financial services company which originates and
manages asset-based financings. Newcourt was formed in 1984 as an investment
bank which originated and structured asset based financings for the corporate
and institutional asset finance market and syndicated such financings to
Canadian financial institutions. In 1988, Newcourt broadened its activities to
include vendor and direct equipment financing.
Newcourt and its subsidiaries originate their asset-based financings by
providing services to specific segments of the vendor asset finance market and
corporate and institutional asset finance market. Newcourt's strategy has been
to sell and manage, rather than own, the majority of the finance assets it and
its subsidiaries originate, thereby reducing its capital requirements.
Consequently, Newcourt's consolidated revenues are generated primarily by gains
and fees earned from the sale of financings it and its subsidiaries originate
and by management fees earned following such sales.
Newcourt's principal executive offices are located at BCE Place, 181 Bay
Street, Suite 3500, P.O. Box 827, Toronto, Ontario, Canada M5J 2T3 and its
telephone number is (416) 594-2400.
As of December 31, 1997, on a Canadian GAAP basis, Newcourt had total
assets of $4.3 billion (C$6.2 billion) compared with $1.6 billion (C$2.2
billion) as of December 31, 1996, total liabilities of $2.2 billion (C$3.1
billion) as of December 31, 1997 compared with $1.2 billion (C$1.7 billion) as
of December 31, 1996, shareholders' equity of $2.1 billion (C$3.1 billion) as of
December 31, 1997 compared with $0.4 billion (C$0.5 billion) as of December 31,
1996 and total revenues and net income
9
<PAGE>
<PAGE>
of $230.1 million (C$318.4 million) and $26.3 million (C$36.4 million),
respectively for the year ended December 31, 1997 compared with $125.8 million
(C$171.6 million) and $37.2 million (C$50.7 million), respectively for the year
ended December 31, 1996.
RELATIONSHIP WITH AT&T/LUCENT/NCR
In connection with the Company's IPO in 1993, the Company entered into a
series of agreements with AT&T to formalize the relationship between the two
companies, including the following three significant agreements, each dated as
of June 25, 1993: (i) an Operating Agreement (the 'AT&T Operating Agreement'),
(ii) an Intercompany Agreement (the 'Intercompany Agreement') and (iii) a
License Agreement (the 'License Agreement'). The Company executed agreements
comparable to the AT&T Operating Agreement with each of Lucent Technologies,
Inc. ('Lucent') and NCR Corporation ('NCR') (the 'Lucent Operating Agreement'
and 'NCR Operating Agreement,' respectively, and, together with the AT&T
Operating Agreement, the 'Operating Agreements'). In addition, the Company also
entered into letter agreements (the 'Agreement Supplements') with Lucent and NCR
pursuant to which Lucent and NCR agreed that various provisions of the
Intercompany Agreement and the License Agreement would apply equally to them.
The initial term of each of the Operating Agreements, the Intercompany
Agreement, the License Agreement and the Agreement Supplements is scheduled to
end on August 4, 2000. In addition, AT&T has the right under the License
Agreement, after two years' prior notice, to require the Company to discontinue
use of the 'AT&T' trade name as part of the Company's corporate or 'doing
business' name.
On March 9, 1998, Newcourt signed the 1998 Lucent Agreement which expands
the global financing program established to serve Lucent's business systems
customers. The 1998 Lucent Agreement replaces the Lucent Operating Agreement and
the letter agreements previously discussed between the Company and Lucent. The
1998 Lucent Agreement covers the period from October 1, 1997 through September
30, 2002. See 'Risk Factors -- Changes in Relationship with AT&T/Lucent/NCR.'
At December 31, 1997, on an owned and securitized basis, the Company's 100
largest customers (including AT&T and Lucent) accounted for approximately 18% of
the Company's owned and securitized portfolio assets, and no customer (with the
exception of AT&T and Lucent, in the aggregate) accounted for more than 1% of
such portfolio assets.
USE OF PROCEEDS
The proceeds from the sale of the Securities will be used primarily to
finance installment sale and lease agreements with respect to direct financing
programs and to repay debt of the Company and its subsidiaries as they become
due. In addition, the proceeds will be used for borrowings by affiliated
entities, all of whom are within the Merged Company's consolidated group, in
connection with the acquisition of equipment, repayment of debt and general
corporate purposes. Ongoing purchases of finance receivables and installment
sale and lease agreements, direct financing programs and any future financing
arrangements will be financed from various sources, including the issuance of
commercial paper and the sale of Securities. The amount and timing of the sales
of the Securities will depend on the timing of asset purchases, market
conditions and the availability of other funds to the Company.
The debt to be repaid with the proceeds from such sales consists generally
of medium-term notes and commercial paper. Such debt has various maturities and
bears interest at various fixed rates. At December 31, 1997, the aggregate
principal amount of the Company's outstanding medium-term notes was
approximately $4.9 billion, and the Company had approximately $1.6 billion in
principal amount of commercial paper outstanding at such date. The weighted
average interest rate of such medium-term notes and commercial paper at December
31, 1997 was approximately 6.30% and 6.37%, respectively. The net proceeds of
all the outstanding medium-term notes and commercial paper issued or incurred by
the Company within the last year to be repaid with net proceeds from the sale of
Securities have been used by the Company as working capital for general
corporate purposes or to repay previously outstanding commercial paper or
medium-term notes.
10
<PAGE>
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the historical ratios of earnings to fixed
charges for the Company for the years ended December 31, 1993 through 1997. The
table also includes such ratio calculated on a pro forma basis to give effect to
the Newcourt Acquisition.
<TABLE>
<CAPTION>
PRO FORMA(1)(2) HISTORICAL(1)
----------------------- -------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
----------------------- -------------------------------------
1997 1997 1996 1995 1994 1993
----------------------- ----- ----- ----- ----- -----
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges................ 1.03 1.07 1.60 1.50 1.62 1.57
</TABLE>
- ------------
(1) Earnings before income taxes and cumulative effect on prior years of
accounting change plus fixed charges (the sum of interest on indebtedness
and the portion of rentals representative of the interest factor) divided by
fixed charges. Fixed charges do not include distributions on
Company-obligated preferred securities of the company's subsidiaries. See
'The Company -- General' for a discussion regarding the reduction of the
Company's net income for 1997. Prior to the Merger, a portion of the
Company's indebtedness to AT&T did not bear interest.
(2) The pro forma data represents the Company's ratio of earnings to fixed
charges as if the Newcourt Acquisition had occurred on January 1, 1997. See
'AT&T Capital Corporation and Subsidiaries and Newcourt Credit Group Inc.
Unaudited Pro Forma Consolidated Financial Statements'.
11
<PAGE>
<PAGE>
DESCRIPTION OF THE DEBT SECURITIES
The Debt Securities are to be issued under the Indenture dated as of April
1, 1998, as amended (the 'Indenture'), between the Company and The Chase
Manhattan Bank, as Trustee (the 'Trustee'). A copy of the Indenture is filed as
an exhibit to the Registration Statement. The following summaries of certain
provisions of the Indenture do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, all the provisions of the
Indenture, including the definitions therein of certain terms. Section
references are to sections of the Indenture, and wherever particular provisions
are referred to, such provisions are incorporated by reference as part of the
statement made, and the statement is qualified in its entirety by such
reference.
The Debt Securities are not guaranteed or supported in any way by AT&T.
GENERAL
The Indenture does not limit the aggregate principal amount of Debt
Securities that may be issued thereunder and provides that the Debt Securities
may be issued from time to time in one or more series. Reference is made to the
Prospectus Supplement which accompanies this Prospectus for a description of the
Debt Securities being offered thereby including:
(1) the title of the series of the Debt Securities;
(2) the aggregate principal amount of such Debt Securities;
(3) the percentage of their principal amount at which such Debt
Securities will be sold;
(4) the date(s) on which such Debt Securities will mature, or whether
such securities are payable on demand;
(5) the rate(s) per annum at which such Debt Securities will bear
interest, if any, or the method of calculating such rate or rates of
interest;
(6) the times at which such interest, if any, will be payable;
(7) the terms for redemption, early repayment or amortization, if
any;
(8) the denominations in which such Debt Securities are authorized to
be issued;
(9) the coin or currency in which the Debt Securities are
denominated, which may be a Euro;
(10) any provision permitting payments of the principal of or any
premium or interest on the Debt Securities in a coin or currency other than
the currency in which the Debt Securities are denominated, including a
non-U.S. dollar denominated currency;
(11) the manner in which the amount of payments of principal of and
any premium or interest on the Debt Securities is to be determined if such
determination is to be made with reference to one or more indices (which
will be based on one or more U.S. or foreign stocks, bonds or other
securities, one or more U.S. or foreign interest rates, one or more
currencies or currency units, one or more commodities, or one or more
equipment leases, third-party loans, tax receipts, real property values,
SWAP receivables, reinsurance contracts, pooled receivables, or any
combination of the foregoing);
(12) whether such Debt Securities are issuable in registered form
('registered Debt Securities') or bearer form (with or without interest
coupons) ('bearer Debt Securities') or both, and whether such Debt
Securities shall be uncertificated;
(13) whether any series of Debt Securities will be represented by one
or more temporary or permanent global Debt Securities ('global Debt
Securities') and, if so, whether any such global Debt Securities will be in
registered or bearer form, the identity of the depositary for such global
Debt Security or Securities and the method of transferring beneficial
interests in such global Debt Security or Securities;
(14) if a temporary global Debt Security is to be issued with respect
to a series, the terms upon which interests in such temporary global Debt
Security may be exchanged for interests in a permanent global Debt Security
or for definitive Debt Securities of the series and the terms upon
12
<PAGE>
<PAGE>
which interest in a permanent global Debt Security, if any, may be
exchanged for definitive Debt Securities of the series;
(15) information with respect to book-entry procedures, if any;
(16) whether and under what circumstances the Company will pay
additional amounts on any Debt Securities held by a person who is not a
U.S. person in respect of taxes or similar charges withheld and, if so,
whether the Company will have the option to redeem such Debt Securities
rather than pay such additional amounts; and
(17) any other terms, including any terms which may be required by or
advisable under United States laws and regulations or advisable in
connection with the marketing of the Debt Securities of such series, which
will not be inconsistent with the provisions of the Indenture.
Debt Securities of any series may be registered Debt Securities or bearer
Debt Securities or both as specified in the terms of the series. Additionally,
Debt Securities of any series may be represented by one or more global Debt
Securities registered in the name of a depositary's nominee and, if so
represented, beneficial interests in such a global Debt Security will be shown
on, and transfers thereof will be effected only through, records maintained by a
designated depositary and its participants. Debt Securities of any series may
also be uncertificated. Unless otherwise indicated in the Prospectus Supplement,
no bearer Debt Securities (including Debt Securities in permanent global bearer
form) will be offered, sold, resold or delivered to any United States person (as
defined under 'Limitations on Issuance of Bearer Debt Securities' below) in
connection with their original issuance or their exchange for a portion of a
temporary or permanent global Debt Security.
Unless otherwise indicated in the Prospectus Supplement, principal and
interest, if any, will be payable at the office of one or more paying agents as
specified in the Prospectus Supplement; provided that, in the case of registered
Debt Securities, payment of interest may be made at the option of the Company by
check mailed to the address of the person entitled thereto as it appears in the
register of the Debt Securities. To the extent set forth in the Prospectus
Supplement, except in special circumstances set forth in the Indenture,
interest, if any, on bearer Debt Securities will be payable only against
presentation and surrender of the coupons for the interest installments
evidenced thereby as they mature at the office of a paying agent of the Company
located outside of the United States and its possessions. The Company will
maintain one or more such agents for a period of two years after the principal
of such bearer Debt Securities has become due and payable. During any period
thereafter for which it is necessary in order to conform to United States tax
laws or regulations, the Company will maintain a paying agent outside of the
United States and its possessions to which the bearer Debt Securities and
coupons related thereto may be presented for payment and will provide the
necessary funds therefor to such paying agent upon reasonable notice. No payment
with respect to any bearer Debt Security will be made at any office or agency of
the Company in the United States or by check mailed to any address in the United
States or by transfer to an account maintained with a bank located in the United
States. Notwithstanding the foregoing, payment of principal of (and premium, if
any) and interest on bearer Debt Securities denominated and payable in U.S.
dollars will be made at the office of the Company's Paying Agent in the Borough
of Manhattan, The City of New York if, and only if, payment of the full amount
thereof in U.S. dollars at all offices or agencies outside the United States is
illegal or effectively precluded by exchange controls or other similar
restrictions.
In connection with any sale during the 'restricted period' as defined in
Section 1.163-5(c)(2)(i)(D)(7) of the United States Treasury Regulations
(generally, the first 40 days after the closing date and, with respect to unsold
allotments, until sold), no bearer Debt Security shall be mailed or otherwise
delivered to any location in the United States (as defined under 'Limitations on
Issuance of Bearer Debt Securities' below). A bearer Debt Security in definitive
form (including interests in a permanent global Security) may be delivered only
if the person entitled to receive such bearer Debt Security furnishes written
certification, in the form required by the applicable Indenture, to the effect
that such bearer Debt Security is not owned by or on behalf of a United States
person (as defined under 'Limitations on Issuance of Bearer Debt Securities'
below), or, if a beneficial interest in such bearer Debt Security is owned by or
on behalf of a United States person, that such United States person (i) acquired
and holds the bearer Debt Security through a foreign branch of a United States
financial institution, (ii) is a foreign branch of a United States financial
institution purchasing for its own account
13
<PAGE>
<PAGE>
or resale (and in either case (i) or (ii) such financial institution agrees to
comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal
Revenue Code of 1986, as amended (the 'Code'), and the regulations thereunder)
or (iii) is a financial institution purchasing for resale during the restricted
period only to non-United States persons outside the United States. See
'Limitations on Issuance of Bearer Debt Securities' below and 'Global
Securities -- Bearer Debt Securities'.
Bearer Debt Securities and the coupons related thereto will be transferable
by delivery. Unless otherwise indicated in the Prospectus Supplement, registered
Debt Securities will be transferable at the office of one or more registrars as
specified in the Prospectus Supplement.
The Debt Securities will be unsecured obligations of the Company and will
rank pari passu (equal in right of payment) with all other unsecured and
unsubordinated indebtedness of the Company. At December 31, 1997, the Company's
consolidated indebtedness (all of which is unsecured and unsubordinated) was
approximately $7.1 billion. The Debt Securities will, however, be effectively
subordinate (with respect to the assets of the Company's subsidiaries) to the
indebtedness and other liabilities of such subsidiaries. At December 31, 1997,
such indebtedness and other liabilities aggregated approximately $1.1 billion.
The Company has no current intention or plan to increase the amount of such
indebtedness in the future, other than in connection with the growth of the
Company's business.
Unless otherwise indicated in the Prospectus Supplement, the Debt
Securities will be issued only in denominations that are integral multiples of
$1,000. No service charge will be made for any transfer or exchange of the Debt
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Debt Securities may be issued as original issue discount Debt Securities
(bearing no interest or interest at a rate which at the time of issuance is
below market rates) to be sold at a substantial discount below their stated
principal amount. United States federal income tax consequences and other
special considerations applicable to any such original issue discount Debt
Securities will be described in the Prospectus Supplement relating thereto.
Registered Debt Securities may be exchanged for an equal aggregate
principal amount of registered Debt Securities of the same series, date of
maturity, interest rate and original issue date in such authorized denominations
as may be requested upon surrender of the registered Debt Securities to the
registrar or a paying agent of the Company as specified in the Prospectus
Supplement and upon fulfillment of all other requirements of such agent.
To the extent permitted by the terms of a series of Debt Securities
authorized to be issued in registered form and bearer form, bearer Debt
Securities may be exchanged for an equal aggregate principal amount of
registered or bearer Debt Securities of the same series, date of maturity,
interest rate and original issue date in such authorized denominations as may be
requested upon delivery of the bearer Debt Securities with all unpaid coupons
relating thereto to the registrar or a paying agent of the Company as specified
in the Prospectus Supplement and upon fulfillment of all other requirements of
such agent. Registered Debt Securities will not be exchangeable for bearer Debt
Securities.
COVENANTS
Set forth below is a description of the principal covenants of the Company
contained in the Indenture. The Indenture does not restrict the Company, other
than as set forth below, from engaging in any highly leveraged transaction,
reorganization, restructuring, merger or similar transaction, or from incurring
additional indebtedness or causing its subsidiaries to incur additional
indebtedness, any of which transactions could have a material adverse effect on
the holders of the Debt Securities.
CONSOLIDATION, MERGER, SALE OR CONVEYANCE OF ASSETS OF THE
COMPANY. Pursuant to the Indenture, each of the Company and Newcourt (together
with any successor or assign, the 'Guarantor') covenants that it will not merge
or consolidate with any other corporation or sell or convey all or substantially
all its assets to any person (other than such a sale or conveyance to a
Subsidiary (as defined below) of the Company or the Guarantor or any successor
thereto (such a sale or conveyance being called an 'Asset Drop-Down')), unless
(1) either the Company or the Guarantor is the continuing corporation or the
successor corporation or the person which acquires by sale or conveyance
substantially all the assets of the Company or the Guarantor (if other than the
Company or the Guarantor) is an entity organized
14
<PAGE>
<PAGE>
under the laws of the United States of America or any state thereof or of Canada
or any province or territory thereof and expressly assumes the due and punctual
payment of the principal of, premium, if any, and interest, if any, on all the
Debt Securities or the due and punctual payment of all amounts due under the
Guarantee, as applicable, and the due and punctual performance and observance of
all the covenants and conditions of the Indenture and the Guarantee to be
performed or observed by the Company or the Guarantor, by supplemental indenture
in form satisfactory to the Trustee, executed and delivered to the Trustee by
such corporation, and (2) the Company or the Guarantor or such successor
corporation, as the case may be, is not, immediately after such merger or
consolidation, or such sale or conveyance, in default in the performance of any
such covenant or condition. In the case of any such consolidation, merger, sale
or conveyance, and following such an assumption by the successor corporation,
such successor corporation will succeed to and be substituted for the Company or
the Guarantor, as applicable, with the same effect as if it had been named in
the Indenture or the Guarantee, as applicable, and, in the case of any such sale
or conveyance (other than a conveyance by way of lease), the Company or the
Guarantor, as applicable, will be released and discharged from all obligations
and covenants under the Indenture and the Debt Securities or the Guarantee, as
applicable. In the event of any Asset Drop-Down after the date of the Indenture,
any subsequent sale or conveyance of assets by the Subsidiary of the Company or
the Guarantor, as applicable, to which assets were transferred in such Asset
Drop-Down (the 'Drop-Down Subsidiary') will be deemed to be a sale or conveyance
of assets by the Company or the Guarantor for purposes of the covenant described
in this paragraph. (Sections 5.01 and 5.02)
The term 'all or substantially all', which appears in the foregoing
covenant, is not defined in the Indenture, and it does not have a precise
established definition under applicable law. The application of the covenant may
depend on the facts and circumstances of a particular transaction, including the
qualitative as well as the quantitative aspects of such transaction.
Accordingly, there may be uncertainty in connection with any particular
transaction as to whether a sale or conveyance of all or substantially all of
the assets of the Company or the Guarantor has occurred and thus as to whether
the Company or the Guarantor has complied with this covenant. Because New York
law governs the Indenture, New York law will govern the interpretation of such
term.
LIMITATIONS ON INCURRENCE OF SECURED DEBT. The Company will not, nor will
it permit any Restricted Subsidiary (as defined below) to, incur, issue, assume
or guarantee any indebtedness for money borrowed ('debt') secured by any pledge,
mortgage, security interest or lien ('lien') on any property or assets of the
Company or any Restricted Subsidiary, or on any shares of stock or debt of any
Restricted Subsidiary, without effectively providing that the principal of,
premium, if any, and interest on the Debt Securities of each series (together
with, if the Company so determines, any other debt of the Company or such
Restricted Subsidiary, which is not subordinated to the Debt Securities of each
series) shall be secured equally and ratably with (or prior to) such debt, so
long as any such debt shall be so secured, unless, after giving effect thereto,
the aggregate amount of all such secured debt of the Guarantor would not exceed
10% of the Consolidated Net Tangible Assets (as defined below); provided,
however, that (i) any recourse provided by the Company or any Restricted
Subsidiary in connection with any sale, transfer or other disposition by the
Company or any Restricted Subsidiary of Accounts Receivable (as defined below)
or of any Restricted Subsidiary substantially all the assets of which are
Accounts Receivable which constitutes a 'sale' under generally accepted
accounting principles (as in effect at the time of such sale, transfer or other
disposition) shall not, in any event, constitute debt and (ii) no Asset
Drop-Down shall, in any event, constitute a lien; and provided further that
neither the satisfaction and discharge of any debt pursuant to the Indenture or
pursuant to any similar provision in any other indenture or instrument governing
any debt, nor the defeasance of any debt pursuant to the Indenture or pursuant
to any similar provision in any other indenture or instrument governing any
debt, shall be deemed the incurrence, issue, assumption or guarantee of debt
secured by a lien for purposes of this provision. Notwithstanding the foregoing,
this restriction does not apply to: (1) liens on property of, or on any shares
of stock or debt of, any corporation existing at the time such corporation
becomes a Restricted Subsidiary; (2) liens on property, shares of stock, other
equity interests, or debt existing at the time of acquisition or repossession
thereof by the Company or any Restricted Subsidiary; (3) liens on physical
property (or any Accounts Receivable arising in connection with the lease
thereof), shares of stock, other equity interests, or debt acquired (or, in the
15
<PAGE>
<PAGE>
case of physical property, constructed) after the date of the Indenture by the
Company or any Restricted Subsidiary, which liens are created prior to, at the
time of, or within one year after such acquisition (or, in the case of physical
property, the completion of such construction or commencement of commercial
operation of such property, whichever is later) to secure any debt issued,
incurred, assumed or guaranteed prior to, at the time of, or within one year
after such acquisition (or such completion or commencement, whichever is later)
or to secure any other debt issued, incurred, assumed or guaranteed at any time
thereafter for the purpose of refinancing all or any part of such debt; (4)
liens on Accounts Receivable of the Company or any Restricted Subsidiary arising
from or in connection with transactions entered into by the Company or such
Restricted Subsidiary after the date of the Indenture or on Accounts Receivable
acquired by the Company or such Restricted Subsidiary after such date from
others, which liens are created prior to, at the time of, or within one year
after such Accounts Receivable arise or are acquired or, if later, the
completion of the delivery or installation of the equipment or goods or the
rendering of the services or the advancement or loaning of funds relating
thereto (i) as a result of any guarantee, repurchase or other contingent (direct
or indirect) or recourse obligation of the Company or such Restricted Subsidiary
in connection with the discounting, sale, assignment, transfer or other
disposition of such Accounts Receivable or any interest therein, or (ii) to
secure or provide for the payment of all or any part of the investment of the
Company or such Restricted Subsidiary in any such Accounts Receivable (whether
or not such Accounts Receivable are the Accounts Receivable on which such liens
are created) or the purchase price thereof or to secure any debt (including
without limitation Non-Recourse Debt (as defined below)) issued, incurred,
assumed or guaranteed for the purpose of financing or refinancing all or any
part of such investment or purchase price; (5) liens in favor of the Guarantor
or any of the Guarantor's Subsidiaries; (6) liens in favor of the United States
of America or any State thereof or the District of Columbia, or any agency,
department or other instrumentality thereof, to secure progress, advance or
other payments pursuant to any contract or provision of any statute; (7) liens
securing the performance of letters of credit, bids, tenders, sales contracts,
purchase agreements, leases, surety and performance bonds, and other similar
obligations not incurred in connection with the borrowing of money; (8) liens to
secure Non-Recourse Debt in connection with the Company or any Restricted
Subsidiary engaging in any leveraged or single-investor or other lease
transactions, whether (in the case of liens on or relating to leases or groups
of leases or the particular properties subject thereto) such liens be on the
particular properties subject to any leases involved in any of such transactions
and/or the rental or other payments or rights under such leases or, in the case
of any group of related or unrelated leases, on the properties subject to the
leases comprising such group and/or on the rental or other payments or rights
under such leases, or on any direct or indirect interest therein, and whether
(in any case) (i) such liens be created prior to, at the time of, or at any time
after the entering into of such lease transactions and/or (ii) such leases be in
existence prior to, or be entered into by the Company or such Restricted
Subsidiary at the time of or at any time after, the purchase or other
acquisition by the Company or such Restricted Subsidiary of the properties
subject to such leases; and (9) any extension, renewal or replacement (or
successive extensions, renewals or replacements), in whole or in part, of any of
the foregoing; provided, however, that any such extension, renewal or
replacement shall be limited to all or a part of the property or assets which
secured the lien so extended, renewed or replaced (plus any improvements on such
property). (Section 4.03)
'Accounts Receivable' means (i) any accounts receivable (whether or not
earned by performance), chattel paper, instruments, documents, general
intangibles, trade acceptances, any other rights to receive installment, rental
or other payments for, or relating to amounts due or to become due on account of
equipment or goods sold or leased or to be sold or leased or services rendered
or to be rendered or funds advanced or loaned or to be advanced or loaned and
other rights to payment of any kind, (ii) any proceeds of any of the foregoing
and (iii) any interest in any property or asset of any kind (whether of the
obligor under such Accounts Receivable or any other person) securing the payment
of any item listed in clause (i) hereof. (Section 1.01)
'Consolidated Net Tangible Assets' means, at the date of any determination,
the total assets appearing on the consolidated balance sheet of the Guarantor as
at the end of the most recent fiscal quarter of the Guarantor for which such
balance sheet is available, prepared in accordance with generally accepted
accounting principles, less (a) all current liabilities (obligations whose
liquidation is
16
<PAGE>
<PAGE>
reasonably expected to occur within twelve months), (b) investments in and
advances to Subsidiaries of the Guarantor other than Restricted Subsidiaries or
other entities accounted for on the equity method of accounting and (c)
Intangible Assets. (Section 1.01)
'Intangible Assets' means the value (net of any applicable reserves), as
shown on or reflected in the Guarantor's consolidated balance sheet, of: (i) all
trade names, trademarks, licenses, patents, copyrights and goodwill; (ii)
organization and development costs; (iii) deferred charges (other than prepaid
items such as insurance, taxes, interest, commissions, rents and similar items
and tangible assets being amortized); and (iv) unamortized debt discount and
expense, less unamortized premium. (Section 1.01)
'Non-Recourse Debt' of the Company or any Restricted Subsidiary means any
indebtedness for borrowed money of the Company or such Restricted Subsidiary, as
the case may be, which is secured by any lien on, or payable solely from the
income and proceeds of, any property (including, without limiting the generality
of such term, any intangible assets), shares of stock, other equity interests or
debt of the Company or such Restricted Subsidiary, as the case may be, and which
is not a general obligation of the Company or such Restricted Subsidiary, as the
case may be. (Section 1.01)
'Restricted Subsidiary' means each Subsidiary of the Company organized
under the laws of any State of the United States or the District of Columbia, no
substantial portion of the business of which is carried on outside the United
States; provided that each Drop-Down Subsidiary will be a Restricted Subsidiary.
(Section 1.01)
'Subsidiary' means any corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by any person. For purposes of
such definition, 'voting stock' means stock ordinarily having voting power for
the election of directors, whether at all times or only so long as no senior
class of stock has such voting power by reason of any contingency. (Section
1.01)
EVENTS OF DEFAULT, NOTICE AND WAIVER
The Indenture provides that, if an Event of Default specified therein in
respect of any series of Debt Securities shall have occurred and be continuing,
either the Trustee or the holders of not less than 25% in aggregate principal
amount of the outstanding Debt Securities of such series may declare the
principal of all the securities of such series to be due and payable. (Section
6.01)
Events of Default in respect of the Debt Securities of any series are
defined in the Indenture as being: default for 90 days in payment of any
interest installment when due; unless otherwise specified in the Prospectus
Supplement with respect to the Debt Securities of any series, default in payment
of principal of or premium, if any, on Debt Securities of such series when due;
default for 90 days after written notice to the Company by the Trustee or by the
holders of not less than 25% in aggregate principal amount of the outstanding
Debt Securities of such series in the performance of any other agreement in the
Debt Securities or Indenture in respect of such series; and certain events of
bankruptcy, insolvency and reorganization of the Company or the Guarantor.
(Section 6.01)
The Indenture provides that the Company will, within 120 days after the
close of each fiscal year, commencing with the first fiscal year following the
issuance of any series of Debt Securities, file with the Trustee a certificate
stating whether or not the Company has complied with all conditions and
covenants on its part contained in the Indenture and, if not, specifying each
default (without regard to any grace period or requirement of notice under the
Indenture) and the nature thereof. (Section 4.04)
The Indenture provides that the Trustee will, within 90 days after the
occurrence of a default in respect of any series of Debt Securities, if such
default is known to the Trustee, give to the holders of such series notice of
all defaults known to it; provided that, except in the case of default in
payment on any of the Debt Securities of such series, the Trustee will 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 such series. The
term 'default' for the purpose of this provision means any event which is, or
after notice or passage of time or both would be, an Event of Default. (Section
7.05)
The Indenture contains provisions entitling the Trustee, subject to the
duty of the Trustee during an Event of Default in respect of any series of Debt
Securities to act with the required standard of care, to
17
<PAGE>
<PAGE>
refuse to perform any duty or exercise any right or power unless it receives
indemnity satisfactory to it. (Section 7.01)
The Indenture provides that the holders of a majority in aggregate
principal amount of the outstanding securities of any series affected (with each
series voting as a separate class) may direct the time, method and place of
conducting proceedings for remedies available to the Trustee, or exercising any
trust or power conferred on the Trustee, in respect of such series. (Section
6.06)
In certain cases, the holders of a majority in principal amount of the
outstanding Debt Securities of a series may on behalf of the holders of all Debt
Securities of such series waive any past default or Event of Default, or
compliance with certain provisions of the Indenture, except, among other things,
a default in payment of the principal of, premium, if any, or interest on, any
of the Debt Securities of such series. (Sections 6.01 and 6.06)
DISCHARGE AND DEFEASANCE
Under terms satisfactory to the Trustee, the Company may discharge certain
obligations to holders of any series of Debt Securities issued under the
Indenture which have not already been delivered to the Trustee for cancellation
and which have either become due and payable or are by their terms due and
payable within one year (or scheduled for redemption within one year) by
irrevocably depositing with the Trustee as trust funds an amount in cash
sufficient to pay at maturity (or upon redemption) the principal of, premium, if
any, and interest on such Debt Securities. (Section 8.01)
In the case of any series of Debt Securities with respect to which the
exact amounts (including the currency of payment) of principal of and interest
due on such series can be determined at the time of making the deposit referred
to below (which include Debt Securities with a floating or variable rate of
interest that cannot exceed a specified or determinable maximum rate), the
Company at its option may also (i) discharge any and all of its obligations to
holders of such series of Debt Securities ('defeasance') on the 91st day after
the conditions set forth below have been satisfied, but may not thereby avoid
its duty to register the transfer or exchange of such series of Debt Securities,
to replace any temporary, mutilated, destroyed, lost or stolen Debt Securities
of such series or to maintain an office or agency in respect of such series of
Debt Securities, or (ii) be released with respect to such series of Debt
Securities from the obligations imposed by the covenants described under
'Covenants' above ('covenant defeasance'). Defeasance and covenant defeasance
may be effected only if, among other things, (i) the Company irrevocably
deposits with the Trustee as trust funds (a) money in an amount, (b) in the case
of Debt Securities payable only in U.S. Dollars, U.S. Governmental Obligations
(as defined in the Indenture) which through the payment of interest and
principal in respect thereof will provide money in an amount, or (c) a
combination of (a) and (b), certified by a nationally recognized firm of
independent public accountants to be sufficient to pay each installment of
principal of and interest on all outstanding Debt Securities of such series on
the dates such installments of principal and interest are due; and (ii) the
Company delivers to the Trustee an opinion of independent counsel to the effect
that the holders of such series of Debt Securities will not recognize income,
gain or loss for United States federal income tax purposes as a result of such
defeasance or covenant defeasance and will be subject to United States federal
income tax on the same amount and in the same manner and at the same time as
would have been the case if such defeasance or covenant defeasance had not
occurred (which opinion may include or be based on a ruling to that effect
received from or published by the Internal Revenue Service). (Section 8.02)
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of a majority in principal amount of the
outstanding Debt Securities of each series affected thereby (with such series
voting as a separate class), to execute supplemental indentures adding any
provisions to or changing or eliminating any of the provisions of the Indenture
or modifying the rights of the holders of Debt Securities of each such series,
except that no such supplemental indenture may, without the consent of each
holder affected, among other things, change the maturity of any Debt Securities,
or change the principal amount thereof, or any premium thereon, or change the
rate or
18
<PAGE>
<PAGE>
change the time of payment of interest thereon, make any Debt Security payable
in money other than that stated in the Debt Security, or reduce the aforesaid
percentage of outstanding Debt Securities required to approve any such
supplemental indenture. (Section 9.02)
CONCERNING THE TRUSTEE
The Company may from time to time maintain lines of credit, and have other
customary banking relationships, with The Chase Manhattan Bank, the Trustee
under the Indenture. In addition, The Chase Manhattan Bank is the trustee under
the Indentures dated as of April 9, 1990, and as of June 1, 1992, each as
amended, among the Company, AT&T, AT&T Capital Holdings, Inc., a wholly-owned
subsidiary of AT&T, and The Chase Manhattan Bank, pursuant to which, the Company
assumed and AT&T guaranteed certain medium-term notes and long-term debt issued
by AT&T Capital Holdings, Inc. As of December 31, 1997 the aggregate outstanding
principal amount of such medium-term and long-term notes was approximately
$106.8 million. Furthermore, The Chase Manhattan Bank is the trustee under the
Indenture dated as of July 1, 1993 between the Company and The Chase Manhattan
Bank pursuant to which the Company has issued $4.8 billion aggregate principal
amount of medium-term notes.
LIMITATIONS ON ISSUANCE OF BEARER DEBT SECURITIES
In compliance with United States federal tax laws and regulations, bearer
Debt Securities may not be offered or sold during the restricted period (as
defined under 'General' above), or delivered in definitive form in connection
with a sale during the restricted period, in the United States or to United
States persons other than to (a) the United States office of (i) an
international organization (as defined in Section 7701(a)(18) of the Code and
the regulations thereunder), (ii) a foreign central bank (as defined in Section
895 of the Code and the regulations thereunder), or (iii) any underwriter,
agent, or dealer offering or selling bearer Debt Securities during the
restricted period (a 'Distributor') pursuant to a written contract with the
issuer or with another Distributor, that purchases bearer Debt Securities for
resale or for its own account and agrees to comply with the requirements of
Section 165(j)(3)(A), (B), or (C) of the Code, or (b) the foreign branch of a
United States financial institution purchasing for its own account or for
resale, which institution agrees to comply with the requirements of Section 165
(j)(3)(A), (B), or (C) of the Code. In addition, a sale of a bearer Debt
Security may be made during the restricted period to a United States person who
acquired and holds the bearer Debt Security on the Certification Date through a
foreign branch of a United States financial institution that agrees to comply
with the requirements of Section 165(j)(3)(A), (B) or (C) of the Code. Any
Distributor (including an affiliate of a Distributor) offering or selling bearer
Debt Securities during the restricted period must agree not to offer or sell
bearer Debt Securities in the United States or to United States persons (except
as discussed above) and must employ procedures reasonably designed to ensure
that its employees or agents directly engaged in selling bearer Debt Securities
are aware of these restrictions.
Bearer Debt Securities and their interest coupons will bear the following
legend: 'Any United States person who holds this obligation will be subject to
limitations under the United States income tax laws, including the limitations
provided in Sections 165(j) and 1287(a) of the Internal Revenue Code'.
Purchasers of bearer Debt Securities may be affected by certain limitations
under United States tax laws. See the applicable Prospectus Supplement for a
summary of material U.S. federal income tax consequences to United States
persons investing in bearer Debt Securities.
As used herein, 'United States person' means a citizen or resident of the
United States, a corporation, partnership or other entity created or organized
in or under the laws of the United States and an estate or trust the income of
which is subject to United States federal income taxation regardless of its
source, and 'United States' means the United States of America (including the
States and the District of Columbia) and its possessions including Puerto Rico,
the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern
Mariana Islands.
19
<PAGE>
<PAGE>
DESCRIPTION OF THE WARRANTS
The Debt Warrants, Currency Warrants, Index Warrants and Interest Rate
Warrants are to be issued under separate warrant agreements (each a 'Warrant
Agreement' and respectively a 'Debt Warrant Agreement', a 'Currency Warrant
Agreement', an 'Index Warrant Agreement' and an 'Interest Rate Warrant
Agreement') to be entered into between the Company and one or more banks or
trust companies, as warrant agent (each a 'Warrant Agent' and respectively a
'Debt Warrant Agent', a 'Currency Warrant Agent', an 'Index Warrant Agent' and
an 'Interest Rate Warrant Agent'), all as shall be set forth in the Prospectus
Supplement relating to the Warrants being offered thereby. A form of each type
of Warrant Agreement, including a form of warrant certificate representing each
type of Warrant (each a 'Warrant Certificate' and respectively a 'Debt Warrant
Certificate', a 'Currency Warrant Certificate', an 'Index Warrant Certificate'
and an 'Interest Rate Warrant Certificate'), reflecting the alternative
provisions that may be included in the Warrant Agreements to be entered into
with respect to particular offerings of Warrants, are herein incorporated by
reference to exhibits to the Registration Statement of which this Prospectus is
a part. The descriptions contained herein of the Warrant Agreements and the
Warrant Certificates and summaries of certain provisions of the Warrant
Agreements and the Warrant Certificates do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all the
provisions of the applicable Warrant Agreements and the Warrant Certificates,
including the definitions therein of certain terms not otherwise defined in this
Prospectus. Wherever particular sections of, or terms defined in, the Warrant
Agreements are referred to, such sections or defined terms are incorporated
herein by reference.
The particular terms of each issue of Warrants, as well as any
modifications or additions to the general terms of the applicable Warrant
Agreement or Warrant Certificate, will be described in the Prospectus Supplement
relating to such Warrants. Accordingly, for a description of the terms of a
particular issue of Warrants, reference must be made to the Prospectus
Supplement relating thereto and to the descriptions set forth below.
DEBT WARRANTS
The Company may issue, together with Debt Securities, Currency Warrants,
Index Warrants or Interest Rate Warrants, or separately, Debt Warrants for the
purchase of Debt Securities. If any of the Debt Warrants are sold for foreign
currencies or foreign currency units or if any series of Debt Warrants is
exercisable in foreign currencies or foreign currency units, the restrictions,
elections, tax consequences, specific terms and other information with respect
to such issue of Debt Warrants and such currencies or currency units will be set
forth in the Prospectus Supplement relating thereto.
If so specified in the Prospectus Supplement, the Debt Warrants may, in
certain circumstances, be cancelled by the Company prior to their expiration
date and the holders thereof will be entitled to receive only the applicable
Cancellation Amount. The Cancellation Amount may be either a fixed amount or an
amount that varies during the term of the Debt Warrants in accordance with a
schedule or formula.
GENERAL
The Prospectus Supplement will describe the terms of any Debt Warrants
offered thereby, the Debt Warrant Agreement relating to such Debt Warrants and
the Debt Warrant Certificates representing such Debt Warrants, including the
following: (1) the title of such Debt Warrants; (2) the aggregate amount of such
Debt Warrants; (3) the initial offering price of such Debt Warrants; (4) the
exercise price; (5) the currency or currency unit in which the initial offering
price and/or the exercise price of such Debt Warrants is payable; (6) whether
the Debt Warrants are to be issuable in registered or bearer form or both, and
if in bearer form whether such Debt Warrants may be exchanged for Debt Warrants
in registered form and the circumstances and places for such exchange, if
permitted; (7) if applicable, the title and terms of related Debt Securities
with which such Debt Warrants are issued, the number of such Debt Warrants
issued with each such Debt Security and the date, if any, on and after which
such Debt Warrants and such Debt Securities will be separately transferable; (8)
the title, aggregate principal
20
<PAGE>
<PAGE>
amount and terms of the Debt Securities purchasable upon exercise of all such
Debt Warrants; (9) the principal amount of Debt Securities purchasable upon
exercise of each Debt Warrant and the price at which such principal amount of
Debt Securities may be purchased upon such exercise; (10) the date on which the
right to exercise such Debt Warrants shall commence and the date (the 'Debt
Warrant Expiration Date') on which such right shall expire; (11) any minimum
number of Debt Warrants which must be exercised at any one time, other than upon
automatic exercise; (12) the maximum number, if any, of such Debt Warrants that
may, subject to election by the Company, be exercised by all owners (or by any
person or entity) on any day; (13) any provisions for the automatic exercise of
such Debt Warrants; (14) whether and under which circumstances such Debt
Warrants may be cancelled by the Company prior to expiration; (15) any other
procedures and conditions relating to the exercise of such Debt Warrants; (16)
the identity of the Debt Warrant Agent; (17) any national securities exchange on
which such Debt Warrants will be listed; (18) provisions, if any, for issuing
such Debt Warrants in certificated form; (19) if applicable, a discussion of
certain United States federal income tax, accounting or other special
considerations applicable thereto; and (20) any other terms of the Debt
Warrants.
Debt Warrant Certificates will be exchangeable for new Debt Warrant
Certificates of different denominations and, if in registered form, may be
presented for registration of transfer and Debt Warrants may be exercised at the
corporate trust office of the Debt Warrant Agent or any other office indicated
in the Prospectus Supplement relating thereto (Section 3.1). Prior to the
exercise of Debt Warrants, holders of Debt Warrants will not be entitled to
payments of principal of (or premium, if any) or interest, if any, on the Debt
Securities purchasable upon such exercise, or to enforce any of the covenants in
the Indenture (Section 4.1).
EXERCISE OF DEBT WARRANTS
Unless otherwise provided in the Prospectus Supplement, each Debt Warrant
will entitle the holder thereof to purchase for cash such principal amount of
Debt Securities at such exercise price as shall in each case be set forth in, or
be determinable as set forth in, the Prospectus Supplement relating to the Debt
Warrants offered thereby (Section 2.1). Debt Warrants may be exercised at any
time up to the close of business on the Debt Warrant Expiration Date specified
in the Prospectus Supplement relating to the Debt Warrants offered thereby.
After the close of business on the Debt Warrant Expiration Date (or such later
date to which such Debt Warrant Expiration Date may be extended by the Company),
unexercised Debt Warrants will become void (Section 2.2).
Debt Warrants may be exercised as set forth in the Prospectus Supplement
relating to the Debt Warrants offered thereby. Upon receipt of payment and the
Debt Warrant Certificate properly completed and duly executed at the corporate
trust office of the Debt Warrant Agent or any other office indicated in the
Prospectus Supplement, the Company will, as soon as practicable, forward to the
person entitled thereto the Debt Securities purchasable upon such exercise. If
fewer than all the Debt Warrants represented by such Debt Warrant Certificate
are exercised, a new Debt Warrant Certificate will be issued for the remaining
amount of Debt Warrants (Section 2.3).
OTHER INFORMATION
Other important information concerning Debt Warrants is set forth below
under 'Certain Items Applicable to All Warrants -- Modifications', ' -- Merger,
Consolidation, Sale or Other Disposition' and ' -- Enforceability of Rights by
Beneficial Owner; Governing Law'.
CURRENCY WARRANTS
The Company may issue, together with Debt Securities, Debt Warrants, Index
Warrants or Interest Rate Warrants, or separately, Currency Warrants (a) in the
form of Currency Put Warrants, entitling the owners thereof to receive from the
Company the Currency Warrant Cash Settlement Value (as shall be defined in the
Prospectus Supplement) of the right to sell a specified amount of one currency
(whether U.S. dollars or a foreign currency or foreign currency unit) (a 'Base
Currency') for a specified amount of a different currency (whether U.S. dollars
or a foreign currency or foreign currency unit) (a 'Reference Currency'), (b) in
the form of Currency Call Warrants, entitling the owners thereof to
21
<PAGE>
<PAGE>
receive from the Company the Currency Warrant Cash Settlement Value of the right
to purchase a specified amount of a Base Currency for a specified amount of a
Reference Currency, or (c) in such other form as shall be specified in the
related Prospectus Supplement. The Prospectus Supplement for an issue of
Currency Warrants will set forth the formula pursuant to which the Currency
Warrant Cash Settlement Value will be determined, including any multipliers, if
applicable.
The Prospectus Supplement will describe the terms of any Currency Warrants
offered thereby, the Currency Warrant Agreement relating to such Currency
Warrants and the Currency Warrant Certificates representing such Currency
Warrants, including the following: (1) the title of such Currency Warrants; (2)
the aggregate amount of such Currency Warrants; (3) the initial offering price
of such Currency Warrants; (4) the exercise price, if any; (5) the currency or
currency unit in which the initial offering price, the exercise price, if any,
and the Currency Warrant Cash Settlement Value of such Currency Warrants is
payable; (6) the Base Currency and the Reference Currency for such Currency
Warrants; (7) whether such Currency Warrants shall be Currency Put Warrants,
Currency Call Warrants or otherwise; (8) the formula for determining the
Currency Warrant Cash Settlement Value, if applicable, of each Currency Warrant;
(9) whether and under what circumstances a minimum and/or maximum expiration
value is applicable upon the expiration or exercise of such Currency Warrants;
(10) the effect or effects, if any, of the occurrence of a Market Disruption
Event or Force Majeure Event (each as defined in the Currency Warrant
Agreement); (11) the date on which the right to exercise such Currency Warrants
shall commence and the date (the 'Currency Warrant Expiration Date') on which
such right shall expire; (12) any minimum number (or maximum number) of Currency
Warrants which must be exercised at any one time, other than upon automatic
exercise; (13) the maximum number, if any, of such Currency Warrants that may,
subject to election by the Company, be exercised by all owners (or by any person
or entity) on any day; (14) any provisions for the automatic exercise of such
Currency Warrants other than at expiration; (15) whether and under what
circumstances such Currency Warrants may be cancelled by the Company prior to
their expiration date; (16) any provisions permitting a Holder to condition any
notice of exercise on the absence of certain specified changes in the Spot Rate
(as defined in the Currency Warrant Agreement); (17) any other procedures and
conditions relating to the exercise of such Currency Warrants; (18) the identity
of the Currency Warrant Agent; (19) any national securities exchange on which
such Currency Warrants will be listed; (20) provisions, if any, for issuing such
Currency Warrants in certificated form; (21) if such Currency Warrants are not
issued in book-entry form, the place or places at which payments in respect of
such Currency Warrants are to be made by the Company; (22) if applicable, a
discussion of certain United States federal income tax, accounting or other
special considerations applicable thereto; and (23) any other terms of such
Currency Warrants.
Other important information concerning Currency Warrants is set forth below
under 'Certain Items Applicable to All Warrants -- Modifications', ' -- Merger,
Consolidation, Sale or Other Disposition' and ' -- Enforceability of Rights by
Beneficial Owner; Governing Law' and 'Certain Items Applicable to Currency
Warrants, Index Warrants and Interest Rate Warrants -- Exercise of Warrants',
' -- Market Disruption and Force Majeure Events', ' -- Settlement Currency' and
' -- Listing'.
INDEX WARRANTS
The Company may issue, together with Debt Securities, Debt Warrants,
Currency Warrants or Interest Rate Warrants, or separately, Index Warrants (a)
in the form of Index Put Warrants, entitling the owners thereof to receive from
the Company the Index Cash Settlement Value (as shall be defined in the
Prospectus Supplement) in cash, which amount will be determined by reference to
the amount, if any, by which the Fixed Amount (as shall be defined in the
Prospectus Supplement) at the time of exercise exceeds the Index Value (as shall
be defined in the Prospectus Supplement), (b) in the form of Index Call
Warrants, entitling the owners thereof to receive from the Company the Index
Cash Settlement Value in cash, which amount will be determined by reference to
the amount, if any, by which the Index Value at the time of exercise exceeds the
Fixed Amount, (c) in the form of Index Spread Warrants, entitling the owners
thereof to receive from the Company the Index Cash Settlement Value in cash,
which amount will be determined by reference to the amount, if any, by which the
Reference Index Value (as shall be defined in the Prospectus Supplement) at the
time of exercise exceeds the Base
22
<PAGE>
<PAGE>
Index Value (as shall be defined in the Prospectus Supplement) or (d) in such
other form as shall be specified in the related Prospectus Supplement. The
Prospectus Supplement for an issue of Index Warrants will set forth the formula
pursuant to which the Index Cash Settlement Value will be determined, including
any multipliers, if applicable.
The Prospectus Supplement will describe the terms of Index Warrants offered
thereby, the Index Warrant Agreement relating to such Index Warrants and the
Index Warrant Certificate representing such Index Warrants, including the
following: (1) the title of such Index Warrants; (2) the aggregate amount of
such Index Warrants; (3) the initial offering price of such Index Warrants; (4)
the exercise price, if any; (5) the currency or currency unit in which the
initial offering price, the exercise price, if any, and the Index Cash
Settlement Value of the Index Warrants is payable; (6) the Index or Indices for
such Index Warrants, which may be based on one or more U.S. or foreign stocks,
bonds, or other securities, one or more U.S. or foreign interest rates, one or
more currencies or currency units, or any combination of the foregoing, and may
be a preexisting U.S. or foreign index compiled and published by a third party
or an index based on one or more securities, interest rates or currencies
selected by the Company solely in connection with the issuance of such Index
Warrants, and certain information regarding such Index or Indices and the
underlying securities, interest rates or currencies or currency units
(including, to the extent possible, the policies of the publisher of the Index
with respect to additions, deletions and substitutions of such securities,
interests rates or currencies or currency units); (7) whether such Index
Warrants shall be Index Put Warrants, Index Call Warrants, Index Spread Warrants
or otherwise; (8) the method of providing for a substitute Index or Indices or
otherwise determining the amount payable in connection with the exercise of such
Index Warrants if any Index changes or ceases to be made available by its
publisher, which determination will be made by an independent expert; (9) the
formula for determining the Index Cash Settlement Value, if applicable, of each
Index Warrant; (10) whether and under what circumstances a minimum and/or
maximum expiration value is applicable upon the expiration or exercise of such
Index Warrants; (11) the effect or effects, if any, of the occurrence of a
Market Disruption Event or Force Majeure event (each as defined in the Index
Warrant Agreement); (12) the date on which the right to exercise such Index
Warrants shall commence and the date (the 'Index Warrant Expiration Date') on
which such right shall expire; (13) any minimum number of Index Warrants which
must be exercised at any one time, other than upon automatic exercise; (14) the
maximum number if any, of such Index Warrants that may, subject to election by
the Company, be exercised by all owners (or by any person or entity) on any day;
(15) any provisions for the automatic exercise of such Index Warrants other than
at expiration; (16) whether and under what circumstances such Index Warrants may
be cancelled by the Company prior to their expiration date; (17) any provisions
permitting a Holder to condition any notice of exercise on the absence of
certain specified changes in the Index Value, the Base Index Value or the
Referenced Index Value after the date of exercise; (18) any other procedures and
conditions relating to the exercise of such Index Warrants; (19) the identity of
the Index Warrant Agent; (20) any national securities exchange on which such
Index Warrants will be listed; (21) provisions, if any, for issuing such Index
Warrants in certificated form; (22) if such Index Warrants are not issued in
book-entry form, the place or places at which payments in respect of such Index
Warrants are to be made by the Company; (23) if applicable, a discussion of
certain United States federal income tax, accounting or other special
considerations applicable thereto; and (24) any other terms of such Index
Warrants.
Other important information concerning Index Warrants is set forth below
under 'Certain Items Applicable to All Warrants -- Modifications', ' -- Merger,
Consolidation, Sale or Other Disposition' and ' -- Enforceability of Rights by
Beneficial Owner; Governing Law' and 'Certain Items Applicable to Currency
Warrants, Index Warrants and Interest Rate Warrants -- Exercise of Warrants',
' -- Market Disruption and Force Majeure Events', ' -- Settlement Currency' and
' -- Listing'.
INTEREST RATE WARRANTS
The Company may issue, together with Debt Securities, Debt Warrants,
Currency Warrants or Index Warrants, or separately, Interest Rate Warrants (a)
in the form of Interest Rate Put Warrants, entitling the owners thereof to
receive from the Company the Interest Rate Cash Settlement Value (as shall be
defined in the Prospectus Supplement) in cash, which amount will be determined
by reference
23
<PAGE>
<PAGE>
to the amount, if any, by which the Spot Amount (as shall be defined in the
Prospectus Supplement) is less than the Strike Amount (as shall be defined in
the Prospectus Supplement) on the applicable valuation date following exercise,
(b) in the form of Interest Rate Call Warrants, entitling the owners thereof to
receive from the Company the Interest Rate Cash Settlement Value in cash, which
amount will be determined by reference to the amount, if any, by which the Spot
Amount on the applicable valuation date following exercise exceeds the Strike
Amount or (c) in such other form as shall be specified in the related Prospectus
Supplement. The Prospectus Supplement for an issue of Interest Rate Warrants
will set forth the formula pursuant to which the Interest Rate Cash Settlement
Value will be determined, including any multipliers, if applicable. The Strike
Amount may either be a fixed yield, price or rate of a Sovereign Debt
Instrument, a Rate or any combination of Sovereign Debt Instruments and/or Rates
or a yield, price or rate that varies during the term of the Interest Rate
Warrants in accordance with a schedule or formula. The Sovereign Debt Instrument
will be one or more instruments specified in the applicable Prospectus
Supplement issued either by the United States government or by a foreign
government. The Rate will be one or more interest rates or interest rate swap
rates established from time to time by one or more financial institutions
specified in the applicable Prospectus Supplement.
The Prospectus Supplement will describe the terms of Interest Rate Warrants
offered thereby, the Interest Rate Warrant Agreement relating to such Interest
Rate Warrants and the Interest Rate Warrant Certificate representing such
Interest Rate Warrants, including the following: (1) the title of such Interest
Rate Warrants; (2) the aggregate amount of such Interest Rate Warrants; (3) the
initial offering price of such Interest Rate Warrants; (4) the exercise price,
if any; (5) the currency or currency unit in which the initial offering price,
the exercise price, if any, and the Interest Rate Cash Settlement Value of such
Interest Rate Warrants is payable; (6) the Sovereign Debt Instrument (which may
be one or more debt instruments issued either by the United States government or
by a foreign government), the Rate (which may be one or more interest rates or
interest rate swap rates established from time to time by one or more specified
financial institutions) or the other yield, price or rate utilized for such
Interest Rate Warrants, and certain information regarding such Sovereign Debt
Instrument, Rate or such other yield, price or rate; (7) whether such Interest
Rate Warrants shall be Interest Rate Put Warrants, Interest Rate Call Warrants
or otherwise; (8) the Strike Amount, the method of determining the Spot Amount
and the method of expressing movements in the yield or closing price of the
Sovereign Debt Instrument or in the level of the Rate or such other yield, price
or rate as a cash amount in the currency in which the Interest Rate Cash
Settlement Value of such Warrants is payable; (9) the formula for determining
the Interest Rate Cash Settlement Value, if applicable, of each Interest Rate
Warrant; (10) whether and under what circumstances a minimum and/or maximum
expiration value is applicable upon the expiration or exercise of such Interest
Rate Warrants; (11) the effect or effects, if any, of the occurrence of a Market
Disruption Event or Force Majeure Event (each as defined in the Interest Rate
Warrant Agreement); (12) the date on which the right to exercise such Interest
Rate Warrants shall commence and the date (the 'Interest Rate Warrant Expiration
Date') on which such right shall expire; (13) any minimum number of Interest
Rate Warrants which must be exercised at any one time, other than upon automatic
exercise; (14) the maximum number, if any, of such Interest Rate Warrants that
may, subject to elections by the Company, be exercised by all owners (or by any
person or entity) on any day; (15) any provisions for the automatic exercise of
such Interest Rate Warrants other than at expiration; (16) whether and under
what circumstances such Interest Rate Warrants may be cancelled by the Company
prior to their expiration date; (17) any provisions permitting a Holder to
condition any notice of exercise on the absence of certain specified changes in
the Spot Amount after the date of exercise; (18) any other procedures and
conditions relating to the exercise of such Interest Rate Warrants; (19) the
identity of the Interest Rate Warrant Agent; (20) any national securities
exchange on which such Interest Rate Warrants will be listed; (21) provisions,
if any, for issuing such Interest Rate Warrants in certificated form; (22) if
such Interest Rate Warrants are not issued in book-entry form, the place or
places at which payments in respect of such Interest Rate Warrants are to be
made by the Company; (23) if applicable, a discussion of certain United States
federal income tax, accounting or other special considerations applicable
thereto; and; (24) any other terms of such Interest Rate Warrants.
24
<PAGE>
<PAGE>
Other important information concerning Interest Rate Warrants is set forth
below under 'Certain Items Applicable to All Warrants -- Modifications',
' -- Merger, Consolidation, Sale or Other Disposition' and ' -- Enforceability
of Rights by Beneficial Owner; Governing Law' and 'Certain Items Applicable to
Currency Warrants, Index Warrants and Interest Rate Warrants -- Exercise of
Warrants', ' -- Market Disruption and Force Majeure Events', ' -- Settlement
Currency' and ' -- Listing'.
CERTAIN ITEMS APPLICABLE TO ALL WARRANTS
MODIFICATIONS. Each Warrant Agreement and the terms of each issue of
Warrants may be amended by the Company and the applicable Warrant Agent, without
the consent of the beneficial owners or the registered holders, for the purpose
of curing any ambiguity, or of curing, correcting or supplementing any defective
or inconsistent provision contained therein, or in any other manner which the
Company may deem necessary or desirable and which will not materially adversely
affect the interests of the beneficial owners of the then outstanding
unexercised Warrants (Section 6.1).
The Company and the applicable Warrant Agent may also modify or amend the
applicable Warrant Agreement and the terms of the related Warrants, with the
consent of the beneficial owners of not less than a majority in number of the
then outstanding unexercised Warrants affected, provided that no such
modification or amendment that reduces the amount receivable upon exercise,
shortens the period of time during which the Warrants may be exercised,
increases the minimum or decreases the maximum number of Warrants that may be
exercised by or on behalf of any one beneficial owner at any one time, changes
the formula for determining the Cash Settlement Value or otherwise materially
and adversely affects the exercise rights of the owners or reduces the number of
outstanding Warrants the consent of whose beneficial owners is required for
modification or amendment of the applicable Warrant Agreement or the terms of
the Warrants may be made without the consent of each beneficial owner affected
thereby (Section 6.1).
MERGER, CONSOLIDATION, SALE OR OTHER DISPOSITION. The Company will
covenant in the Warrant Agreements that it will not merge or consolidate with
any other corporation or sell or convey all or substantially all its assets to
any person (other than an Asset Drop-Down (as defined under 'Description of the
Debt Securities -- Covenants -- Consolidation, Merger, Sale or Conveyance of
Assets of the Company')), unless (i) either the Company is the continuing
corporation or the successor corporation or the person which acquires by sale or
conveyance substantially all the assets of the Company (if other than the
Company) is a corporation organized under the laws of the United States of
America or any state thereof and expressly assumes the due and punctual
performance and observance of all the covenants and conditions of each Warrant
Agreement to be performed or observed by the Company, by amendment to the
Warrant Agreements satisfactory to the respective Warrant Agents, executed and
delivered to the Warrant Agents by such corporation, and (ii) the Company or
such successor corporation, as the case may be, is not, immediately after such
merger or consolidation, or such sale or conveyance, in default in the
performance of any such covenant or condition. In the case of any such
consolidation, merger, sale or conveyance, and following such an assumption by
the successor corporation, such successor corporation will succeed to and be
substituted for the Company, with the same effect as if it had been named in the
Warrant Agreements, and, in the case of any such sale or conveyance, the Company
will be released and discharged from all obligations and covenants under the
Warrant Agreements and the Warrants. In the event of any Asset Drop-Down after
the date of any Warrant Agreement, any subsequent sale or conveyance of assets
by the Drop-Down Subsidiary will be deemed to be a sale or conveyance of assets
by the Company for purposes of the covenant described in this paragraph. The
term 'substantially all', which appears in the foregoing covenant, is not
defined in the Warrant Agreements and a precise explanation of such term is not
feasible. The Company will interpret such term in any particular situation in
light of all then existing facts and circumstances.
ENFORCEABILITY OF RIGHTS BY BENEFICIAL OWNER; GOVERNING LAW. Each Warrant
Agent will act solely as an agent of the Company in connection with the issuance
and exercise of the applicable Warrants and will not assume any obligation or
relationship of agency or trust for or with any owner of a beneficial interest
in any Warrant or with the registered holder thereof (Sections 5.2). A Warrant
Agent shall have no duty or responsibility in the case of any default by the
Company in the performance of its covenants or agreements under the applicable
Warrant Agreement or Warrant Certificate including, without limitation, any duty
or responsibility to initiate any proceedings at law or
25
<PAGE>
<PAGE>
otherwise or except as provided in the applicable Debt Warrant Agreement, to
make any demand upon the Company (Section 5.2). Beneficial owners may, without
the consent of the applicable Warrant Agent, enforce by appropriate legal
action, on their own behalf, their right to exercise their Warrants, to receive
Debt Securities, in the case of Debt Warrants, and to receive payment, if any,
for their Warrants, in the case of Currency Warrants, Index Warrants or Interest
Rate Warrants (Section 3.3 of the Debt Warrant Agreement and Section 3.1 of each
other Warrant Agreement).
Except as may otherwise be provided in the Prospectus Supplement relating
thereto, each issue of Warrants and the applicable Warrant Agreement will be
governed by and construed in accordance with the law of the State of New York
(Section 6.7 of the Debt Warrant Agreement and Section 6.5 of each other Warrant
Agreement).
CERTAIN ITEMS APPLICABLE TO CURRENCY WARRANTS, INDEX WARRANTS AND INTEREST RATE
WARRANTS
EXERCISE OF WARRANTS. Except as may otherwise be provided in the
applicable Prospectus Supplement relating thereto, (a) each Currency Warrant,
Index Warrant and Interest Rate Warrant will entitle the owner, upon payment of
the exercise price, if any, to the applicable Cash Settlement Value of such
Warrant, on the applicable Exercise Date, in each case as such terms will
further be defined in the applicable Prospectus Supplement relating thereto
(Sections 1.1 and 2.2) and (b) if not exercised prior to 1:30 p.m., New York
City time, on the Business Day preceding the applicable Warrant Expiration Date,
the Warrants will be deemed automatically exercised on such Warrant Expiration
Date (Section 2.3). As described below, Currency Warrants, Index Warrants and
Interest Rate Warrants may also be deemed to be automatically exercised if they
are delisted. Procedures for exercise of the Currency Warrants, Index Warrants
and Interest Rate Warrants will be set forth in the applicable Prospectus
Supplement.
MARKET DISRUPTION AND FORCE MAJEURE EVENTS. If so specified in the
applicable Prospectus Supplement, following the occurrence of a Market
Disruption Event or Force Majeure Event (as each term shall be defined therein),
the Cash Settlement Value of a Currency Warrant, an Index Warrant or an Interest
Rate Warrant may be determined on a different basis than under normal exercise
of a Warrant or the determination of the applicable Cash Settlement Value. In
addition, if so specified in the applicable Prospectus Supplement, Currency
Warrants, Index Warrants and Interest Rate Warrants may, in certain
circumstances, be cancelled by the Company prior to the expiration date and the
holders thereof will be entitled to receive only the applicable Cancellation
Amount. The Cancellation Amount may be either a fixed amount or an amount that
varies during the term of the Warrants in accordance with a schedule or formula.
SETTLEMENT CURRENCY. Currency Warrants, Index Warrants and Interest Rate
Warrants will be settled only in U.S. dollars (unless settlement in a foreign
currency is specified in the applicable Prospectus Supplement and is permissible
under securities exchange rules approved by the Commission) and accordingly will
not require or entitle an owner to sell, deliver, purchase, or take delivery of
the currency, security or other instrument underlying such Warrants. If any of
the Currency Warrants, Index Warrants or Interest Rate Warrants are sold for, or
if the exercise price, if any, is payable in, foreign currencies or foreign
currency units or if the amount payable by the Company in respect of any series
of Currency Warrants, Index Warrants or Interest Rate Warrants is payable in
foreign currencies or foreign currency units, the restrictions, elections, tax
consequences, specific terms and other information with respect to such issue of
Warrants and such currencies or currency units will be set forth in the
Prospectus Supplement relating thereto.
LISTING. Unless otherwise provided in the Prospectus Supplement, each
issue of Currency Warrants, Index Warrants and Interest Warrants will be listed
on a national securities exchange, as specified in the applicable Prospectus
Supplement, subject only to official notice of issuance, as a pre-condition to
the sale of any such Warrants. It may be necessary in certain circumstances for
such national securities exchange to obtain the approval of the Commission in
connection with any such listing. In the event that such Warrants are delisted
from, or permanently suspended from trading on, such exchange, and at or prior
to such delisting or suspension, such Warrants shall not have been listed on
another national securities exchange, any such Warrants not previously exercised
will be deemed automatically exercised on the date such delisting or permanent
trading suspension becomes effective
26
<PAGE>
<PAGE>
(Sections 2.3). The applicable Cash Settlement Value to be paid in such event
will be as set forth in the applicable Prospectus Supplement. The Company will
notify holders of such Warrants as soon as practicable of such delisting or
permanent trading suspension. The applicable Warrant Agreement will contain a
covenant of the Company not to seek delisting of such Warrants from or permanent
suspension of their trading on, such exchange (Section 2.4 of the Currency
Warrant Agreement and the Interest Rate Warrant Agreement and Section 2.5 of the
Index Warrant Agreement).
DESCRIPTION OF THE GUARANTEE
Newcourt will provide an irrevocable unconditional guarantee of payment of
principal, premium, if any, and interest on the Notes. Such guarantee will be an
unsecured obligation of Newcourt and will rank pari passu (equal in right of
payment) with all other unsecured and unsubordinated indebtedness of Newcourt.
At December 31, 1997, Newcourt's consolidated indebtedness was approximately
$2.0 billion (C$2.8 billion). Such guarantee will, however, be effectively
subordinate (with respect to the assets of Newcourt's Subsidiaries) to the
indebtedness and other liabilities of such subsidiaries. At December 31, 1997,
such indebtedness and other liabilities aggregated approximately $0.7 billion
(C$1.0 billion). Newcourt has no current intention or plan to increase the
amount of such indebtedness in the future, other than in connection with the
growth of Newcourt's business.
GLOBAL SECURITIES
The Securities of a series may be issued in whole or in part in the form of
one or more global Securities that will be deposited with or on behalf of a
depositary (a 'Depositary') identified in the Prospectus Supplement relating to
such series. Global Securities representing Debt Securities or Debt Warrants may
be issued in either registered or bearer form. Global Securities representing
Currency Warrants, Index Warrants or Interest Rate Warrants will be issued in
registered form only. Global Securities may be issued in either temporary or
permanent form.
The specific terms of the depositary arrangement with respect to any
Securities of a series will be described in the Prospectus Supplement relating
to such series. The Company anticipates that the following provisions will apply
to all depositary arrangements.
Unless otherwise specified in the Prospectus Supplement, Securities which
are to be represented by a global Security in registered form to be deposited
with or on behalf of a Depositary will be registered in the name of such
Depositary or its nominee. Upon the issuance of a global Security in registered
form, the Depositary for such global Security will credit the respective
principal amounts, in the case of Debt Securities, and the respective number of
warrants, in the case of Warrants represented by such global Security, to the
accounts of institutions that have accounts with such Depositary or its nominee
('participants'). The accounts to be credited shall be designated by the
underwriters or agents of such Securities, or by the Company if such Securities
are offered and sold directly by the Company. Ownership of beneficial interests
in such global Securities will be limited to participants or persons that may
hold interests through participants. Ownership of beneficial interests by
participants in such global Securities will be shown on, and the transfer of
that ownership interest will be effected only through, records maintained by the
Depositary or its nominee for such global Security. Ownership of beneficial
interests in global Securities by persons that hold through participants will be
shown on, and the transfer of that ownership interest within such participant
will be effected only through, records maintained by such participant.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a global Security.
So long as the Depositary for a global Security in registered form, or its
nominee, is the registered owner of such global Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder of
the Securities represented by such global Security for all purposes under the
Indenture, in the case of Debt Securities, or under the applicable Warrant
Agreement, in the case of Warrants, governing such Securities. Except as set
forth below or as the Company may otherwise agree in its sole discretion, owners
of beneficial interests in such global Security will not be entitled to have
27
<PAGE>
<PAGE>
Securities of the series represented by such global Security registered in their
names, will not receive or be entitled to receive physical delivery of
Securities of such series in definitive form and will not be considered the
owners or holders thereof under the Indenture, in the case of Debt Securities,
or under the applicable Warrant Agreement, in the case of Warrants.
Payments in respect of Securities registered in the name of or held by a
Depositary or its nominee will be made to the Depositary or its nominee, as the
case may be, as the registered owner or the holder of the global Security. None
of the Company, the Trustee or applicable Warrant Agent, any Paying Agent or any
Security Registrar (the 'Security Registrar') for such Securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a global Security
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interest.
The Company expects that the Depositary for a permanent global Security in
registered form, upon receipt of any payment in respect of a permanent global
Security, will credit immediately participants' accounts with payments in
amounts proportionate to their respective beneficial interests in such global
Security as shown on the records of such Depositary. The Company also expects
that payments by participants to owners of beneficial interests in such global
Security held through such participants will be governed by standing
instructions and customary practices, as is now 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 participants.
A global Security in registered form may not be transferred except as a
whole by the Depositary for such global Security to a nominee of such Depositary
or by a nominee of such Depositary to such Depositary or another nominee of such
Depositary or by such Depositary or any such nominee to a successor of such
Depositary or nominee or a nominee of such successor. If a Depositary for a
permanent global Security in registered form is at any time unwilling or unable
to continue as Depositary and a successor Depositary is not appointed by the
Company within 90 days, the Company will issue Securities in definitive
registered form in exchange for the global Security representing such
Securities. In addition, the Company may at any time and in its sole discretion
determine not to have any Securities of a series in registered form represented
by one or more global Securities and, in such event, will issue Securities of
such series in definitive form in exchange for all the global Securities
representing such Series. Further, if the Company so specifies with respect to
the Securities of a series or otherwise consents in its sole discretion, an
owner of a beneficial interest in a global Security representing Securities of
such series may, on terms acceptable to the Company and the Depositary for such
global Security, receive Securities of such series in definitive form. In any
such instance, an owner of a beneficial interest in a global Security will be
entitled to physical delivery in definitive form of Securities of the series
represented by such global Security equal in principal amount, in the case of
Debt Securities, or number, in the case of Warrants, to such beneficial interest
and to have such Securities registered in its name (if the Securities of such
series are issuable as registered securities). Unless otherwise specified by the
Company, Securities of such series so issued in definitive form will be issued
either as registered or bearer securities (if the Securities of such series are
issuable in such form) and in authorized denominations, in the case of Debt
Securities, or in authorized numbers, in the case of Warrants, as specified in
the applicable Prospectus Supplement. See, however, 'Description of the Debt
Securities -- Limitations on Issuance of Bearer Debt Securities' for a
description of certain restrictions on the issuance of a bearer Debt Security in
definitive form in exchange for an interest in a global Security.
BEARER DEBT SECURITIES
If so specified in the Prospectus Supplement, pending the availability of a
permanent global Security, all or any portion of the Debt Securities of a series
which may be issuable as bearer Debt Securities will initially be represented by
one or more temporary global Securities, without interest coupons, to be
deposited with a common depositary in London for Morgan Guaranty Trust Company
of New York, Brussels Office, as operator of the Euroclear System ('Euroclear')
and Cedel Bank, societe anonyme ('Cedel Bank') for credit to the designated
accounts. The interests of the beneficial owner or owners in such a temporary
global Security in bearer form will be exchangeable for definitive bearer
28
<PAGE>
<PAGE>
Debt Securities (including interests in a permanent global Security in bearer
form), representing Debt Securities having the same interest rate and stated
maturity, but only upon written certification in the form and to the effect
described under 'Description of the Debt Securities -- General' unless such
certification has been provided on an earlier interest payment date. The
beneficial owner of a Debt Security represented by a temporary global Security
in bearer form or a permanent global Security in bearer form may, on or after
the applicable exchange date and upon 30 days' notice to the Trustee given
through Euroclear or Cedel Bank, exchange its interest for definitive bearer
Debt Securities or, if specified in the Prospectus Supplement, definitive
registered Debt Securities of any authorized denomination. No bearer Debt
Security delivered in exchange for a temporary global Security or a permanent
global Security shall be mailed or otherwise delivered to any location in the
United States in connection with such exchange.
Unless otherwise specified in the Prospectus Supplement, interest in
respect of any portion of such a temporary global Security in bearer form
payable in respect of an Interest Payment Date occurring prior to the issuance
of a permanent global Security in bearer form will be paid to each of Euroclear
and Cedel Bank with respect to the portion of the temporary global Security in
bearer form held for its account. Each of Euroclear and Cedel Bank will
undertake in such circumstances to credit such interest received by it in
respect of a temporary global Security in bearer form to the respective accounts
for which it holds such temporary global Security in bearer form as of the
relevant Interest Payment Date, but only upon receipt in each case of written
certification, in the form and to the effect described under 'Description of
Debt Securities -- General'.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
A summary of the material United States federal income tax consequences to
persons investing in Securities will be set forth in the Prospectus Supplement.
This summary in the Prospectus Supplement will be presented for information
purposes only, however, and will not be intended as legal or tax advice to
prospective purchasers. Prospective purchasers of Securities are urged to
consult their own tax advisors prior to any acquisition of Securities.
PLAN OF DISTRIBUTION
The Company may sell any of the Securities in four ways: (i) directly to
purchasers, (ii) through agents, (iii) through dealers or (iv) through
underwriters. Any or all of the foregoing may be customers of, engage in other
transactions with or perform other services for the Company in the ordinary
course of business.
Offers to purchase the Securities may be solicited directly by the Company
or by agents designated by the Company from time to time. Any such agent, who
may be deemed to be an underwriter as that term is defined in the Securities
Act, involved in the offer or sale of the Securities in respect of which this
Prospectus is delivered will be named, and any commissions payable by the
Company to such agent set forth, in the Prospectus Supplement. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment. Agents may be entitled under
agreements, which may be entered into with the Company, to indemnification by
the Company against certain civil liabilities, including liabilities under the
Securities Act.
If a dealer is utilized in the sale of the Securities in respect of which
this Prospectus is delivered, the Company will sell such Securities to the
dealer, as principal. The dealer may then resell such Securities to the public
at varying prices to be determined by such dealer at the time of resale. Dealers
may be entitled to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act.
If the sale is accomplished through an underwriter or underwriters, the
Company will enter into an underwriting agreement with such underwriters at the
time of sale to them, and the names of the underwriters and the terms of the
transaction will be set forth in the Prospectus Supplement, which, together with
this Prospectus, will be used by the underwriters to make resales of the
Securities in respect of which the Prospectus Supplement and this Prospectus are
delivered to the public. The
29
<PAGE>
<PAGE>
underwriters may be entitled, under the relevant underwriting agreement, to
indemnification by the Company against certain liabilities, including
liabilities under the Securities Act.
If so indicated in the Prospectus Supplement, the Company will authorize
agents and underwriters to solicit offers by certain institutions to purchase
Securities from the Company at the public offering price set forth in the
Prospectus Supplement pursuant to Delayed Delivery Contracts ('Contracts')
providing for payment and delivery on a specified future date. Institutions with
which Contracts, when authorized, may be made include commercial and savings
banks, insurance companies, pension funds, educational and charitable
institutions, and other institutions, but shall in all cases be subject to the
approval of the Company. Except as otherwise provided in the Prospectus
Supplement, Contracts will not be subject to any conditions except that the
purchase by an institution of the Securities covered by its Contract shall not
at the time of delivery be prohibited under the laws of any jurisdiction in the
United States to which such institution is subject. A commission indicated in
the Prospectus Supplement will be paid to agents and underwriters soliciting
purchases of the Securities pursuant to Contracts accepted by the Company.
The place and time of delivery for the Securities in respect of which this
Prospectus is delivered are set forth in the Prospectus Supplement.
VALIDITY OF SECURITIES
The validity of the Securities will be passed upon for the Company by Glen
J. DuMont, Assistant General Counsel, and for any agent, dealer or underwriter
by Winston & Strawn, New York, New York. The opinions of Glen J. DuMont and
Winston & Strawn will be conditioned upon, and subject to certain assumptions
regarding, future action required to be taken by the Company and the Trustee in
connection with the issuance and sale of any particular Security, the specific
terms of Securities and other matters which may affect the validity of
Securities but which cannot be ascertained on the date of such opinions.
EXPERTS
The consolidated financial statements for the Company as of December 31,
1997 and for the year then ended incorporated by reference in the Prospectus and
elsewhere in the Registration Statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto and is incorporated by reference in reliance upon the authority of said
firm as experts in giving said report.
The Company's consolidated balance sheet as of December 31, 1996 and the
consolidated statements of income, changes in shareowners' equity, and cash
flows for each of the two years in the period ended December 31, 1996,
incorporated by reference in this Prospectus, have been incorporated by
reference in reliance on the report of Coopers & Lybrand L.L.P., independent
auditors, given on the authority of that firm as experts in accounting and
auditing.
The financial statements for Newcourt incorporated by reference in the
Prospectus and elsewhere in the Registration Statement, to the extent and for
the periods indicated in their report, have been audited by Ernst & Young,
Chartered Accountants, and are included herein in reliance on their reports
given on the authority of that firm as experts in accounting and auditing.
30
<PAGE>
<PAGE>
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
AND NEWCOURT CREDIT GROUP INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
F-1
<PAGE>
<PAGE>
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
AND NEWCOURT CREDIT GROUP INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma consolidated balance sheet and statement
of income of AT&T Capital Corporation and Subsidiaries ('AT&T Capital' or the
'Company') are based on the historical Consolidated Financial Statements of AT&T
Capital and Newcourt Credit Group Inc. ('Newcourt') at December 31, 1997 and for
the year then ended. The unaudited pro forma consolidated balance sheet has been
prepared assuming the Newcourt Acquisition, as defined herein, had occurred on
December 31, 1997 and the unaudited pro forma consolidated income statement has
been prepared assuming the Newcourt Acquisition had occurred on January 1, 1997.
On January 12, 1998, Newcourt, an Ontario corporation, consummated the purchase
(the 'Newcourt Acquisition') of all of the outstanding shares of common stock of
AT&T Capital, pursuant to a Stock Purchase Agreement dated as of November 17,
1997 (the 'Stock Purchase Agreement') among the Company, Newcourt, Hercules
Holdings (Cayman) Ltd. ('Hercules'), the former direct owner of 97.4% of the
Company's common stock, and by 21 members and one former member of the senior
management of the Company. In connection with the Newcourt Acquisition, all of
the outstanding shares of common stock of the Company were transferred to
Newcourt Holdings USA, Inc., a newly-formed Delaware corporation which is a
wholly-owned subsidiary of Newcourt. As a result of the Newcourt Acquisition,
all of the outstanding shares of common stock of the Company are owned
indirectly by Newcourt.
The aggregate purchase price pursuant to such Stock Purchase Agreement paid
by Newcourt to the stockholders of AT&T Capital was approximately $1.6 billion
comprised of approximately $1.0 billion in cash and the remainder comprising
approximately 17.6 million of Newcourt common shares. Such shares were issued
entirely to Hercules and generally may not be transferred for periods ranging
from 6 to 18 months following the date of the Newcourt Acquisition. The cash
portion of the purchase price paid by Newcourt was raised through the issuance
by Newcourt of 38.5 million shares of Newcourt common stock at approximately
$32.50 per share to employees of Newcourt and the public in Canada and the
United States. See the Company's Current Report on Form 8-K dated February 9,
1998, as amended by the Company's Current Report on Form 8-K/A dated February
18, 1998, both incorporated by reference in this Registration Statement, for the
prospectus filed by Newcourt in connection with its registration of fully paid
subscription rights to receive one common share of Newcourt.
The pro forma consolidated financial statements reflect the historical cost
of the Company's assets and liabilities. Adjustments to the Company's assets and
liabilities to reflect their respective fair values as a result of the Newcourt
Acquisition have not been made. The excess of purchase price over net book value
has been allocated to goodwill.
The following pro forma financial information is unaudited and should be
read in conjunction with the accompanying notes thereto and with the Company's
1997 audited consolidated financial statements, incorporated by reference in
this Registration Statement, and with the consolidated financial statements
included in Newcourt's Form 6-K for the year ended December 31, 1997,
incorporated by reference in this Registration Statement. The pro forma
financial information is not necessarily indicative of either the financial
position or the results of operations that would have been achieved had the
Newcourt Acquisition and the related transactions actually occurred on the dates
referred to above, nor is it necessarily indicative of the results of future
operations, because such unaudited pro forma financial information is based on
estimates of financial effects that may prove to be inaccurate over time.
F-2
<PAGE>
<PAGE>
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
AND NEWCOURT CREDIT GROUP INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
U.S.
GAAP/$ AT&T PRO FORMA PRO FORMA
NEWCOURT CAPITAL ADJUSTMENTS NOTE CONSOLIDATED
---------- ---------- ----------- ----- ------------
NOTE 2 NOTE 1
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
Cash........................................... $1,245,228 $ 8,317 $(1,101,900) 4a $ 120,545
(31,100) 4b
Investment in finance assets................... 1,061,223 2,564,933 3,626,156
Investment in capital leases................... 559,529 3,288,141 3,847,670
Investment in operating leases................. 192,513 1,593,582 1,786,095
Assets held for securitization and
syndication.................................. 761,724 478,213 1,239,937
Investment in affiliated companies............. 121,383 121,383
Accounts receivable and other.................. 236,956 525,963 45,700 4a 808,619
Goodwill, net.................................. 299,010 85,600 871,121 4a 1,296,631
40,900 4b
Deferred income taxes.......................... 0 231,146 231,146
---------- ---------- ----------- ------------
TOTAL ASSETS......................... $4,477,566 $8,775,895 $ (175,279) $ 13,078,182
---------- ---------- ----------- ------------
---------- ---------- ----------- ------------
LIABILITIES, PREFERRED SECURITIES AND
SHAREHOLDERS' EQUITY
LIABILITIES
Accounts payable and accrued
liabilities............................. $ 202,283 $ 709,997 $ 8,700 4a $ 967,880
46,900 4b
Debt...................................... 2,063,579 7,117,994 9,181,573
Future income tax liability............... 28,980 4,125 33,105
---------- ---------- ----------- ------------
TOTAL LIABILITIES.................... 2,294,842 7,832,116 55,600 10,182,558
---------- ---------- ----------- ------------
PREFERRED SECURITIES........................... 200,000 200,000
SHAREHOLDERS' EQUITY
Share capital............................. 2,048,718 903 549,097 4a 2,561,618
(37,100) 4b
Additional paid-in capital................ 651,552 (651,552) 4a
Recourse loans to senior executives....... (15,471) 15,471 4a
Foreign currency translation
adjustments............................. (4,032) 4,032 4a
Retained earnings......................... 134,006 110,827 (110,827) 4a 134,006
---------- ---------- ----------- ------------
TOTAL SHAREHOLDERS' EQUITY........... 2,182,724 743,779 (230,879) 2,695,624
---------- ---------- ----------- ------------
TOTAL LIABILITIES, PREFERRED
SECURITIES AND SHAREHOLDERS'
EQUITY............................. $4,477,566 $8,775,895 $ (175,279) $ 13,078,182
---------- ---------- ----------- ------------
---------- ---------- ----------- ------------
</TABLE>
See accompanying explanatory notes to the Unaudited Pro Forma Consolidated
Balance Sheet.
F-3
<PAGE>
<PAGE>
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
AND NEWCOURT CREDIT GROUP INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
U.S.
GAAP/$ AT&T PRO FORMA PRO FORMA
NEWCOURT CAPITAL ADJUSTMENTS NOTE CONSOLIDATED
----------- -------- ----------- ----- ------------
NOTE 2 NOTE 1
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
FEE AND AFFILIATE INCOME:
Securitization and syndication fees............ $ 143,570 $ 82,663 $226,233
Net income from affiliated companies........... 6,902 6,902
Management fees................................ 25,794 261,701 287,495
----------- -------- ------------
TOTAL FEE BASED INCOME.................... 176,266 344,364 520,630
Net rental revenue from operating leases....... 279,968 279,968
Net finance income............................. 51,027 25,208 76,235
----------- -------- ------------
TOTAL ASSET FINANCE INCOME................ 227,293 649,540 876,833
Selling, general and other operating
expenses..................................... 130,092 525,383 655,475
Depreciation and amortization.................. 14,760 20,345 $ 45,600 4c 80,705
Distributions on Preferred Securities.......... 18,120 18,120
----------- -------- ----------- ------------
Income before loss on sale of businesses, net,
restructuring charges and taxes................... 82,441 85,692 $ (45,600) 122,533
Loss on sales of businesses, net............... 18,563 18,563
Restructuring charges.......................... 49,377 35,093 84,470
----------- -------- ----------- ------------
Income before taxes................................. 33,064 32,036 $ (45,600) 19,500
Provision for (benefit of) income taxes........ (4,742) 11,029 6,287
----------- -------- ----------- ------------
NET INCOME................................ $ 37,806 $ 21,007 $ (45,600) $ 13,213
----------- -------- ----------- ------------
----------- -------- ----------- ------------
Basic and diluted earnings per common share......... $.10
------------
------------
</TABLE>
See accompanying explanatory notes to the unaudited Pro Forma Consolidated
Statement of Income.
F-4
<PAGE>
<PAGE>
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
AND NEWCOURT CREDIT GROUP INC.
EXPLANATORY NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AND THE UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1. BASIS OF PRESENTATION
The unaudited pro forma consolidated balance sheet and unaudited pro forma
consolidated statement of income have been prepared using the following
information:
(a) Audited consolidated financial statements of Newcourt Credit Group
Inc. ('Newcourt') as of and for the year ended December 31, 1997, which are
incorporated by reference in this Registration Statement (See Note 2);
(b) Audited consolidated financial statements of AT&T Capital
Corporation ('AT&T Capital' or the 'Company') as of and for the year ended
December 31, 1997, which are incorporated by reference in this Registration
Statement. Certain financial statement items have been reclassified from
the audited consolidated financial statements of AT&T Capital in order to
conform to the presentation used by Newcourt. These reclassifications are
as follows:
<TABLE>
<CAPTION>
PER AT&T CAPITAL PRO FORMA NEWCOURT
BALANCE SHEET CATEGORY* PRESENTATION RECLASSIFICATION NOTE PRESENTATION
- --------------------------------------------- ---------------- ---------------- ----------- ------------
<S> <C> <C> <C> <C>
Net investment in finance receivables........ 2,343,604 221,329 (1) 2,564,933
Deferred charges and other assets............ 832,892 (221,329) (1) 525,963
(85,600) (2)
Goodwill, net................................ -- 85,600 (2) 85,600
Short-term notes, less unamortized
discounts.................................. 1,868,585 (1,868,585) (3) --
Medium and long-term debt.................... 5,249,409 1,868,585 (3) 7,117,994
Income taxes and other payables.............. 714,122 (4,125) (4) 709,997
Future income tax liability.................. -- 4,125 (4) 4,125
INCOME STATEMENT CATEGORY*
Finance revenue.............................. 229,855 (229,855) (5) --
Capital lease revenue........................ 361,124 (361,124) (5) --
Rental revenue on operating leases........... 834,027 (834,027) (6) --
Equipment sales.............................. 49,349 (49,349) (7) --
Other revenue, net........................... 257,121 (257,121) (7) --
Interest expense............................. 451,470 (451,470) (5) --
Operating and administrative................. 545,728 (20,345) (8) 525,383
Depreciation on operating leases............. 554,059 (554,059) (6) --
Cost of equipment sales...................... 44,769 (44,769) (7) --
Provision for credit losses.................. 114,301 (114,301) (5) --
Net finance income........................... -- 25,208 sum of (5) 25,208
Net rental revenue from operating leases..... -- 279,968 sum of (6) 279,968
Management fees.............................. -- 261,701 sum of (7) 261,701
Depreciation and amortization................ -- 20,345 (8) 20,345
</TABLE>
- ------------
(1) Net investment in securitized assets have been reclassified from Deferred
charges and other assets to the caption Investment in finance assets.
(2) Goodwill has been reclassified from Deferred charges and other assets to the
caption Goodwill, net.
F-5
<PAGE>
<PAGE>
(3) Short-term notes, less unamortized discounts and Medium and long-term debt
have been reclassified to the caption Debt.
(4) The current liability for operating income taxes has been reclassified from
Income taxes and other payables to Future income tax liability.
(5) Finance revenue, Capital lease revenue, Interest expense and Provision for
credit losses have been reclassified to the caption Net finance income.
(6) Rental revenue on operating leases and Depreciation on operating leases have
been reclassified to the caption Net rental revenue from operating leases.
(7) Other revenue, net, Equipment sales and Cost of equipment sales have been
reclassified to the caption Management fees.
(8) Depreciation on property, plant and equipment and goodwill amortization have
been reclassified from Operating and administrative to the caption
Depreciation and amortization.
* Descriptions may differ slightly in the Newcourt presentation. See AT&T
Capital Corporation and Subsidiaries and Newcourt Credit Group
Inc. -- Unaudited Pro Forma Consolidated Balance Sheet and Income Statement.
(c) Such other supplementary information as was considered necessary
to reflect the acquisition of the Company by Newcourt (the 'Newcourt
Acquisition') in these unaudited pro forma consolidated financial
statements.
2. NEWCOURT CREDIT GROUP INC.
The financial statements of Newcourt as of and for the year ended December
31, 1997, incorporated by reference in this Registration Statement, were
prepared in accordance with accounting principles generally accepted in Canada
and are expressed in Canadian dollars. For the purposes of these unaudited pro
forma consolidated financial statements, the following adjustments have been
made to the balance sheet and income statement of Newcourt to conform them to
U.S. generally accepted accounting principles in U.S. dollars.
(a) Differences between Generally Accepted Accounting Principles ('GAAP')
in Canada and the United States.
(i) For Canadian GAAP purposes, unrealized translation gains and
losses on long term monetary items are deferred and amortized over the
remaining terms of those items. For U.S. GAAP purposes, such gains and
losses are recorded in income immediately.
(ii) For Canadian GAAP purposes, amounts paid to employees to retire
issued stock options without issuing common stock are recorded as capital
transactions. For U.S. GAAP purposes, such amounts paid are recorded as
compensation expense.
(iii) For Canadian GAAP purposes, finance assets sold to
securitization vehicles are not consolidated. Under U.S. GAAP, certain of
these securitization vehicles are required to be accounted for under the
equity method of accounting while others are required to be consolidated.
Accordingly, for U.S. GAAP purposes, gains relating to these asset sales
have been deferred, and, in the case of consolidated vehicles, the assets
and liabilities have been recorded on the balance sheet. The deferred gains
will be recognized in income as the related finance assets are collected.
(iv) The restructuring charge was reduced for costs that would have
been accrued as an adjustment to the liabilities assumed relating to a
recent acquisition and the rationalization of certain Newcourt businesses
in Canada and the United States under U.S. GAAP, rather than expensed as
permitted by Canadian GAAP.
F-6
<PAGE>
<PAGE>
The following tables summarizes the differences between what was reported
by Newcourt in its financial statements under Canadian GAAP and what has been
reflected herein for U.S. GAAP purposes as of and for the year ended December
31, 1997:
Income Statement:
<TABLE>
<S> <C>
Net income for the year ended December 31, 1997 as reported under Canadian GAAP.... $26,318
Difference in accounting for foreign exchange gains (losses) (net of income tax
recovery of $4,466).............................................................. (5,458)
Difference in accounting for options retired....................................... (796)
Difference in accounting for securitization transactions (net of income taxes of
$3,153).......................................................................... 3,964
Difference in accounting for restructuring charge (net of income taxes of
$11,272)......................................................................... 13,778
-------
Net income for the year ended December 31, 1997 reported under U.S. GAAP........... $37,806
-------
-------
</TABLE>
Balance Sheet:
<TABLE>
<S> <C>
Increase in investment in finance assets........................................... $95,370
Increase in accounts receivable and other.......................................... 53,132
Increase in goodwill, net.......................................................... 13,726
Decrease in accounts payable and accrued liabilities............................... 9,867
Increase in debt................................................................... 94,540
Increase in subordinated debt...................................................... 21,930
Increase in future income tax liability............................................ 9,620
</TABLE>
(b) Currency
The audited consolidated financial statements of Newcourt are expressed in
Canadian dollars. For the purposes of these unaudited pro forma consolidated
financial statements, the consolidated balance sheet of Newcourt has been
translated into U.S. dollars using the December 31, 1997 exchange rate of 1.4328
and the consolidated statement of income of Newcourt has been translated into
U.S. dollars using the weighted average exchange rate for the year ended
December 31, 1997 of 1.3839.
3. PRO FORMA ASSUMPTIONS
(a) The acquisition, pursuant to an agreement dated November 17, 1997,
whereby Newcourt agreed to purchase all of the issued and outstanding common
shares of AT&T Capital, subject to satisfaction of certain closing conditions,
for approximately $1.6 billion payable as follows:
(i) approximately $1.0 billion by means of cash payment at closing;
and
(ii) the remainder by the issuance of approximately 17.6 million of
Newcourt common shares at closing.
(b) The acquisition of AT&T Capital has been accounted for using the
purchase method. The difference between the purchase price and estimated fair
value of the net assets acquired has been allocated to goodwill. Goodwill has
not yet been adjusted to revalue the assets and liabilities of AT&T Capital to
their fair values. The amount assigned to goodwill will be amortized as a
reduction to income over a twenty year period.
(c) The issuance of 38.5 million Newcourt common shares, pursuant to a
prospectus filed with the Securities and Exchange Commission on November 24,
1997, which resulted in Newcourt receiving net proceeds (after the underwriters'
fees and the expenses of issue) of approximately $1.2 billion.
4. PRO FORMA ADJUSTMENTS
The pro forma adjustments contained in these pro forma consolidated
financial statements are based on estimates and assumptions by management of
AT&T Capital and Newcourt based on available information. The adjustments for
the actual acquisition may differ as a result of changes arising from
F-7
<PAGE>
<PAGE>
evaluation of the fair value of AT&T Capital's net assets by Newcourt after the
effective date of acquisition. The following adjustments have been made to
reflect the Newcourt Acquisition:
(a) Issuance of approximately $1.2 billion of Newcourt common shares,
a portion of which, was used to satisfy the cash portion of the purchase
price (See Note 3), the issuance of approximately 17.6 million treasury
shares by Newcourt in the amount of approximately $.6 billion to satisfy
the remaining portion of the purchase price and to reflect the purchase of
all the issued and outstanding common stock of AT&T Capital.
(b) To reflect the costs of issuing Newcourt common shares as well as
other transaction related costs.
(c) Amortization of goodwill over a twenty year period.
5. EARNINGS PER SHARE
Earnings per share reflects the issuance by Newcourt of approximately 56.1
million common shares arising from the acquisition of the Company combined with
the average number of Newcourt common shares outstanding (subsequent to the
subdivision of the common shares) during the period.
F-8
<PAGE>
<PAGE>
________________________________ ________________________________
No person has been authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
Prospectus Supplement or the Prospectus in connection with the offer made by
this Prospectus Supplement and the Prospectus and, if given or made, such
information or representations must not be relied upon as having been
authorized. Neither the delivery of this Prospectus Supplement and the
Prospectus nor any sale made hereunder and thereunder shall under any
circumstances create an implication that there has been no change in the affairs
of the Company since the date hereof. This Prospectus Supplement and the
Prospectus do not constitute an offer or solicitation by anyone in any state in
which such offer or solicitation is not authorized or in which the person making
such offer or solicitation is not qualified to do so or to anyone to whom it is
unlawful to make such offer or solicitation.
---------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Supplement
Important Currency Exchange Information...................................................................................... S-2
Description of Medium-Term Notes, Series F................................................................................... S-2
Foreign Currency and Indexed Note Risks...................................................................................... S-16
Material Federal Income Tax Consequences..................................................................................... S-17
Plan of Distribution......................................................................................................... S-29
Prospectus
Available Information........................................................................................................ 2
Incorporation of Documents by Reference...................................................................................... 3
Risk Factors................................................................................................................. 3
The Company.................................................................................................................. 7
Use of Proceeds.............................................................................................................. 10
Ratio of Earnings to Fixed Charges........................................................................................... 11
Description of the Debt Securities........................................................................................... 12
Description of the Warrants.................................................................................................. 20
Description of the Guarantee................................................................................................. 27
Global Securities............................................................................................................ 27
Material Federal Income Tax Consequences..................................................................................... 29
Plan of Distribution......................................................................................................... 29
Validity of Securities....................................................................................................... 30
Experts...................................................................................................................... 30
</TABLE>
U.S. $5,000,000,000
[LOGO]
MEDIUM-TERM NOTES, SERIES F
DUE NINE MONTHS OR
MORE FROM DATE OF ISSUE
GUARANTEED AS TO PAYMENT OF PRINCIPAL,
PREMIUM, IF ANY, AND INTEREST BY
[LOGO]
------------------------------------------
PROSPECTUS SUPPLEMENT
DATED MAY 5, 1998
------------------------------------------
________________________________ ________________________________
