PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED NOVEMBER 22, 2000)
ABN AMRO Bank N.V.
$500,000,000 Global Medium-Term Notes, Series A
We, ABN AMRO Bank N.V., may offer from time to time global medium-term notes.
The specific terms of any notes that we offer will be included in a pricing
supplement. The notes will have the following general terms:
o The notes will mature more than nine months from the date of issue.
o The notes will bear interest at either a fixed rate, which may be zero, or
a floating rate. Floating rates will be based on rates specified in the
applicable pricing supplement.
o The notes will pay interest, if any, on the dates stated in the applicable
pricing supplement.
o The applicable pricing supplement will specify whether the notes will be
denominated in U.S. dollars or some other currency.
o The notes will be held in global form by The Depository Trust Company,
unless the pricing supplement provides otherwise.
The pricing supplement may also specify that the notes will have additional
terms, including the following:
o The notes may be optionally or mandatorily exchanged for securities of an
issuer that is not affiliated with us, into a basket or index of those
securities or for the cash value of those securities.
o Payments on the notes may be linked to currency prices, commodity prices,
single securities, baskets of securities or indices.
o The notes may be either callable by us or puttable by you.
Investing in the notes involves risks. See "Foreign Currency Risks" beginning
on page S-3.
<TABLE>
Price to Agent's Proceeds to
-------- ------------- -------------
<S> <C> <C> <C>
Per note ...................... 100% 4% - 1% 96% - 99%
Total.......................... $ 500,000,000 $20,000,000 - $ 5,000,000 $ 480,000,000 - $ 495,000,000
</TABLE>
The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities, or determined if this prospectus
supplement or the accompanying prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
ABN AMRO Incorporated has agreed to use reasonable efforts to solicit offers to
purchase these securities as our agent. The agent may also purchase these
securities as principal at prices to be agreed upon at the time of sale. The
agent may resell any securities they purchase as principal at prevailing market
prices, or at other prices, as the agent determines.
ABN AMRO Incorporated may use this prospectus supplement and the accompanying
prospectus in connection with offers and sales of the securities in
market-making transactions.
ABN AMRO INCORPORATED
November 27, 2000
<PAGE>
ABOUT THIS PROSPECTUS
We may offer from time to time up to $500,000,000, or the equivalent of
this amount in other currencies, of the medium-term notes described in this
prospectus supplement. We refer to the notes offered under this prospectus
supplement as our Series A medium-term notes. We refer to the offering of the
Series A medium-term notes as our "Series A program".
As used in this prospectus supplement, the "Bank", "we" or "us" refers to
ABN AMRO Bank N.V.
The debt securities may not be offered or sold anywhere in the world
except in compliance with the requirements of the Dutch Securities Market
Supervision Act 1995 (Wet toezicht effectenverkee).
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FOREIGN CURRENCY RISKS
You should consult your financial and legal advisors as to any specific
risks entailed by an investment in notes that are denominated or payable in, or
the payment of which is linked to the value of, foreign currency. These notes
are not appropriate investments for investors who are not sophisticated in
foreign currency transactions.
The information set forth in this prospectus supplement is directed to
prospective purchasers who are United States residents. We disclaim any
responsibility to advise prospective purchasers who are residents of countries
other than the United States of any matters arising under foreign law that may
affect the purchase of or holding of, or receipt of payments on, the notes.
These persons should consult their own legal and financial advisors concerning
these matters.
Exchange Rates and Exchange Controls May Affect the Securities' Value or Return
Securities Involving Foreign Currencies Are Subject to General Exchange
Rate and Exchange Control Risks. An investment in a note that is denominated or
payable in, or the payment of which is linked to the value of, currencies other
than U.S. dollars entails significant risks. These risks include the
possibility of significant changes in rates of exchange between the U.S. dollar
and the relevant foreign currencies and the possibility of the imposition or
modification of exchange controls by either the U.S. or foreign governments.
These risks generally depend on economic and political events over which we
have no control.
Exchange Rates Will Affect Your Investment. In recent years, rates of
exchange between U.S. dollars and some foreign currencies have been highly
volatile and this volatility may continue in the future. Fluctuations in any
particular exchange rate that have occurred in the past are not necessarily
indicative, however, of fluctuations that may occur during the term of any
note. Depreciation against the U.S. dollar of the currency in which a note is
payable would result in a decrease in the effective yield of the note below its
coupon rate and could result in an overall loss to you on a U.S. dollar basis.
In addition, depending on the specific terms of a currency-linked note, changes
in exchange rates relating to any of the relevant currencies could result in a
decrease in its effective yield and in your loss of all or a substantial
portion of the value of that note.
We Have No Control Over Exchange Rates. Foreign exchange rates can either
float or be fixed by sovereign governments. Exchange rates of most economically
developed nations are permitted to fluctuate in value relative to the U.S.
dollar and to each other. However, from time to time governments may use a
variety of techniques, such as intervention by a country's central bank or the
imposition of regulatory controls or taxes, to influence the exchange rates of
their currencies. Governments may also issue a new currency to replace an
existing currency or alter the exchange rate or relative exchange
characteristics by a devaluation or revaluation of a currency. These
governmental actions could change or interfere with currency valuations and
currency fluctuations that would otherwise occur in response to economic
forces, as well as in response to the movement of currencies across borders. As
a consequence, these government actions could adversely affect the U.S.
dollar-equivalent yields or payouts for notes denominated or payable in
currencies other than U.S. dollars and currency-linked notes.
We will not make any adjustment or change in the terms of the notes in the
event that exchange rates should become fixed, or in the event of any
devaluation or revaluation or imposition of exchange or other regulatory
controls or taxes, or in the event of other developments affecting the U.S.
dollar or any applicable foreign currency. You will bear those risks.
Some Foreign Currencies May Become Unavailable. Governments have imposed
from time to time, and may in the future impose, exchange controls that could
also affect the availability of a specified foreign currency. Even if there are
no actual exchange controls, it is possible that the applicable currency for
any security not denominated in U.S. dollars would not be available when
payments on that security are due.
Alternative Payment Method Used if Payment Currency Becomes Unavailable.
If a payment currency is unavailable, we would make required payments in U.S.
dollars on the basis of the market exchange rate. However, if the applicable
currency for any security is not available because the euro has been
substituted for that currency, we
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would make the payments in euro. The mechanisms for making payments in these
alternative currencies are explained in "Description of Notes--Interest and
Principal Payments" below.
We Will Provide Currency Exchange Information in Pricing Supplements. The
applicable pricing supplement will include information regarding current
applicable exchange controls, if any, and historic exchange rate information
for any note denominated or payable in a foreign currency or requiring payments
that are related to the value of a foreign currency. That information will be
furnished only for information purposes. You should not assume that any
historic information concerning currency exchange rates will be representative
of the range of or trends in fluctuations in currency exchange rates that may
occur in the future.
Currency Conversions May Affect Payments on Some Securities
The applicable pricing supplement may provide for payments on a non-U.S.
dollar denominated note to be made in U.S. dollars or payments on a U.S. dollar
denominated note to be made in a currency other than U.S. dollars. In these
cases, the exchange rate agent identified in the pricing supplement, will
convert the currencies. You will bear the costs of conversion through
deductions from those payments.
Exchange Rates May Affect the Value of a New York Judgment Involving
Non-U.S. Dollar Securities
The notes will be governed by and construed in accordance with the laws of
the State of New York. Unlike many courts in the United States outside the
State of New York, the courts in the State of New York customarily enter
judgments or decrees for money damages in the foreign currency in which notes
are denominated. These amounts would then be converted into U.S. dollars at the
rate of exchange in effect on the date the judgment or decree is entered. You
would bear the foreign currency risk during litigation.
ADDITIONAL RISKS SPECIFIC TO PARTICULAR SECURITIES ISSUED UNDER OUR SERIES A
PROGRAM WILL BE DETAILED IN THE APPLICABLE PRICING SUPPLEMENTS.
S-4
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DESCRIPTION OF NOTES
Investors should carefully read the general terms and provisions of our
debt securities in "Description of Debt Securities" in the prospectus. This
section supplements that description. The pricing supplement will add specific
terms for each issuance of notes and may modify or replace any of the
information in this section and in "Description of Debt Securities" in the
prospectus.
General Terms of Notes
We may issue notes under an Indenture (the "Indenture"), between us and
The Chase Manhattan Bank ("Chase"), as Trustee. The Series A medium-term notes
issued under the Indenture will constitute a single series under the Indenture,
together with any medium-term notes we issue in the future under the Indenture
that we designate as being part of that series.
Outstanding Indebtedness of the Bank. The Indenture does not limit the
amount of additional indebtedness that we may incur.
Ranking. Notes issued under the Indenture will constitute unsecured and
unsubordinated obligations of the Bank and rank pari passu without any
preference among them and with all other present and future unsecured and
unsubordinated obligations of the Bank save for those preferred by mandatory
provision of law.
Terms Specified in Pricing Supplements. A pricing supplement will specify
the following terms of any issuance of our Series A medium-term notes to the
extent applicable:
o the specific designation of the notes;
o the issue price (price to public);
o the aggregate principal amount;
o the denominations or minimum denominations;
o the original issue date;
o the stated maturity date;
o whether the notes are fixed rate notes, floating rate notes, or notes
with original issue discount;
o for fixed rate notes, the rate per year at which the notes will bear
interest, if any, or the method of calculating that rate and the
dates on which interest will be payable;
o for floating rate notes, the base rate, the index maturity, the
spread, the spread multiplier, the initial interest rate, the
interest reset periods, the interest payment dates, the maximum
interest rate, the minimum interest rate and any other terms relating
to the particular method of calculating the interest rate for the
note;
o whether the notes may be redeemed, in whole or in part, at our option
or repaid at your option, prior to the stated maturity date, and the
terms of any redemption or repayment;
o whether the notes are currency-linked notes and/or notes linked to
commodity prices, single securities, baskets of securities or
indices;
o the terms on which holders of the notes may convert or exchange them
into or for stock or other securities of entities not affiliated with
us or any other property, any specific terms relating to the
adjustment of the
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conversion or exchange feature and the period during which the
holders may effect the conversion or exchange;
o if any note is not denominated and payable in U.S. dollars, the
currency or currencies in which the principal, premium, if any, and
interest, if any, will be paid, which we refer to as the "specified
currency," along with any other terms relating to the non-U.S. dollar
denomination, including exchange rates as against the U.S. dollar at
selected times during the last five years and any exchange controls
affecting that specified currency;
o whether and under what circumstances we will pay additional amounts
on the notes for any tax, assessment or governmental charge withheld
or deducted and, if so, whether we will have the option to redeem
those debt securities rather than pay the additional amounts;
o whether the notes will be listed on any stock exchange;
o whether the notes will be issued in book-entry or certificated form;
o if the notes are in book-entry form, whether the notes will be
offered on a global basis to investors through Euroclear and
Clearstream, Luxembourg as well as through the Depositary (each as
defined below); and
o any other terms on which we will issue the notes.
Some Definitions. We have defined some of the terms that we use frequently
in this prospectus supplement below:
A "business day" means any day, other than a Saturday or Sunday, (a) that
is neither a legal holiday nor a day on which banking institutions are
authorized or required by law or regulation to close (x) in The City of New
York or (y) for notes denominated in a specified currency other than U.S.
dollars or euro, in the principal financial center of the country of the
specified currency and (b) for notes denominated in euro, that is also a day on
which the Trans-European Automated Real-time Gross Settlement Express Transfer
System, which is commonly referred to as "TARGET," is operating.
"Clearstream, Luxembourg" means Clearstream Banking, societe anonyme.
"Depositary" means The Depository Trust Company, New York, New York.
"Euro LIBOR notes" means LIBOR notes for which the index currency is
euros.
"Euroclear operator" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear system.
An "interest payment date" for any note means a date on which, under the
terms of that note, regularly scheduled interest is payable.
"London banking day" means any day on which dealings in deposits in the
relevant index currency are transacted in the London interbank market.
The "record date" for any interest payment date is the date 15 calendar
days prior to that interest payment date, whether or not that date is a
business day.
"TARGET Settlement Day" means any day on which the Trans-European
Automated Real-time Gross Settlement Express Transfer System is open.
References in this prospectus supplement to "U.S. dollar," or "U.S.$" or
"$" are to the currency of the United States of America.
S-6
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Forms of Notes
We will offer the notes on a continuing basis and will issue notes only in
fully registered form either as book-entry notes or as certificated notes.
Book-Entry Notes. For notes in book-entry form, we will issue one or more
global certificates representing the entire issue of notes. Except as set forth
in the prospectus under "Forms of Securities -- Global Securities," you may not
exchange book-entry notes or interests in book-entry notes for certificated
notes.
Each global note certificate 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. These certificates name the Depositary or its
nominee as the owner of the notes. The Depositary maintains a computerized
system that will reflect the interests held by its participants in the global
notes. An investor's beneficial interest will be reflected in the records of
the Depositary's direct or indirect participants through an account maintained
by the investor with its broker/dealer, bank, trust company or other
representative. A further description of the Depositary's procedures for global
notes representing book-entry notes is set forth in the prospectus under "Forms
of Securities--Global Securities." The Depositary has confirmed to us, the
agent and each trustee that it intends to follow these procedures.
Certificated Notes. If we issue notes in certificated form, the
certificate will name the investor or the investor's nominee as the owner of
the note. The person named in the note register will be considered the owner of
the note for all purposes under the Indenture. For example, if we need to ask
the holders of the notes to vote on a proposed amendment to the notes, the
person named in the note register will be asked to cast any vote regarding that
note. If you have chosen to have some other entity hold the certificates for
you, that entity will be considered the owner of your note in our records and
will be entitled to cast the vote regarding your note. You may not exchange
certificated notes for book-entry notes or interests in book-entry notes.
Denominations. We will issue the notes:
o for U.S. dollar-denominated notes, in denominations of $1,000 or any
amount greater than $1,000 that is an integral multiple of $1,000; or
o for notes denominated in a specified currency other than U.S.
dollars, in denominations of the equivalent of $1,000, rounded to an
integral multiple of 1,000 units of the specified currency, or any
larger integral multiple of 1,000 units of the specified currency, as
determined by reference to the market exchange rate, as defined under
"-- Interest and Principal Payments -- Unavailability of Foreign
Currency" below, on the business day immediately preceding the date
of issuance.
Interest and Principal Payments
Payments, Exchanges and Transfers. Holders may present notes for payment
of principal, premium, if any, and interest, if any, register the transfer of
the notes and exchange the notes at the agency in the Borough of Manhattan, The
City of New York, maintained by us for that purpose. However, holders of global
notes may transfer and exchange global notes only in the manner and to the
extent set forth under "Forms of Securities -- Global Securities" in the
prospectus. On the date of this prospectus supplement, the agent for the
payment, transfer and exchange of the notes is The Chase Manhattan Bank, acting
through its corporate trust office at 450 West 33rd Street, New York, New York
10001. We refer to The Chase Manhattan Bank, acting in this capacity, as the
paying agent.
We will not be required to:
o register the transfer of or exchange any note if the holder has
exercised the holder's right, if any, to require us to repurchase the
note, in whole or in part, except the portion of the note not
required to be repurchased,
o register the transfer of or exchange notes to be redeemed for a
period of fifteen calendar days preceding the mailing of the relevant
notice of redemption, or
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o register the transfer of or exchange any registered note selected for
redemption in whole or in part, except the unredeemed or unpaid
portion of that registered note being redeemed in part.
No service charge will be made for any registration or transfer or
exchange of notes, but we may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection with the registration of
transfer or exchange of notes.
Although we anticipate making payments of principal, premium, if any, and
interest, if any, on most notes in U.S. dollars, some notes may be payable in
foreign currencies as specified in the applicable pricing supplement.
Currently, few facilities exist in the United States to convert U.S. dollars
into foreign currencies and vice versa. In addition, most U.S. banks do not
offer non-U.S. dollar denominated checking or savings account facilities.
Accordingly, unless alternative arrangements are made, we will pay principal,
premium, if any, and interest, if any, on notes that are payable in a foreign
currency to an account at a bank outside the United States, which, in the case
of a note payable in euro, will be made by credit or transfer to a euro account
specified by the payee in a country for which the euro is the lawful currency.
Recipients of Payments. The paying agent will pay interest to the person
in whose name the note is registered at the close of business on the applicable
record date. However, upon maturity, redemption or repayment, the paying agent
will pay any interest due to the person to whom it pays the principal of the
note. The paying agent will make the payment of interest on the date of
maturity, redemption or repayment, whether or not that date is an interest
payment date. The paying agent will make the initial interest payment on a note
on the first interest payment date falling after the date of issuance, unless
the date of issuance is less than 15 calendar days before an interest payment
date. In that case, the paying agent will pay interest, on the next succeeding
interest payment date to the holder of record on the record date corresponding
to the succeeding interest payment date.
Book-Entry Notes. The paying agent will make payments of principal,
premium, if any, and interest, if any, to the account of the Depositary, as
holder of book-entry notes, by wire transfer of immediately available funds. We
expect that the Depositary, upon receipt of any payment, will immediately
credit its participants' accounts in amounts proportionate to their respective
beneficial interests in the book-entry notes as shown on the records of the
Depositary. We also expect that payments by the Depositary's participants to
owners of beneficial interests in the book-entry notes will be governed by
standing customer instructions and customary practices and will be the
responsibility of those participants.
Certificated Notes. Except as indicated below for payments of interest at
maturity, redemption or repayment, the paying agent will make U.S. dollar
payments of interest either:
o by check mailed to the address of the person entitled to payment as
shown on the note register; or
o for a holder of at least $10,000,000 in aggregate principal amount of
certificated notes having the same interest payment date, by wire
transfer of immediately available funds, if the holder has given
written notice to the paying agent not later than 15 calendar days
prior to the applicable interest payment date.
U.S. dollar payments of principal, premium, if any, and interest, if any, upon
maturity, redemption or repayment on a note will be made in immediately
available funds against presentation and surrender of the note.
Payment Procedures for Book-Entry Notes Denominated in a Foreign Currency.
Book-entry notes payable in a specified currency other than U.S. dollars will
provide that a beneficial owner of interests in those notes may elect to
receive all or a portion of the payments of principal, premium, if any, or
interest, if any, in U.S. dollars. In those cases, the Depositary will elect to
receive all payments with respect to the beneficial owner's interest in the
notes in U.S. Dollars, unless the beneficial owner takes the following steps:
o The beneficial owner must give complete instructions to the direct or
indirect participant through which it holds the book-entry notes of
its election to receive those payments in the specified currency
other than U.S. dollars by wire transfer to an account specified by
the beneficial owner with a bank located outside the United
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States. In the case of a note payable in euro, the account must be a
euro account in a country for which the euro is the lawful currency.
o The participant must notify the Depositary of the beneficial owner's
election on or prior to the third business day after the applicable
record date, for payments of interest, and on or prior to the twelfth
business day prior to the maturity date or any redemption or
repayment date, for payment of principal or premium.
o The Depositary will notify the paying agent of the beneficial owner's
election on or prior to the fifth business day after the applicable
record date, for payments of interest, and on or prior to the tenth
business day prior to the maturity date or any redemption or
repayment date, for payment of principal or premium.
Beneficial owners should consult their participants in order to ascertain
the deadline for giving instructions to participants in order to ensure that
timely notice will be delivered to the Depositary.
Payment Procedures for Certificated Notes Denominated in a Foreign
Currency. For certificated notes payable in a specified currency other than
U.S. dollars, the notes may provide that the holder may elect to receive all or
a portion of the payments on those notes in U.S. dollars. To do so, the holder
must send a written request to the paying agent:
o for payments of interest, on or prior to the fifth business day after
the applicable record date; or
o for payments of principal, at least ten business days prior to the
maturity date or any redemption or repayment date.
To revoke this election for all or a portion of the payments on the
certificated notes, the holder must send written notice to the paying agent:
o at least five business days prior to the applicable record date, for
payment of interest; or
o at least ten calendar days prior to the maturity date or any
redemption or repayment date, for payments of principal.
If the holder does not elect to be paid in U.S. dollars, the paying agent will
pay the principal, premium, if any, or interest, if any, on the certificated
notes:
o by wire transfer of immediately available funds in the specified
currency to the holder's account at a bank located outside the United
States, and in the case of a note payable in euro, in a country for
which the euro is the lawful currency, if the paying agent has
received the holder's written wire transfer instructions not less
than 15 calendar days prior to the applicable payment date; or
o by check payable in the specified currency mailed to the address of
the person entitled to payment that is specified in the note
register, if the holder has not provided wire instructions.
However, the paying agent will only pay the principal of the certificated
notes, any premium and interest, if any, due at maturity, or on any redemption
or repayment date, upon surrender of the certificated notes at the office or
agency of the paying agent.
Determination of Exchange Rate for Payments in U.S. Dollars for Notes
Denominated in a Foreign Currency. The exchange rate agent will convert the
specified currency into U.S. dollars for holders who elect to receive payments
in U.S. dollars and for beneficial owners of book-entry notes that do not
follow the procedures we have described immediately above. The conversion will
be based on the highest bid quotation in The City of New York received by the
exchange rate agent at approximately 11:00 a.m., New York City time, on the
second business day preceding the applicable payment date from three recognized
foreign exchange dealers for the purchase by the quoting dealer:
o of the specified currency for U.S. dollars for settlement on the
payment date;
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o in the aggregate amount of the specified currency payable to those
holders or beneficial owners of notes; and
o at which the applicable dealer commits to execute a contract.
One of the dealers providing quotations may be the exchange rate agent unless
the exchange rate agent is our affiliate. If those bid quotations are not
available, payments will be made in the specified currency. The holders or
beneficial owners of notes will pay all currency exchange costs by deductions
from the amounts payable on the notes.
Unavailability of Foreign Currency. The relevant specified currency may
not be available to us for making payments of principal of, premium, if any, or
interest, if any, on any note. This could occur due to the imposition of
exchange controls or other circumstances beyond our control or if the specified
currency is no longer used by the government of the country issuing that
currency or by public institutions within the international banking community
for the settlement of transactions. If the specified currency is unavailable,
we may satisfy our obligations to holders of the notes by making those payments
on the date of payment in U.S. dollars on the basis of the noon dollar buying
rate in The City of New York for cable transfers of the currency or currencies
in which a payment on any note was to be made, published by the Federal Reserve
Bank of New York, which we refer to as the "market exchange rate." If that rate
of exchange is not then available or is not published for a particular payment
currency, the market exchange rate will be based on the highest bid quotation
in The City of New York received by the exchange rate agent at approximately
11:00 a.m., New York City time, on the second business day preceding the
applicable payment date from three recognized foreign exchange dealers for the
purchase by the quoting dealer:
o of the specified currency for U.S. dollars for settlement on the
payment date;
o in the aggregate amount of the specified currency payable to those
holders or beneficial owners of notes; and
o at which the applicable dealer commits to execute a contract.
One of the dealers providing quotations may be the exchange rate agent unless
the exchange rate agent is our affiliate. If those bid quotations are not
available, the exchange rate agent will determine the market exchange rate at
its sole discretion.
These provisions do not apply if a specified currency is unavailable
because it has been replaced by the euro. If the euro has been substituted for
a specified currency, we may at our option, or will, if required by applicable
law, without the consent of the holders of the affected notes, pay the
principal of, premium, if any, or interest, if any, on any note denominated in
the specified currency in euro instead of the specified currency, in conformity
with legally applicable measures taken pursuant to, or by virtue of, the treaty
establishing the European Community, as amended by the treaty on European
Union. Any payment made in U.S. dollars or in euro as described above where the
required payment is in an unavailable specified currency will not constitute an
event of default.
Discount Notes. Some notes may be considered to be issued with original
issue discount, which must be included in income for United States federal
income tax purposes at a constant yield. See "United States Federal Taxation --
Notes -- Discount Notes" below. If the principal of any note that is considered
to be issued with original issue discount is declared to be due and payable
immediately as described under "Description of Debt Securities -- Events of
Default" in the prospectus, the amount of principal due and payable on that
note will be limited to:
o the aggregate principal amount of the note multiplied by the sum of
o its issue price, expressed as a percentage of the aggregate principal
amount, plus
o the original issue discount amortized from the date of issue to the
date of declaration, expressed as a percentage of the aggregate
principal amount.
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The amortization will be calculated using the "interest method," computed in
accordance with generally accepted accounting principles in effect on the date
of declaration. See the applicable pricing supplement for any special
considerations applicable to these notes.
Fixed Rate Notes
Each fixed rate note will bear interest from the date of issuance at the
annual rate stated on its face until the principal is paid or made available
for payment.
How Interest Is Calculated. Interest on fixed rate notes will be computed
on the basis of a 360-day year of twelve 30-day months.
How Interest Accrues. Interest on fixed rate notes will accrue from and
including the most recent interest payment date to which interest has been paid
or duly provided for, or, if no interest has been paid or duly provided for,
from and including the issue date or any other date specified in a pricing
supplement on which interest begins to accrue. Interest will accrue to but
excluding the next interest payment date, or, if earlier, the date on which the
principal has been paid or duly made available for payment, except as described
below under "If a Payment Date is Not a Business Day."
When Interest Is Paid. Payments of interest on fixed rate notes will be
made on the interest payment dates specified in the applicable pricing
supplement. However, if the first interest payment date is less than 15 days
after the date of issuance, interest will not be paid on the first interest
payment date, but will be paid on the second interest payment date.
Amount of Interest Payable. Interest payments for fixed rate notes will
include accrued interest from and including the date of issue or from and
including the last date in respect of which interest has been paid, as the case
may be, to but excluding the relevant interest payment date or date of maturity
or earlier redemption or repayment, as the case may be.
If a Payment Date is Not a Business Day. If any scheduled interest payment
date is not a business day, we will pay interest on the next business day, but
interest on that payment will not accrue during the period from and after the
scheduled interest payment date. If the scheduled maturity date or date of
redemption or repayment is not a business day, we may pay interest and
principal and premium, if any, on the next succeeding business day, but
interest on that payment will not accrue during the period from and after the
scheduled maturity date or date of redemption or repayment.
Floating Rate Notes
Each floating rate note will mature on the date specified in the
applicable pricing supplement.
Each floating rate note will bear interest at a floating rate determined
by reference to an interest rate or interest rate formula, which we refer to as
the "base rate." The base rate may be one or more of the following:
o the CD rate,
o the commercial paper rate,
o EURIBOR,
o the federal funds rate,
o LIBOR,
o the prime rate,
o the Treasury rate,
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o the CMT rate, or
o any other rate or interest rate formula specified in the applicable
pricing supplement and in the floating rate note.
Formula for Interest Rates. The interest rate on each floating rate note
will be calculated by reference to:
o the specified base rate based on the index maturity,
o plus or minus the spread, if any, and/or
o multiplied by the spread multiplier, if any.
For any floating rate note, "index maturity" means 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. The "spread" is the number
of basis points (one one-hundredth of a percentage point) specified in the
applicable pricing supplement to be added to or subtracted from the base rate
for a floating rate note. The "spread multiplier" is the percentage specified
in the applicable pricing supplement to be applied to the base rate for a
floating rate note.
Limitations on Interest Rate. A floating rate note may also have either or
both of the following limitations on the interest rate:
o a maximum limitation, or ceiling, on the rate of interest which may
accrue during any interest period, which we refer to as the "maximum
interest rate;"
o a minimum limitation, or floor, on the rate of interest that may
accrue during any interest period, which we refer to as the "minimum
interest rate."
Any applicable maximum interest rate or minimum interest rate will be set forth
in the applicable pricing supplement.
In addition, the interest rate on a floating rate note may not be higher
than the maximum rate permitted by New York law, as that rate may be modified
by United States law of general application. Under current New York law, the
maximum rate of interest, subject to some exceptions, for any loan in an amount
less than $250,000 is 16% and for any loan in the amount of $250,000 or more
but less than $2,500,000 is 25% per annum on a simple interest basis. These
limits do not apply to loans of $2,500,000 or more.
How Floating Interest Rates Are Reset. The interest rate in effect from
the date of issue to the first interest reset date for a floating rate note
will be the initial interest rate specified in the applicable pricing
supplement. We refer to this rate as the "initial interest rate." The interest
rate on each floating rate note may be reset daily, weekly, monthly, quarterly,
semiannually or annually. This period is the "interest reset period" and the
first day of each interest reset period is the "interest reset date." The
"interest determination date" for any interest reset date is the day the
calculation agent will refer to when determining the new interest rate at which
a floating rate will reset, and is applicable as follows:
o for CD rate notes, commercial paper rate notes, federal funds rate
notes, prime rate notes and CMT rate notes, the interest
determination date will be the second business day prior to the
interest reset date;
o for EURIBOR notes or Euro LIBOR notes, the interest determination
date will be the second TARGET Settlement Day, as defined above under
"-- General Terms of Notes -- Some Definitions," prior to the
interest reset date;
o for LIBOR notes (other than Euro LIBOR notes), the interest
determination date will be the second London banking day prior to the
interest reset date, except that the interest determination date
pertaining to an interest reset date for a LIBOR note for which the
index currency is pounds sterling will be the interest reset date;
and
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o for Treasury rate notes, the interest determination date will be the
day of the week in which the 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, but the auction may be held on the preceding Friday. If, as
the result of a legal holiday, the auction is held on the preceding Friday,
that Friday will be the interest determination date pertaining to the interest
reset date occurring in the next succeeding week. If an auction falls on a day
that is an interest reset date, that interest reset date will be the next
following business day.
The interest reset dates will be specified in the applicable pricing
supplement. If an interest reset date for any floating rate note falls on a day
that is not a business day, it will be postponed to the following business day,
except that, in the case of a EURIBOR note or a LIBOR note, if that business
day is in the next calendar month, the interest reset date will be the
immediately preceding business day.
The interest rate in effect for the ten calendar days immediately prior to
maturity, redemption or repayment will be the one in effect on the tenth
calendar day preceding the maturity, redemption or repayment date.
In the detailed descriptions of the various base rates which follow, the
"calculation date" pertaining to an interest determination date means the
earlier of (1) the tenth calendar day after that interest determination date,
or, if that day is not a business day, the next succeeding business day, and
(2) the business day preceding the applicable interest payment date or maturity
date or, for any principal amount to be redeemed or repaid, any redemption or
repayment date.
How Interest Is Calculated. Interest on floating rate notes will accrue
from and including the most recent interest payment date to which interest has
been paid or duly provided for, or, if no interest has been paid or duly
provided for, from and including the issue date or any other date specified in
a pricing supplement on which interest begins to accrue. Interest will accrue
to but excluding the next interest payment date or, if earlier, the date on
which the principal has been paid or duly made available for payment, except as
described below under "If a Payment Date is Not a Business Day."
The applicable pricing supplement will specify a calculation agent for 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 that will become effective on the next
interest reset date for that floating rate note.
For a floating rate note, accrued interest will be calculated by
multiplying the principal amount of the floating rate note by an accrued
interest factor. This accrued interest factor will be computed by adding the
interest factors calculated for each day in the period for which interest is
being paid. The interest factor for each day is computed by dividing the
interest rate applicable to that day:
o by 360, in the case of CD rate notes, commercial paper rate notes,
EURIBOR notes, federal funds rate notes, LIBOR notes, except for
LIBOR notes denominated in pounds sterling, and prime rate notes;
o by 365, in the case of LIBOR notes denominated in pounds sterling; or
o by the actual number of days in the year, in the case of Treasury rate
notes and CMT rate notes.
For these calculations, the interest rate in effect on any interest reset date
will be the applicable rate as reset on that date. The interest rate applicable
to any other day is the interest rate from the immediately preceding interest
reset date or, if none, the initial interest rate.
All percentages used in or 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 U.S. dollar
amounts used in or resulting from these calculations on floating rate notes
will be rounded to the nearest cent, with one-half cent rounded upward.
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When Interest Is Paid. We will pay interest on floating rate notes on the
interest payment dates specified in the applicable pricing supplement. However,
if the first interest payment date is less than 15 days after the date of
issuance, interest will not be paid on the first interest payment date, but
will be paid on the second interest payment date.
If a Payment Date is Not a Business Day. If any scheduled interest payment
date, other than the maturity date or any earlier redemption or repayment date,
for any floating rate note falls on a day that is not a business day, it will
be postponed to the following business day, except that, in the case of a
EURIBOR note or a LIBOR note, if that business day would fall in the next
calendar month, the interest payment date will be the immediately preceding
business day. If the scheduled maturity date or any earlier redemption or
repayment date of a floating rate note falls on a day that is not a business
day, the payment of principal, premium, if any, and interest, if any, will be
made on the next succeeding business day, but interest on that payment will not
accrue during the period from and after the maturity, redemption or repayment
date.
Base Rates
CD Rate Notes
CD rate notes will bear interest at the interest rates specified in the CD
rate notes and in the applicable pricing supplement. Those interest rates will
be based on the CD rate and any spread and/or spread multiplier and will be
subject to the minimum interest rate and the maximum interest rate, if any.
"CD rate" means, for any interest determination date, the rate on that
date for negotiable certificates of deposit having the index maturity specified
in the applicable pricing supplement as published by the Board of Governors of
the Federal Reserve System in "Statistical Release H.15(519), Selected Interest
Rates," or any successor publication of the Board of Governors of the Federal
Reserve System ("H.15(519)") under the heading "CDs (Secondary Market)."
The following procedures will be followed if the CD rate cannot be
determined as described above:
o If the above rate is not published in H.15(519) by 9:00 a.m., New
York City time, on the calculation date, the CD rate will be the rate
on that interest determination date set forth in the daily update of
H.15(519), available through the world wide website of the Board of
Governors of the Federal Reserve System at
http://www.bog.frb.fed.us/releases/h15/update, or any successor site
or publication, which is commonly referred to as the "H.15 Daily
Update," for the interest determination date for certificates of
deposit having the index maturity specified in the applicable pricing
supplement, under the caption "CDs (Secondary Market)."
o If the above rate is not yet published in either H.15(519) or the
H.15 Daily Update by 3:00 p.m., New York City time, on the
calculation date, the calculation agent will determine the CD rate to
be the arithmetic mean of the secondary market offered rates as of
10:00 a.m., New York City time, on that 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, after consultation with us, for negotiable
certificates of deposit of major United States money center banks of
the highest credit standing in the market for negotiable certificates
of deposit with a remaining maturity closest to the index maturity
specified in the applicable pricing supplement in an amount that is
representative for a single transaction in that market at that time.
o If the dealers selected by the calculation agent are not quoting as
set forth above, the CD rate for that interest determination date
will remain the CD rate for the immediately preceding interest reset
period, or, if there was no interest reset period, the rate of
interest payable will be the initial interest rate.
Commercial Paper Rate Notes
Commercial paper rate notes will bear interest at the interest rates
specified in the commercial paper rate notes and in the applicable pricing
supplement. Those interest rates will be based on the commercial paper rate and
any spread and/or spread multiplier and will be subject to the minimum interest
rate and the maximum interest rate, if any.
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The "commercial paper rate" means, for any interest determination date,
the money market yield, calculated as described below, of the rate on that date
for commercial paper having the index maturity specified in the applicable
pricing supplement, as that rate is published in H.15(519), under the heading
"Commercial Paper -- Nonfinancial."
The following procedures will be followed if the commercial paper rate
cannot be determined as described above:
o If the above rate is not published by 9:00 a.m., New York City time,
on the calculation date, then the commercial paper rate will be the
money market yield of the rate on that interest determination date
for commercial paper of the index maturity specified in the
applicable pricing supplement as published in the H.15 Daily Update
under the heading "Commercial Paper -- Nonfinancial."
o If by 3:00 p.m., New York City time, on that calculation date the
rate is not yet published in either H.15(519) or the H.15 Daily
Update, then the calculation agent will determine the commercial
paper rate to be the money market yield of the arithmetic mean of the
offered rates as of 11:00 a.m., New York City time, on that interest
determination date of three leading dealers of commercial paper in
The City of New York selected by the calculation agent, after
consultation with us, for commercial paper of the index maturity
specified in the applicable pricing supplement, placed for an
industrial issuer whose bond rating is "AA," or the equivalent, from
a nationally recognized statistical rating agency.
o If the dealers selected by the calculation agent are not quoting as
mentioned above, the commercial paper rate for that interest
determination date will remain the commercial paper rate for the
immediately preceding interest reset period, or, if there was no
interest reset period, the rate of interest payable will be the
initial interest rate.
The "money market yield" will be a yield calculated in accordance with the
following formula:
money market yield = D x 360 x 100
---------------------
360 - (D x M)
where "D" refers to the applicable per year rate for commercial paper quoted on
a bank discount basis and expressed as a decimal and "M" refers to the actual
number of days in the interest period for which interest is being calculated.
EURIBOR Notes
EURIBOR notes will bear interest at the interest rates specified in the
EURIBOR notes and in the applicable pricing supplement. That interest rate will
be based on EURIBOR and any spread and/or spread multiplier and will be subject
to the minimum interest rate and the maximum interest rate, if any.
"EURIBOR" means, for any interest determination date, the rate for
deposits in euros as sponsored, calculated and published jointly by the
European Banking Federation and ACI - The Financial Market Association, or any
company established by the joint sponsors for purposes of compiling and
publishing those rates, for the index maturity specified in the applicable
pricing supplement as that rate appears on the display on Bridge Telerate,
Inc., or any successor service, on page 248 or any other page as may replace
page 248 on that service, which is commonly referred to as "Telerate Page 248,"
as of 11:00 a.m. (Brussels time).
The following procedures will be followed if the rate cannot be determined
as described above:
o If the above rate does not appear, the calculation agent will request
the principal Euro-zone office of each of four major banks in the
Euro-zone interbank market, as selected by the calculation agent,
after consultation with us, to provide the calculation agent with its
offered rate for deposits in euros, at approximately 11:00 a.m.
(Brussels time) on the interest determination date, to prime banks in
the Euro-zone interbank market for the index maturity specified in
the applicable pricing supplement commencing on the applicable
interest reset date, and in a principal amount not less than the
equivalent of U.S.$1 million in euro that is representative of
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a single transaction in euro, in that market at that time. If at
least two quotations are provided, EURIBOR will be the arithmetic
mean of those quotations.
o If fewer than two quotations are provided, EURIBOR will be the
arithmetic mean of the rates quoted by four major banks in the
Euro-zone, as selected by the calculation agent, after consultation
with us, at approximately 11:00 a.m. (Brussels time), on the
applicable interest reset date for loans in euro to leading European
banks for a period of time equivalent to the index maturity specified
in the applicable pricing supplement commencing on that interest
reset date in a principal amount not less than the equivalent of
U.S.$1 million in euro.
o If the banks so selected by the calculation agent are not quoting as
mentioned above, EURIBOR for that determination date will remain
EURIBOR for the immediately preceding interest reset period, or, if
there was no interest reset period, the rate of interest will be the
initial interest rate.
"Euro-zone" means the region comprised of member states of the European
Union that adopt the single currency in accordance with the treaty establishing
the European Community, as amended by the treaty on European Union.
Federal Funds Rate Notes
Federal funds rate notes will bear interest at the interest rates
specified in the federal funds rate notes and in the applicable pricing
supplement. Those interest rates will be based on the federal funds rate and
any spread and/or spread multiplier and will be subject to the minimum interest
rate and the maximum interest rate, if any.
The "federal funds rate" means, for any interest determination date, the
rate on that date for federal funds as published in H.15(519) under the heading
"Federal Funds (Effective)" as displayed on Bridge Telerate, Inc., or any
successor service, on page 120 or any other page as may replace the applicable
page on that service, which is commonly referred to as "Telerate Page 120."
The following procedures will be followed if the federal funds rate cannot
be determined as described above:
o If the above rate is not published by 9:00 a.m., New York City time,
on the calculation date, the federal funds rate will be the rate on
that interest determination date as published in the H.15 Daily
Update under the heading "Federal Funds/Effective Rate."
o If the above rate is not yet published in either H.15(519) or the
H.15 Daily Update by 3:00 p.m., New York City time, on the
calculation date, the calculation agent will determine the federal
funds rate to be the arithmetic mean of the rates for the last
transaction in overnight federal funds by each of three leading
brokers of federal funds transactions in The City of New York
selected by the calculation agent, after consultation with us, prior
to 9:00 a.m., New York City time, on that interest determination
date.
o If the brokers selected by the calculation agent are not quoting as
mentioned above, the federal funds rate for that interest
determination date will remain the federal funds rate for the
immediately preceding interest reset period, or, if there was no
interest reset period, the rate of interest payable will be the
initial interest rate.
LIBOR Notes
LIBOR notes will bear interest at the interest rates specified in the
LIBOR notes and in the applicable pricing supplement. That interest rate will
be based on London interbank offered rate, which is commonly referred to as
"LIBOR," and any spread and/or spread multiplier and will be subject to the
minimum interest rate and the maximum interest rate, if any.
The calculation agent will determine "LIBOR" for each interest
determination date as follows:
o As of the interest determination date, LIBOR will be either:
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o if "LIBOR Reuters" is specified in the applicable pricing
supplement, the arithmetic mean of the offered rates for
deposits in the index currency having the index maturity
designated in the applicable pricing supplement, commencing on
the second London banking day immediately following that
interest determination date, that appear on the Designated LIBOR
Page, as defined below, as of 11:00 a.m., London time, on that
interest determination date, if at least two offered rates
appear on the Designated LIBOR Page; except that if the
specified Designated LIBOR Page, by its terms provides only for
a single rate, that single rate will be used; or
o if "LIBOR Telerate" is specified in the applicable pricing
supplement, the rate for deposits in the index currency having
the index maturity designated in the applicable pricing
supplement, commencing on the second London banking day
immediately following that interest determination date or, if
pounds sterling is the index currency, commencing on that
interest determination date, that appears on the Designated
LIBOR Page at approximately 11:00 a.m., London time, on that
interest determination date.
o If (1) fewer than two offered rates appear and "LIBOR Reuters" is
specified in the applicable pricing supplement, or (2) no rate
appears and the applicable pricing supplement specifies either (x)
"LIBOR Telerate" or (y) "LIBOR Reuters" and the Designated LIBOR Page
by its terms provides only for a single rate, then 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 after consultation with us, to provide the
calculation agent with its offered quotation for deposits in the
index currency for the period of the index maturity specified in the
applicable pricing supplement commencing on the second London banking
day immediately following the interest determination date or, if
pounds sterling is the index currency, commencing on that interest
determination date, to prime banks in the London interbank market at
approximately 11:00 a.m., London time, on that interest determination
date and in a principal amount that is representative of a single
transaction in that index currency in that market at that time.
o If at least two quotations are provided, LIBOR determined on that
interest determination date will be the arithmetic mean of those
quotations. If fewer than two quotations are provided, LIBOR will be
determined for the applicable interest reset date as the arithmetic
mean of the rates quoted at approximately 11:00 a.m., London time, or
some other time specified in the applicable pricing supplement, in
the applicable principal financial center for the country of the
index currency on that interest reset date, by three major banks in
that principal financial center selected by the calculation agent,
after consultation with us, for loans in the index currency to
leading European banks, having the index maturity specified in the
applicable pricing supplement and in a principal amount that is
representative of a single transaction in that index currency in that
market at that time.
o If the banks so selected by the calculation agent are not quoting as
mentioned above, LIBOR for that determination date will remain LIBOR
for the immediately preceding interest reset period, or, if there was
no interest reset period, the rate of interest payable will be the
initial interest rate.
The "index currency" means the currency specified in the applicable
pricing supplement as the currency for which LIBOR will be calculated, or, if
the euro is substituted for that currency, the index currency will be the euro.
If that currency is not specified in the applicable pricing supplement, the
index currency will be U.S. dollars.
"Designated LIBOR Page" means either (a) if "LIBOR Reuters" is designated
in the applicable pricing supplement, the display on the Reuters Monitor Money
Rates Service for the purpose of displaying the London interbank rates of major
banks for the applicable index currency or its designated successor, or (b) if
"LIBOR Telerate" is designated in the applicable pricing supplement, the
display on Bridge Telerate Inc., or any successor service, on the page
specified in the applicable pricing supplement, or any other page as may
replace that page on that service, for the purpose of displaying the London
interbank rates of major banks for the applicable index currency.
If neither LIBOR Reuters nor LIBOR Telerate is specified in the applicable
pricing supplement, LIBOR for the applicable index currency will be determined
as if LIBOR Telerate were specified, and, if the U.S. dollar is the index
currency, as if Page 3750, had been specified.
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Prime Rate Notes
Prime rate notes will bear interest at the interest rates specified in the
prime rate notes and in the applicable pricing supplement. That interest rate
will be based on the prime rate and any spread and/or spread multiplier, and
will be subject to the minimum interest rate and the maximum interest rate, if
any.
The "prime rate" means, for any interest determination date, the rate on
that date as published in H.15(519) under the heading "Bank Prime Loan."
The following procedures will be followed if the prime rate cannot be
determined as described above:
o If the above rate is not published prior to 9:00 a.m., New York City
time, on the calculation date, then the prime rate will be the rate
on that interest determination date as published in H.15 Daily Update
under the heading "Bank Prime Loan."
o If the rate is not published in either H.15 (519) or the H.15 Daily
Update by 3:00 p.m., New York City time, on the calculation date,
then the calculation agent will determine the prime rate to be the
arithmetic mean of the rates of interest publicly announced by each
bank that appears on the Reuters Screen USPRIME 1 Page, as defined
below, as that bank's prime rate or base lending rate as in effect
for that interest determination date.
o If fewer than four rates appear on the Reuters Screen USPRIME 1 Page
for that interest determination date, the calculation agent will
determine the prime rate to be the arithmetic mean of the prime rates
quoted on the basis of the actual number of days in the year divided
by 360 as of the close of business on that interest determination
date by at least three major banks in The City of New York selected
by the calculation agent, after consultation with us.
o If the banks selected by the calculation agent are not quoting as
mentioned above, the prime rate for that interest determination date
will remain the prime rate for the immediately preceding interest
reset period, or, if there was no interest reset period, the rate of
interest payable will be the initial interest rate.
"Reuters Screen USPRIME 1 Page" means the display designated as page
"USPRIME 1" on the Reuters Monitor Money Rates Service, or any successor
service, or any other page as may replace the USPRIME 1 Page on that service
for the purpose of displaying prime rates or base lending rates of major United
States banks.
Treasury Rate Notes
Treasury rate notes will bear interest at the interest rates specified in
the Treasury rate notes and in the applicable pricing supplement. That interest
rate will be based on the Treasury rate and any spread and/or spread multiplier
and will be subject to the minimum interest rate and the maximum interest rate,
if any.
"Treasury rate" means:
o the rate from the auction held on the applicable interest
determination date, which we refer to as the "auction," of direct
obligations of the United States, which are commonly referred to as
"Treasury Bills," having the index maturity specified in the
applicable pricing supplement as that rate appears under the caption
"INVESTMENT RATE" on the display on Bridge Telerate, Inc., or any
successor service, on page 56 or any other page as may replace page
56 on that service, which we refer to as "Telerate Page 56," or page
57 or any other page as may replace page 57 on that service, which we
refer to as "Telerate Page 57," or
o if the rate described in the first bullet point is not published by
3:00 p.m., New York City time, on the calculation date, the bond
equivalent yield of the rate for the applicable Treasury Bills as
published in the H.15 Daily Update, or other recognized electronic
source used for the purpose of displaying the applicable rate, under
the caption "U.S. Government Securities/Treasury Bills/Auction High,"
or
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o if the rate described in the second bullet point is not published by
3:00 p.m., New York City time, on the related calculation date, the
bond equivalent yield of the auction rate of the applicable Treasury
Bills, announced by the United States Department of the Treasury, or
o if the rate referred to in the third bullet point is not announced by
the United States Department of the Treasury, or if the auction is
not held, the bond equivalent yield of the rate on the applicable
interest determination date of Treasury Bills having the index
maturity specified in the applicable pricing supplement published in
H.15(519) under the caption "U.S. Government Securities/Treasury
Bills/Secondary Market," or
o if the rate referred to in the fourth bullet point is not so
published by 3:00 p.m., New York City time, on the related
calculation date, the rate on the applicable interest determination
date of the applicable Treasury Bills as published in H.15 Daily
Update, or other recognized electronic source used for the purpose of
displaying the applicable rate, under the caption "U.S. Government
Securities/Treasury Bills/Secondary Market," or
o if the rate referred to in the fifth bullet point is not so published
by 3:00 p.m., New York City time, on the related calculation date,
the rate on the applicable interest determination date calculated by
the calculation agent as the bond equivalent yield of the arithmetic
mean of the secondary market bid rates, as of approximately 3:30
p.m., New York City time, on the applicable interest determination
date, of three primary United States government securities dealers,
which may include the agent or its affiliates, selected by the
calculation agent, for the issue of Treasury Bills with a remaining
maturity closest to the index maturity specified in the applicable
pricing supplement, or
o if the dealers selected by the calculation agent are not quoting as
mentioned set forth above, the Treasury rate for that interest
determination date will remain the Treasury rate for the immediately
preceding interest reset period, or, if there was no interest reset
period, the rate of interest payable will be the initial interest
rate.
The "bond equivalent yield" means a yield calculated in accordance with
the following formula and expressed as a percentage:
bond equivalent yield = D x N x 100
-----------------
360 - (D x M)
where "D" refers to the applicable per annum rate for Treasury Bills quoted on
a bank discount basis, "N" refers to 365 or 366, as the case may be, and "M"
refers to the actual number of days in the interest period for which interest
is being calculated.
CMT Rate Notes
CMT rate notes will bear interest at the interest rates specified in the
CMT rate notes and in the applicable pricing supplement. That interest rate
will be based on the CMT rate and any spread and/or spread multiplier and will
be subject to the minimum interest rate and the maximum interest rate, if any.
The "CMT rate" means, for any interest determination date, the rate
displayed on the Designated CMT Telerate Page, as defined below, 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 defined below, for:
o the rate on that interest determination date, if the Designated CMT
Telerate Page is 7051; and
o the week or the month, as applicable, ended immediately preceding the
week in which the related interest determination date occurs, if the
Designated CMT Telerate Page is 7052.
The following procedures will be followed if the CMT rate cannot be
determined as described above:
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o If the above 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 will be the Treasury Constant
Maturity rate for the Designated CMT Maturity Index as published in
the relevant H.15(519).
o If the above rate described in the first bullet point is no longer
published, or if not published by 3:00 p.m., New York City time, on
the related calculation date, then the CMT rate will be the Treasury
Constant Maturity rate for the Designated CMT Maturity Index or other
United States Treasury rate for the Designated CMT Maturity Index on
the 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 the relevant H.15(519).
o If the information described in the second bullet point is not
provided by 3:00 p.m., New York City time, on the related calculation
date, then the calculation agent will determine the CMT rate to be a
yield to maturity, based on the arithmetic mean of the secondary
market closing offer side prices as of approximately 3:30 p.m., New
York City time, on the interest determination date, reported,
according to their written records, by three leading primary United
States government securities dealers, which we refer to as a
"reference dealer," in The City of New York, which may include an
agent or other affiliates of ours, selected by the calculation agent
as described in the following sentence. The calculation agent will
select five reference dealers, after consultation with us, and will
eliminate 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, which are commonly
referred to as "Treasury notes," with an original maturity of
approximately the Designated CMT Maturity Index and a remaining term
to maturity of not less than that Designated CMT Maturity Index minus
one year. If two Treasury notes with an original maturity as
described above have remaining terms to maturity equally close to the
Designated CMT Maturity Index, the quotes for the Treasury note with
the shorter remaining term to maturity will be used.
o If the calculation agent cannot obtain three Treasury notes
quotations as described in the immediately preceding sentence, the
calculation agent will determine the CMT rate to 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
interest determination date of three reference dealers in The City of
New York, selected using the same method described in the immediately
preceding sentence, for Treasury notes with an original maturity
equal to the number of years closest to but not less than the
Designated CMT Maturity Index and a remaining term to maturity
closest to the Designated CMT Maturity Index and in an amount of at
least $100,000,000.
o If three or four (and not five) of the reference dealers are quoting
as described above, then the CMT rate will be based on the arithmetic
mean of the offer prices obtained and neither the highest nor the
lowest of those quotes will be eliminated.
o If fewer than three reference dealers selected by the calculation
agent are quoting as described above, the CMT rate for that interest
determination date will remain the CMT rate for the immediately
preceding interest reset period, or, if there was no interest reset
period, the rate of interest payable will be the initial interest
rate.
"Designated CMT Telerate Page" means the display on Bridge Telerate, Inc.,
or any successor service, on the page designated in the applicable pricing
supplement or any other page as may replace that page on that service for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519). If
no page is specified in the applicable pricing supplement, the Designated CMT
Telerate Page will be 7052, for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of
the U.S. Treasury securities, which is either 1, 2, 3, 5, 7, 10, 20 or 30
years, specified in the applicable pricing supplement for which the CMT rate
will be calculated. If no maturity is specified in the applicable pricing
supplement, the Designated CMT Maturity Index will be two years.
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Exchangeable Notes
We may issue notes, which we refer to as "exchangeable notes," that are
optionally or mandatorily exchangeable into:
o the securities of an entity not affiliated with us;
o a basket of those securities;
o an index or indices of those securities; or
o any combination of the above.
The exchangeable notes may or may not bear interest or be issued with
original issue discount or at a premium. The general terms of the exchangeable
notes are described below.
Optionally Exchangeable Notes. The holder of an optionally exchangeable
note may, during a period, or at specific times, exchange the note for the
underlying property at a specified rate of exchange. If specified in the
applicable pricing supplement, we will have the option to redeem the optionally
exchangeable note prior to maturity. If the holder of an optionally
exchangeable note does not elect to exchange the note prior to maturity or any
applicable redemption date, the holder will receive the principal amount of the
note plus any accrued interest at maturity or upon redemption.
Mandatorily Exchangeable Notes. At maturity, the holder of a mandatorily
exchangeable note must exchange the note for the underlying property at a
specified rate of exchange, and, therefore, depending upon the value of the
underlying property at maturity, the holder of a mandatorily exchangeable note
may receive less than the principal amount of the note at maturity. If so
indicated in the applicable pricing supplement, the specified rate at which a
mandatorily exchangeable note may be exchanged may vary depending on the value
of the underlying property so that, upon exchange, the holder participates in a
percentage, which may be less than, equal to, or greater than 100% of the
change in value of the underlying property. Mandatorily exchangeable notes may
include notes where we have the right, but not the obligation, to require
holders of notes to exchange their notes for the underlying property.
Payments upon Exchange. The pricing supplement will specify if upon
exchange, at maturity or otherwise, the holder of an exchangeable note may
receive, at the specified exchange rate, either the underlying property or the
cash value of the underlying property. The underlying property may be the
securities of either U.S. or foreign entities or both. The exchangeable notes
may or may not provide for protection against fluctuations in the exchange rate
between the currency in which that note is denominated and the currency or
currencies in which the market prices of the underlying security or securities
are quoted. Exchangeable notes may have other terms, which will be specified in
the applicable pricing supplement.
Special Requirements for Exchange of Global Securities. If an optionally
exchangeable note is represented by a global note, the Depositary's nominee
will be the holder of that note and therefore will be the only entity that can
exercise a right to exchange. In order to ensure that the Depositary's nominee
will timely exercise a right to exchange a particular note or any portion of a
particular note, the beneficial owner of the note must instruct the broker or
other direct or indirect participant through which it holds an interest in that
note to notify the Depositary of its desire to exercise a right to exchange.
Different firms have different deadlines for accepting instructions from their
customers. Each beneficial owner should consult the broker or other participant
through which it holds an interest in a note in order to ascertain the deadline
for ensuring that timely notice will be delivered to the Depositary.
Payments upon Acceleration of Maturity. If the principal amount payable at
maturity of any exchangeable note is declared due and payable prior to
maturity, the amount payable on:
o an optionally exchangeable note will equal the face amount of the
note plus accrued interest, if any, to but excluding the date of
payment, except that if a holder has exchanged an optionally
exchangeable note prior
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to the date of declaration without having received the amount due
upon exchange, the amount payable will be the amount due upon
exchange and will not include any accrued but unpaid interest; and
o a mandatorily exchangeable note will equal an amount determined as if
the date of declaration were the maturity date plus accrued interest,
if any, to but excluding the date of payment.
Notes Linked to Commodity Prices, Single Securities, Baskets of Securities
or Indices
We may issue notes with the principal amount payable on any principal
payment date and/or the amount of interest payable on any interest payment date
is determined by reference to one or more commodity prices, securities of
entities not affiliated with us, a basket of those securities or an index or
indices of those securities. These notes may include other terms, which will be
specified in the relevant pricing supplement.
Currency-Linked Notes
We may issue notes with the principal amount payable on any principal
payment date and/or the amount of interest payable on any interest payment date
to be determined by reference to the value of one or more currencies as
compared to the value of one or more other currencies, which we refer to as
"currency-linked notes." The pricing supplement will specify the following:
o information as to the one or more currencies to which the principal
amount payable on any principal payment date or the amount of
interest payable on any interest payment date is linked or indexed;
o the currency in which the face amount of the currency-linked note is
denominated, which we refer to as the "denominated currency;"
o the currency in which principal on the currency-linked note will be
paid, which we refer to as the "payment currency;"
o the interest rate per annum and the dates on which we will make
interest payments;
o specific historic exchange rate information and any currency risks
relating to the specific currencies selected; and
o additional tax considerations, if any.
The denominated currency and the payment currency may be the same currency
or different currencies. Interest on currency-linked notes will be paid in the
denominated currency.
Redemption and Repurchase of Notes
Optional Redemption. The pricing supplement will indicate the terms of our
option to redeem the notes, if any. We will mail a notice of redemption to each
holder by first-class mail, postage prepaid, at least 30 days and not more than
60 days prior to the date fixed for redemption, or within the redemption notice
period designated in the applicable pricing supplement, to the address of each
holder as that address appears upon the books maintained by the paying agent.
Unless otherwise specified in the pricing supplement, the notes will not be
subject to any sinking fund.
Repayment at Option of Holder. If applicable, the pricing supplement
relating to each note will indicate that the holder has the option to have us
repay the note on a date or dates specified prior to its maturity date. The
repayment price will be equal to 100% of the principal amount of the note,
together with accrued interest to the date of repayment. For notes issued with
original issue discount, the pricing supplement will specify the amount payable
upon repayment.
For us to repay a note, the paying agent must receive at least 15 days but
not more than 30 days prior to the repayment date:
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o the note with the form entitled "Option to Elect Repayment" on the
reverse of the note duly completed; or
o 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, a statement that the option to elect repayment is
being exercised and a guarantee that the note to be repaid, together
with the duly completed form entitled "Option to Elect Repayment" on
the reverse of the note, will be received by the paying agent not
later than the fifth business day after the date of that telegram,
telex, facsimile transmission or letter. However, the telegram,
telex, facsimile transmission or letter will only be effective if
that note and form duly completed are received by the paying agent by
the fifth business day after the date of that telegram, telex,
facsimile transmission or letter.
Exercise of the repayment option by the holder of a note will be
irrevocable. The holder may exercise the repayment option for less than the
entire principal amount of the note but, in that event, the principal amount of
the note remaining outstanding after repayment must be an authorized
denomination.
Special Requirements for Optional Repayment of Global Notes. If a note is
represented by a global note, the Depositary or the Depositary's nominee will
be the holder of the note and therefore will be the only entity that can
exercise a right to repayment. In order to ensure that the Depositary's nominee
will timely exercise a right to repayment of a particular note, the beneficial
owner of the note must instruct the broker or other direct or indirect
participant through which it holds an interest in the note to notify the
Depositary of its desire to exercise a right to repayment. Different firms have
different cut-off times for accepting instructions from their customers and,
accordingly, each beneficial owner should consult the broker or other direct or
indirect participant through which it holds an interest in a note in order to
ascertain the cut-off time by which an instruction must be given in order for
timely notice to be delivered to the Depositary.
Open Market Purchases. We may purchase notes at any price in the open
market or otherwise. Notes so purchased by us may, at our discretion, be held
or resold or surrendered to the relevant trustee for cancellation.
Replacement of Notes
At the expense of the holder, we will replace any notes that become
mutilated, destroyed, lost or stolen or are apparently destroyed, lost or
stolen. The mutilated notes must be delivered to the applicable trustee, the
paying agent and the registrar, in the case of registered notes, or
satisfactory evidence of the destruction, loss or theft of the notes must be
delivered to us, the paying agent, the registrar, in the case of registered
notes, and the applicable trustee. At the expense of the holder, an indemnity
that is satisfactory to us, the principal paying agent, the registrar, in the
case of registered notes, and the applicable trustee may be required before a
replacement note will be issued.
THE DEPOSITARY
The Depository Trust Company, New York, New York will be designated as the
depositary for any registered global security. Each registered global security
will be registered in the name of Cede & Co., the Depositary's nominee.
The Depositary has advised us as follows: the Depositary is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934, as amended. The Depositary holds securities deposited with it by its
participants, and it facilitates the settlement of transactions among its
participants in those securities through electronic computerized book-entry
changes in participants' accounts, eliminating the need for physical movement
of securities certificates. The Depositary's participants include securities
brokers and dealers, including the agent, banks, trust companies, clearing
corporations and other organizations, some of whom and/or their representatives
own the Depositary. Access to the Depositary's
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book-entry system is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship
with a participant, either directly or indirectly.
According to the Depositary, the foregoing information relating to the
Depositary has been provided to the financial community for informational
purposes only and is not intended to serve as a representation, warranty or
contract modification of any kind.
SERIES A NOTES OFFERED ON A GLOBAL BASIS
If we offer any of our securities on a global basis, we will so specify in
the applicable pricing supplement. The additional information contained in this
section under "--Book Entry, Delivery and Form" and "--Global Clearance and
Settlement Procedures" will apply to every offering on a global basis. The
additional provisions described under "--Tax Redemption" and "--Payment of
Additional Amounts" will apply to securities offered on a global basis only if
we so specify in the applicable pricing supplement.
Book-Entry, Delivery and Form
The securities will be issued in the form of one or more fully registered
global securities which will be deposited with, or on behalf of, the Depositary
and registered in the name of Cede & Co., the Depositary's nominee. Beneficial
interests in the registered global securities will be represented through
book-entry accounts of financial institutions acting on behalf of beneficial
owners as direct and indirect participants in the Depositary. Investors may
elect to hold interests in the registered global securities held by the
Depositary through Clearstream, Luxembourg or the Euroclear operator if they
are participants in such systems, or indirectly through organizations which are
participants in those systems. Clearstream, Luxembourg and the Euroclear
operator will hold interests on behalf of their participants through customers'
securities accounts in Clearstream, Luxembourg's and the Euroclear operator's
names on the books of their respective depositaries, which in turn will hold
such interests in the registered global securities in customers' securities
accounts in the depositaries' names on the books of the Depositary. Citibank,
N.A. will act as depositary for Clearstream, Luxembourg and The Chase Manhattan
Bank will act as depositary for the Euroclear operator. We refer to each of
Citibank, N.A. and The Chase Manhattan Bank, acting in this depositary
capacity, as the "U.S. depositary" for the relevant clearing system. Except as
set forth below, the registered global securities may be transferred, in whole
but not in part, only to the Depositary, another nominee of the Depositary or
to a successor of the Depositary or its nominee.
Clearstream, Luxembourg advises that it is incorporated under the laws of
Luxembourg as a bank. Clearstream, Luxembourg holds securities for its
customers, "Clearstream, Luxembourg customers," and facilitates the clearance
and settlement of securities transactions between Clearstream, Luxembourg
customers through electronic book-entry transfers between their accounts,
thereby eliminating the need for physical movement of securities. Clearstream,
Luxembourg provides to Clearstream, Luxembourg customers, among other things,
services for safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing.
Clearstream, Luxembourg interfaces with domestic securities markets in over 30
countries through established depository and custodial relationships. As a
bank, Clearstream, Luxembourg is subject to regulation by the Luxembourg
Commission for the Supervision of the Financial Sector (Commission de
Surveillance du Secteur Financier). Clearstream, Luxembourg customers are
world-wide financial institutions, including underwriters, securities brokers
and dealers, banks, trust companies and clearing corporations. Clearstream,
Luxembourg's U.S. customers are limited to securities brokers and dealers and
banks. Indirect access to Clearstream, Luxembourg is also available to other
institutions such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a Clearstream, Luxembourg
customer. Clearstream, Luxembourg has established an electronic bridge with the
Euroclear operator to facilitate settlement of trades between Clearstream,
Luxembourg and the Euroclear operator.
Distributions with respect to the securities held through Clearstream,
Luxembourg will be credited to cash accounts of Clearstream, Luxembourg
customers in accordance with its rules and procedures, to the extent received
by the U.S. depositary for Clearstream, Luxembourg.
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The Euroclear operator advises that the Euroclear system was created in
1968 to hold securities for its participants, "Euroclear participants," and to
clear and settle transactions between Euroclear participants through
simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk from
lack of simultaneous transfers of securities and cash. The Euroclear system
provides various other services, including securities lending and borrowing and
interfaces with domestic markets in several countries. The Euroclear system is
operated by the Euroclear operator, under contract with Euroclear Clearance
Systems S.C., a Belgian cooperative corporation, the "cooperative." All
operations are conducted by the Euroclear operator, and all Euroclear
securities clearance accounts and Euroclear cash accounts are accounts
maintained with the Euroclear operator, not the cooperative. The cooperative
establishes policy for the Euroclear system on behalf of Euroclear
participants. Euroclear participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries
and include the agent. Indirect access to the Euroclear system is also
available to other firms that clear through or maintain a custodial
relationship with a Euroclear participant, either directly or indirectly.
The Euroclear operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian
Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear
operator are governed by the Terms and Conditions Governing Use of Euroclear
and the related Operating Procedures of the Euroclear System, and applicable
Belgian law, collectively, the "terms and conditions." The terms and conditions
govern transfers of securities and cash within the Euroclear system,
withdrawals of securities and cash from the Euroclear system, and receipts of
payments with respect to securities in the Euroclear system. All securities in
the Euroclear system are held on a fungible basis without attribution of
specific certificates to specific securities clearance accounts. The Euroclear
operator acts under the terms and conditions only on behalf of Euroclear
participants and has no record of or relationship with persons holding through
Euroclear participants.
Distributions with respect to the securities held beneficially through the
Euroclear system will be credited to the cash accounts of Euroclear
participants in accordance with the terms and conditions, to the extent
received by the U.S. depositary for Euroclear.
The Euroclear operator further advises that investors that acquire, hold
and transfer interests in the securities by book-entry through accounts with
the Euroclear operator or any other securities intermediary are subject to the
laws and contractual provisions governing their relationship with their
intermediary, as well as the laws and contractual provisions governing the
relationship between their intermediary and each other intermediary, if any,
standing between themselves and the registered global securities.
The Euroclear operator advises as follows: Under Belgian law, investors
that are credited with securities on the records of the Euroclear operator have
a co-property right in the fungible pool of interests in securities on deposit
with the Euroclear operator in an amount equal to the amount of interests in
securities credited to their accounts. In the event of the insolvency of the
Euroclear operator, Euroclear participants would have a right under Belgian law
to the return of the amount and type of interests in securities credited to
their accounts with the Euroclear operator. If the Euroclear operator does not
have a sufficient amount of interests in securities on deposit of a particular
type to cover the claims of all participants credited with interests in
securities of that type on the Euroclear operator's records, all participants
having an amount of interests in securities of that type credited to their
accounts with the Euroclear operator will have the right under Belgian law to
the return of their pro-rata share of the amount of interests in securities
actually on deposit.
Under Belgian law, the Euroclear operator is required to pass on the
benefits of ownership in any interests in securities on deposit with it (such
as dividends, voting rights and other entitlements) to any person credited with
those interests in securities on its records.
Individual certificates in respect of the securities will not be issued in
exchange for the registered global securities, except in very limited
circumstances. If the Depositary notifies us that it is unwilling or unable to
continue as a clearing system in connection with the registered global
securities or ceases to be a clearing agency registered under the
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Exchange Act, and a successor clearing system is not appointed by us within 90
days after receiving such notice from the Depositary or upon becoming aware
that the Depositary is no longer so registered, we will issue or cause to be
issued individual certificates in registered form on registration of transfer
of, or in exchange for, book-entry interests in the securities represented by
such registered global securities upon delivery of those registered global
securities for cancellation.
Title to book-entry interests in the securities will pass by book-entry
registration of the transfer within the records of Clearstream, Luxembourg, the
Euroclear operator or the Depositary, as the case may be, in accordance with
their respective procedures. Book-entry interests in the securities may be
transferred within Clearstream, Luxembourg and within the Euroclear system and
between Clearstream, Luxembourg and the Euroclear system in accordance with
procedures established for these purposes by Clearstream, Luxembourg and the
Euroclear operator. Book-entry interests in the securities may be transferred
within the Depositary in accordance with procedures established for this
purpose by the Depositary. Transfers of book-entry interests in the securities
among Clearstream, Luxembourg and the Euroclear operator and the Depositary may
be effected in accordance with procedures established for this purpose by
Clearstream, Luxembourg, the Euroclear operator and the Depositary.
A further description of the Depositary's procedures with respect to the
registered global securities is set forth in the prospectus under "Forms of
Securities-Global Securities."
Global Clearance and Settlement Procedures
Initial settlement for the securities offered on a global basis will be
made in immediately available funds. Secondary market trading between the
Depositary's participants will occur in the ordinary way in accordance with the
Depositary's rules and will be settled in immediately available funds using the
Depositary's Same-Day Funds Settlement System. Secondary market trading between
Clearstream, Luxembourg customers and/or Euroclear participants will occur in
the ordinary way in accordance with the applicable rules and operating
procedures of Clearstream, Luxembourg and Euroclear and will be settled using
the procedures applicable to conventional Eurobonds in immediately available
funds.
Cross-market transfers between persons holding directly or indirectly
through the Depositary on the one hand, and directly or indirectly through
Clearstream, Luxembourg customers or Euroclear participants, on the other, will
be effected through the Depositary in accordance with the Depositary's rules on
behalf of the relevant European international clearing system by its U.S.
depositary; however, these cross-market transactions will require delivery of
instructions to the relevant European international clearing system by the
counterparty in the clearing system in accordance with its rules and procedures
and within its established deadlines (European time). The relevant European
international clearing system will, if the transaction meets its settlement
requirements, deliver instructions to its U.S. depositary to take action to
effect final settlement on its behalf by delivering interests in the securities
to or receiving interests in the securities from the Depositary, and making or
receiving payment in accordance with normal procedures for same-day funds
settlement applicable to the Depositary. Clearstream, Luxembourg customers and
Euroclear participants may not deliver instructions directly to their
respective U.S. depositaries.
Because of time-zone differences, credits of interests in the securities
received in Clearstream, Luxembourg or the Euroclear system as a result of a
transaction with a Depositary participant will be made during subsequent
securities settlement processing and dated the business day following the
Depositary settlement date. Credits of interests or any transactions involving
interests in the securities received in Clearstream, Luxembourg or the
Euroclear system as a result of a transaction with a Depositary participant and
settled during subsequent securities settlement processing will be reported to
the relevant Clearstream, Luxembourg customers or Euroclear participants on the
business day following the Depositary settlement date. Cash received in
Clearstream, Luxembourg or the Euroclear system as a result of sales of
interests in the securities by or through a Clearstream, Luxembourg customer or
a Euroclear participant to a Depositary participant will be received with value
on the Depositary settlement date but will be available in the relevant
Clearstream, Luxembourg or Euroclear cash account only as of the business day
following settlement in the Depositary.
Although the Depositary, Clearstream, Luxembourg and the Euroclear
operator have agreed to the foregoing procedures in order to facilitate
transfers of interests in the securities among participants of the Depositary,
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Clearstream, Luxembourg and Euroclear, they are under no obligation to perform
or continue to perform the foregoing procedures and such procedures may be
changed or discontinued at any time.
Notices
Notices to holders of the securities will be given by mailing such notices
to each holder by first class mail, postage prepaid, at the respective address
of each holder as that address appears upon our books. Notices given to the
Depositary, as holder of the registered global securities, will be passed on to
the beneficial owners of the securities in accordance with the standard rules
and procedures of the Depositary and its direct and indirect participants,
including Clearstream, Luxembourg and the Euroclear operator.
See also "Plan of Distribution--Series A Notes Offered on a Global Basis."
UNITED STATES FEDERAL TAXATION
In the opinion of Schulte Roth & Zabel LLP, counsel to the Bank, the
following summary accurately describes the principal United States federal
income tax consequences of ownership and disposition of the notes. This summary
is based on the Internal Revenue Code of 1986, as amended, which we refer to as
the "Code," and existing and proposed Treasury regulations, revenue rulings,
administrative interpretations and judicial decisions, all as currently in
effect and all of which are subject to change, possibly with retroactive
effect. Except as specifically set forth in this section, this summary deals
only with notes purchased by a United States holder, as defined below, on
original issuance and held as capital assets within the meaning of Section 1221
of the Code. It does not discuss all of the tax consequences that may be
relevant to you in light of your particular circumstances or to holders subject
to special rules, such as persons other than United States holders, insurance
companies, dealers in securities or foreign currencies, persons holding the
notes as part of a hedging transaction, "straddle," conversion transaction, or
other integrated transaction, or United States holders whose functional
currency, as defined in Section 985 of the Code, is not the U.S. dollar.
Persons considering the purchase of the notes should consult with their own tax
advisors concerning the application of the United States federal income tax
laws to their particular situations as well as any tax consequences arising
under the laws of any state, local or foreign jurisdiction.
In the event we offer any of the securities under our Series A Program on
a global basis, you should consult the applicable pricing supplement for
additional discussion regarding United States federal taxation.
As used in this section, the term "United States holder" means a
beneficial owner of a note who or that is:
o a citizen or resident of the United States for United States federal
income tax purposes;
o a corporation or partnership, including an entity treated as a
corporation or partnership for United States federal income tax
purposes, created or organized in or under the laws of the United
States, any state of the United States or the District of Columbia;
o an estate the income of which is subject to United States federal
income taxation regardless of its source; or
o a trust if both:
o a United States court is able to exercise primary supervision
over the administration of the trust, and
o one or more United States persons have the authority to control
all substantial decisions of the trust.
In addition, some trusts treated as United States persons before August 20,
1996 may elect to continue to be so treated to the extent provided in Treasury
regulations.
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Notes
Payments of Interest on the Notes
Interest paid on a note, whether in U.S. dollars or in other than U.S.
dollars, that is not a discount note, as defined below in " -- Discount Notes,"
or an exchangeable note, 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 tax accounting.
Special rules governing the treatment of interest paid with respect to
discount notes, including notes that pay interest annually and are issued less
than 15 calendar days before an interest payment date, notes that mature one
year or less from their date of issuance and notes issued for an amount less
than their stated redemption price at maturity, are described under "Discount
Notes" below. Special rules governing the treatment of interest paid with
respect to exchangeable notes are described under "Optionally Exchangeable
Notes" and "Mandatorily Exchangeable Notes" below.
Discount Notes
The following discussion is a summary of the principal United States
federal income tax consequences of the ownership and disposition of discount
notes by United States holders. Additional rules applicable to discount notes
that are denominated in a specified currency other than the U.S. dollar, or
have payments of interest or principal determined by reference to the value of
one or more currencies or currency units other than the U.S. dollar, are
described under "Foreign Currency Notes" below.
A note that has an "issue price" that is less than its "stated redemption
price at maturity" will generally be considered to have been issued bearing
original issue discount, which we refer to as "OID," for United States federal
income tax purposes and will be referred to as a "discount note." If the
difference between the stated redemption price at maturity and the issue price
is less than a specified de minimis amount, generally 0.0025 multiplied by the
product of the stated redemption price at maturity and the number of complete
years to maturity, then the note will not be considered to have OID. The issue
price of each note in an issue of notes issued for cash generally will equal
the first price at which a substantial amount of those notes is sold to the
public, ignoring sales to bond houses, brokers, or similar persons or
organizations acting in the capacity of underwriters, placement agents or
wholesalers. The issue price of a note does not change even if part of the
issue is subsequently sold at a different price. The stated redemption price at
maturity of a note is the total of all payments required to be made under the
note other than "qualified stated interest" payments. The term "qualified
stated interest" is defined as stated interest that is unconditionally payable
in cash or property, other than debt instruments of the issuer, at least
annually at a single fixed rate of interest. In addition, qualified stated
interest generally includes, among other things, stated interest on a variable
rate debt instrument that is unconditionally payable at least annually at a
single qualified floating rate or a rate that is determined using a single
fixed formula that is based on objective financial or economic information. A
rate is a qualified floating rate if variations in 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.
No payment of interest on a note that matures one year or less from its
date of issuance will be considered qualified stated interest and accordingly
that note will be treated as a discount note.
A United States holder of a discount note is required to include qualified
stated interest in respect of the note in income at the time it is received or
accrued, in accordance with the holder's method of accounting for tax purposes.
In addition, United States holders of discount notes having a maturity
upon issuance of more than one year will be required to include OID in income
for United States federal income tax purposes as it accrues, in accordance with
a constant yield method based on a compounding of interest, before the receipt
of cash payments attributable to that income, but those holders will not be
required to include separately in income cash payments received on those notes,
even if denominated as interest, to the extent they do not constitute qualified
stated interest. The amount of OID includable in income for a taxable year by a
United States holder of a discount note will generally equal the sum of the
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"daily portions" of the total OID on the discount note for each day during the
taxable year in which that holder held the discount note, which we refer to as
"accrued OID." Generally, the daily portion of OID is determined by allocating
to each day in any "accrual period" a ratable portion of the OID allocable to
that accrual period. The term "accrual period" means any interval of time of
one year or less, provided that each scheduled payment of principal or interest
either occurs on the final day of an accrual period or the first day of an
accrual period. The amount of OID allocable to an accrual period is generally
equal to the difference between (1) the product of the "adjusted issue price"
of the discount note at the beginning of that accrual period and its "yield to
maturity" adjusted to reflect the length of the accrual period and (2) the
amount of any qualified stated interest allocable to the accrual period.
The "adjusted issue price" of a discount note at the beginning of an
accrual period will equal the issue price of the discount note plus the amount
of OID previously includable in the gross income of any United States holder
without reduction for any premium or amortized acquisition premium, as
described below, less any prior payments made on the discount note that were
not qualified stated interest payments. The "yield to maturity" of the discount
note will be computed on the basis of a constant annual interest rate
compounded at the end of each accrual period. Under the foregoing rules, United
States holders of discount notes will generally be required to include in
income increasingly greater amounts of OID in successive accrual periods.
Special rules will apply for calculating OID for initial short or final accrual
periods.
Notes that pay interest annually and are issued less than 15 calendar days
before an interest payment date may be treated as discount notes. United States
holders intending to purchase those notes should refer to the applicable
pricing supplement.
Discount notes may be redeemable prior to maturity at our option, which we
refer to as a "call option," and/or repayable prior to maturity at the option
of the holder, which we refer to as a "put option." Discount notes containing
either or both of these features may be subject to rules that differ from the
general rules discussed above. Holders intending to purchase discount notes
with either or both of these features should carefully examine the applicable
pricing supplement and should consult with their own tax advisors with respect
to either or both of these features since the tax consequences with respect to
OID will depend, in part, on the particular terms and the particular features
of the purchased note.
In general, a United States holder who uses the cash method of tax
accounting and who holds a discount note that has a term of one year or less
from the date of its issuance, which we refer to as a "short-term discount
note," is not required to accrue OID for United States federal income tax
purposes unless the holder elects to do so. United States holders who report
income for United States federal income tax purposes on the accrual method and
other holders, including banks and dealers in securities, are required to
include OID, or alternatively acquisition discount, on those short-term
discount notes on a straight-line basis, unless an election is made to accrue
the OID according to a constant yield method based on daily compounding. In the
case of a United States holder who is not required, and does not elect, to
include OID in income currently, any gain realized on the sale, exchange or
retirement of a short-term discount note will be ordinary interest income to
the extent of the OID accrued on a straight-line basis or, if elected by the
holder, under the constant yield method through the date of sale, exchange or
retirement. In addition, non-electing United States holders who are not subject
to the current inclusion requirement described in the second sentence of this
paragraph may be required to defer the deduction of all or a portion of any
interest paid on indebtedness incurred to purchase short-term discount notes
until OID is included in the holder's income.
If the amount of OID with respect to a note is less than the specified de
minimis amount, generally 0.0025 multiplied by the product of the stated
redemption price at maturity and the number of complete years to maturity, the
amount of OID is treated as zero and all stated interest is treated as
qualified stated interest. A United States holder will be required to treat any
stated principal payment on a note as capital gain to the extent of the product
of the total amount of de minimis OID and a fraction, the numerator of which is
the amount of the principal payment made and the denominator of which is the
stated principal amount of the note.
United States holders are permitted to elect to include all interest on a
note using the constant yield method. For this purpose, interest includes
stated interest, acquisition discount, OID, de minimis OID, market discount, de
minimis market discount, and unstated interest, as adjusted by any amortizable
bond premium or acquisition premium. Special
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rules apply to elections made with respect to notes with amortizable bond
premium or market discount and United States holders considering this election
should consult their own tax advisors. The election cannot be revoked without
the approval of the Internal Revenue Service.
Market Discount and Premium
If a United States holder purchases a note (other than a discount note or
an exchangeable note) for an amount that is less than its issue price, the
amount of the difference will be treated as "market discount" for United States
federal income tax purposes, unless this difference is less than a specified de
minimis amount.
Under the market discount rules of the Code, a United States holder will
be required to treat any partial principal payment on or any gain realized on
the sale, exchange, retirement or other disposition of, a note as ordinary
income to the extent of the lesser of:
o the amount of the payment or realized gain, or
o the market discount that has not previously been included in income
and is treated as having accrued on the note at the time of payment or
disposition.
If the note is disposed of in a nontaxable transaction, other than a
nonrecognition transaction described in Code Section 1276(c), the amount of
gain realized on the disposition for purposes of the market discount rules will
be determined as if the holder had sold the note at its then fair market value.
Market discount will be considered to accrue ratably during the period from the
date of acquisition to the maturity date of the note, unless the United States
holder elects to accrue on the basis of a constant interest rate.
A United States holder may be required to defer the deduction of all or a
portion of the interest paid or accrued on any indebtedness incurred or
maintained to purchase or carry a note until the maturity of the note or its
earlier disposition, except for certain nonrecognition transactions. A United
States holder may elect to include market discount in income currently as it
accrues, on either a ratable or a constant interest rate basis, in which case
the rules described above regarding the treatment as ordinary income of gain
upon the disposition of the note and upon the receipt of cash payments on the
note and regarding the deferral of interest deductions will not apply.
Generally, this currently included market discount is treated as ordinary
interest. The election will apply to all debt instruments acquired by the
United States holder on or after the first day of the first taxable year to
which that election applies and may be revoked only with the consent of the
Internal Revenue Service.
A United States holder who purchases a discount note for an amount that is
greater than its adjusted issue price, but less than or equal to the sum of all
amounts payable on the note after the purchase date, other than payments of
qualified stated interest, will be considered to have purchased the note at an
"acquisition premium" within the meaning of the Code. Under the acquisition
premium rules, the amount of OID which the holder must include in its gross
income with respect to the note for any taxable year, or for the part of a
taxable year in which the United States holder holds the discount note, will be
reduced by a fraction the numerator of which is the excess of the cost of the
note over its adjusted issue price and the denominator of which is the excess
of the sum of all amounts payable on the note after the purchase date, other
than qualified stated interest, over the note's adjusted issue price.
A United States holder who purchases a discount note for an amount that is
greater than the sum of all amounts payable on the note after the purchase
date, other than qualified stated interest, will be considered to have
purchased that note at a "premium" within the meaning of the OID regulations.
In that case, the holder is not required to include any OID in gross income.
If a United States holder purchases a note, other than an exchangeable
note, for an amount that is greater than the amount payable at maturity, or on
the earlier call date, in the case of a note that is redeemable at the option
of the Bank, that holder will be considered to have purchased the note with
"amortizable bond premium" equal in amount to that excess, and may elect, in
accordance with applicable Code provisions, to amortize this premium, using a
constant yield method over the remaining term of the note and to offset
interest otherwise required to be included in income in respect
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of the note during any taxable year by the amortized amount of that excess for
the taxable year. However, if the note may be optionally redeemed after the
United States holder acquires it at a price in excess of its stated redemption
price at maturity, special rules would apply that could result in a deferral of
the amortization of some bond premium until later in the term of the note. Any
election to amortize bond premium applies to all debt instruments acquired by
the United States holder on or after the first day of the first taxable year to
which the election applies and may be revoked only with the consent of the
Internal Revenue Service.
Sale, Exchange or Retirement of the Notes
Upon the sale, exchange or retirement of a note, a United States holder
will generally recognize taxable gain or loss equal to the difference between
the amount realized on the sale, exchange or retirement and the United States
holder's adjusted tax basis in the note. For these purposes, the amount
realized on the sale, exchange or retirement of a note, other than an
exchangeable note, does not include any amount attributable to accrued interest
or, in the case of a discount note, accrued qualified stated interest, which
will be taxable as interest unless previously taken into account. A United
States holder's adjusted tax basis in a note, other than an exchangeable note,
generally will equal the cost of the note to that holder, increased by the
amounts of any market discount, OID and de minimis OID previously included in
income by the holder with respect to the note and reduced by any amortized bond
premium and any principal payments received by the United States holder and, in
the case of a discount note, by the amounts of any other payments that do not
constitute qualified stated interest.
Subject to the discussion under "foreign currency notes" and "optionally
exchangeable notes" below, gain or loss recognized on the sale, exchange or
retirement of a note will be capital gain or loss, except to the extent of any
accrued market discount or, in the case of a short-term discount note, any
accrued OID which the United States holder has not previously included in
income, and will generally be long-term capital gain or loss if at the time of
sale, exchange or retirement the note has been held for more than one year. The
deductibility of capital losses is subject to limitations.
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, other than the currency-linked notes described above,
that are denominated in a specified currency other than the U.S. dollar or the
payments of interest or principal on which are payable in one or more
currencies or currency units other than the U.S. dollar, which we refer to as
"foreign currency notes."
The rules discussed below will generally not apply to a United States
holder that enters into a "qualified hedging transaction." A qualified hedging
transaction is an integrated economic transaction consisting of a qualifying
debt instrument, such as a foreign currency note, and a "section 1.988-5(a)
hedge," as defined in section 1.988-5(a)(4) of the Treasury regulations.
Generally, an integrated economic transaction, if identified as an integrated
economic transaction by either the United States holder or the Internal Revenue
Service, is treated as a single transaction for United States federal income
tax purposes, the effect of which is to treat a holder as owning a synthetic
debt instrument that is subject to rules applicable to discount notes. The
rules with respect to a qualified hedging transaction are extremely complex and
special rules may apply in certain circumstances, and persons that are
considering hedging the currency risk are urged to consult with their own tax
advisors with respect to the application of these rules.
A United States holder who uses the cash method of tax accounting and who
receives a payment of interest with respect to a foreign currency note, other
than a discount note (except to the extent any qualified stated interest is
received) on which OID is accrued on a current basis, will be required to
include in income the U.S. dollar value of the foreign currency payment,
determined on the date that payment is received, regardless of whether the
payment is in fact converted to U.S. dollars at that time, and that U.S. dollar
value will be the United States holder's tax basis in the foreign currency.
A United States holder, to the extent the above paragraph is not
applicable, will be required to include in income the U.S. dollar value of the
amount of interest income, including OID or market discount and reduced by
premium, acquisition premium and amortizable bond premium to the extent
applicable, that has accrued and is otherwise required
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to be taken into account with respect to a foreign currency note during an
accrual period. The U.S. dollar value of the accrued income will be determined
by translating the 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 the period, or other
method if this method is reasonably derived and consistently applied. A United
States holder may elect to determine the U.S. dollar value of this accrued
income by translating the income at the spot rate on the last day of the
interest accrual period, or, in the case of a partial accrual period, the spot
rate on the last day of the taxable year, or, if the date of receipt is within
five business days of the last day of the interest accrual period, the spot
rate on the date of receipt. The United States holder will recognize exchange
gain or loss with respect to accrued interest income on the date this income is
received. The amount of exchange gain or loss recognized will equal the
difference between the U.S. dollar value of the foreign currency payments
received, determined on the date this payment is received, in respect of the
accrual period and the U.S. dollar value of interest income that has accrued
during this accrual period, as determined above.
A United States holder will have a tax basis in any foreign currency
received on the sale, exchange or retirement of a foreign currency note equal
to the U.S. dollar value of that foreign currency, determined at the time of
the sale, exchange or retirement. 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.
A United States holder's tax basis in a foreign currency note, and the
amount of any subsequent adjustment to the United States holder's tax basis,
will be the U.S. dollar value of the foreign currency amount paid for the
foreign currency note, or of the foreign currency amount of the adjustment,
determined on the date of the purchase or adjustment. A United States holder
who converts U.S. dollars to a foreign currency and immediately uses that
currency to purchase a foreign currency note denominated in the same currency
ordinarily will not recognize gain or loss in connection with this conversion
and purchase. However, a United States holder who 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 the holder's tax
basis in the foreign currency and the U.S. dollar fair 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 the
sale, exchange or retirement will be the U.S. dollar value of the foreign
currency received, determined on the date of sale, exchange or retirement.
Gain or loss realized upon the sale, exchange or retirement of a foreign
currency note will be ordinary income or loss to the extent it is attributable
to fluctuations in currency exchange rates. Gain or loss attributable to
fluctuations in exchange rates will equal the difference between the U.S.
dollar value of the foreign currency principal amount of that note determined
on the date that payment is received or that note is disposed of (including any
payment with respect to accrued interest) and the U.S. dollar value of the
foreign currency principal amount of the note determined on the date the United
States holder acquired the note (including the U.S. dollar value of accrued
interest received determined by translating that interest at the average
exchange rate for the accrual period.) This foreign currency principal amount
of a foreign currency note generally equals the United States holder's purchase
price in units of foreign currency. This foreign currency gain or loss will be
recognized only to the extent of the total gain or loss recognized by a United
States holder on the sale, exchange or retirement of the foreign currency note.
The source of exchange gain or loss will be determined by reference to the
residence of the holder or the "qualified business unit" of the holder on whose
books the note is properly reflected. Any gain or loss recognized by a United
States holder in excess of the 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 discount note, any accrued OID, and generally will be
long-term capital gain or loss if the holding period of the foreign currency
note exceeds one year. The deductibility of capital losses is subject to
limitations.
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 by administrative pronouncements of the Internal Revenue
Service.
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OID, market discount, premium, acquisition premium and amortizable bond
premium of a foreign currency note are to be determined in the relevant foreign
currency. The amount of the discount or premium that is taken into account
currently under general rules applicable to notes other than foreign currency
notes is to be determined for any accrual period in the relevant foreign
currency and then translated into the United States holder's functional
currency on the basis of the average exchange rate in effect during the accrual
period. The amount of accrued market discount, other than market discount that
is included in income on a current basis, 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 will be the U.S. dollar value of
the accrued market discount determined on the date of receipt of that partial
principal payment or upon the sale, exchange, retirement or other disposition.
Any loss realized on the sale, exchange or retirement of a foreign
currency note with amortizable bond premium by a United States holder who has
not elected to amortize the premium will be a capital loss to the extent of the
bond premium. If this election is made, amortizable bond premium taken into
account on a current basis will reduce interest income in units of the relevant
foreign currency. Exchange gain or loss is realized on the amortized bond
premium with respect to any period by treating the bond premium amortized in
the period as a return of principal.
On January 12, 2000, Treasury regulations were finalized regarding debt
instruments denominated in a hyperinflationary currency. These regulations are
effective for transactions entered into on or after February 14, 2000. A
foreign currency note will be considered to be a debt instrument denominated in
a hyperinflationary currency if it is denominated in a specified currency of a
country in which there is cumulative inflation of at least 100% during the 36
calendar month period preceding the end of the holder's taxable year. Under the
finalized regulations, a United States holder who acquires a foreign currency
note that is denominated in a hyperinflationary currency will recognize gain or
loss for its taxable year determined by reference to the change in exchange
rates between the first day of the taxable year, or the date the note was
acquired, if later, and the last day of the taxable year or the date the note
was disposed of, if earlier. This gain or loss will reduce or increase the
amount of interest income otherwise required to be taken into account. Special
rules apply to the extent the loss exceeds the amount of interest income
otherwise taken into account.
Optionally Exchangeable Notes
The following discussion summarizes the principal United States federal
income tax consequences to a United States holder of the ownership and
disposition of optionally exchangeable notes.
Unless otherwise noted in the applicable pricing supplement, optionally
exchangeable notes will be treated as "contingent payment debt instruments" for
United States federal income tax purposes. As a result, the optionally
exchangeable notes will generally be subject to the OID provisions of the Code
and the Treasury regulations issued thereunder and a United States holder will
be required to accrue interest income on the optionally exchangeable notes as
set forth below.
At the time the optionally exchangeable notes are issued, the Bank will be
required to determine a "comparable yield" for the optionally exchangeable
notes that takes into account the yield at which the Bank could issue a fixed
rate debt instrument with terms similar to those of the optionally exchangeable
notes, including the level of subordination, term, timing of payments and
general market conditions, but excluding any adjustments for liquidity or the
riskiness of the contingencies with respect to the optionally exchangeable
notes. The comparable yield may be greater than or less than the stated
interest rate, if any, with respect to the optionally exchangeable notes.
Solely for purposes of determining the amount of interest income that a
United States holder will be required to accrue, the Bank will be required to
construct a "projected payment schedule" in respect of the optionally
exchangeable notes representing a series of payments the amount and timing of
which would produce a yield to maturity on the optionally exchangeable notes
equal to the comparable yield. Neither the comparable yield nor the projected
payment schedule constitutes a representation by the Bank regarding the actual
amount, if any, that the optionally exchangeable notes will pay. For United
States federal income tax purposes, a United States holder is required to use
the comparable yield and the projected payment schedule established by the Bank
in determining interest accruals and adjustments in respect of an optionally
exchangeable note, unless the United States holder timely discloses and
justifies the use of other estimates to the Internal Revenue Service.
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Based on the comparable yield and the issue price of the optionally
exchangeable notes, a United States holder of an optionally exchangeable note,
regardless of accounting method, will be required to accrue as OID the sum of
the daily portions of interest on the optionally exchangeable note for each day
in the taxable year on which the holder held the optionally exchangeable note,
adjusted upward or downward to reflect the difference, if any, between the
actual and the projected amount of any contingent payments on the optionally
exchangeable note as set forth below. The daily portions of interest in respect
of an optionally exchangeable note are determined by allocating to each day in
an accrual period the ratable portion of interest on the optionally
exchangeable note that accrues in the accrual period. The amount of interest on
an optionally exchangeable note that accrues in an accrual period is the
product of the comparable yield on the optionally exchangeable note, adjusted
to reflect the length of the accrual period, and the adjusted issue price of
the optionally exchangeable note. The adjusted issue price of an optionally
exchangeable note at the beginning of the first accrual period will equal its
issue price and for any accrual period thereafter will be (x) the sum of the
issue price of the optionally exchangeable note and any interest previously
accrued thereon by a holder, disregarding any positive or negative adjustments,
minus (y) the amount of any projected payments on the optionally exchangeable
note for previous accrual periods.
A United States holder will be required to recognize interest income equal
to the amount of any net positive adjustment, i.e., the excess of actual
payments over projected payments, in respect of an optionally exchangeable note
for a taxable year. A net negative adjustment, i.e., the excess of projected
payments over actual payments, in respect of an optionally exchangeable note
for a taxable year:
o will first reduce the amount of interest in respect of the optionally
exchangeable note that a United States holder would otherwise be
required to include in income in the taxable year and
o to the extent of any excess, will give rise to an ordinary loss equal
to that portion of this excess as does not exceed the excess of:
o the amount of all previous interest inclusions under the
optionally exchangeable note over
o the total amount of the United States holder's net negative
adjustments treated as ordinary loss on the exchangeable note in
prior taxable years.
A net negative adjustment is not subject to the two percent floor limitation
imposed on miscellaneous deductions under Section 67 of the Code. Any net
negative adjustment in excess of the amounts described above will be carried
forward to offset future interest income in respect of the optionally
exchangeable note or to reduce the amount realized on a sale, exchange or
retirement of the optionally exchangeable note. Where a United States holder
purchases an optionally exchangeable note at a price other than the issue price
thereof, the difference between the purchase price and the issue price will
generally be treated as a positive or negative adjustment, as the case may be,
and allocated to the daily portions of interest or projected payments with
respect to the optionally exchangeable note over its remaining term.
Upon a sale, exchange or retirement of an optionally exchangeable note, a
United States holder will generally recognize taxable gain or loss equal to the
difference between the amount realized on the sale, exchange or retirement and
the holder's tax basis in the optionally exchangeable note. If the Bank
delivers property, other than cash, to a holder in retirement of an optionally
exchangeable note, the amount realized will equal the fair market value of the
property, determined at the time of retirement, plus the amount of cash, if
any, received in lieu of property. A United States holder's tax basis in an
optionally exchangeable note will equal the cost thereof, increased by the
amount of interest income previously accrued by the holder in respect of the
optionally exchangeable note, disregarding any positive or negative
adjustments, and decreased by the amount of all prior projected payments in
respect of the optionally exchangeable note. A United States holder generally
will treat any gain as interest income, and any loss as ordinary loss to the
extent of the excess of previous interest inclusions over the total net
negative adjustments previously taken into account as ordinary losses, and the
balance as capital loss.
A United States holder will have a tax basis in any property, other than
cash, received upon the retirement of an optionally exchangeable note equal to
the fair market value of the property, determined at the time of retirement.
Any gain or loss realized by a United States holder on a sale or exchange of
the property will generally be capital gain or loss
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and will generally be long-term capital gain or loss if the sale or exchange
occurs more than one year after the retirement of the exchangeable note. The
deductibility of capital losses is subject to limitations.
Mandatorily Exchangeable Notes
Under current United States federal income tax law, it is unclear how a
mandatorily exchangeable note will be treated. Prospective purchasers of
mandatorily exchangeable notes are urged to review the applicable pricing
supplement and consult with their tax advisors.
Notes Linked to Commodity Prices, Single Securities, Baskets of Securities
or Indices
The United States federal income tax consequences to a United States
holder of the ownership and disposition of notes that have principal or
interest determined by reference to commodity prices, securities of entities
unaffiliated with the Bank, baskets of those securities or indices will vary
depending upon the exact terms of the notes and related factors. Unless
otherwise noted in the applicable pricing supplement, these notes will be
subject to the same United States federal income tax treatment as optionally
exchangeable notes.
Backup Withholding
Certain "backup" withholding and information reporting requirements may
apply to payments on, and to proceeds of the sale before maturity of, the
notes. The Bank, its agent, a broker, the relevant trustee or any paying agent,
as the case may be, will generally withhold tax at a rate of 31% from any
payments to a United States holder who fails to furnish his taxpayer
identification number, i.e. social security number or employer identification
number, to certify that the holder is not subject to backup withholding, or to
otherwise comply with the applicable requirements of the backup withholding
rules. Some holders, including, among others, corporations, are generally not
subject to the backup withholding and information reporting requirements.
Any amounts withheld under the backup withholding rules from a payment to
a United States holder would be allowed as a refund or a credit against the
holder's United States federal income tax as long as the required information
is furnished to the Internal Revenue Service.
On October 6, 1997, the Treasury Department issued regulations which make
modifications to the withholding, backup withholding and information reporting
rules described above. These regulations attempt to unify certification
requirements and modify reliance standards. These regulations will generally be
effective for payments made after December 31, 2000. Prospective investors are
urged to consult their own tax advisors regarding these regulations.
The federal income tax discussion set forth above is included for general
information only and may not be applicable depending upon a holder's particular
situation. Holders should consult their own tax advisors with respect to the
tax consequences to them of the ownership and disposition of the notes,
including the tax consequences under state, local, foreign and other tax laws
and the possible effects of changes in federal or other tax laws.
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PLAN OF DISTRIBUTION
We are offering the Series A notes on a continuing basis exclusively
through ABN AMRO Incorporated, which we refer to as the "agent", who has agreed
to use reasonable efforts to solicit offers to purchase these securities. We
will have the sole right to accept offers to purchase these securities and may
reject any offer in whole or in part. The agent may reject, in whole or in
part, any offer it solicited to purchase securities. Unless otherwise specified
in the applicable pricing supplement, we will pay the agent, in connection with
sales of these securities resulting from a solicitation the agent made or an
offer to purchase the agent received, a commission ranging from 1% to 4% of the
initial offering price of the securities to be sold, depending upon the
maturity of the securities. We and the agent will negotiate commissions for
securities with a maturity of 30 years or greater at the time of sale.
We may also sell these securities to the agent as principal for its own
account at discounts to be agreed upon at the time of sale. The agent may
resell these securities to investors and other purchasers at a fixed offering
price or at prevailing market prices, or prices related thereto at the time of
resale or otherwise, as the agent determines and as we will specify in the
applicable pricing supplement. The agent may offer the securities it has
purchased as principal to other dealers. The agent may sell the securities to
any dealer at a discount and, unless otherwise specified in the applicable
pricing supplement, the discount allowed to any dealer will not be in excess of
the discount that agent will receive from us. After the initial public offering
of securities that the agent is to resell on a fixed public offering price
basis, the agent may change the public offering price, concession and discount.
The agent may be deemed to be an "underwriter" within the meaning of the
Securities Act of 1933. We and the agent have agreed to indemnify each other
against certain liabilities, including liabilities under the Securities Act, or
to contribute to payments made in respect of those liabilities. We have also
agreed to reimburse the agent for specified expenses.
We estimate that we will spend approximately $825,000 for printing, rating
agency, trustee's and legal fees and other expenses allocable to the offering.
Unless otherwise provided in the applicable pricing supplement, we do not
intend to apply for the listing of these securities on a national securities
exchange, but have been advised by the agent that it intends to make a market
in these securities, as applicable laws and regulations permit. The agent is
not obligated to do so, however, and the agent may discontinue making a market
at any time without notice. No assurance can be given as to the liquidity of
any trading market for these securities.
ABN AMRO Incorporated is a wholly owned subsidiary of the Bank. The agent
will conduct each offering of these securities in compliance with the
requirements of Rule 2720 of the NASD regarding an NASD member firm's
distributing the securities of an affiliate. Following the initial distribution
of these securities, the agent may offer and sell those securities in the
course of its business as a broker-dealer. The agent may act as principal or
agent in those transactions and will make any sales at varying prices related
to prevailing market prices at the time of sale or otherwise. The agent may use
this prospectus supplement in connection with any of those transactions. The
agent is not obligated to make a market in any of these securities and may
discontinue any market-making activities at any time without notice.
Neither of the agent nor any dealer utilized in the initial offering of
these securities will confirm sales to accounts over which it exercises
discretionary authority without the prior specific written approval of its
customer.
In order to facilitate the offering of these securities, the agent may
engage in transactions that stabilize, maintain or otherwise affect the price
of these securities or of any other securities the prices of which may be used
to determine payments on these securities. Specifically, the agent may sell
more securities than it is obligated to purchase in connection with the
offering, creating a short position in these securities for its own accounts. A
short sale is covered if the short position is no greater than the number or
amount of securities available for purchase by the agent under any
overallotment option. The agent can close out a covered short sale by
exercising the overallotment option or purchasing these securities in the open
market. In determining the source of securities to close out a covered short
sale, the agent will consider, among other things, the open market price of
these securities compared to the price available under the overallotment
option. The agent may also sell these securities or any other securities in
excess of the overallotment
S-36
<PAGE>
option, creating a naked short position. The agent must close out any naked
short position by purchasing securities in the open market. A naked short
position is more likely to be created if the agent is concerned that there may
be downward pressure on the price of these securities in the open market after
pricing that could adversely affect investors who purchase in the offering. As
an additional means of facilitating the offering, the agent may bid for, and
purchase, these securities or any other securities in the open market to
stabilize the price of these securities or of any other securities. Finally, in
any offering of the securities through a syndicate of underwriters, the
underwriting syndicate may also reclaim selling concessions allowed to an
underwriter or a dealer for distributing these securities in the offering if
the syndicate repurchases previously distributed securities to cover syndicate
short positions or to stabilize the price of these securities. Any of these
activities may raise or maintain the market price of these securities above
independent market levels or prevent or retard a decline in the market price of
these securities. The agent is not required to engage in these activities, and
may end any of these activities at any time.
Concurrently with the offering of these securities through the agent, we
may issue other debt securities under the Indenture. Those debt securities may
include medium-term notes under our Series B prospectus supplement. We refer to
those notes as "Euro medium-term notes". The Euro medium-term notes may have
terms substantially similar to the terms of the securities offered under this
prospectus supplement. The Euro medium-term notes may be offered concurrently
with the offering of these securities, on a continuing basis outside the United
States by the Bank, under a distribution agreement with AAI and other
affiliates of the Bank, as agents for the Bank. The terms of that distribution
agreement, which we refer to as the Euro Distribution Agreement are
substantially similar to the terms of the distribution agreement for a U.S.
offering, except for selling restrictions specified in the Euro Distribution
Agreement. Any Euro medium-term note sold under the Euro Distribution
Agreement, and any debt securities issued by the Bank under the Indenture will
reduce the aggregate offering price of the securities that may be offered under
this prospectus supplement, any pricing supplement and the accompanying
prospectus.
Notes Offered on a Global Basis
If the applicable pricing supplement indicates that any of our notes will
be offered on a global basis, those registered global securities will be
offered for sale in those jurisdictions outside of the United States where it
is legal to make offers for sale of those securities.
The agent has represented and agreed, and any other agent through which we
may offer these securities on a global basis will represent and agree, that it
will comply with all applicable laws and regulations in force in any
jurisdiction in which it purchases, offers, sells or delivers the securities or
possesses or distributes the applicable pricing supplement, this prospectus
supplement or the accompanying prospectus and will obtain any consent, approval
or permission required by it for the purchase, offer or sale by it of the
securities under the laws and regulations in force in any jurisdiction to which
it is subject or in which it makes purchases, offers or sales of the
securities, and we shall not have responsibility for the agent's compliance
with the applicable laws and regulations or obtaining any required consent,
approval or permission.
Purchasers of any securities offered on a global basis may be required to
pay stamp taxes and other charges in accordance with the laws and practices of
the country of purchase in addition to the issue price set forth on the cover
page hereof.
LEGAL MATTERS
The validity of the notes will be passed upon for the Bank by Schulte Roth
& Zabel LLP. Davis Polk & Wardwell will pass upon some legal matters relating
to the notes for the agent. Davis Polk & Wardwell has in the past represented
ABN AMRO Holding N.V. and its affiliates, including the Bank and continues to
represent ABN AMRO Holding N.V. and its affiliates on a regular basis and in a
variety of matters.
S-37
<PAGE>
PROSPECTUS
ABN AMRO BANK N.V.
(Incorporated with limited liability under the laws of
The Netherlands with corporate seat in Amsterdam)
$500,000,000 Debt Securities
We, ABN AMRO Bank N.V., may offer from time to time debt securities. This
prospectus describes the general terms of these securities and the general
manner in which we will offer the securities. The specific terms of any
securities we offer will be included in a supplement to this prospectus. The
prospectus supplement will also describe the specific manner in which we will
offer the securities.
These securities are not insured by the Federal Deposit Insurance Corporation
or any other federal agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The Bank's principal executive offices are at Gustav Mahlerlaan 10, 1082 PP
Amsterdam, The Netherlands, and our telephone number is (31-20) 628 9393.
ABN AMRO Incorporated
November 22, 2000
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a Registration Statement that we filed with the
Securities and Exchange Commission (the "Commission") utilizing a "shelf"
registration process. Under this shelf process, we may, from time to time, sell
the debt securities described in the prospectus in one or more offerings up to
a total dollar amount of $500,000,000 or the equivalent of this amount in
foreign currencies or foreign currency units.
This prospectus provides you with a general description of the securities
we may offer. Each time we sell securities, we will provide a prospectus
supplement that will contain specific information about the terms of the
offering. The prospectus supplement may also add, update or change information
contained in this prospectus. You should read both this prospectus and any
prospectus supplement together with additional information described under the
heading "Where You Can Find Additional Information" beginning on page 2 of this
prospectus.
Following the initial distribution of an offering of securities, ABN AMRO
Incorporated and other affiliates of ours may offer and sell those securities
in the course of their businesses as broker-dealers. ABN AMRO Incorporated and
other affiliates of ours may act as a principal or agent in these transactions.
This prospectus and the applicable prospectus supplement will also be used in
connection with those transactions. Sales in any of those transactions will be
made at varying prices related to prevailing market prices and other
circumstances at the time of sale.
The debt securities may not be offered or sold anywhere in the world
except in compliance with the requirements of the Dutch Securities Market
Supervision Act 1995 (Wet toezicht effectenverkee).
The terms the "Bank," "we," "us," and "our" refer to ABN AMRO Bank N.V.
2
<PAGE>
WHERE YOU CAN FIND ADDITIONAL INFORMATION
Our parent corporation, ABN AMRO Holding N.V., is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith, we and ABN AMRO Holding N.V.
file reports and other information with the SEC. You may read and copy these
documents at the SEC's public reference room at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's regional offices
at Northeast Regional Office, Seven World Trade Center, Suite 1300, New York,
New York 10048 and Midwest Regional Office, Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of this material can also
be obtained from the Public Reference Room of the SEC at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Please call the
SEC at 1-800-SEC-0330 for further information about the Public Reference Room.
The SEC also maintains an Internet website that contains reports and other
information regarding us and ABN AMRO Holding N.V. that are filed through the
SEC's Electronic Data Gathering, Analysis and Retrieval (EDGAR) System. This
website can be accessed at http://www.sec.gov. You can find information we and
ABN AMRO Holding N.V. have filed with the SEC by reference to file numbers
1-14624 and 5-52647.
This prospectus is part of a registration statement we filed with the SEC.
This prospectus omits some information contained in the registration statement
in accordance with SEC rules and regulations. You should review the information
and exhibits in the registration statement for further information on us and
the securities we are offering. Statements in this prospectus concerning any
document we filed as an exhibit to the registration statement or that we or ABN
AMRO Holding N.V. otherwise filed with the SEC are not intended to be
comprehensive and are qualified by reference to these filings. You should
review the complete document to evaluate these statements.
The SEC allows us to incorporate by reference much of the information we
or ABN AMRO Holding N.V. file with them, which means that we can disclose
important information to you by referring you to those publicly available
documents. The information that we incorporate by reference in this prospectus
is considered to be part of this prospectus. Because we are incorporating by
reference future filings with the SEC, this prospectus is continually updated
and those future filings may modify or supersede some of the information
included or incorporated in this prospectus. This means that you must look at
all of the SEC filings that we incorporate by reference to determine if any of
the statements in this prospectus or in any document previously incorporated by
reference have been modified or superseded. This prospectus incorporates by
reference the documents listed below and any future filings we or ABN AMRO
Holding N.V. make with the SEC (including any Form 6-K's we or ABN AMRO Holding
N.V. subsequently file with the SEC and specifically incorporate by reference
into this prospectus) under Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 until we complete our offering of the securities to be
issued under the registration statement or, if later, the date on which any of
our affiliates cease offering and selling these securities:
(a) the Annual Report on Form 20-F of ABN AMRO Holding N.V. and ABN AMRO
Bank N.V. for the year ended December 31, 1999; and
(b) the Reports on Form 6-K dated (A) March 15, 2000 (press release of
ABN AMRO Holding N.V. announcing (1) the approval of a proposal
empowering the Executive Committee of Stichting Administratiekantoor
ABN AMRO Holding N.V. to authorize holders of depository receipts for
preference shares to vote at the Annual Shareholders' Meeting of ABN
AMRO Holding N.V. and (2) the annual figures of ABN AMRO Holding N.V.
for 1999), (B) May 31, 2000 (press release of ABN AMRO Bank N.V.
announcing the restructuring of its business into three business
units consisting of Wholesale Clients, Retail Clients and Private
Clients & Asset Management) and (C) August 17, 2000 (press release of
ABN AMRO Holding N.V. announcing its 2000 interim results).
You may request, at no cost to you, a copy of these documents (other than
exhibits not specifically incorporated by reference) by writing or telephoning
us at: ABN AMRO Bank N.V., ABN AMRO Investor Relations Department,
Hoogoorddreef 66-68, P.O. Box 283, 1101 BE Amsterdam, The Netherlands
(Telephone: (31-20) 628 3842).
3
<PAGE>
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth our consolidated ratios of earnings to
fixed charges for the periods indicated.
<TABLE>
(Unaudited)
Six Months Ended Year ended December 31,
------------------ ----------------------------
June 30, June 30,
2000 2000 1999 1998 1997 1996 1995
-------- -------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Excluding Interest on Deposits1....... 2.04 2.09 2.09 1.96 1.88 1.94 1.80
Including Interest on Deposits1....... 1.20 1.21 1.21 1.16 1.18 1.18 1.15
</TABLE>
--------
1Deposits include Banks and Total customer accounts. See the Consolidated
Financial Statements incorporated by reference herein.
4
<PAGE>
ABN AMRO BANK N.V.
ABN AMRO Holding N.V. ("Holding") was incorporated under The Netherlands
law by deed of May 30, 1990 as the holding company of ABN AMRO Bank N.V. (the
"Bank"). Holding's main purpose is to own the Bank and its subsidiaries.
Holding owns all of the shares of the Bank and is jointly and severally liable
for all liabilities of the Bank. The Bank traces its origin to the formation of
the "Nederlandsche Handel--Maatschappij, N.V." in 1825 pursuant to a Dutch
Royal Decree of 1824.
The ABN AMRO group ("ABN AMRO"), which consists of Holding and its
subsidiaries, including the Bank, is a global banking group offering a wide
range of commercial and investment banking products and services on a global
basis through its network of approximately 3,500 offices and branches in 76
countries and territories (as of December 31, 1999). ABN AMRO is the largest
banking group based in The Netherlands with total consolidated assets of EUR
457.9 billion at December 31, 1999. ABN AMRO has a substantial presence in the
United States, where it is one of the largest foreign banking groups based on
total assets held in the country. ABN AMRO also has a substantial presence in
Brazil where it acquired Banco Real, the fourth largest privately held bank in
the country in November 1998. During 1999, ABN AMRO also established a presence
in Italy.
5
<PAGE>
USE OF PROCEEDS
We will use the net proceeds from the sale of the securities we offer by
this prospectus for general corporate purposes, in connection with hedging our
obligations under the securities, or for any other purposes described in the
applicable prospectus supplement. General corporate purposes may include
additions to working capital, investments in or extensions of credit to our
subsidiaries and the repayment of indebtedness.
6
<PAGE>
DESCRIPTION OF DEBT SECURITIES
General
The following description of the terms of the debt securities contains
certain general terms that may apply to the debt securities. The specific terms
of any debt securities will be described in the prospectus supplement relating
to those debt securities.
The debt securities will be issued under an Indenture (the "Indenture"),
between us and The Chase Manhattan Bank ("Chase"), as Trustee.
We have summarized below the material provisions of the Indenture and the
debt securities, or indicated which material provisions will be described in
the related prospectus supplement. These descriptions are only summaries, and
each investor should refer to the Indenture, which describes completely the
terms and definitions summarized below and contains additional information
regarding the debt securities. Where appropriate, we use parentheses to refer
you to the particular sections of the Indenture. Any reference to particular
sections or defined terms of the Indenture in any statement under this heading
qualifies the entire statement and incorporates by reference the applicable
section or definition into that statement.
The debt securities will be our direct, unsecured general obligations. The
debt securities will have the same rank in liquidation as all of our other
unsecured and unsubordinated debt.
Payments
We may issue debt securities from time to time in one or more series. The
provisions of the Indenture allow us to "reopen" a previous issue of a series
of debt securities and issue additional debt securities of that series. The
debt securities may be denominated and payable in U.S. dollars or foreign
currencies. We may also issue debt securities, from time to time, with the
principal amount or interest payable on any relevant payment date to be
determined by reference to one or more currency exchange rates, securities or
baskets of securities, commodity prices or indices. Holders of these types of
debt securities will receive payments of principal or interest that depend upon
the value of the applicable currency, security or basket of securities,
commodity or index on the relevant payment dates.
Debt securities may bear interest at a fixed rate, which may be zero, or a
floating rate. Debt securities bearing no interest or interest at a rate that
at the time of issuance is below the prevailing market rate may be sold at a
discount below their stated principal amount.
Terms Specified in Prospectus Supplement
The prospectus supplement will contain, where applicable, the following
terms of and other information relating to any offered debt securities:
o the specific designation;
o aggregate principal amount, purchase price and denomination;
o currency in which the debt securities are denominated and/or in which
principal, and premium, if any, and/or interest, if any, is payable;
o date of maturity;
o the interest rate or rates or the method by which the calculation
agent will determine the interest rate or rates, if any;
7
<PAGE>
o the interest payment dates, if any;
o the place or places for payment of the principal of and any premium
and/or interest on the debt securities;
o any repayment, redemption, prepayment or sinking fund provisions,
including any redemption notice provisions;
o whether we will issue the debt securities in registered form or
bearer form or both and, if we are offering debt securities in bearer
form, any restrictions applicable to the exchange of one form for
another and to the offer, sale and delivery of those debt securities
in bearer form;
o whether we will issue the debt securities in definitive form and
under what terms and conditions;
o the terms on which holders of the debt securities may convert or
exchange these securities into or for stock or other securities of an
entity unaffiliated with us, any specific terms relating to the
adjustment of the conversion or exchange feature and the period
during which the holders may make the conversion or exchange;
o information as to the methods for determining the amount of principal
or interest payable on any date and/or the currencies, securities or
baskets of securities, commodities or indices to which the amount
payable on that date is linked;
o any agents for the debt securities, including trustees, depositories,
authenticating or paying agents, transfer agents or registrars;
o any applicable United States federal income tax consequences and
Netherlands income tax consequences, including, but not limited to:
o whether and under what circumstances we will pay additional
amounts on debt securities for any tax, assessment or
governmental charge withheld or deducted and, if so, whether we
will have the option to redeem those debt securities rather than
pay the additional amounts;
o tax considerations applicable to any discounted debt securities
or to debt securities issued at par that are treated as having
been issued at a discount for United States federal income tax
purposes;
o tax considerations applicable to any debt securities denominated
and payable in foreign currencies; and
o any other specific terms of the debt securities, including any
additional events of default or covenants, and any terms required by
or advisable under applicable laws or regulations.
Some of the debt securities may be issued as original issue discount debt
securities (the "Original Issue Discount Securities"). Original Issue Discount
Securities bear no interest or bear interest at below-market rates and will be
sold at a discount below their stated principal amount. The prospectus
supplement relating to an issue of Original Issue Discount Securities will
contain information relating to federal income tax, accounting, and other
special considerations applicable to Original Issue Discount Securities.
Registration and Transfer of Debt Securities
Holders may present debt securities for exchange, and holders of
registered debt securities may present these securities for transfer, in the
manner, at the places and subject to the restrictions stated in the debt
securities and described in the applicable prospectus supplement. We will
provide these services without charge except for any tax or other governmental
charge payable in connection with these services and subject to any limitations
provided in the Indenture.
8
<PAGE>
Holders may transfer debt securities in bearer form and the related
coupons, if any, by delivery to the transferee. If any of the securities are
held in global form, the procedures for transfer of interests in those
securities will depend upon the procedures of the depositary for those global
securities. See "Forms of Securities."
Covenant Restricting Mergers and Other Significant Corporate Actions
The Indenture provides that we will not merge or consolidate with any
other person and will not sell, lease or convey all or substantially all of our
assets to any other person, unless:
o we will be the continuing legal entity; or
o the successor legal entity or person that acquires all or
substantially all of our assets:
o will be incorporated and existing under the laws of the
Netherlands, or a member state of the European Union or the
Organisation for Economic Co-Operation and Development; and
o will expressly assume all of our obligations under the Indenture
and the debt securities issued under the Indenture; and
o immediately after the merger, consolidation, sale, lease or
conveyance, we, that person or that successor legal entity will not
be in default in the performance of the covenants and conditions of
the Indenture applicable to us. (Indenture, Section 9.01)
Absence of Protections against All Potential Actions of the Bank. There
are no covenants or other provisions in the Indenture that would afford holders
of debt securities additional protection in the event of a recapitalization
transaction, a change of control of the Bank or a highly leveraged transaction.
The merger covenant described above would only apply if the recapitalization
transaction, change of control or highly leveraged transaction were structured
to include a merger or consolidation of the Bank or a sale, lease or conveyance
of all or substantially all of our assets. However, we may provide specific
protections, such as a put right or increased interest, for particular debt
securities, which we would describe in the applicable prospectus supplement.
Events of Default
The Indenture provides holders of debt securities with remedies if we fail
to perform specific obligations, such as making payments on the debt
securities, or if we become bankrupt. Holders should review these provisions
and understand which of our actions trigger an event of default and which
actions do not. The Indenture permits the issuance of debt securities in one or
more series, and, in many cases, whether an event of default has occurred is
determined on a series by series basis.
An event of default is defined under the Indenture, with respect to any
series of debt securities issued under that Indenture, as any one or more of
the following events (each an "Event of Default") having occurred and be
continuing:
o default is made for more than 30 days in the payment of interest,
premium or principal in respect of the securities; or
o we fail to perform or observe any of our other obligations under the
securities and such failure has continued for the period of 60 days
next following the service on us of notice requiring the same to be
remedied; or
o we are declared bankrupt, or a declaration in respect of us is made
under Chapter X of the Act on the Supervision of the Credit System
(Wet toezicht kredietwezen 1992) of the Netherlands; or
o an order is made or an effective resolution is passed for the winding
up or liquidation of us unless this is done in compliance with the
"Covenant Restricting Mergers and Other Significant Corporate Action"
described above;
9
<PAGE>
Acceleration of Debt Securities Upon an Event of Default. The Indenture
provides that:
o if an event of default due to the default in payment of principal of,
or any premium or interest on, any series of debt securities issued
under the Indenture, or due to the default in the performance or
breach of any other covenant or warranty of the Bank applicable to
the debt securities of that series but not applicable to all
outstanding debt securities issued under that indenture occurs and is
continuing, either the Trustee or the holders of not less than 25% in
aggregate principal amount of the outstanding debt securities of each
affected series, voting as one class, by notice in writing to the
Bank, may declare the principal of all debt securities of each
affected series and interest accrued thereon to be due and payable
immediately; and
o if an event of default due to a default in the performance of any
other of the covenants or agreements in the Indenture applicable to
all outstanding debt securities issued under the Indenture or due to
specified events of bankruptcy, insolvency or reorganization of the
Bank, occurs and is continuing, either the Trustee or the holders of
not less than 25% in aggregate principal amount of all outstanding
debt securities issued under the Indenture, voting as one class, by
notice in writing to the Bank may declare the principal of all those
debt securities and interest accrued thereon to be due and payable
immediately. (Indenture, Section 5.01)
Annulment of Acceleration and Waiver of Defaults. In some circumstances,
if any and all events of default under the Indenture, other than the
non-payment of the principal of the securities that has become due as a result
of an acceleration, have been cured, waived or otherwise remedied, then the
holders of a majority in aggregate principal amount of all series of
outstanding debt securities affected, voting as one class, may annul past
declarations of acceleration of or waive past defaults of the debt securities.
(Indenture, Sections 5.01 and 5.10)
Indemnification of Trustee for Actions Taken on Your Behalf. The Indenture
provides that the trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction of
the holders of debt securities issued under that Indenture relating to the
time, method and place of conducting any proceeding for any remedy available to
the trustee, or exercising any trust or power conferred upon the trustee.
(Indenture, Section 6.01) Subject to these provisions and some other
limitations, the holders of a majority in aggregate principal amount of each
series of outstanding debt securities of each affected series, voting as one
class, may direct the time, method and place of conducting any proceeding for
any remedy available to the trustee, or exercising any trust or power conferred
on the trustee. (Indenture, Section 5.09)
Limitation on Actions by You as an Individual Holder. The Indenture
provides that no individual holder of debt securities may institute any action
against us under that Indenture, except actions for payment of overdue
principal and interest, unless the following actions have occurred:
o the holder must have previously given written notice to the trustee
of the continuing default;
o the holders of not less than 25% in aggregate principal amount of the
outstanding debt securities of each affected series, treated as one
class, must have (1) requested the trustee to institute that action
and (2) offered the trustee reasonable indemnity;
o the trustee must have failed to institute that action within 60 days
after receipt of the request referred to above; and
o the holders of a majority in principal amount of the outstanding debt
securities of each affected series, voting as one class, must not
have given directions to the trustee inconsistent with those of the
holders referred to above. (Indenture, Sections 5.06 and 5.09)
The Indenture contains a covenant that we will file annually with the
trustee a certificate of no default or a certificate specifying any default
that exists. (Indenture, Section 3.05)
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Discharge, Defeasance and Covenant Defeasance
We have the ability to eliminate most or all of our obligations on any
series of debt securities prior to maturity if we comply with the following
provisions. (Indenture, Section 10.01)
Discharge of Indenture. We may discharge all of our obligations, other
than as to transfers and exchanges, under the Indenture after we have:
o paid or caused to be paid the principal of and interest on all of the
outstanding debt securities in accordance with their terms;
o delivered to the applicable trustee for cancellation all of the
outstanding debt securities; or
o irrevocably deposited with the applicable trustee cash or, in the
case of a series of debt securities payable only in U.S. dollars,
U.S. government obligations in trust for the benefit of the holders
of any series of debt securities issued under the Indenture that have
either become due and payable, or are by their terms due and payable,
or are scheduled for redemption, within one year, in an amount
certified to be sufficient to pay on each date that they become due
and payable, the principal of and interest on, and any mandatory
sinking fund payments for, those debt securities, except that the
deposit of cash or U.S. government obligations for the benefit of
holders of a series of debt securities that are due and payable, or
are scheduled for redemption, within one year will discharge
obligations under the relevant Indenture relating only to that series
of debt securities.
Defeasance of a Series of Securities at Any Time. We may also discharge
all of our obligations, other than as to transfers and exchanges, under any
series of debt securities at any time, which we refer to as defeasance.
We may be released with respect to any outstanding series of debt
securities from the obligations imposed by Section 9.01, which section contains
the covenants described above limiting consolidations, mergers, asset sales and
leases, and elect not to comply with those sections without creating an event
of default. Discharge under those procedures is called "covenant defeasance."
Defeasance or covenant defeasance may be effected only if, among other
things:
o we irrevocably deposit with the relevant trustee cash or, in the case
of debt securities payable only in U.S. dollars, U.S. government
obligations, as trust funds in an amount certified to be sufficient
to pay on each date that they become due and payable, the principal
of and interest on, and any mandatory sinking fund payments for, all
outstanding debt securities of the series being defeased;
o we deliver to the relevant trustee an opinion of counsel to the
effect that:
o the holders of the series of debt securities being defeased will
not recognize income, gain or loss for United States federal
income tax purposes as a result of the defeasance or covenant
defeasance; and
o the defeasance or covenant defeasance will not otherwise alter
those holders' United States federal income tax treatment of
principal and interest payments on the series of debt securities
being defeased; in the case of a defeasance, this opinion must
be based on a ruling of the Internal Revenue Service or a change
in United States federal income tax law occurring after the date
of this prospectus, since that result would not occur under
current tax law.
Modification of the Indenture
Modification without Consent of Holders. We and the relevant trustee may
enter into supplemental indentures without the consent of the holders of debt
securities issued under the Indenture to:
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o secure any debt securities;
o evidence the assumption by a successor corporation of our
obligations;
o add covenants for the protection of the holders of debt securities;
o cure any ambiguity or correct any inconsistency;
o establish the forms or terms of debt securities of any series; or
o evidence the acceptance of appointment by a successor trustee.
(Indenture, Section 8.01)
Modification with Consent of Holders. We and the trustee, with the consent
of the holders of not less than a majority in aggregate principal amount of
each affected series of outstanding debt securities, voting as one class, may
add any provisions to, or change in any manner or eliminate any of the
provisions of, the Indenture or modify in any manner the rights of the holders
of those debt securities. However, we and the trustee may not make any of the
following changes to any outstanding debt security without the consent of each
potentially affected holder:
o extend the final maturity of the principal;
o reduce the principal amount;
o reduce the rate or extend the time of payment of interest;
o reduce any amount payable on redemption;
o change the currency in which the principal, including any amount of
original issue discount, premium, or interest thereon is payable;
o modify or amend the provisions for conversion of any currency into
another currency;
o reduce the amount of any original issue discount security payable
upon acceleration or provable in bankruptcy;
o alter the terms on which holders of the debt securities may convert
or exchange debt securities for stock or other securities of the Bank
or of other entities or for other property or the cash value of the
property, other than in accordance with the antidilution provisions
or other similar adjustment provisions included in the terms of the
debt securities;
o impair the right of any holder to institute suit for the enforcement
of any payment on any debt security when due; or
o reduce the percentage of debt securities the consent of whose holders
is required for modification of the Indenture.
Concerning Our Relationship with the Trustee
We and our subsidiaries maintain ordinary banking relationships and
custodial facilities with Chase and affiliates of Chase.
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FORMS OF SECURITIES
Each debt security will be represented either by a certificate issued in
definitive form to a particular investor or by one or more global securities
representing the entire issuance of securities. Both certificated securities in
definitive form and global securities may be issued either (1) in registered
form, where our obligation runs to the holder of the security named on the face
of the security or (2) in bearer form, where our obligation runs to the bearer
of the security. Definitive securities name you or your nominee as the owner of
the security (other than definitive bearer securities, which name the bearer as
owner), and in order to transfer or exchange these securities or to receive
payments other than interest or other interim payments, you or your nominee
must physically deliver the securities to the trustee, registrar, paying agent
or other agent, as applicable. Global securities name a depositary or its
nominee as the owner of the debt securities represented by these global
securities (other than global bearer securities, which name the bearer as
owner). The depositary maintains a computerized system that will reflect each
investor's beneficial ownership of the securities through an account maintained
by the investor with its broker/dealer, bank, trust company or other
representative, as we explain more fully below.
Global Securities
Registered Global Securities. We may issue the registered debt securities
in the form of one or more fully registered global securities that will be
deposited with a depositary or its nominee identified in the applicable
prospectus supplement and registered in the name of that depositary or nominee.
In those cases, one or more registered global securities will be issued in a
denomination or aggregate denominations equal to the portion of the aggregate
principal or face amount of the securities to be represented by registered
global securities. Unless and until it is exchanged in whole for securities in
definitive registered form, a registered global security may not be transferred
except as a whole by and among the depositary for the registered global
security, the nominees of the depositary or any successors of the depositary or
those nominees.
If not described below, any specific terms of the depositary arrangement
with respect to any securities to be represented by a registered global
security will be described in the prospectus supplement relating to those
securities. We anticipate that the following provisions will apply to all
depositary arrangements.
Ownership of beneficial interests in a registered global security will be
limited to persons, called participants, that have accounts with the depositary
or persons that may hold interests through participants. Upon the issuance of a
registered global security, the depositary will credit, on its book-entry
registration and transfer system, the participants' accounts with the
respective principal or face amounts of the securities beneficially owned by
the participants. Any dealers, underwriters or agents participating in the
distribution of the securities will designate the accounts to be credited.
Ownership of beneficial interests in a registered global security will be shown
on, and the transfer of ownership interests will be effected only through,
records maintained by the depositary, with respect to interests of
participants, and on the records of participants, with respect to interests of
persons holding through participants. The laws of some states may require that
some purchasers of securities take physical delivery of these securities in
definitive form. These laws may impair your ability to own, transfer or pledge
beneficial interests in registered global securities.
So long as the depositary, or its nominee, is the registered owner of a
registered global security, that depositary or its nominee, as the case may be,
will be considered the sole owner or holder of the securities represented by
the registered global security for all purposes under the applicable Indenture.
Except as described below, owners of beneficial interests in a registered
global security will not be entitled to have the securities represented by the
registered global security registered in their names, will not receive or be
entitled to receive physical delivery of the securities in definitive form and
will not be considered the owners or holders of the securities under the
applicable Indenture. Accordingly, each person owning a beneficial interest in
a registered global security must rely on the procedures of the depositary for
that registered global security and, if that person is not a participant, on
the procedures of the participant through which the person owns its interest,
to exercise any rights of a holder under the applicable Indenture. We
understand that under existing industry practices, if we request any action of
holders or if an owner of a beneficial interest in a registered global security
desires to give or take any action that a holder is entitled to give or take
under the applicable Indenture, the depositary for the registered global
security would authorize the participants holding the relevant beneficial
interests to give or take that action, and the participants would authorize
beneficial owners owning
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through them to give or take that action or would otherwise act upon the
instructions of beneficial owners holding through them.
Principal, premium, if any, and interest payments on debt securities
represented by a registered global security registered in the name of a
depositary or its nominee will be made to the depositary or its nominee, as the
case may be, as the registered owner of the registered global security. None of
the Bank, the trustee or any other agent of the Bank or agent of the trustee
will have any responsibility or liability for any aspect of the records
relating to payments made on account of beneficial ownership interests in the
registered global security or for maintaining, supervising or reviewing any
records relating to those beneficial ownership interests.
We expect that the depositary for any of the securities represented by a
registered global security, upon receipt of any payment of principal, premium,
interest or other distribution of underlying securities or other property to
holders on that registered global security, will immediately credit
participants' accounts in amounts proportionate to their respective beneficial
interests in that registered global security as shown on the records of the
depositary. We also expect that payments by participants to owners of
beneficial interests in a registered global security held through participants
will be governed by standing customer instructions and customary practices, as
is now the case with the securities held for the accounts of customers in
bearer form or registered in "street name," and will be the responsibility of
those participants.
If the depositary for any of these securities represented by a registered
global security is at any time unwilling or unable to continue as depositary or
ceases to be a clearing agency registered under the Securities Exchange Act of
1934, and a successor depositary registered as a clearing agency under the
Securities Exchange Act of 1934 is not appointed by us within 90 days, we will
issue securities in definitive form in exchange for the registered global
security that had been held by the depositary. In addition, we may at any time
and in our sole discretion decide not to have any of the securities represented
by one or more registered global securities. If we make that decision, we will
issue securities in definitive form in exchange for all of the registered
global security or securities representing those securities. Any securities
issued in definitive form in exchange for a registered global security will be
registered in the name or names that the depositary gives to the relevant
trustee or other relevant agent of ours or theirs. It is expected that the
depositary's instructions will be based upon directions received by the
depositary from participants with respect to ownership of beneficial interests
in the registered global security that had been held by the depositary.
Bearer Global Securities. The securities may also be issued in the form of
one or more bearer global securities that will be deposited with a common
depositary for the Euroclear System and Clearstream Banking, societe anonyme or
with a nominee for the depositary identified in the prospectus supplement
relating to those securities. The specific terms and procedures, including the
specific terms of the depositary arrangement, with respect to any securities to
be represented by a bearer global security will be described in the prospectus
supplement relating to those securities.
Limitations on Issuance of Bearer Securities
In compliance with United States federal income tax laws and regulations,
bearer securities, including bearer securities in global form, will not be
offered, sold, resold or delivered, directly or indirectly, in the United
States or its possessions or to United States persons, as defined below, except
as otherwise permitted by United States Treasury Regulations Section
1.163-5(c)(2)(i)(D). Any underwriters, agents or dealers participating in the
offerings of bearer securities, directly or indirectly, must agree that they
will not, in connection with the original issuance of any bearer securities or
during the restricted period, as defined in United States Treasury Regulations
Section 1.163-5(c)(2)(i)(D)(7)), which we refer to as the "restricted period,"
offer, sell, resell or deliver, directly or indirectly, any bearer securities
in the United States or its possessions or to United States persons, other than
as permitted by the applicable Treasury Regulations described above. In
addition, any underwriters, agents or dealers must have procedures reasonably
designed to ensure that their employees or agents who are directly engaged in
selling bearer securities are aware of the above restrictions on the offering,
sale, resale or delivery of bearer securities.
Bearer securities, other than temporary global debt securities and bearer
securities that satisfy the requirements of United States Treasury Regulations
Section 1.163-5(c)(2)(i)(D)(3)(iii) and any coupons appertaining thereto will
not be delivered in definitive form, and no interest will be paid thereon,
unless the Bank has received a signed certificate
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in writing, or an electronic certificate described in United States Treasury
Regulations Section 1.163-5(c)(2)(i)(D)(3)(ii), stating that on the date of
that certificate the bearer security:
o is owned by a person that is not a United States person;
o is owned by a United States person that (a) is a foreign branch of a
United States financial institution, as defined in applicable United
States Treasury Regulations, which we refer to as a "financial
institution," purchasing for its own account or for resale, or (b) is
acquiring the bearer security through a foreign branch of a United
States financial institution and who holds the bearer security
through that financial institution through that date, and in either
case (a) or (b) above, each of those United States financial
institutions agrees, on its own behalf or through its agent, that the
Bank may be advised that it will comply with the requirements of
Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986
and the regulations thereunder; or
o is owned by a United States or foreign financial institution for the
purposes of resale during the restricted period and, in addition, if
the owner of the bearer security is a United States or foreign
financial institution described in this clause, whether or not also
described in the first or second clause above, the financial
institution certifies that it has not acquired the bearer security
for purposes of resale directly or indirectly to a United States
person or to a person within the United States or its possessions.
We will make payments on bearer securities only outside the United States
and its possessions except as permitted by the above regulations.
Bearer securities, other than temporary global securities, and any coupons
issued with bearer securities 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." The sections
referred to in this legend provide that, with exceptions, a United States
person will not be permitted to deduct any loss, and will not be eligible for
capital gain treatment with respect to any gain, realized on the sale, exchange
or redemption of that bearer security or coupon.
As used herein, "United States person" means a citizen or resident of the
United States for United States federal income tax purposes, a corporation or
partnership, including an entity treated as a corporation or partnership for
United States federal income tax purposes, created or organized in or under the
laws of the United States, or any state of the United States or the District of
Columbia, an estate the income of which is subject to United States federal
income taxation regardless of its source, or a trust if a court within the
United States is able to exercise primary supervision of the administration of
the trust and one or more United States persons have the authority to control
all substantial decisions of the trust. In addition, some trusts treated as
United States persons before August 20, 1996 may elect to continue to be so
treated to the extent provided in the Treasury Regulations.
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PLAN OF DISTRIBUTION
We may sell the securities being offered by this prospectus in three ways:
(1) through agents, (2) through underwriters and (3) through dealers. Any of
these agents, underwriters or dealers in the United States or outside the
United States will include ABN AMRO Incorporated and may include other
affiliates of the Bank.
We may designate agents from time to time to solicit offers to purchase
these securities. We will name any such agent, who may be deemed to be an
underwriter as that term is defined in the Securities Act, and state any
commissions we are to pay to that agent in the applicable prospectus
supplement. That agent will be acting on a reasonable efforts basis for the
period of its appointment or, if indicated in the applicable prospectus
supplement, on a firm commitment basis.
If we use any underwriters to offer and sell these securities, we will
enter into an underwriting agreement with those underwriters when we and they
determine the offering price of the securities, and we will include the names
of the underwriters and the terms of the transaction in the applicable
prospectus supplement.
If we use a dealer to offer and sell these securities, we will sell the
securities to the dealer, as principal, and will name the dealer in the
applicable prospectus supplement. The dealer may then resell the securities to
the public at varying prices to be determined by that dealer at the time of
resale.
Our net proceeds will be the purchase price in the case of sales to a
dealer, the public offering price less discount in the case of sales to an
underwriter or the purchase price less commission in the case of sales through
an agent -- in each case, less other expenses attributable to issuance and
distribution.
In order to facilitate the offering of these securities, the underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of these securities or any other securities the prices of which may be
used to determine payments on these securities. Specifically, the underwriters
may sell more securities than they are obligated to purchase in connection with
the offering, creating a short position for their own accounts. A short sale is
covered if the short position is no greater than the number or amount of
securities available for purchase by the underwriters under any over allotment
option. The underwriters can close out a covered short sale by exercising the
over allotment option or purchasing these securities in the open market. In
determining the source of securities to close out a covered short sale, the
underwriters will consider, among other things, the open market price of these
secruities compared to the price available under the over allotment option. The
underwriters may also sell these securities or any other securities in excess
of the over allotment option, creating a naked short position. The underwriters
must close out any naked short position by purchasing securities in the open
market. A naked short position is more likely to be created if the underwriters
are concerned that there may be downward pressure on the price of these
securities in the open market after pricing that could adversely affect
investors who purchase in the offering. As an additional means of facilitating
the offering, the underwriters may bid for, and purchase, these securities or
any other securities in the open market to stabilize the price of these
securities or of any other securities. Finally, in any offering of the
securities through a syndicate of underwriters, the underwriting syndicate may
also reclaim selling concessions allowed to an underwriter or a dealer for
distributing these securities in the offering, if the syndicate repurchases
previously distributed securities to cover syndicate short positions or to
stabilize the price of these securities. Any of these activities may raise or
maintain the market price of these securities above independent market levels
or prevent or retard a decline in the market price of these securities. The
underwriters are not required to engage in these activities, and may end any of
these activities at any time.
Agents, underwriters and dealers may be entitled under agreements with us
to indemnification by us against some civil liabilities, including liabilities
under the Securities Act, and may be customers of, engage in transactions with
or perform services for us in the ordinary course of business.
If so indicated in the prospectus supplement, we will authorize agents,
underwriters or dealers to solicit offers by some purchasers to purchase debt
securities from us at the public offering price stated in the prospectus
supplement under delayed delivery contracts providing for payment and delivery
on a specified date in the future. These contracts
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will be subject to only those conditions described in the prospectus
supplement, and the prospectus supplement will state the commission payable for
solicitation of these offers.
Any underwriter, agent or dealer utilized in the initial offering of
securities will not confirm sales to accounts over which it exercises
discretionary authority without the prior specific written approval of its
customer.
ABN AMRO Incorporated is an indirect wholly-owned subsidiary of the Bank.
Each initial offering of securities will be conducted in compliance with the
requirements of Rule 2720 of the National Association of Securities Dealers,
Inc., which is commonly referred to as the NASD, regarding a NASD member firm's
distributing the securities of an affiliate. Following the initial distribution
of any of these securities, ABN AMRO Incorporated and other affiliates of the
Bank may offer and sell these securities in the course of their business as
broker-dealers. ABN AMRO Incorporated and other affiliates may act as
principals or agents in these transactions and may make any sales at varying
prices related to prevailing market prices at the time of sale or otherwise.
ABN AMRO Incorporated and other affiliates may use this prospectus in
connection with these transactions. None of ABN AMRO Incorporated or any other
affiliate is obligated to make a market in any of these securities and may
discontinue any market-making activities at any time without notice.
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LEGAL MATTERS
The validity of the debt securities will be passed upon for the Bank by
Schulte Roth & Zabel LLP and certain matters of Dutch law will be passed upon
for the Bank by Clifford Chance Limited Liability Partnership. Davis Polk &
Wardwell will pass upon some legal matters relating to these securities for the
agents. Davis Polk & Wardwell has in the past represented Holding and its
affiliates, including the Bank and continues to represent Holding and its
affiliates on a regular basis and in a variety of matters.
EXPERTS
The Consolidated Financial Statements of ABN AMRO as of December 31, 1999
and for each of the years in the three-year period ended December 31, 1999 are
included in reliance upon the report of Ernst & Young Accountants, independent
auditors, given upon the authority of that firm as experts in auditing and
accounting.
ERISA MATTERS FOR PENSION PLANS AND INSURANCE COMPANIES
The Bank and some of our affiliates, including ABN AMRO Incorporated, may
each be considered a "party in interest" within the meaning of the Employee
Retirement Income Security Act of 1974, as amended, which is commonly referred
to as ERISA, or a "disqualified person" within the meaning of the Code with
respect to many employee benefit plans. Prohibited transactions within the
meaning of ERISA or the Code may arise, for example, if the debt securities are
acquired by or with the assets of a pension or other employee benefit plan with
respect to which ABN AMRO Incorporated or any of its affiliates is a service
provider, unless those debt securities are acquired pursuant to an exemption
for transactions effected on behalf of one of these plans by a "qualified
professional asset manager" or pursuant to any other available exemption. The
assets of a pension or other employee benefit plan may include assets held in
the general account of an insurance company that are deemed to be "plan assets"
under ERISA. Any insurance company or pension or employee benefit plan, or any
person investing the assets of a pension or employee benefit plan, proposing to
invest in the debt securities should consult with its legal counsel.
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<S> <C>
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You should rely only on the information contained
or incorporated by reference in this prospectus
supplement, the prospectus and any pricing
supplement. We have not authorized anyone else
to provide you with different or additional
information. We are offering to sell these ABN AMRO BANK N.V.
securities and seeking offers to buy these
securities only in jurisdictions where offers and $500,000,000
sales are permitted. Neither the delivery of this
prospectus supplement or the accompanying Debt Securities
pricing supplement, nor any sale made hereunder
and thereunder shall, under any circumstances,
create any implication that there has been no
change in the affairs of ABN AMRO Bank N.V. since
the date hereof or that the information contained or
incorporated by reference herein is correct as of
any time subsequent to the date of such
information.
Until 25 days following the bona fide offering of any
securities offered by this prospectus supplement to
public, all dealers that effect transactions in
securities, whether or not participating in this
may be required to deliver a prospectus.
This is in addition to the dealers' obligation to
deliver a prospectus when acting as underwriters
and with respect to their unsold allotments or
subscriptions.
------------------------------------------------------- PROSPECTUS SUPPLEMENT the
(TO PROSPECTUS DATED these
TABLE OF CONTENTS NOVEMBER 22, 2000) offering,
PROSPECTUS SUPPLEMENT
Page
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About This Prospectus...............................S-2
Foreign Currency Risks..............................S-3
Description of Notes................................S-5
The Depositary.....................................S-23
Series A Notes Offered on ABN AMRO INCORPORATED
a Global Basis..................................S-24
United States Federal Taxation.....................S-27
Plan of Distribution...............................S-36
Legal Matters......................................S-37
PROSPECTUS
Page
----
About This Prospectus.................................2
Where You Can Find Additional Information.............3 November 27, 2000
Consolidated Ratios of Earnings
to Fixed Charges..................................4
ABN AMRO Bank N.V.....................................5
Use of Proceeds.......................................6
Description of Debt Securities........................7
Forms of Securities..................................13
Plan of Distribution.................................16
Legal Matters........................................18
Experts..............................................18
ERISA Matters for Pension Plans and
Insurance Companies..............................18
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