CALCULATION OF REGISTRATION FEE
Amount of
Maximum Aggregate Registration
Title of Each Class of Securities Offered Offering Price Fee(1)
Caterpillar Knock-in REX $1,000,000 $30.70
(1) Pursuant to Rule 457(p) under the Securities Act of 1933, filing
fees of $94,671.00 have already been paid with respect to unsold
securities that were previously registered pursuant to a Registration
Statement on Form F-3 (No. 333-89136) of ABN AMRO Bank N.V. (the
"Prior Registration Statement"), which was initially filed on May 24,
2002 and for which a post-effective amendment was filed on September
17, 2003 and have been carried forward. The $30.70 fee with respect
to the $1,000,000 Knock-in Reverse Exchangeable Securities linked to
the common stock of Caterpillar due April 24, 2008
sold pursuant to this registration statement is offset against those
filing fees,and $41,400.97 remains available for future registration
fees. No additional fee has been paid with respect to this offering.
PRICING SUPPLEMENT PRICING SUPPLEMENT NO. 317 TO
(TO PROSPECTUS DATED SEPTEMBER 29, 2006 REGISTRATION STATEMENT NOS.
AND PROSPECTUS SUPPLEMENT 333-137691, 333-137691-02
DATED SEPTEMBER 29, 2006) DATED OCTOBER 19, 2007
CUSIP: 00078UZY9 RULE 424(b)(2)
[ABN AMRO LOGO]
$1,000,000
ABN AMRO BANK N.V.
ABN NOTES(SM)
SENIOR FIXED RATE NOTES
FULLY AND UNCONDITIONALLY GUARANTEED BY
ABN AMRO HOLDING N.V.
----------------
11.75% (ANNUALIZED) KNOCK-IN REVERSE EXCHANGEABLE(SM) SECURITIES DUE
APRIL 24, 2008 LINKED TO COMMON STOCK OF CATERPILLAR INC.
The Securities do not guarantee any return of principal at maturity. Instead,
the payout at maturity will be based on the performance of the shares of common
stock of Caterpillar Inc., which we refer to as the Underlying Shares, during
the life of the Securities, and in certain circumstances described below, we
will exchange each Security at maturity for a predetermined number of the
Underlying Shares rather than the principal amount of the Securities. THE MARKET
VALUE OF THOSE UNDERLYING SHARES WILL BE LESS THAN THE PRINCIPAL AMOUNT OF EACH
SECURITY AND COULD BE ZERO.
SECURITIES 11.75% (Annualized) Knock-in Reverse
Exchangeable(SM) Securities due April 24, 2008.
PRINCIPAL AMOUNT $1,000,000
UNDERLYING SHARES Common Stock, $1.00 par value per share, of
Caterpillar Inc.
INTEREST RATE 11.75% per annum, payable monthly in arrears on
the 24th day of each month commencing on
November 24, 2007 and ending on the maturity
date.
ISSUE PRICE 100%
ORIGINAL ISSUE DATE October 24, 2007
PRICING DATE October 19, 2007
MATURITY DATE April 24, 2008
INITIAL PRICE $73.57 (the initial price is subject to
adjustment for certain corporate events
affecting the Underlying Shares, which we
describe in "Description of Securities --
Adjustment Events").
KNOCK-IN LEVEL $55.18, which is 75% of the initial price.
STOCK REDEMPTION AMOUNT 13.592 Underlying Shares for each $1,000
principal amount of the Securities, which is
equal to $1,000 divided by the initial price.
DETERMINATION DATE The third trading day prior to the maturity
date, subject to adjustment in certain
circumstances which we describe in "Description
of the Securities -- Determination Date."
PAYMENT AT MATURITY The payment at maturity is based on the
performance of the Underlying Shares:
o If the closing price of the Underlying
Shares on the primary U.S. exchange or
market for the Underlying Shares has not
fallen below the knock-in level on any
trading day from but not including the
pricing date to and including the
determination date, we will pay you the
principal amount of each Security in cash.
o If the closing price of the Underlying
Shares on the primary U.S. exchange or
market for the Underlying Shares falls below
the knock-in level on any trading day from
but not including the pricing date to and
including the determination date:
-- we will deliver to you a number of
Underlying Shares equal to the stock
redemption amount, in the event that the
closing price of the Underlying Shares
on the determination date is below the
initial price; or
-- we will pay you the principal amount of
each Security in cash, in the event that
the closing price of the Underlying
Shares on the determination date is at
or above the initial price.
o You will receive cash in lieu of fractional
shares.
The payment at maturity is subject to adjustment
in certain circumstances.
GUARANTEE The Securities will be fully and unconditionally
guaranteed by ABN AMRO Holding N.V.
DENOMINATIONS The Securities may be purchased in denominations
of $1,000 and integral multiples thereof.
NO AFFILIATION WITH Caterpillar Inc., which we refer to as
CATERPILLAR INC. "Caterpillar," is not an affiliate of ours and
is not involved with this offering in any way.
The obligations represented by the Securities
are our obligations, not those of Caterpillar.
Investing in the Securities is not equivalent to
investing in Caterpillar common stock.
LISTING We do not intend to list the Securities on any
securities exchange.
THE SECURITIES ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER FEDERAL AGENCY.
THE SECURITIES INVOLVE RISKS NOT ASSOCIATED WITH AN INVESTMENT IN CONVENTIONAL
DEBT SECURITIES. SEE "RISK FACTORS" BEGINNING ON PS-8.
The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these Securities, or determined if this Pricing
Supplement or the accompanying Prospectus Supplement or Prospectus is truthful
or complete. Any representation to the contrary is a criminal offense.
The agents are not obligated to purchase the Securities but have agreed to use
reasonable efforts to solicit offers to purchase the Securities. TO THE EXTENT
THE FULL AGGREGATE PRINCIPAL AMOUNT OF THE SECURITIES BEING OFFERED BY THIS
PRICING SUPPLEMENT IS NOT PURCHASED BY INVESTORS IN THE OFFERING, ONE OR MORE OF
OUR AFFILIATES HAS AGREED TO PURCHASE THE UNSOLD PORTION, WHICH MAY CONSTITUTE A
SUBSTANTIAL PORTION OF THE TOTAL AGGREGATE PRINCIPAL AMOUNT OF THE SECURITIES,
AND TO HOLD SUCH SECURITIES FOR INVESTMENT PURPOSES. SEE "HOLDING OF THE
SECURITIES BY OUR AFFILIATES AND FUTURE SALES" UNDER THE HEADING "RISK FACTORS"
AND "PLAN OF DISTRIBUTION." This Pricing Supplement and the accompanying
Prospectus Supplement and Prospectus may be used by our affiliates in connection
with offers and sales of the Securities in market-making transactions.
PRICE $1,000 PER SECURITY
PRICE TO PUBLIC AGENT'S COMMISSIONS(1) PROCEEDS TO ABN AMRO BANK N.V.
Caterpillar Inc. 100% 1.75% 98.25%
Total $1,000,000 $17,500 $982,500
(1) For additional information see "Plan of Distribution" in this pricing
supplement.
ABN AMRO INCORPORATED
In this Pricing Supplement, the "Bank," "we," "us" and "our" refer to ABN
AMRO Bank N.V. and "Holding" refers to ABN AMRO Holding N.V., our parent
company. We refer to the Securities offered hereby and the related guarantees as
the "Securities" and to each individual security offered hereby as a "Security."
Reverse Exchangeable(SM) and ABN Notes(SM) are service marks of ABN AMRO
Bank N.V.
ANY SECURITIES ISSUED, SOLD OR DISTRIBUTED PURSUANT TO THIS PRICING
SUPPLEMENT MAY NOT BE OFFERED OR SOLD (i) TO ANY PERSON/ENTITY LISTED ON
SANCTIONS LISTS OF THE EUROPEAN UNION, UNITED STATES OR ANY OTHER APPLICABLE
LOCAL COMPETENT AUTHORITY; (ii) WITHIN THE TERRITORY OF CUBA, SUDAN, IRAN AND
MYANMAR; (iii) TO RESIDENTS IN CUBA, SUDAN, IRAN OR MYANMAR; OR (iv) TO CUBAN
NATIONALS, WHEREVER LOCATED.
PS-2
SUMMARY
THE FOLLOWING SUMMARY ANSWERS SOME QUESTIONS THAT YOU MIGHT HAVE REGARDING
THE SECURITIES IN GENERAL TERMS ONLY. IT DOES NOT CONTAIN ALL THE INFORMATION
THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE SUMMARY TOGETHER WITH THE MORE
DETAILED INFORMATION THAT IS CONTAINED IN THE REST OF THIS PRICING SUPPLEMENT
AND IN THE ACCOMPANYING PROSPECTUS AND PROSPECTUS SUPPLEMENT. YOU SHOULD
CAREFULLY CONSIDER, AMONG OTHER THINGS, THE MATTERS SET FORTH IN "RISK FACTORS."
IN ADDITION, WE URGE YOU TO CONSULT WITH YOUR INVESTMENT, LEGAL, ACCOUNTING, TAX
AND OTHER ADVISORS WITH RESPECT TO ANY INVESTMENT IN THE SECURITIES.
WHAT ARE THE SECURITIES?
The Securities are interest paying, non-principal protected securities
issued by us, ABN AMRO Bank N.V., and are fully and unconditionally guaranteed
by our parent company, ABN AMRO Holding N.V. The Securities are senior notes of
ABN AMRO Bank N.V. and have a maturity of six months. These Securities combine
certain features of debt and equity by offering a fixed interest rate on the
principal amount while the payment at maturity is determined based on the
performance of the Underlying Shares. Therefore your principal is at risk.
The Securities have certain features that make them what we refer to as
"Knock-in Reverse Exchangeable Securities." This means that if the closing price
of the Underlying Shares on the primary U.S. securities exchange or organized
market for the Underlying Shares, which we refer to as the relevant exchange,
never falls below a certain price level, which we call the knock-in level, on
any trading day from but not including the pricing date to and including the
determination date (such period, the "Knock-in Period"), then we will pay you in
cash the principal amount of each Security at maturity. On the other hand, if
the closing price of the Underlying Shares on the relevant exchange falls below
the knock-in level on any trading day during the Knock-in Period, then the
payment at maturity will depend on the closing price of the Underlying Shares on
the determination date. In this latter case, if the closing price of the
Underlying Shares on the determination date is equal to or greater than the
initial price, we will pay you in cash the principal amount of each Security you
hold; if the closing price of the Underlying Shares on the determination date is
less than the initial price, we will deliver to you, in exchange for each $1,000
principal amount of Securities, a number of Underlying Shares equal to the stock
redemption amount.
WHY IS THE INTEREST RATE ON THE SECURITIES HIGHER THAN THE INTEREST RATE PAYABLE
ON YOUR CONVENTIONAL DEBT SECURITIES WITH THE SAME MATURITY?
The Securities offer a higher interest rate than the yield that would be
payable on a conventional debt security with the same maturity issued by us or
an issuer with a comparable credit rating. This is because you, the investor in
the Securities, indirectly sell a put option to us on the Underlying Shares. The
premium due to you for this put option is combined with a market interest rate
on our senior debt to produce the higher interest rate on the Securities.
WHAT ARE THE CONSEQUENCES OF THE INDIRECT PUT OPTION THAT I HAVE SOLD YOU?
The put option you indirectly sell to us creates the feature of
exchangeability. If the closing price of the Underlying Shares on the relevant
exchange falls below the knock-in level on any trading day during the Knock-in
Period, and on the determination date the closing price per Underlying Share is
less than the initial price, you will receive a fixed number of Underlying
Shares for each Security you hold, which we call the stock redemption amount. On
the other hand, if the closing price of the Underlying Shares on the relevant
exchange falls below the knock-in level, and on the determination date the
closing price per Underlying Share is equal to or greater than the initial
price, you will receive $1,000 for each Security you hold. Because of the
exchangeability of the Securities, and because we will determine whether you
will receive cash or Underlying Shares by reference to the closing price of the
Underlying Shares on the determination date, such securities are generally
referred to as "reverse exchangeable securities." However, because this feature
of exchangeability is created only if the closing price of the Underlying Shares
on the relevant exchange falls below the knock-in level on any trading day
during the Knock-in Period, we call the Securities "Knock-in Reverse
Exchangeable Securities."
WHAT WILL I RECEIVE AT MATURITY OF THE SECURITIES?
The payment at maturity of the Securities will depend on (i) whether or not
the closing price of the Underlying Shares fell below the knock-in level on any
trading day during the Knock-in Period, and if so, (ii) the closing price of the
Underlying Shares on
PS-3
the determination date. To determine closing prices, we look at the prices
quoted by the relevant exchange.
o If the closing price per Underlying Share on the relevant exchange has
not fallen below the knock-in level on any trading day during the
Knock-in Period, we will pay you the principal amount of each Security
in cash.
o If the closing price per Underlying Share on the relevant exchange has
fallen below the knock-in level on any trading day during the Knock-in
Period, we will either:
o deliver to you the stock redemption amount, in exchange for each
Security, in the event that the closing price of the Underlying
Shares is below the initial price on the determination date; or
o pay you the principal amount of each Security in cash, in the event
that the closing price of the Underlying Shares is at or above the
initial price on the determination date.
The payment at maturity is subject to adjustment in certain circumstances,
which we describe in "Description of Securities -- Adjustment Events.
HOW ARE THE STOCK REDEMPTION AMOUNT AND KNOCK-IN LEVEL DETERMINED?
The stock redemption amount for each $1,000 principal amount of the
Securities is equal to $1,000 divided by the initial price. The value of any
fractional shares you are entitled to receive, after aggregating your total
holdings of the Securities, will be paid in cash based on the closing price of
the Underlying Shares on the determination date.
The knock-in level is 75% of the initial price.
The initial price and consequently the stock redemption amount and knock-in
level are subject to adjustment for certain corporate events affecting the
Underlying Shares, which we describe in "Description of Securities -- Adjustment
Events."
WHAT INTEREST PAYMENTS CAN I EXPECT ON THE SECURITIES?
The Securities pay interest at a rate of 11.75% per annum. The interest rate
is fixed at issue and is payable monthly in arrears. This means that
irrespective of whether the Securities are exchanged at maturity for cash or the
stock redemption amount, you will be entitled to monthly interest payments on
the full principal amount of the Securities you hold, payable in cash.
CAN YOU GIVE ME AN EXAMPLE OF THE PAYMENT AT MATURITY?
If, for example, in a hypothetical offering, the interest rate was 10% per
annum, the initial price of a share of underlying stock was $45.00 and the
knock-in level for such offering was 80%, then the stock redemption amount would
be 22.222 shares of underlying stock, or $1,000 divided by $45.00, and the
knock-in level would be $36.00, or 80% of the initial price.
If the closing price of that hypothetical underlying stock fell below the
knock-in level of $36.00 on any trading day during the Knock-in Period, then the
payment at maturity would depend on the closing price of the underlying stock on
the determination date. In this case, if the closing price of the underlying
stock on the determination date is $30.00 per share at maturity, which is below
the initial price level, you would receive 22.222 shares of underlying stock for
each $1,000 principal amount of the securities. (In actuality, because we cannot
deliver fractions of a share, you would receive on the maturity date for each
$1,000 principal amount of the securities 22 shares of underlying stock plus
$6.66 cash in lieu of 0.222 fractional shares, determined by multiplying 0.222
by $30.00, the closing price per shares of underlying stock on the determination
date.) In addition, over the life of the securities you would have received
interest payments at a rate of 10% per annum. IN THIS HYPOTHETICAL EXAMPLE, THE
MARKET VALUE OF THOSE 22 SHARES OF UNDERLYING STOCK (INCLUDING THE CASH PAID IN
LIEU OF FRACTIONAL SHARES) THAT WE WOULD DELIVER TO YOU AT MATURITY FOR EACH
$1,000 PRINCIPAL AMOUNT OF SECURITY WOULD BE $666.66, WHICH IS LESS THAN THE
PRINCIPAL AMOUNT OF $1,000, AND YOU WOULD HAVE LOST A PORTION OF YOUR INITIAL
INVESTMENT. If, on the other hand, the closing price of the underlying stock on
the determination date is $50.00 per share, which is above the initial price
level, you will receive $1,000 in cash for each $1,000 principal amount of the
securities regardless of the knock-in level having been breached. In addition,
over the life of the Securities you would have received interest payments at a
rate of 10% per annum.
Alternatively, if the closing price of the underlying stock never falls
below $36.00, which is
PS-4
the knock-in level, on any trading day during the Knock-in Period, at maturity
you will receive $1,000 in cash for each security you hold regardless of the
closing price of the underlying stock on the determination date. In addition,
over the life of the securities you would have received interest payments at a
rate of 10% per annum.
THIS EXAMPLE IS FOR ILLUSTRATIVE PURPOSES ONLY AND IS BASED ON A
HYPOTHETICAL OFFERING. FOR EACH OFFERING OF SECURITIES, WE WILL SET THE INITIAL
PRICE, KNOCK-IN LEVEL AND STOCK REDEMPTION AMOUNT (SUBJECT TO ADJUSTMENT FOR
CERTAIN CORPORATE EVENTS AFFECTING THE APPLICABLE UNDERLYING SHARES) ON THE DATE
WE PRICE THE SECURITIES, WHICH WE REFER TO AS THE PRICING DATE. IT IS NOT
POSSIBLE, HOWEVER, TO PREDICT THE CLOSING PRICE OF ANY OF THE UNDERLYING SHARES
ON THE DETERMINATION DATE OR AT ANY TIME DURING THE LIFE OF THE SECURITIES.
In this Pricing Supplement, we have provided under the heading "Hypothetical
Sensitivity Analysis of Total Return of the Securities at Maturity" the total
return of owning the Securities through maturity for various hypothetical
closing prices of the Underlying Shares on the determination date in the case
where the knock-in level has been breached and in the case where the knock-in
level has not been breached.
DO I GET ALL MY PRINCIPAL BACK AT MATURITY?
You are not guaranteed to receive any return of principal at maturity. If
the closing price of Underlying Shares falls below the knock-in level on any
trading day during the Knock-in Period, and the closing price of the Underlying
Shares is below the initial price on the determination date, we will deliver to
you Underlying Shares. The market value of the Underlying Shares at the time you
receive those shares will be less than the principal amount of the Securities
and could be zero.
IS THERE A LIMIT TO HOW MUCH I CAN EARN OVER THE LIFE OF THE SECURITIES?
Yes. The amount payable under the terms of the Securities will never exceed
the principal amount of the Securities payable at maturity plus interest
payments you earn over the life of the Securities.
DO I BENEFIT FROM ANY APPRECIATION IN THE UNDERLYING SHARES OVER THE LIFE OF THE
SECURITIES?
No. The amount paid at maturity for each $1,000 principal amount of the
Securities will not exceed $1,000. As a result, if the Underlying Shares have
appreciated above their price level on the pricing date, the payment you receive
at maturity will not reflect that appreciation. UNDER NO CIRCUMSTANCES WILL YOU
RECEIVE A PAYMENT AT MATURITY GREATER THAN THE PRINCIPAL AMOUNT OF THE
SECURITIES THAT YOU HOLD AT THAT TIME.
WHAT IS THE MINIMUM REQUIRED PURCHASE?
You can purchase Securities in $1,000 denominations or in integral multiples
thereof.
IS THERE A SECONDARY MARKET FOR THE SECURITIES?
We do not intend to list the Securities on any securities exchange.
Accordingly, there may be little or no secondary market for the Securities and,
as such, information regarding independent market pricing for the Securities may
be limited. You should be willing to hold your Securities until the maturity
date.
Although it is not required to do so, we have been informed by our affiliate
that when this offering is complete, it intends to make purchases and sales of
the Securities from time to time in off-exchange transactions. If our affiliate
does make such a market in the Securities, it may stop doing so at any time.
In connection with any secondary market activity in the Securities, our
affiliate may post indicative prices for the Securities on a designated website
or via Bloomberg. However, our affiliate is not required to post such indicative
prices and may stop doing so at any time. INVESTORS ARE ADVISED THAT ANY PRICES
SHOWN ON ANY WEBSITE OR BLOOMBERG PAGE ARE INDICATIVE PRICES ONLY AND, AS SUCH,
THERE CAN BE NO ASSURANCE THAT ANY TRADE COULD BE EXECUTED AT SUCH PRICES.
Investors should contact their brokerage firm for further information.
In addition, the issue price of the Securities includes the selling agents'
commissions paid with respect to the Securities and the cost of hedging our
obligations under the Securities. The cost of hedging includes the profit
component that our affiliate has charged in consideration for assuming the risks
inherent in managing the hedging the transactions. The fact that the issue price
of the Securities includes these commissions and hedging costs is expected to
adversely affect the secondary market prices of the Securities. See "Risk
Factors--The Inclusion of Commissions and Cost of Hedging in the Issue Price is
Likely to Adversely Affect Secondary Market Prices" and "Use of Proceeds."
PS-5
TELL ME MORE ABOUT ABN AMRO BANK N.V. AND ABN AMRO HOLDING N.V.
ABN AMRO Bank N.V. is an international banking group offering a wide range
of banking products and financial services on a global basis through our network
of offices and branches in 56 countries and territories as of year-end 2006. ABN
AMRO Holding N.V. is the parent company of ABN AMRO Bank N.V. Holding's main
purpose is to own the Bank and its subsidiaries. All of the Securities issued by
the Bank hereunder are fully and unconditionally guaranteed by Holding.
On October 10, 2007 a consortium (the "Consortium") of the Royal Bank of
Scotland Group plc, Fortis SA/NV and Fortis N.V., and Banco Santander Central
Hispano SA announced that their tender offer for the shares of Holding had
become unconditional and approximately 86% of the shares of Holding had been
tendered to the Consortium. Shareholders who had tendered their shares received
payment for their shares on October 17, 2007.
Holding is currently listed on Euronext and the New York Stock Exchange. ABN
AMRO Bank N.V. is rated AA- by Standard & Poor's and Aa2 by Moody's.
WHERE CAN I FIND OUT MORE ABOUT CATERPILLAR?
Because the Underlying Shares are registered under the Securities Exchange
Act of 1934, as amended, Caterpillar is required to file periodically certain
financial and other information specified by the Commission which is available
to the public. You should read "Public Information Regarding the Underlying
Shares" in this Pricing Supplement to learn how to obtain public information
regarding the Underlying Shares and other important information. The historical
highest intra-day price, lowest intra-day price and last day closing price of
the Underlying Shares for each quarter since 2003 are set forth under the
heading "Public Information Regarding the Underlying Shares" in this Pricing
Supplement.
WHO WILL DETERMINE WHETHER THE CLOSING PRICE OF THE UNDERLYING SHARES HAS FALLEN
BELOW THE KNOCK-IN LEVEL, THE CLOSING PRICE OF THE UNDERLYING SHARES ON THE
DETERMINATION DATE, THE STOCK REDEMPTION AMOUNT AND THE INITIAL PRICE?
We have appointed ABN AMRO Incorporated, which we refer to as AAI, to act as
calculation agent for Wilmington Trust Company, the trustee for the Securities
and Citibank, N.A., the securities administrator. As calculation agent, AAI will
determine whether the closing price of the Underlying Shares has fallen below
the knock-in level, the closing price of the Underlying Shares on the
determination date, the stock redemption amount and the initial price. The
calculation agent may adjust the initial price of the Underlying Shares and
consequently the stock redemption amount and knock-in level, which we describe
in the section called "Description of Securities -- Adjustment Events."
WHO INVESTS IN THE SECURITIES?
The Securities are not suitable for all investors. The Securities might be
considered by investors who:
o seek a higher interest rate than the current dividend yield on the
Underlying Shares or the yield on a conventional debt security with the same
maturity issued by us or an issuer with a comparable credit rating;
o are willing to accept the risk of owning equity in general and the
Underlying Shares in particular and the risk that they could lose their
entire investment;
o do not expect to participate in any appreciation in the price of the
Underlying Shares; and
o and are willing to hold the Securities until maturity.
You should carefully consider whether the Securities are suited to your
particular circumstances before you decide to purchase them. In addition, we
urge you to consult with your investment, legal, accounting, tax and other
advisors with respect to any investment in the Securities.
WHAT ARE SOME OF THE RISKS IN OWNING THE SECURITIES?
Investing in the Securities involves a number of risks. We have described
the most significant risks relating to the Securities under the heading "Risk
Factors" in this Pricing Supplement which you should read before making an
investment in the Securities.
Some selected risk considerations include:
o CREDIT RISK. Because you are purchasing a security from us, you are assuming
our credit risk. In addition, because the Securities are fully and
unconditionally guaranteed by Holding, you are
PS-6
assuming the credit risk of Holding in the event that we fail to make any
payment or delivery required by the terms of the Securities.
o PRINCIPAL RISK. The Securities are not principal protected, which means
there is no guaranteed return of principal. If the closing price of the
Underlying Shares falls below the knock-in level on any trading day during
the life of the Securities and the closing price on the determination date
is less than the initial price, we will deliver to you a fixed number of
Underlying Shares with a market value less than the principal amount of the
Securities, which value may be zero.
o LIQUIDITY AND MARKET RISK. We do not intend to list the Securities on any
securities exchange. Accordingly, there may be little or no secondary market
for the Securities and information regarding independent market pricing for
the Securities may be limited. The value of the Securities in the secondary
market, if any, will be subject to many unpredictable factors, including
then prevailing market conditions.
WHAT IF I HAVE MORE QUESTIONS?
You should read "Description of Securities" in this Pricing Supplement for a
detailed description of the terms of the Securities. The Securities are senior
notes issued as part of our ABN Notes(SM) program and guaranteed by Holding. The
Securities offered by the Bank will constitute the Bank's unsecured and
unsubordinated obligations and rank pari passu without any preference among them
and with all our other present and future unsecured and unsubordinated
obligations. The guarantee of Holding will constitute Holding's unsecured and
unsubordinated obligations and rank pari passu without any preference among them
and with all Holding's other present and future unsecured and unsubordinated
obligations. You can find a general description of our ABN Notes(SM) program in
the accompanying Prospectus Supplement. We also describe the basic features of
this type of note in the sections called "Description of Notes" and "Notes
Linked to Commodity Prices, Single Securities, Baskets of Securities or
Indices".
You may contact our principal executive offices at Gustav Mahleraan 10, 1082
PP Amsterdam, The Netherlands. Our telephone number is (54-20) 628-9393.
PS-7
RISK FACTORS
This section describes the most significant risks relating to the
Securities. For a discussion of certain general risks associated with your
investment in the Securities, please refer to the section entitled "Risk
Factors" beginning on page S-3 of the accompanying prospectus supplement. YOU
SHOULD CAREFULLY CONSIDER WHETHER THE SECURITIES ARE SUITED TO YOUR PARTICULAR
CIRCUMSTANCES BEFORE YOU DECIDE TO PURCHASE THEM. IN ADDITION, WE URGE YOU TO
CONSULT WITH YOUR INVESTMENT, LEGAL, ACCOUNTING, TAX AND OTHER ADVISORS WITH
RESPECT TO ANY INVESTMENT IN THE SECURITIES.
THE SECURITIES ARE NOT ORDINARY SENIOR NOTES; THERE IS NO GUARANTEED RETURN OF
PRINCIPAL
The Securities combine limited features of debt and equity. The terms of the
Securities differ from those of ordinary debt securities in that we will not pay
you a fixed principal amount in cash at maturity if the closing price of the
Underlying Shares has fallen below the knock-in level on any trading day during
the Knock-in Period and, in addition, the closing price of the Underlying Shares
is below the initial price on the determination date. In such event, we will
exchange each Security you hold for a number of Underlying Shares equal to the
stock redemption amount. Such shares will have a market value of less than the
principal amount of the Securities, and such value may be zero. You cannot
predict the future performance of the Underlying Shares based on their
historical performance. ACCORDINGLY, YOU COULD LOSE SOME OR ALL OF THE AMOUNT
YOU INVEST IN THE SECURITIES.
THE SECURITIES WILL NOT PAY MORE THAN THE STATED PRINCIPAL AMOUNT AT MATURITY
The amount paid at maturity of the Securities in cash or Underlying Shares
will not exceed the principal amount of the Securities. If the closing price of
the Underlying Shares on the determination date is equal to or exceeds the
initial price (regardless of whether the knock-in level has been previously
breached), you will receive the principal amount of the Securities irrespective
of any appreciation in the share price. You will not receive Underlying Shares
or any other asset equal to the value of the Underlying Shares. As a result, if
the Underlying Shares have appreciated above their closing price level on the
pricing date, the payment you receive at maturity will not reflect that
appreciation. UNDER NO CIRCUMSTANCES WILL YOU RECEIVE A PAYMENT AT MATURITY
GREATER THAN THE PRINCIPAL AMOUNT OF THE SECURITIES THAT YOU HOLD AT THAT TIME.
WE DO NOT INTEND TO LIST THE SECURITIES ON ANY SECURITIES EXCHANGE; SECONDARY
TRADING MAY BE LIMITED
You should be willing to hold your Securities until the maturity date. We do
not intend to list the Securities on any securities exchange; accordingly, there
may be little or no secondary market for the Securities and information
regarding independent market pricing for the Securities may be limited. Even if
there is a secondary market, it may not provide enough liquidity to allow you to
trade or sell the Securities easily. Upon completion of the offering, our
affiliate has informed us that it intends to purchase and sell the Securities
from time to time in off-exchange transactions, but it is not required to do so.
If our affiliate does make such a market in the Securities, it may stop doing so
at any time. In addition, the total principal amount of the Securities being
offered is not being purchased by investors in the offering, and one or more of
our affiliates has agreed to purchase the unsold portion. Such affiliate or
affiliates intend to hold the Securities for investment purposes, which may
affect the supply of Securities available for secondary trading and therefore
adversely affect the price of the Securities in any secondary trading. If a
substantial portion of any Securities held by our affiliates were to be offered
for sale following this offering, the market price of such Securities could
fall, especially if secondary trading in such Securities is limited or illiquid.
MARKET PRICE OF THE SECURITIES INFLUENCED BY MANY UNPREDICTABLE FACTORS
The value of the Securities may move up and down between the date you
purchase them and the determination date when the calculation agent determines
the amount to be paid to the holders of the Securities on the maturity date.
Several factors, many of which are beyond our control, will influence the
value of the Securities, including:
o the market price of the Underlying Shares, in particular, whether the
market price of the Underlying Shares has fallen below the knock-in
level;
PS-8
o the volatility (frequency and magnitude of changes) in the price of the
Underlying Shares;
o the dividend rate on the Underlying Shares. While dividend payments on
the Underlying Shares, if any, are not paid to holders of the
Securities, such payments may have an influence on the market price of
the Underlying Shares and therefore on the Securities;
o interest and yield rates in the market;
o economic, financial, political and regulatory or judicial events that
affect the stock markets generally and which may affect the closing
price of the Underlying Shares and/or the Securities;
o the time remaining to the maturity of the Securities; and
o the creditworthiness of the Bank as issuer of the Securities and Holding
as the guarantor of the Bank's obligations under the Securities. Any
person who purchases the Securities is relying upon the creditworthiness
of the Bank and Holding and has no rights against any other person. The
Securities constitute the general, unsecured and unsubordinated
contractual obligations of the Bank and Holding.
Some or all of these factors will influence the price that you will receive
if you sell your Securities in the secondary market, if any, prior to maturity.
For example, you may have to sell your Securities at a substantial discount from
the principal amount if at the time of sale the market price of the Underlying
Shares is at, below, or not sufficiently above the knock-in level. See "Risk
Factors--The Inclusion of Commissions and Cost of Hedging in the Issue Price is
Likely to Adversely Affect Secondary Market Prices."
THE INCLUSION OF COMMISSIONS AND COST OF HEDGING IN THE ISSUE PRICE IS LIKELY TO
ADVERSELY AFFECT SECONDARY MARKET PRICES
Assuming no change in market conditions or any other relevant factors, the
price, if any, at which the selling agents are willing to purchase Securities in
secondary market transactions will likely be lower than the issue price, since
the issue price included, and secondary market prices are likely to exclude,
commissions paid with respect to the Securities, as well as the profit component
included in the cost of hedging our obligations under the Securities. In
addition, any such prices may differ from values determined by pricing models
used by the selling agents, as a result of dealer discounts, mark-ups or other
transaction costs.
AN INCREASE IN THE VALUE OF THE UNDERLYING SHARES WILL NOT INCREASE THE RETURN
ON YOUR INVESTMENT
Owning the Securities is not the same as owning the Underlying Shares.
Accordingly, the market value of your Securities may not have a direct
relationship with the market price of the Underlying Shares, and changes in the
market price of the Underlying Shares may not result in a comparable change in
the market value of your Securities. If the price per Underlying Share increases
above the initial price, the market value of the Securities may not increase. It
is also possible for the price of the Underlying Shares to increase while the
market price of the Securities declines.
POTENTIAL CONFLICTS OF INTEREST; NO SECURITY INTEREST IN THE UNDERLYING SHARES
HELD BY US
We and our affiliates may carry out hedging activities that minimize our
risks related to the Securities, including trading in the Underlying Shares. In
particular, on or prior to the date of this Pricing Supplement, we, through our
affiliates, hedged our anticipated exposure in connection with the Securities by
taking positions in the Underlying Shares, options contracts on Underlying
Shares listed on major securities markets, and/or other instruments that we
deemed appropriate in connection with such hedging. Such hedging is carried out
in a manner designed to minimize any impact on the price of the Underlying
Shares. Our purchase activity, however, could potentially have increased the
initial price of the Underlying Shares, and therefore inadvertently increased
the level below which we would be required to deliver to you at maturity
Underlying Shares, which, in turn, would have a value less than the principal
amount of your Securities.
PS-9
Through our affiliates, we are likely to modify our hedge position
throughout the life of the Securities by purchasing and selling Underlying
Shares, options contracts on Underlying Shares listed on major securities
markets or positions in other securities or instruments that we may wish to use
in connection with such hedging. Although we have no reason to believe that our
hedging activity or other trading activities that we, or any of our affiliates,
engage in or may engage in has had or will have a material impact on the price
of the Underlying Shares, we cannot give you any assurance that we have not or
will not affect such price as a result of our hedging or trading activities. It
is possible that we or one of more of our affiliates could receive substantial
returns from these hedging activities while the value of the Securities may
decline. We or one or more of our affiliates may also engage in trading the
Underlying Shares and other investments relating to Caterpillar on a regular
basis as part of our or its general broker-dealer and other businesses, for
proprietary accounts, for other accounts under management or to facilitate
transactions for customers, including block transactions. Any of these
activities could adversely affect the price of the Underlying Shares and,
therefore, the value of the Securities. We or one or more of our affiliates may
also issue or underwrite other securities or financial or derivative instruments
with returns linked or related to changes in the value of the Underlying Shares.
By introducing competing products into the marketplace in this manner, we or one
or more of our affiliates could adversely effect the value of the Securities. It
is also possible that any advisory services that we or our affiliates provide in
the course of any business with Caterpillar or its affiliates could lead to
actions on the part of the issuer of the stock which might adversely affect the
value of the Underlying Shares.
The indenture governing the Securities does not contain any restrictions on
our ability or the ability of any of our affiliates to sell, pledge or otherwise
convey all or any portion of the Underlying Shares acquired by us or our
affiliates. Neither we nor Holding nor any of our affiliates will pledge or
otherwise hold Underlying Shares for the benefit of holders of the Securities in
order to enable the holders to exchange their Securities for Underlying Shares
under any circumstances. Consequently, in the event of a bankruptcy, insolvency
or liquidation involving us or Holding, as the case may be, any Underlying
Shares that we or Holding own will be subject to the claims of our creditors or
Holding's creditors generally and will not be available specifically for the
benefit of the holders of the Securities.
NO SHAREHOLDER RIGHTS IN THE UNDERLYING SHARES
As a holder of the Securities, you will not have voting rights or rights to
receive dividends or other distributions or other rights that holders of
Underlying Shares would have.
Because neither we nor Holding nor any of our affiliates are affiliated with
Caterpillar, we have no ability to control or predict the actions of
Caterpillar, including any corporate actions of the type that would require the
calculation agent to adjust the initial price and consequently the knock-in
level and stock redemption amount, and have no ability to control the public
disclosure of these corporate actions or any other events or circumstances
affecting Caterpillar. CATERPILLAR IS NOT INVOLVED IN THE OFFER OF THE
SECURITIES IN ANY WAY AND HAS NO OBLIGATION TO CONSIDER YOUR INTEREST AS AN
OWNER OF THE SECURITIES IN TAKING ANY CORPORATE ACTIONS THAT MIGHT AFFECT THE
VALUE OF YOUR SECURITIES. NONE OF THE MONEY YOU PAY FOR THE SECURITIES WILL GO
TO CATERPILLAR.
INFORMATION REGARDING CATERPILLAR
Neither we nor Holding nor any of our affiliates assume any responsibility
for the adequacy of the information about Caterpillar contained in this Pricing
Supplement or in any of Caterpillar's publicly available filings. AS AN INVESTOR
IN THE SECURITIES, YOU SHOULD MAKE YOUR OWN INVESTIGATION INTO CATERPILLAR.
NEITHER WE NOR HOLDING NOR ANY OF OUR AFFILIATES HAVE ANY AFFILIATION WITH
CATERPILLAR, AND ARE NOT RESPONSIBLE FOR CATERPILLAR'S PUBLIC DISCLOSURE OF
INFORMATION, WHETHER CONTAINED IN SEC FILINGS OR OTHERWISE.
LIMITED ANTIDILUTION PROTECTION
AAI, as calculation agent, will adjust the initial price and consequently
the stock redemption amount and knock-in level for certain events affecting the
Underlying Shares, such as stock splits and corporate actions. The calculation
agent is not required to make an adjustment for every corporate action which
affects the Underlying Shares. For example, the calculation agent is not
required to make any adjustments if Caterpillar or anyone else makes a partial
tender or partial exchange offer for the Underlying Shares. IF AN EVENT OCCURS
THAT DOES NOT REQUIRE THE
PS-10
CALCULATION AGENT TO ADJUST THE AMOUNT OF THE UNDERLYING SHARES PAYABLE AT
MATURITY, THE MARKET PRICE OF THE SECURITIES MAY BE MATERIALLY AND ADVERSELY
AFFECTED.
HOLDINGS OF THE SECURITIES BY OUR AFFILIATES AND FUTURE SALES
Certain of our affiliates have agreed to purchase for investment the portion
of the Securities that has not been purchased by investors in this offering,
which initially they intend to hold for investment purposes. As a result, upon
completion of this offering, our affiliates may own a substantial portion of the
aggregate principal amount of the Securities. Circumstances may occur in which
our interests or those of our affiliates could be in conflict with your
interests.
POTENTIAL CONFLICTS OF INTEREST BETWEEN HOLDERS OF SECURITIES AND THE
CALCULATION AGENT
As calculation agent, AAI will calculate the payout to you at maturity of
the Securities. AAI and other affiliates may carry out hedging activities
related to the Securities, including trading in the Underlying Shares, as well
as in other instruments related to the Underlying Shares. AAI and some of our
other affiliates also trade the Underlying Shares on a regular basis as part of
their general broker dealer businesses. Any of these activities could influence
AAI's determinations as calculation agent and any such trading activity could
potentially affect the price of the Underlying Shares and, accordingly could
effect the payout on the Securities. AAI IS AN AFFILIATE OF ABN AMRO BANK N.V.
In addition, if certain reorganization events occur as defined under
"Description of Securities--Adjustment Events" the calculation agent may adjust
the initial price and consequently the knock-in level and stock redemption
amount to reflect the new securities issued in such reorganization event. The
calculation agent may make such adjustment based on its assessment of the market
value and volatility of those new securities, which may adversely affect the
value of the Securities. The calculation agent's adjustment to the Securities
may be influenced by, among other things, our or our affiliates' hedging
transactions with respect to the Securities and our or their ability to hedge
our obligations under the Securities following those reorganization events.
While we do not currently anticipate the occurrence of a reorganization event,
there can be no assurance that a reorganization event will not occur or that the
calculation agent's adjustments upon a reorganization event will not adversely
affect the value of the Securities.
Moreover, the issue price of the Securities includes the agents'
commissions and certain costs of hedging our obligations under the Securities.
Our affiliates through which we hedge our obligations under the Securities
expect to make a profit. Since hedging our obligations entails risk and may be
influenced by market forces beyond our affiliates' control, such hedging may
result in a profit that is more or less than initially projected.
TAX TREATMENT
You should also consider the tax consequences of investing in the
Securities. Significant aspects of the tax treatment of the Securities are
uncertain. We do not plan to request a ruling from the U.S. Internal Revenue
Service (the "IRS") or from the Dutch authorities regarding the tax treatment of
the Securities, and the IRS, the Dutch authorities or a court may not agree with
the tax treatment described in the accompanying Prospectus Supplement. Please
read carefully the sections entitled "United States Federal Taxation" (and in
particular the subsection entitled "--Mandatorily Exchangeable Notes--Reverse
Exchangeable and Knock-in ReversE Exchangeable Securities") and "Taxation in the
Netherlands" in the accompanying Prospectus Supplement. You should consult your
tax advisor about your own situation.
PS-11
HYPOTHETICAL SENSITIVITY ANALYSIS OF TOTAL RETURN
OF THE SECURITIES AT MATURITY
The following tables set out the total return to maturity of a Security,
based on the assumptions outlined below and several variables, which include (a)
whether the closing price of the Underlying Shares has fallen below the knock-in
level on any trading day during the Knock-in Period and (b) several hypothetical
closing prices for the Underlying Shares on the determination date. The
information in the tables is based on hypothetical market values for the
Underlying Shares. We cannot predict the market price or the closing price of
the Underlying Shares on the determination date or at any time during the life
of the Securities. THE ASSUMPTIONS EXPRESSED BELOW ARE FOR ILLUSTRATIVE PURPOSES
ONLY AND THE RETURNS SET FORTH IN THE TABLE MAY OR MAY NOT BE THE ACTUAL RATES
APPLICABLE TO A PURCHASER OF THE SECURITIES.
ASSUMPTIONS
Initial Price: $73.57 (the closing price on the day we priced
the Securities)
Knock-in level: $55.18 (75% of the Initial Price)
Annual Interest
on the Securities: 11.75%
Term of the Securities: 6 months
Exchange Factor: 1.0 (we have assumed that no market disruption
event occurs and the calculation agent does
not need to adjust the exchange factor for any
adjustment events during the term of the
Securities).
PAYMENT AT MATURITY IF THE CLOSING PRICE OF THE UNDERLYING SHARES FALLS BELOW
THE KNOCK-IN LEVEL ON ANY TRADING DAY DURING THE KNOCK-IN PERIOD:
------------------------ ---------------------- ---------------------- ---------------------------------------------
ASSUMED SIX
CATERPILLAR VALUE OF MONTHLY TOTAL RETURN(b)
CLOSING PRICE ON PAYMENT AT INTEREST ----------------------- ---------------------
DETERMINATION DATE MATURITY(a) PAYMENTS(c) $ %
------------------------ ---------------------- ---------------------- ----------------------- ---------------------
+$73.57 $1,000.00 $58.75 $1,058.75 5.88%
$73.57 $1,000.00 $58.75 $1,058.75 5.88%
$71.73 $ 974.95 $58.75 $1,033.70 3.37%
$68.42 $ 929.96 $58.75 $ 988.71 -1.13%
$66.95 $ 909.98 $58.75 $ 968.73 -3.13%
$60.26 $ 819.05 $58.75 $ 877.80 -12.22%
$53.03 $ 720.78 $58.75 $ 779.53 -22.05%
$42.42 $ 576.57 $58.75 $ 635.32 -36.47%
$29.69 $ 403.55 $58.75 $ 462.30 -53.77%
$14.85 $ 201.84 $58.75 $ 260.59 -73.94%
$ 7.43 $ 100.99 $58.75 $ 159.74 -84.03%
$ 0.00 $ 0.00 $58.75 $ 58.75 -94.13%
------------------------ ---------------------- ---------------------- ----------------------- ---------------------
PS-12
PAYMENT AT MATURITY IF THE CLOSING PRICE OF THE UNDERLYING SHARES NEVER FALLS
BELOW THE KNOCK-IN LEVEL ON ANY TRADING DAY DURING THE KNOCK-IN PERIOD:
------------------------ ---------------------- ---------------------- ---------------------------------------------
ASSUMED
Caterpillar VALUE OF SIX MONTHLY TOTAL RETURN(b)
CLOSING PRICE ON PAYMENT AT INTEREST ---------------------- ----------------------
DETERMINATION DATE MATURITY(d) PAYMENT (c) $ %
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
+$73.57 $1,000.00 $58.75 $1,058.75 5.88%
$73.57 $1,000.00 $58.75 $1,058.75 5.88%
$66.21 $1,000.00 $58.75 $1,058.75 5.88%
$62.90 $1,000.00 $58.75 $1,058.75 5.88%
$55.18 $1,000.00 $58.75 $1,058.75 5.88%
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
----------------
(a) Based on the assumptions set forth above, if the closing price of the
Underlying Shares falls below $55.18 on any trading day during the Knock-in
Period and, in addition, the closing price of the Underlying Shares is less
than $73.57 on the determination date, the payment at maturity will be made
in Underlying Shares. For determining the value of the payment at maturity,
we have assumed that the closing price of the Underlying Shares will be the
same on the maturity date as on the determination date.
(b) The total return presented is exclusive of any tax consequences of owning
the Securities. You should consult your tax adviser regarding whether owning
the Securities is appropriate for your tax situation. See the sections
titled "Risk Factors" in this Pricing Supplement and "United States Federal
Taxation" and "Taxation in the Netherlands" in the accompanying Prospectus
Supplement.
(c) Interest on the Securities will be computed on the basis of a 360-day year
of twelve 30-day months or, in the case of an incomplete month, the number
of actual days elapsed. Accordingly, depending on the number of days in any
monthly interest payment period, the coupon payable in such period and,
consequently, the total interest payable over the life of the Securities,
may be less than the amount reflected in this column.
(d) Based on the assumptions set forth above, if the closing price of the
Underlying Shares never falls below $55.18 on any trading day during the
Knock-in Period, the payment at maturity will be made in cash.
PS-13
INCORPORATION OF DOCUMENTS BY REFERENCE
Holding is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, Holding files reports and other information with the Securities and
Exchange Commission (the "Commission"). You may read and copy these documents at
the SEC Headquarters Public Reference Room at 100 F Street, N.E., Washington,
D.C. 20549 (tel: 202-551-8090), and at the SEC's regional offices at Northeast
Regional Office, 3 World Financial Center, Room 4300, New York, NY 10281 (tel:
212-336-1100) and Midwest Regional Office, 175 W. Jackson Boulevard, Suite 900,
Chicago, Illinois 60604. Copies of this material can also be obtained from the
Public Reference Room of the Commission at 100 F Street, N.E., Washington, D.C.
20549 at prescribed rates. Please call the Commission at 1-800-SEC-0330 for
further information about the Public Reference Room. The Commission also
maintains an Internet website that contains reports and other information
regarding Holding that are filed through the Commission's Electronic Data
Gathering, Analysis and Retrieval (EDGAR) System. This website can be accessed
at www.sec.gov. You can find information Holding has filed with the Commission
by reference to file number 1-8207.
This Pricing Supplement is part of a registration statement that we and
Holding filed with the Commission. This Pricing Supplement omits some
information contained in the registration statement in accordance with
Commission rules and regulations. You should review the information and exhibits
in the registration statement for further information on us and Holding and the
securities we and Holding are offering. Statements in this prospectus concerning
any document we and Holding filed as an exhibit to the registration statement or
that Holding otherwise filed with the Commission 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 Commission allows us to incorporate by reference much of the
information that we and Holding 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 and Holding incorporate by reference in this
Pricing Supplement is considered to be part of this Pricing Supplement. Because
we and Holding are incorporating by reference future filings with the
Commission, this Pricing Supplement is continually updated and those future
filings may modify or supersede some of the information included or incorporated
in this Pricing Supplement. This means that you must look at all of the
Commission filings that we and Holding incorporate by reference to determine if
any of the statements in this Pricing Supplement or in any document previously
incorporated by reference have been modified or superseded. This Pricing
Supplement incorporates by reference all Annual Reports on Form 20-F filed by
Holding since September 29, 2006, and any future filings that we or Holding make
with the Commission (including any Form 6-K's that we or Holding subsequently
file with the Commission) under Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act, that are identified in such filing as being specifically
incorporated by reference into Registration Statement Nos. 333-137691 or
333-137691-02, of which this Pricing Supplement is a part, until we and Holding
complete our offering of the Securities to be issued hereunder or, if later, the
date on which any of our affiliates cease offering and selling these Securities.
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).
PS-14
PUBLIC INFORMATION REGARDING THE UNDERLYING SHARES
According to publicly available documents, Caterpillar is a producer of
construction and mining equipment, diesel and natural gas engines and industrial
gas turbines. The company is also a services provider through Caterpillar
Financial Services, Caterpillar Logistics Services and Caterpillar
Remanufacturing Services.
The Underlying Shares are registered under the Exchange Act. Companies with
securities registered under the Exchange Act are required periodically to file
certain financial and other information specified by the Commission. Information
provided to or filed with the Commission can be inspected and copied at the
public reference facilities maintained by the Commission at the SEC Headquarters
Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 (tel:
202-551-8090), and at the Commission's regional offices at Northeast Regional
Office, 3 World Financial Center, Room 4300, New York, New York 10281 (tel:
212-336-1100) and Midwest Regional Office, 175 W. Jackson Boulevard, Suite 900,
Chicago, Illinois 60604. Copies of this material can also be obtained from the
Public Reference Room of the Commission at 100 F Street, N.E., Washington, D.C.
20549 at prescribed rates. Please call the Commission at 1-800-SEC-0330 for
further information about the Public Reference Room. In addition, information
provided to or filed with the Commission electronically can be accessed through
a website maintained by the Commission. The address of the Commission's website
is http://www.sec.gov. Information provided to or filed with the Commission by
Caterpillar pursuant to the Exchange Act can be located by reference to
Commission file number 1-768.
In addition, information regarding Caterpillar Inc. may be obtained from
other sources including, but not limited to, press releases, newspaper articles
and other publicly disseminated documents. We make no representation or warranty
as to the accuracy or completeness of such reports.
THIS PRICING SUPPLEMENT RELATES ONLY TO THE SECURITIES OFFERED HEREBY AND
DOES NOT RELATE TO THE UNDERLYING SHARES OR OTHER SECURITIES OF CATERPILLAR WE
HAVE DERIVED ALL DISCLOSURES CONTAINED IN THIS PRICING SUPPLEMENT REGARDING
CATERPILLAR FROM THE PUBLICLY AVAILABLE DOCUMENTS DESCRIBED IN THE PRECEDING
PARAGRAPH. NEITHER WE NOR HOLDING NOR THE AGENTS HAVE PARTICIPATED IN THE
PREPARATION OF SUCH DOCUMENTS OR MADE ANY DUE DILIGENCE INQUIRY WITH RESPECT TO
CATERPILLAR IN CONNECTION WITH THE OFFERING OF THE SECURITIES. NEITHER WE NOR
HOLDING NOR THE AGENTS MAKE ANY REPRESENTATION THAT SUCH PUBLICLY AVAILABLE
DOCUMENTS OR ANY OTHER PUBLICLY AVAILABLE INFORMATION REGARDING CATERPILLAR ARE
ACCURATE OR COMPLETE. FURTHERMORE, NEITHER WE NOR HOLDING CAN GIVE ANY ASSURANCE
THAT ALL EVENTS OCCURRING PRIOR TO THE DATE HEREOF (INCLUDING EVENTS THAT WOULD
AFFECT THE ACCURACY OR COMPLETENESS OF THE PUBLICLY AVAILABLE DOCUMENTS
DESCRIBED IN THE PRECEDING PARAGRAPH) THAT WOULD AFFECT THE TRADING PRICE OF THE
UNDERLYING SHARES (AND THEREFORE THE INITIAL PRICE AND THE KNOCK-IN LEVEL AND
STOCK REDEMPTION AMOUNT) HAVE BEEN PUBLICLY DISCLOSED. SUBSEQUENT DISCLOSURE OF
ANY SUCH EVENTS OR THE DISCLOSURE OF OR FAILURE TO DISCLOSE MATERIAL FUTURE
EVENTS CONCERNING CATERPILLAR COULD AFFECT THE VALUE YOU WILL RECEIVE ON THE
MATURITY DATE WITH RESPECT TO THE SECURITIES AND THEREFORE THE TRADING PRICES OF
THE SECURITIES. NEITHER WE NOR HOLDING NOR ANY OF OUR AFFILIATES HAVE ANY
OBLIGATION TO DISCLOSE ANY INFORMATION ABOUT CATERPILLAR AFTER THE DATE OF THIS
PRICING SUPPLEMENT.
NEITHER WE NOR HOLDING NOR ANY OF OUR AFFILIATES MAKES ANY REPRESENTATION TO
YOU AS TO THE PERFORMANCE OF THE UNDERLYING SHARES.
We and/or our affiliates may presently or from time to time engage in
business with Caterpillar, including extending loans to, or making equity
investments in, or providing advisory services to Caterpillar, including merger
and acquisition advisory services. In the course of such business, we and/or our
affiliates may acquire non-public information with respect to Caterpillar and,
in addition, one or more of our affiliates may publish research reports with
respect to Caterpillar. The statement in the preceding sentence is not intended
to affect the rights of holders of the Securities under the securities laws. AS
A PROSPECTIVE PURCHASER OF A SECURITY, YOU SHOULD UNDERTAKE SUCH INDEPENDENT
INVESTIGATION OF Caterpillar AS IN YOUR JUDGMENT IS APPROPRIATE TO MAKE AN
INFORMED DECISION WITH RESPECT TO AN INVESTMENT IN THE UNDERLYING SHARES.
PS-15
HISTORICAL INFORMATION
The Underlying Shares are traded on the NYSE under the symbol "CAT". The
following table sets forth the published highest intra-day price for the
quarter, lowest intra-day price for the quarter and last day closing price for
the quarter of the Underlying Shares since 2003. We obtained the prices listed
below from Bloomberg Financial Markets without independent verification. You
should not take the historical prices of the Underlying Shares as an indication
of future performance. NEITHER WE NOR HOLDING CAN GIVE ANY ASSURANCE THAT THE
PRICE OF THE UNDERLYING SHARES WILL NOT DECREASE, SUCH THAT WE WILL DELIVER
UNDERLYING SHARES AT MATURITY.
PERIOD HIGH LOW LAST DAY
------ INTRA-DAY INTRA-DAY CLOSING
PRICE PRICE PRICE
----- ----- -----
2003
First Quarter............................. $26.65 $20.62 $24.60
Second Quarter............................ $29.13 $24.49 $27.83
Third Quarter............................. $36.99 $26.55 $34.42
Fourth Quarter............................ $42.47 $34.47 $41.51
2004
First Quarter............................. $42.72 $36.26 $39.54
Second Quarter............................ $42.38 $36.01 $39.72
Third Quarter............................. $40.65 $34.25 $40.23
Fourth Quarter............................ $49.36 $38.40 $48.76
2005
First Quarter............................. $49.98 $43.22 $45.72
Second Quarter............................ $51.49 $41.35 $47.66
Third Quarter............................. $59.87 $47.43 $58.75
Fourth Quarter ........................... $59.84 $48.30 $57.77
2006
First Quarter............................. $77.20 $57.05 $71.81
Second Quarter............................ $82.00 $64.41 $74.48
Third Quarter ............................ $75.43 $62.09 $65.80
Fourth Quarter............................ $70.91 $58.85 $61.33
2007
First Quarter ............................ $68.43 $57.98 $67.03
Second Quarter............................ $82.88 $65.87 $78.30
Third Quarter............................. $87.00 $70.59 $78.43
Fourth Quarter
(through October 19, 2007).............. $82.74 $72.80 $73.57
Neither we nor Holding make any representation as to the amount of
dividends, if any, that Caterpillar will pay in the future. In any event, as a
holder of a Security, you will not be entitled to receive dividends, if any,
that may be payable on the Underlying Shares.
PS-16
DESCRIPTION OF SECURITIES
Capitalized terms not defined herein have the meanings given to such terms
in the accompanying Prospectus Supplement. The term "Security" refers to each
$1,000 principal amount of our 11.75% Knock-in Reverse Exchangeable Securities
due April 24, 2008 linked to common stock of the Underlying Company and fully
and unconditionally guaranteed by Holding.
Principal Amount:.............. $1,000,000
Underlying Shares.............. Common Stock, $1.00 par value per share, of
Caterpillar Inc.
Underlying Company............. Caterpillar Inc.
Original Issue Date............ October 24, 2007
Pricing Date................... October 19, 2007
Issue Price.................... 100%
Initial Price.................. $73.57 (the Closing Price per Underlying Share
when we priced the Securities on the Pricing
Date, divided by the Exchange Factor).
Knock-in Level................. 75% of the Initial Price, which will be
determined by the Calculation Agent. The Initial
Price and consequently the Knock-in Level may be
adjusted for certain corporate events affecting
the Underlying Company.
Maturity Date.................. April 24, 2008
Specified Currency............. U.S. Dollars
CUSIP.......................... 00078UZY9
Denominations.................. The Securities may be purchased in denominations
of $1,000 and integral multiples thereof.
Form of Securities............. The Securities will be represented by a single
registered global security, deposited with the
Depository Trust Company.
Guarantee...................... The payment and delivery obligations of ABN AMRO
Bank N.V. under the Securities, when and as they
shall become due and payable, whether at
maturity or upon acceleration, are fully and
unconditionally guaranteed by ABN AMRO Holding
N.V.
Interest Rate.................. 11.75% per annum, payable monthly in arrears on
the 24th day of each month commencing on
November 24, 2007 and ending on the Maturity
Date, which shall represent (a) an interest
coupon of 5.03% and (b) an option premium of
6.72% per annum.
Payment at Maturity............ If the Closing Price per Underlying Share has
not fallen below the Knock-in Level on any
Trading Day during the Knock-in Period, we will
pay you the principal amount of each Security in
cash. If the Closing Price per Underlying Share
has fallen below the Knock-in Level on any
Trading Day during the Knock-in Period, then (i)
if the Closing Price per Underlying Share on the
Determination Date is below the Initial Price,
we will deliver to you, in exchange for each
Security, a number of Underlying Shares equal to
the Stock Redemption Amount or (ii) if the
Closing Price per Underlying Share on the
Determination Date is at or above the Initial
Price, we will pay you the principal amount of
each Security in cash. We will pay cash in lieu
of delivering fractional Underlying Shares in an
amount equal to the corresponding fractional
Closing Price of the Underlying Shares, as
determined by the Calculation Agent on the
Determination Date. Following a Reorganization
Event, the amount payable at maturity is subject
to adjustments as described below under
"--
PS-17
Adjustment Events."
Stock Redemption Amount........ The Calculation Agent will determine the Stock
Redemption Amount on the Determination Date by
dividing $1,000 by the Initial Price of the
Underlying Shares. The Initial Price and
consequently the Stock Redemption Amount may be
adjusted for certain corporate events affecting
the Underlying Company. The interest payment on
the Securities at maturity will be paid in cash.
Determination Date............. The third scheduled Trading Day prior to the
Maturity Date; provided that if such day is not
a Trading Day, or if a Market Disruption Event
has occurred on such a Trading Day, the
Determination Date shall be the immediately
succeeding Trading Day; provided, further, that
the Determination Date shall be no later than
the second scheduled Trading Day preceding the
Maturity Date, notwithstanding the occurrence of
a Market Disruption Event on such second
scheduled Trading Day.
Closing Price.................. If the Underlying Shares (or any other security
for which a closing price must be determined)
are listed on a U.S. securities exchange
registered under the Exchange Act, or are
included in the OTC Bulletin Board Service,
which we refer to as the OTC Bulletin Board
(operated by the National Association of
Securities Dealers, Inc.), the Closing Price for
one Underlying Share (or one unit of any such
other security) on any Trading Day means (i) the
last reported sale price, regular way, in the
principal trading session on such day on the
principal securities exchange on which the
Underlying Shares (or any such other security)
are listed or admitted to trading or (ii) if not
listed or admitted to trading on any such
securities exchange or if such last reported
sale price is not obtainable (even if the
Underlying Shares, or other such security, are
listed or admitted to trading on such securities
exchange), the last reported sale price in the
principal trading session on the
over-the-counter market as reported on the
Relevant Exchange or OTC Bulletin Board on such
day. If the last reported sale price is not
available pursuant to clause (i) or (ii) of the
preceding sentence, the Closing Price for any
Trading Day shall be the mean, as determined by
the Calculation Agent, of the bid prices for the
Underlying Shares (or any such other security)
obtained from as many dealers in such security
(which may include AAI or any of our other
affiliates), but not exceeding three, as will
make such bid prices available to the
Calculation Agent. The term "OTC Bulletin Board
Service" shall include any successor service
thereto.
Relevant Exchange.............. The primary U.S. securities organized exchange
or market of trading for the Underlying Shares.
If a Reorganization Event has occurred, the
Relevant Exchange will be the stock exchange or
securities market on which the Exchange Property
(as defined below under "--Adjustment Events")
that is a listed equity security is principally
traded as determined by the Calculation Agent.
Trading Day.................... A day, as determined by the Calculation Agent,
on which trading is generally conducted on the
Relevant Exchange.
Book Entry Note or
Certificated Note............ Book Entry
Trustee........................ Wilmington Trust Company
Securities Administrator....... Citibank, N.A.
Market Disruption Event........ Means, with respect to any securities for which
a Closing Price must be determined:
PS-18
(i) either:
(x) any suspension of or limitation imposed
on trading in such securities by the
primary exchange therefore or otherwise
and whether by reason of movements in
price exceeding limits permitted by such
exchange or otherwise or by any exchange
or quotation system on which trading in
futures or options contracts relating to
such securities is executed, or
(y) any event (other than an event described
in clause (z) below) that disrupts or
impairs (as determined by the
Calculation Agent) the ability of market
participants in general (1) to effect
transactions in or obtain market values
for such securities on the primary
exchange therefore or (2) to effect
transactions in or obtain market values
for futures or options contracts
relating to such securities on any other
exchange, or
(z) the closure on any Trading Day of the
primary exchange for such securities, or
any exchange or quotation system on
which trading in future or options
relating such securities is executed,
prior to its scheduled closing time
unless such earlier closing time is
announced by such exchange at least one
hour prior to the earlier of (1) the
actual closing time for the regular
trading session on such exchange on such
Trading Day and (2) the submission
deadline for orders to be entered into
such exchange for execution on such
Trading Day; and
(ii) a determination by the Calculation Agent in
its sole discretion that the event described
in clause (i) above materially interfered
with our ability or the ability of any of
our affiliates to unwind or adjust all or a
material portion of the hedge with respect
to the Securities.
For purposes of determining whether a market
disruption event has occurred: (1) a limitation
on the hours or number of days of trading will
not constitute a market disruption event if it
results from an announced change in the regular
business hours of the relevant exchange; (2) a
decision to permanently discontinue trading in
the relevant futures or options contract will
not constitute a market disruption event; (3)
limitations pursuant to New York Stock Exchange
Inc. Rule 70A (or any applicable rule or
regulation enacted or promulgated by the New
York Stock Exchange Inc., any other
self-regulatory organization or the Commission
of similar scope as determined by the
calculation agent) on trading during significant
market fluctuations shall constitute a
suspension, absence or material limitation of
trading; (4) a suspension of trading in a
futures or options contract on such securities
by the primary securities market trading in such
futures or options, if available, by reason of
(x) a price change exceeding limits set by such
securities exchange or market, (y) an imbalance
of orders relating to such contracts or (z) a
disparity in bid and ask quotes relating to such
contracts will constitute a suspension, absence
or material limitation of trading in futures or
options contracts related to such securities;
and (5) a suspension, absence or material
limitation of trading on the primary securities
market on which futures or options contracts
related to such securities are traded will not
include any time when such securities market is
itself closed for trading under ordinary
circumstances.
The Calculation Agent shall as soon as
reasonably practicable under the circumstances
notify us, the trustee, the Depository Trust
Company and the agents of the existence or
occurrence of a Market Disruption Event on
PS-19
any day that but for the occurrence or existence
of a Market Disruption Event would have been the
Determination Date.
Exchange Factor................ The Exchange Factor will be set initially at
1.0, but will be subject to adjustment upon the
occurrence of certain corporate events affecting
the Underlying Shares. See "Adjustment Events"
below.
Adjustment Events.............. The Exchange Factor or the amounts paid at
maturity will be adjusted as follows:
1. If the Underlying Shares are subject to a
stock split or reverse stock split, then
once such split has become effective, the
Exchange Factor will be proportionately
adjusted.
2. If the Underlying Shares are subject (i) to
a stock dividend (i.e., the issuance of
additional Underlying Shares) that is given
ratably to all holders of Underlying Shares
or (ii) to a distribution of the Underlying
Shares as a result of the triggering of any
provision of the corporate charter of the
Underlying Company, in each case other than
a stock split described in paragraph 1, then
once the dividend has become effective and
the Underlying Shares are trading
ex-dividend, the Exchange Factor will be
proportionally adjusted.
3. There shall be no adjustments to the
Exchange Factor to reflect cash dividends or
other distributions paid with respect to the
Underlying Shares unless such cash dividends
or other distributions constitute
Extraordinary Dividends as described below
(except that distributions described in
paragraph 2 above shall not be subject to
this paragraph). A cash dividend or other
distribution with respect to the Underlying
Shares shall be deemed to be an
"Extraordinary Dividend" if such dividend or
other distribution exceeds the immediately
preceding non-Extraordinary Dividend for the
Underlying Shares by an amount equal to at
least 10% of the Closing Price of the
Underlying Shares (as adjusted for any
subsequent corporate event requiring an
adjustment hereunder, such as a stock split
or reverse stock split) on the Trading Day
preceding the ex-dividend date for the
payment of such Extraordinary Dividend (the
"ex-dividend date"). If an Extraordinary
Dividend occurs with respect to the
Underlying Shares, the Exchange Factor with
respect to the Underlying Shares will be
adjusted on the ex-dividend date with
respect to such Extraordinary Dividend so
that the new Exchange Factor will equal the
product of (i) the then-current Exchange
Factor and (ii) a fraction, the numerator of
which is the Closing Price on the Trading
Day preceding the ex-dividend date, and the
denominator of which is the amount by which
the Closing Price on the Trading Day
preceding the ex-dividend date exceeds the
Extraordinary Dividend Amount. The
"Extraordinary Dividend Amount" with respect
to an Extraordinary Dividend for the
Underlying Shares shall equal (i) in the
case of cash dividends or other
distributions that constitute regular
dividends, the amount per share of such
Extraordinary Dividend minus the amount per
share of the immediately preceding
non-Extraordinary Dividend for the
Underlying Shares or (ii) in the case of
cash dividends or other distributions that
do not constitute regular dividends, the
amount per share of such Extraordinary
Dividend. To the extent an Extraordinary
Dividend is not paid in cash, the value of
the non-cash component will be determined by
the calculation agent, whose determination
shall be conclusive. A distribution on the
Underlying Shares described in clause (A),
clause (D) or clause (E) in the definitions
of
PS-20
"Reorganization Event" of paragraph 5 below
that also constitutes an Extraordinary
Dividend shall not cause an adjustment to
the Exchange Factor pursuant to this
paragraph 3.
4. If the Underlying Company issues rights or
warrants to all holders of the Underlying
Shares to subscribe for or purchase
Underlying Shares at an exercise price per
share less than the closing price of the
Underlying Shares on both (i) the date the
exercise price of such rights or warrants is
determined and (ii) the expiration date of
such rights or warrants, and if the
expiration date of such rights or warrants
precedes the maturity of this Note, then the
Exchange Factor shall be adjusted to equal
the product of the prior Exchange Factor and
a fraction, the numerator of which shall be
the number of Underlying Shares outstanding
immediately prior to the issuance of such
rights or warrants plus the number of
additional Underlying Shares offered for
subscription or purchase pursuant to such
rights or warrants and the denominator of
which shall be the number of Underlying
Shares outstanding immediately prior to the
issuance of such rights or warrants plus the
number of additional Underlying Shares which
the aggregate offering price of the total
number of shares of the Underlying Shares so
offered for subscription or purchase
pursuant to such rights or warrants would
purchase at the closing price on the
expiration date of such rights or warrants,
which shall be determined by multiplying
such total number of shares offered by the
exercise price of such rights or warrants
and dividing the product so obtained by such
Closing Price.
5. If a Reorganization Event (as defined below)
occurs, the payment at maturity will depend
on (i) whether the Closing Price of the
Underlying Shares fell below the Knock-in
Level on any Trading Day from but not
including the Pricing Date to and including
one Trading Day prior to the date of the
Reorganization Event (for purposes of this
paragraph 5, we refer to such period as the
"Relevant Period"), and (ii) the kind and
amount of Exchange Property (as defined
below) received by holders of Underlying
Shares in the Reorganization Event.
In the case where the Closing Price of the
Underlying Shares has fallen below the
Knock-in Level on any Trading Day during the
Relevant Period, each holder of a Security
will receive at maturity, in respect of each
$1,000 principal amount of each Security,
the lesser of: (i) $1,000 in cash or (ii)
Exchange Property in an amount with a value
equal to the product of the Stock Redemption
Amount times the Transaction Value (as
defined below).
In the case where the Closing Price of the
Underlying Shares has not fallen below the
Knock-in Level on any Trading Day during the
Relevant Period, then the payment at
maturity will depend upon the type of
Exchange Property received by holders of
Underlying Shares in accordance with the
following:
(i) If the Exchange Property consists
solely of equity securities listed
on a securities exchange that, in
the opinion of the Calculation
Agent, maintains sufficient
liquidity for trading in such
Exchange Property, then the payment
at maturity for each $1,000
principal amount of Securities will
depend on whether the Closing Price
of such Exchange Property has fallen
below the Knock-in Level on any
Trading Day
PS-21
commencing on the date of such
Reorganization Event to and
including the Determination Date:
(a) If the Closing Price of such
Exchange Property has not fallen
below the Knock-in Level on any
Trading Day commencing on the
date of such Reorganization
Event to and including the
Determination Date, then each
holder of a Security will
receive the principal amount of
$1,000 in cash; or
(b) If the Closing Price of such
Exchange Property has fallen
below the Knock-in Level on any
Trading Day commencing on the
date of such Reorganization
Event to and including the
Determination Date, then (x) if
the Closing Price of such
Exchange Property on the
Determination Date is below the
Initial Price, we will deliver
to you, in exchange for each
Security, Exchange Property with
a value equal to the product of
the Stock Redemption Amount
times the Transaction Value and
(y) if the Closing Price of such
Exchange Property on the
Determination Date is at or
above the Initial Price, we will
pay you $1,000 in cash.
The Calculation Agent will adjust
the Initial Price and consequently
the Knock-in Level to reflect the
new securities delivered in such
Reorganization Event and the market
value and volatility levels of such
securities and any Exchange Factor
adjustments to the Initial Price as
of the effective date of the
Reorganization Event. Following any
such adjustment, the Initial Price
will be such adjusted Initial Price,
divided by the Exchange Factor
(which shall have been reset to 1.0
immediately following the
Reorganization Event). The Bank will
provide notice to the Trustee and
the Securities Administrator of the
adjusted Knock-in Level and Initial
Price as soon as practicable after
the date of such Reorganization
Event.
(ii) If the Exchange Property consists
solely of property other than such
listed equity securities, each
holder of a Security will receive,
on the Maturity Date, in exchange
for each $1,000 principal amount of
Securities, the lesser of: (i)
$1,000 in cash or (ii) Exchange
Property in an amount with a value
equal to the product of the Stock
Redemption Amount times the
Transaction Value as of the
Determination Date. We may, in lieu
of delivering such Exchange
Property, pay you the cash value of
such Exchange Property as of the
Determination Date, as determined by
the Calculation Agent. We will
notify the Trustee and the
Securities Administrator of the
amount and type of Exchange Property
to be delivered or cash to be paid.
(iii) If the Exchange Property consists
of any combination of such listed
equity securities and other
property, then we will (a) deliver,
on the Maturity Date, the portion of
Exchange Property consisting of such
other property with a value equal to
the product of the Stock Redemption
Amount (prior to any adjustment
under this clause) times the
Transaction Value of such portion of
Exchange Property on the
Determination
PS-22
Date or, at our election, pay the
cash value thereof, as determined by
the Calculation Agent, (b)
proportionally adjust the Stock
Redemption Amount to reflect the
portion of the Exchange Property
constituting such listed equity
securities, (c) adjust the Initial
Price and consequently the Knock-in
Level to reflect such listed equity
securities, the market value and
volatility levels of such listed
equity securities and any Exchange
Factor adjustments to the Initial
Price as of the effective date of
the Reorganization Event and (d)
reduce the principal amount of each
$1,000 of Securities to an amount
equal to such adjusted Stock
Redemption Amount multiplied by such
adjusted Initial Price. Following
such adjustments, the amount paid at
maturity for each Security will be
determined as set forth under clause
(i) above, except references to each
$1,000 principal amount of Security
and $1,000 in cash and the reference
to $1,000 in the definition of Stock
Redemption Amount shall be
references to the adjusted principal
amount of Securities as described in
clause (d) of the preceding
sentence. In addition, following any
such adjustment, the Initial Price
will be such adjusted Initial Price,
divided by the Exchange Factor
(which shall have been reset to 1.0
immediately following the
Reorganization Event). The Bank will
provide notice to the Trustee and
the Securities Administrator of any
adjustments to the Securities as a
result of this clause (iii) as soon
as practicable after the date of
such Reorganization Event.
"Reorganization Event" means (A) there has
occurred any reclassification or change with
respect to the Underlying Shares, including,
without limitation, as a result of the
issuance of any tracking stock by the
Underlying Company; (B) the Underlying
Company or any surviving entity or
subsequent surviving entity of the
Underlying Company (an "Underlying Company
Successor") has been subject to a merger,
combination or consolidation and is not the
surviving entity; (C) any statutory exchange
of securities of the Underlying Company or
any Underlying Company Successor with
another corporation occurs (other than
pursuant to clause (B) above); (D) the
Underlying Company is liquidated; (E) the
Underlying Company issues to all of its
shareholders equity securities of an issuer
other than the Underlying Company (other
than in a transaction described in clauses
(B), (C) or (D) above) (a "Spin-off Event");
or (F) a tender or exchange offer or
going-private transaction is consummated for
all the outstanding Underlying Shares.
"Exchange Property" means securities, cash
or any other assets distributed to holders
of the Underlying Shares in any
Reorganization Event, including, (A) in the
case of the issuance of tracking stock or in
the case of a Spin-off Event, the Underlying
Shares with respect to which the tracking
stock or spun-off security was issued and
(B) in the case of any other Reorganization
Event where the Underlying Shares continue
to be held by the holders receiving such
distribution, the Underlying Shares.
"Transaction Value", at any date, means (A)
for any cash received as Exchange Property
in any such Reorganization Event, the amount
of cash received per Underlying Share; (B)
for any property other than cash or
securities received in any such
Reorganization Event, the
PS-23
market value, as determined by the
Calculation Agent, as of the date of
receipt, of such Exchange Property received
per Underlying Share; and (C) for any
security received in any such Reorganization
Event (including in the case of the issuance
of tracking stock, the reclassified
Underlying Shares and, in the case of a
Spin-off Event, the Underlying Shares with
respect to which the spun-off security was
issued), an amount equal to the Closing
Price, as of the determination date, per
share of such security multiplied by the
quantity of such security received for each
Underlying Share.
For purposes of clause (iii) above, if
Exchange Property consists of more than one
type of property that is not listed equity
securities described in clause (iii) above,
holders of Securities will receive at
maturity a pro rata share of each such type
of Exchange Property in proportion to the
quantity of such Exchange Property received
in respect of each Underlying Share. If
Exchange Property includes a cash component,
holders will not receive any interest
accrued on such cash component. In the event
Exchange Property consists of securities,
those securities will, in turn, be subject
to the antidilution adjustments set forth in
paragraphs 1 through 5.
For purposes of this paragraph 5:
(i) in the case of a consummated tender
or exchange offer or going-private
transaction involving Exchange
Property of a particular type,
Exchange Property shall be deemed to
include the amount of cash or other
property paid by the offeror in the
tender or exchange offer with
respect to such Exchange Property
(in an amount determined on the
basis of the rate of exchange in
such tender or exchange offer or
going-private transaction); and
(ii) in the event of a tender or
exchange offer or a going-private
transaction with respect to Exchange
Property in which an offeree may
elect to receive cash or other
property, Exchange Property shall be
deemed to include the kind and
amount of cash and other property
received by offerees who elect to
receive cash.
With respect to paragraphs 1 to 5 above, no
adjustments to the Exchange Factor shall be
required unless such adjustment would require a
change of at least 0.1% in the Exchange Factor
then in effect. The Exchange Factor resulting
from any of the adjustments specified above
shall be rounded to the nearest one
hundred-thousandth with five one-millionths
being rounded upward.
No adjustments to the Exchange Factor or method
of calculating the Exchange Factor shall be
required other than those specified above.
However, the Bank may, at its sole discretion,
cause the Calculation Agent to make additional
changes to the Exchange Factor upon the
occurrence of corporate or other similar events
that affect or could potentially affect market
prices of, or shareholders' rights in, the
Underlying Shares (or other Exchange Property)
but only to reflect such changes, and not with
the aim of changing relative investment risk.
The adjustments specified above do not cover all
events that could affect the Market Price or the
Closing Price of the Underlying Shares,
including, without limitation, a partial tender
or partial exchange offer for the Underlying
Shares.
The Calculation Agent shall be solely
responsible for the determination
PS-24
and calculation of any adjustments to the
Exchange Factor or method of calculating the
Exchange Factor and of any related
determinations and calculations with respect to
any distributions of stock, other securities or
other property or assets (including cash) in
connection with any Reorganization Event
described in paragraph 5 above, and its
determinations and calculations with respect
thereto shall be conclusive.
The Calculation Agent will provide information
as to any adjustments to the Exchange Factor or
method of calculating the Exchange Factor upon
written request by any holder of the Securities.
Alternate Exchange
Calculation in case of
an Event of Default.......... In case an Event of Default with respect to the
Securities shall have occurred and be
continuing, the amount declared due and payable
upon any acceleration of any Security shall be
determined by AAI, as Calculation Agent, and
shall be equal to the principal amount of the
Security plus any accrued interest to, but not
including, the date of acceleration.
Calculation Agent.............. AAI. All determinations made by the Calculation
Agent will be at the sole discretion of the
Calculation Agent and will, in the absence of
manifest error, be conclusive for all purposes
and binding on you and on us.
Additional Amounts............. Subject to certain exceptions and limitations
described in "Description of Debt Securities --
Payment of Additional Amounts" in the
accompanying Prospectus, we will pay such
additional amounts to holders of the Securities
as may be necessary in order that the net
payment of the principal of the Securities and
any other amounts payable on the Securities,
after withholding for or on account of any
present or future tax, assessment or
governmental charge imposed upon or as a result
of such payment by The Netherlands (or any
political subdivision or taxing authority
thereof or therein) or the jurisdiction of
residence or incorporation of any successor
corporation (other than the United States), will
not be less than the amount provided for in the
Securities to be then due and payable.
Book Entry..................... The indenture for the Securities permits us at
anytime and in our sole discretion to decide not
to have any of the Securities represented by one
or more registered global securities. DTC has
advised us that, under its current practices, it
would notify its participants of our request,
but will only withdraw beneficial interests from
the global security at the request of each DTC
participant.
Record Date.................... The "record date" for any interest payment date
is the calendar day prior to that interest
payment date, whether or not that date is a
business day.
PS-25
USE OF PROCEEDS
The net proceeds we receive from the sale of the Securities will be used for
general corporate purposes and, in part, by us or one or more of our affiliates
in connection with hedging our obligations under the Securities. The issue price
of the Securities includes the selling agents' commissions (as shown on the
cover page of the accompanying Prospectus Supplement) paid with respect to the
Securities and the cost of hedging our obligations under the Securities. The
cost of hedging includes the projected profit that our affiliates expect to
realize in consideration for assuming the risks inherent in managing the hedging
transactions. Since hedging our obligations entails risk and may be influenced
by market forces beyond our or our affiliates' control, such hedging may result
in a profit that is more or less than initially projected, or could result in a
loss. See also "Risk Factors--The Inclusion of Commissions and Cost of Hedging
in the Issue Price is Likely to Adversely Affect Secondary Market Prices" and
"Potential Conflicts of Interest; No Security Interest in the Underlying Shares
Held by Us" and "Plan of Distribution" in this Pricing Supplement and "Use of
Proceeds" in the accompanying Prospectus.
TAXATION
Please review carefully the sections entitled "United States Federal
Taxation" (and in particular the subsection entitled "--Mandatorily Exchangeable
Notes--Reverse Exchangeable and Knock-in Reverse Exchangeable Securities") and
"Taxation in the Netherlands" in the accompanying Prospectus Supplement.
Prospective purchasers of the Securities should consult their own tax advisers
as to the tax consequences of acquiring, holding and disposing of the Securities
under the tax law of any state, local and foreign jurisdiction.
PS-26
PLAN OF DISTRIBUTION
We have appointed ABN AMRO Incorporated ("AAI") as agent for this offering.
AAI has agreed to use reasonable efforts to solicit offers to purchase the
Securities. We will pay AAI, in connection with sales of the Securities
resulting from a solicitation such agent made or an offer to purchase such agent
received, a commission of 1.75% of the initial offering price of the Securities.
AAI has informed us that, as part of its distribution of the Securities, it
intends to reoffer the Securities to other dealers who will sell the Securities.
Each such dealer engaged by AAI, or further engaged by a dealer to whom AAI
reoffers the Securities, will purchase the Securities at an agreed discount to
the initial offering price of the Securities. AAI has informed us that such
discounts may vary from dealer to dealer and that not all dealers will purchase
or repurchase the Securities at the same discount. You can find a general
description of the commission rates payable to the agents under "Plan of
Distribution" in the accompanying Prospectus Supplement.
AAI is a wholly owned subsidiary of the Bank. AAI will conduct this offering
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
an NASD member firm's distributing the securities of an affiliate. When the
distribution of the Securities is complete, AAI may offer and sell those
Securities in the course of its business as a broker-dealer. AAI may act as
principal or agent in those transactions and will make any sales at prevailing
secondary market prices at the time of sale. AAI may use this Pricing Supplement
and the accompanying Prospectus and Prospectus Supplement in connection with any
of those transactions. AAI is not obligated to make a market in the Securities
and may discontinue any purchase and sale activities with respect to the
Securities at any time without notice.
To the extent that the total aggregate principal amount of the Securities
being offered by this Pricing Supplement is not purchased by investors in the
offering, one or more of our affiliates has agreed to purchase the unsold
portion, and to hold such Securities for investment purposes. See "Holding of
the Securities by our Affiliates and Future Sales" under the heading "Risk
Factors."
PS-27
FILED PURSUANT TO RULE 424(B)(2)
REGISTRATION NOS. 333-137691
333-137691-02
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED SEPTEMBER 29, 2006)
[ABN AMRO BANK N.V.GRAPHIC OMITTED]
US$ 7,500,000,000 ABN NOTES(SM)
fully and unconditionally guaranteed by ABN AMRO Holding N.V.
We, ABN AMRO Bank N.V., may offer from time to time senior 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 bear interest at either a fixed rate or a floating rate
that varies during the lifetime of the relevant notes, which, in either
case, may be zero. Floating rates will be based on rates or indices
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 notes will be fully and unconditionally guaranteed by ABN AMRO
Holding N.V.
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 exchangeable for securities
of an entity that is not affiliated with us, for 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, securities of entities not affiliated with us, baskets of those
securities or indices, or any combination of the above.
o The notes may be either callable by us or puttable by you.
INVESTING IN THE NOTES INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE S-2.
THESE SECURITIES ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER FEDERAL AGENCY. 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 and LaSalle Financial Services, Inc. have agreed to use
reasonable efforts to solicit offers to purchase these securities as our selling
agents to the extent either or both are named in the applicable pricing
supplement. Certain other selling agents to be named in the applicable pricing
supplement may also be used to solicit such offers on a reasonable efforts
basis. We refer to each selling agent individually as the "agent" and together
as the "agents". The agents may also purchase these securities as principal at
prices to be agreed upon at the time of sale. The agents may resell any
securities they purchase as principal at prevailing market prices, or at other
prices, as they determine.
ABN AMRO Incorporated and LaSalle Financial Services, Inc. may use this
prospectus supplement and the accompanying prospectus in connection with offers
and sales of the securities and related guarantees in market-making
transactions.
ABN AMRO INCORPORATED LASALLE FINANCIAL SERVICES, INC.
SEPTEMBER 29, 2006
TABLE OF CONTENTS
-----------------
PAGE
PROSPECTUS SUPPLEMENT
About This Prospectus Supplement.....................S-1
Risk Factors.........................................S-2
Description of Notes.................................S-4
Taxation in The Netherlands..........................S-24
United States Federal Taxation.......................S-25
Plan of Distribution.................................S-34
Legal Matters........................................S-36
PAGE
----
PROSPECTUS
About This Prospectus...............................1
Where You Can Find Additional Information...........2
Cautionary Statement on Forward-Looking Statements..3
Consolidated Ratios of Earnings to Fixed Charges....4
ABN AMRO Bank N.V...................................5
ABN AMRO Holding N.V................................6
Use of Proceeds.....................................7
Description of Debt Securities......................8
Forms of Securities................................19
The Depositary.....................................20
Plan of Distribution...............................22
Legal Matters......................................25
Experts............................................26
Benefit Plan Investor Considerations...............27
Enforcement of Civil Liabilities...................28
i
ABOUT THIS PROSPECTUS SUPPLEMENT
We may offer from time to time the notes described in this prospectus
supplement. We refer to the notes and related guarantees offered under this
prospectus supplement as our ABN Notes(SM). We refer to the offering of the ABN
Notes(SM) as our "ABN Notes(SM) program".
As used in this prospectus supplement, the "Bank", "we," "us" and "our"
refer to ABN AMRO Bank N.V., "Holding" refers to ABN AMRO Holding N.V, "AAI"
refers to ABN AMRO Incorporated, an affiliate of the Bank and "LFS" refers to
LaSalle Financial Services, Inc., an affiliate of the Bank.
This prospectus supplement sets forth certain terms of the notes that the
Bank may offer and supplements the prospectus that is attached to the back of
this prospectus supplement. Each time the Bank offers notes, it will attach a
pricing supplement to this prospectus supplement. THE PRICING SUPPLEMENT WILL
CONTAIN THE SPECIFIC DESCRIPTION OF THE NOTES THE BANK IS OFFERING AND THE TERMS
OF THE OFFERING AND IT MAY MODIFY OR REPLACE INFORMATION CONTAINED IN THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS.
It is important for you to read and consider all information contained in
this prospectus supplement and the accompanying prospectus and pricing
supplement in making your investment decision. You should also read and consider
the information contained in the documents identified in "Where You Can Find
Additional Information" in the accompanying prospectus.
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 SECURITIES AND SEEKING
OFFERS TO BUY THESE SECURITIES ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE
PERMITTED.
THE NOTES MAY NOT BE OFFERED OR SOLD IN ANY JURISDICTION IN WHICH SUCH OFFER
OR SALE WOULD BE UNLAWFUL. THE NOTES MAY ONLY BE OFFERED WITHIN THE EUROPEAN
ECONOMIC AREA IN COMPLIANCE WITH THE EUROPEAN PROSPECTUS DIRECTIVE 2003/71/EC
AND THE IMPLEMENTING MEASURES IN ANY MEMBER STATE. SEE "PLAN OF DISTRIBUTION -
SELLING RESTRICTIONS" IN THE ACCOMPANYING PROSPECTUS.
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.
S-1
RISK FACTORS
YOUR INVESTMENT IN THE NOTES WILL INVOLVE A NUMBER OF RISKS. ADDITIONAL
RISKS, INCLUDING SPECIFIC TAX RISKS, RELATING TO SPECIFIC TYPES OF NOTES WILL BE
DESCRIBED IN THE APPLICABLE PRICING SUPPLEMENT. YOU SHOULD CONSIDER CAREFULLY
THE FOLLOWING RISKS AND THE RISKS, IF ANY, SET FORTH IN THE APPLICABLE PRICING
SUPPLEMENT, BEFORE YOU DECIDE THAT AN INVESTMENT IN THE NOTES IS SUITABLE FOR
YOU. YOU SHOULD CONSULT YOUR OWN FINANCIAL AND LEGAL ADVISORS REGARDING THE
RISKS AND SUITABILITY OF AN INVESTMENT IN THE NOTES.
IF YOUR NOTES ARE REDEEMABLE, THE BANK MAY CHOOSE TO REDEEM THEM WHEN
PREVAILING INTEREST RATES ARE RELATIVELY LOW.
If your notes are redeemable, the Bank may choose to redeem your notes when
prevailing interest rates are low and you may not be able to reinvest the
redemption proceeds in a comparable security at an effective interest rate as
high as the interest rate on the notes being redeemed.
WE CANNOT ASSURE YOU THAT A TRADING MARKET FOR YOUR NOTES WILL EVER DEVELOP
OR BE MAINTAINED OR THAT A TRADE CAN BE EXECUTED AT ANY INDICATIVE PRICE SHOWN
ON ANY WEBSITE OR BLOOMBERG.
We cannot assure you that a trading market for your notes will ever develop
or be maintained. Many factors independent of our creditworthiness affect the
trading market and market value of your notes. These factors include, among
others:
o whether we list the notes on a securities exchange;
o whether we or any other dealer makes a market in the notes;
o the method of calculating the principal and interest for the notes;
o the time remaining to the maturity of the notes; o the outstanding
amount of the notes;
o the redemption features of the notes; and
o the level, direction and volatility of interest rates, generally.
There may be a limited number of buyers when you decide to sell your notes,
which may affect the price you receive for your notes or your ability to sell
your notes at all.
In connection with any secondary market activity in our notes, our
affiliates may post indicative prices for the notes on a designated website or
via Bloomberg. However, our affiliates are not required to post such indicative
prices and may stop doing so at any time. Investors are advised that any prices
shown on any website or Bloomberg page are indicative prices only and, as such,
there can be no assurance that any trade could be executed at such prices.
Investors should contact their brokerage firm for further information.
IF THE NOTES YOU PURCHASE ARE FLOATING RATE NOTES, YOU MAY RECEIVE A LESSER
AMOUNT OF INTEREST IN THE FUTURE.
Because the interest rate on floating rate notes will be indexed to an
external interest rate or index that may vary from time to time, there will be
significant risks not associated with a conventional fixed rate debt security.
These risks include fluctuation of the applicable interest rate and the
possibility that, in the future, the interest rate on your note will decrease
and may be zero, subject to any minimum interest rate specified in the
applicable pricing supplement. We have no control over a number of matters that
may affect interest rates, including economic, financial and political events
that are important in determining the existence, magnitude and longevity of
these risks and their results.
IF THE FLOATING RATE NOTES YOU PURCHASE ARE SUBJECT TO A MAXIMUM INTEREST
RATE, YOUR RETURN WILL BE LIMITED.
If the applicable pricing supplement specifies that your floating rate notes
are subject to a maximum interest rate, the rate of interest that will accrue on
the floating rate notes during any interest reset period will never exceed the
specified maximum interest rate.
S-2
THE INCLUSION OF COMMISSIONS AND COST OF HEDGING IN THE ISSUE PRICE IS
LIKELY TO ADVERSELY AFFECT SECONDARY MARKET PRICES.
Assuming no change in market conditions or any other relevant factors, the
price, if any, at which the agents are willing to purchase notes in secondary
market transactions will likely be lower than the issue price, since the issue
price included, and secondary market prices are likely to exclude, commissions
paid with respect to the notes, as well as the profit component included in the
cost of hedging our obligations under the notes. In addition, any such prices
may differ from values determined by pricing models used by the agents, as a
result of dealer discounts, mark-ups or other transaction costs.
THERE ARE POTENTIAL CONFLICTS OF INTEREST BETWEEN YOU AND THE CALCULATION
AGENT.
AAI, an affiliate of ours, will serve as the calculation agent with respect
to the notes. In its role as calculation agent, AAI will exercise its judgment
when performing its functions. Absent manifest error, all of its determinations
in its role as calculation agent will be final and binding on you and us,
without any liability on its or our part. You will not be entitled to any
compensation from us or AAI for any loss suffered as a result of any of its
determinations in its role as calculation agent. Since these determinations by
AAI as calculation agent may affect the return on and/or market value of your
notes, we and AAI may have a conflict of interest.
THE U.S. FEDERAL INCOME TAX TREATMENT OF CERTAIN INSTRUMENTS IS UNCERTAIN.
The U.S. federal income tax treatment of certain instruments we may issue is
uncertain. Please read carefully the section entitled "United States Federal
Taxation" in this Prospectus Supplement and any discussion regarding U.S.
federal income taxation contained in the applicable pricing supplement. You
should consult your own tax adviser about an investment in any of our notes in
light of your particular tax situation.
S-3
DESCRIPTION OF NOTES
Investors should carefully read the general terms and provisions of our debt
securities in "Description of Debt Securities" in the accompanying 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
ACCOMPANYING PROSPECTUS.
GENERAL TERMS OF NOTES
We may issue notes under an indenture dated September 15, 2006, among us,
Wilmington Trust Company, as trustee, Citibank, N.A., as securities
administrator and Holding, as guarantor, which we refer to as the "Indenture."
The notes issued under the Indenture will constitute a single series under the
Indenture, together with any notes that 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 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 and any terms related to any extension of the
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 interest, if any, will be payable in cash or payable in kind;
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, securities of entities not affiliated with us, any
other financial, economic or other measures or instruments, including
the occurrence or non-occurrence of any event or circumstance, and/or
baskets or indices of any of these items, or any combination of the
above;
S-4
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 for the cash value of any of these securities or for any other
property, any specific terms relating to the adjustment of the
conversion or exchange feature and the period during which the holders
may effect the conversion or exchange;
o whether the notes are renewable notes;
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
Banking, SOCIETE ANONYME 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) for all notes, in The City of New
York, (y) for notes denominated in a specified currency other than U.S. dollars,
euro or Australian dollars, in the principal financial center of the country of
the specified currency or (z) for notes denominated in Australian dollars, in
Sydney; and (b) for notes denominated in euro, that is also a TARGET Settlement
Day.
"Depositary" means The Depository Trust Company, New York, New York.
"Euro LIBOR notes" means LIBOR notes for which the index currency is euros.
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,
unless another date is specified in the applicable pricing supplement.
"TARGET Settlement Day" means any day on which the Trans-European Automated
Real-time Gross Settlement Express Transfer System ("TARGET") 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-5
GUARANTEE
Holding will fully and unconditionally guarantee payment in full to the
holders of the notes issued by the Bank under the Indenture after the date
hereof. The guarantee is set forth in, and forms a part of, the Indenture under
which the notes will be issued. If, for any reason, the Bank does not make any
required payment in respect of the notes when due, Holding as the guarantor
thereof will cause the payment to be made to or to the order of the trustee.
The holder of the guaranteed note may sue the guarantor to enforce its rights
under the guarantee without first suing the Bank or any other person or entity.
The guarantees will constitute Holding's unsecured and unsubordinated
obligations and rank pari passu without any preference among them and with all
Holding's other present and future unsecured and unsubordinated obligations.
FORMS OF NOTES
We will offer the notes on a continuing basis and will issue notes only in
fully registered form either as registered global notes or as certificated
notes. References to "holders" mean those who own notes registered in their own
names, on the books that we or the trustee maintain for this purpose, and not
those who own beneficial interests in notes registered in street name or in
notes issued in book-entry form through one or more depositaries.
REGISTERED GLOBAL NOTES. For registered global notes, we will issue one or
more global certificates representing the entire issue of notes. Except as set
forth in the accompanying prospectus under "Forms of Securities -- Global
Securities," you may not exchange registered global notes or interests in
registered global notes for certificated notes.
Each global note certificate representing registered global 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 under "Forms of Securities --
The Depositary" in the accompanying prospectus. The Depositary has confirmed to
us, AAI, LFS and the 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
registered global notes or interests in registered global notes.
DENOMINATIONS. Unless otherwise specified in the pricing supplement, we will
issue the notes:
o for U.S. dollar-denominated notes, in denominations of $100 or any
amount greater than $100 that is an integral multiple of $100; or
o for notes denominated in a specified currency other than U.S. dollars,
in denominations of the equivalent of $100, rounded to an integral
multiple of 100 units of the specified currency, or any larger integral
multiple of 100 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 Citibank, N.A, the securities administrator
under the Indenture, at 111 Wall Street, 15th Floor, New York, New York 10043,
Attention: Agency
S-6
and Trust Group, as our current agent for the payment, transfer and exchange of
the notes. We refer to Citibank, acting in this capacity, as the paying agent.
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 accompanying prospectus.
We will not be required to:
o register the transfer or exchange of 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 or exchange of notes to be redeemed for a period
of fifteen calendar days preceding the mailing of the relevant notice of
redemption; or
o register the transfer or exchange of any note selected for redemption in
whole or in part, except the unredeemed or unpaid portion of that 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 by wire transfer of immediately available funds, if the holder has
provided wire transfer instructions 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.
S-7
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 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 must have notified 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 business days prior to the maturity date or any redemption
or repayment date, for payments of principal.
If the holder elects to be paid in a currency other than 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 pay only 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.
S-8
DETERMINATION OF EXCHANGE RATE FOR PAYMENTS IN U.S. DOLLARS FOR NOTES
DENOMINATED IN A FOREIGN CURRENCY. The exchange rate agent identified in the
relevant pricing supplement 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;
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 an affiliate of the Bank. 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 or Holding, as the case may be, for making payments of
principal of, premium on, 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 on, 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 issued at a price which represents a
discount to their principal amount. We refer to these notes as "discount notes."
Such discount may be required to be included in income for U.S. federal income
tax purposes, as described under "United States Federal Taxation -- Original
Issue Discount." In the event of a redemption or repayment of any discount note
or if any discount note is declared to be due and payable
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immediately as described under "Description of Debt Securities -- Events of
Default" in the accompanying 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 accrued from the date of issue to the date
of redemption, repayment or declaration, expressed as a percentage of
the aggregate principal amount.
Solely for purposes of determining the amount of original issue discount
that has accrued under the above formula as of any date on which a redemption,
repayment or acceleration of maturity occurs for a discount note, original issue
discount will be accrued using a constant yield method. The constant yield will
be calculated using a 30-day month, 360-day year convention, a compounding
period that, except for the initial period (as defined below), corresponds to
the shortest period between interest payment dates for the applicable discount
note (with ratable accruals within a compounding period), and an assumption that
the maturity of a discount note will not be accelerated. If the period from the
date of issue to the first interest payment date for a discount note, which we
refer to as the "initial period", is shorter than the compounding period for the
discount note, a proportionate amount of the yield for an entire compounding
period will be accrued. If the initial period is longer than the compounding
period, then the period will be divided into a regular compounding period and a
short period with the short period being treated as provided in the preceding
sentence.
The accrual of the applicable original issue discount described above is
solely for purposes of determining the amounts payable upon redemption,
repayment or acceleration of maturity. That amount of accrued original issue
discount may differ from the accrual of original issue discount for purposes of
the Internal Revenue Code of 1986, as amended (the "Code"). Certain discount
notes may not be treated as having original issue discount within the meaning of
the Code, and notes other than discount notes may be treated as issued with
original issue discount for federal income tax purposes. See "United States
Federal Taxation--Original Issue Discount" below. See also 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.
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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
Unless otherwise 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,
o the CPI, or
o any other rate or interest rate formula specified in the applicable
pricing supplement.
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.
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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
identified in the applicable pricing supplement will refer to when determining
the new interest rate at which a floating rate will reset, and is applicable as
follows (unless otherwise specified in the applicable pricing supplement):
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
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
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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.
Unless otherwise specified in the applicable pricing supplement, 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 (with 0.000005% rounded up to
0.00001%), 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). All Japanese Yen amounts used in or resulting
from these calculations will be rounded downwards to the next lower whole
Japanese Yen amount. All amounts denominated in any other currency used in or
resulting from these calculations will be rounded to the nearest two decimal
places in that currency with 0.005 being rounded upward.
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 RATE NOTES
CD RATE NOTES
CD rate notes will bear interest at the interest rates specified 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.
Unless otherwise specified in the applicable pricing supplement, the "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
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"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.federalreserve.gov/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 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.
Unless otherwise specified in the applicable pricing supplement, 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 set
forth above, the commercial paper rate for that interest determination
date will remain the commercial paper rate for the immediately preceding
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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:
D x 360
money market yield = --------------------------- 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
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.
Unless otherwise specified in the applicable pricing supplement, "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 Reuters, or any successor service, on page EURIBOR01
or any other page as may replace page EURIBOR01 on that service, which is
commonly referred to as "Reuters Page EURIBOR01," 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 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 set
forth above, EURIBOR for that interest 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 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.
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Unless otherwise specified in the applicable pricing supplement, "federal
funds rate" means, for any interest determination date, the rate on that date
for federal funds as published in the Federal Reserve Statistical Release
H.15(519) under the heading "Federal Funds (Effective)" as displayed on Reuters
or any successor service, on page FEDFUNDS1 or any other page as may replace the
applicable page on that service, which is commonly referred to as "Reuters Page
FEDFUNDS1." For the avoidance of doubt, the federal funds rate for any interest
determination date is the rate published for the immediately preceding business
day.
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 set
forth above, the federal funds rate for that interest determination date
will be the federal funds rate last in effect on the interest
determination date.
LIBOR NOTES
LIBOR notes will bear interest at the interest rates specified 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.
Unless otherwise specified in the applicable pricing supplement, the
calculation agent will determine "LIBOR" for each interest determination date as
follows:
o As of the interest determination date, LIBOR will be either:
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, as of 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 Bloomberg" 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, as of
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
Bloomberg" 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 as
of that 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
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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 set
forth above, LIBOR for that interest 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 Reuters 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 Bloomberg" is designated
in the applicable pricing supplement, the display on Bloomberg or any successor
service, page BBAM1 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 Bloomberg is specified in the applicable
pricing supplement, LIBOR for the applicable index currency will be determined
as if LIBOR Reuters were specified, and, if the U.S. dollar is the index
currency, as if Page LIBOR01, had been specified.
PRIME RATE NOTES
Prime rate notes will bear interest at the interest rates specified 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.
Unless otherwise specified in the applicable pricing supplement, "prime
rate" means, for any interest determination date, the rate on that date as
published in Federal Reserve Statistical Release H.15(519) under the heading
"Bank Prime Loan." For the avoidance of doubt, the Prime Rate for any interest
determination date is the rate published for the immediately preceding business
day.
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 Federal Reserve
Statistical Release 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.
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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 set
forth 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 Reuters, 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 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.
Unless otherwise specified in the applicable pricing supplement, "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 Reuters or any successor service, on page USAUCTION 10 or any other
page as may replace page USAUCTION 10 on that service, which we refer to
as "Reuters Page USAUCTION 10," or page USAUCTION 11 or any other page
as may replace page USAUCTION 11 on that service, which we refer to as
"Reuters Page USAUCTION 11";
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
Federal Reserve Statistical Release 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";
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;
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";
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";
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
an agent or one or more of our affiliates,
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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 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:
D x N
bond equivalent yield = ------------------------- x 100
360 - (D x M)
In this formula, "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.
CPI RATE NOTES
CPI rate notes will bear interest at the interest rates specified in the
applicable pricing supplement. That interest rate will be based on a formula
linked to changes in the CPI (as defined below) and which includes a spread
and/or spread multiplier, and will be subject to the minimum interest rate and
the maximum interest rate, if any.
Unless otherwise specified in the applicable pricing supplement, the "CPI"
means, for any interest determination date, the non-seasonally adjusted U.S.
City Average All Items Consumer Price Index for All Urban Consumers reported
monthly by the Bureau of Labor Statistics of the U.S. Department of Labor and
reported on Bloomberg or any successor service.
If, while the CPI Rate Notes are outstanding, the CPI is not published
because it has been discontinued or has been substantially altered, an
applicable substitute index will be chosen to replace the CPI for purposes of
determining interest on the CPI Rate Notes. The applicable index will be that
chosen by the Secretary of the Treasury for the Department of The Treasury's
Inflation-Linked Treasuries as described at 62 Federal Register 846-874 (January
6, 1997) or, if no such securities are outstanding, the substitute index will be
determined by the calculation agent in good faith and in accordance with general
market practice at the time.
RENEWABLE NOTES
We may also issue floating rate renewable notes which will bear interest at
a specified rate that will be reset periodically based on a base rate and any
spread and/or spread multiplier, subject to the minimum interest rate and the
maximum interest rate, if any. Any renewable notes we issue will be registered
global floating rate notes. The general terms of the renewable notes are
described below.
AUTOMATIC EXTENSION OF MATURITY. The renewable notes will mature on the date
specified in the applicable pricing supplement, which we refer to as the
"initial maturity date." On the interest payment dates in each year specified in
the applicable pricing supplement, each of which is treated as an election date
under the terms of the renewable notes, the maturity of the renewable notes will
automatically be extended to the interest payment date occurring twelve months
after the election date, unless the holder elects to terminate the automatic
extension of maturity for all or any portion of the principal amount of that
holder's note. However, the maturity of the renewable notes may not be extended
beyond the final maturity date, which will be specified in the applicable
pricing supplement.
HOLDER'S OPTION TO TERMINATE AUTOMATIC EXTENSION. On an election date, the
holder may elect to terminate the automatic extension of the maturity of the
renewable notes or of any portion of the renewable note having a principal
amount of $1,000 or any integral multiple of $1,000. To terminate the extension,
the holder must deliver a notice to the paying agent within the time frame
specified in the applicable pricing supplement. This option may be exercised for
less than the entire principal amount of the renewable notes, as long as the
principal amount of the remainder is at least $1,000 or any integral multiple of
$1,000.
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If the holder elects to terminate the automatic extension of the maturity of
any portion of the principal amount of the renewable notes and this election is
not revoked as described below, that portion will become due and payable on the
interest payment date falling six months after the applicable election date.
REVOCATION OF ELECTION BY HOLDER. The holder may revoke an election to
terminate the automatic extension of maturity as to any portion of the renewable
notes having a principal amount of $1,000 or any integral multiple of $1,000. To
do so, the holder must deliver a notice to the paying agent on any day after the
election to terminate the automatic extension of maturity is effective and prior
to the fifteenth day before the date on which that portion would otherwise
mature. The holder may revoke the election for less than the entire principal
amount of the renewable notes as long as the principal amount of both the
portion whose maturity is to be terminated and the remainder whose maturity is
to be extended is at least $1,000 or any integral multiple of $1,000. However, a
revocation may not be made during the period from and including a record date to
but excluding the immediately succeeding interest payment date.
An election to terminate the automatic extension of the maturity of the
renewable notes, if not revoked as described above by the holder making the
election or any subsequent holder, will be binding upon that subsequent holder.
REDEMPTION OF NOTES AT COMPANY'S OPTION. We have the option to redeem
renewable notes in whole or in part on the interest payment dates in each year
specified in the applicable pricing supplement, commencing with the interest
payment date specified in the applicable pricing supplement. The redemption
price will be equal to 100% of the principal amount of the renewable notes to be
redeemed, together with accrued and unpaid interest to the date of redemption.
Notwithstanding anything to the contrary in this prospectus supplement, we will
mail a notice of redemption to each holder by first-class mail, postage prepaid,
at least 180 days and not more than 210 days prior to the date fixed for
redemption.
REMARKETING OF NOTES. We may issue renewable notes with the spread or spread
multiplier to be reset by a remarketing agent in remarketing procedures. A
description of the remarketing procedures, the terms of the remarketing
agreement between us and the remarketing agent and the terms of any additional
agreements with other parties that may be involved in the remarketing procedures
will be set forth in the applicable pricing supplement and in the relevant
renewable notes.
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, or the cash value of, any of the above.
As specified in the applicable pricing supplement, 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.
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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.
Mandatorily exchangeable notes that we issue may include the following:
Reverse Exchangeable Securities ("REXs").
Unless otherwise provided in the applicable pricing supplement, investors in
REXs will receive interest payments at a fixed rate. At maturity, investors in
REXs will receive either a cash payment equal to the original principal amount
of the notes or a number of shares of underlying stock equal to the stock
redemption amount. The type of payment at maturity will be determined by
comparing the closing price of the underlying stock on a specified determination
date to the closing price of the underlying stock on the date the notes were
priced. If the closing price of the underlying stock on the determination date
is at or above the closing price of the underlying stock on the date the notes
were priced, the payment at maturity will be a cash payment equal to the
principal amount. If the closing price of the underlying stock on the
determination date is below the closing price of the underlying stock on the
date the notes were priced, the investors will receive the stock redemption
amount. The stock redemption amount is a number of shares of the underlying
stock equal to the principal amount per security divided by the closing price of
the underlying stock on the date the securities were priced.
Knock-in Reverse Exchangeable Securities ("Knock-in REXs").
-----------------------------------------------------------
Unless otherwise provided in the applicable pricing supplement, investors in
Knock-in REXs will receive interest payments at a fixed rate. Like REXs, at
maturity, investors in Knock-in REXs will receive either a cash payment equal to
the original principal amount of the securities or a number of shares of
underlying stock equal to the stock redemption amount. However, the type of
payment at maturity will be calculated by first determining if the closing price
of the underlying stock was at or below the predetermined "knock-in level" on
any trading day from the date the notes were priced to, and including, a
specified determination date. If the closing price of the underlying stock was
never at or below the "knock-in level" on any trading day during the period from
the date the securities were priced to, and including, the determination date,
the payment at maturity will always be a cash payment equal to the principal
amount, irrespective of the closing price of the underlying stock on the
determination date. If, however, the closing price of the underlying stock was
at or below the "knock-in level" on any trading day during the period from the
date the securities were priced to, and including, the determination date, the
payment at maturity will be determined by comparing the closing price of the
underlying stock on the determination date to the closing price of the
underlying stock on the date the notes were priced. If such closing price is
equal to or greater than the closing price of the underlying stock on the date
the securities were priced, the payment at maturity will be a cash payment equal
to the principal amount. If, on the other hand, such closing price is below the
closing price of the underlying stock on the date the securities were priced,
investors will receive the stock redemption amount described above.
PAYMENTS UPON EXCHANGE. The applicable 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
S-21
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 OR UPON TAX REDEMPTION. 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 to the date of declaration or tax redemption without having
received the amount due upon exchange, the amount payable will be an
amount of cash equal to 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 or tax redemption were the maturity date plus
accrued interest, if any, to but excluding the date of payment.
NOTES LINKED TO COMMODITY PRICES, SINGLE SECURITIES, ECONOMIC OR FINANCIAL
MEASURES AND BASKETS OR INDICES THEREOF
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 one or more commodity prices, securities of
entities not affiliated with us, any other financial, economic or other measures
or instruments, including the occurrence or non-occurrence of any event or
circumstance, and/or baskets or indices of any of these items, or any
combination of the above. 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.
GUARANTEED NOTES
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We may issue notes that are subject to a financial insurance guaranty policy
issued by a financial institution that unconditionally and irrevocably
guarantees certain payments on the notes. The terms of the financial insurance
guaranty policy will be described in the relevant pricing supplement.
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TAXATION IN THE NETHERLANDS
The following is a general summary of certain Netherlands tax consequences
as of the date of this prospectus supplement in relation to the notes. It is not
exhaustive and holders who are in doubt as to their tax position should consult
their professional advisers.
DUTCH RESIDENT HOLDERS
Holders who are individuals and are resident or deemed to be resident in The
Netherlands, or who have elected to be treated as a Dutch resident holder for
Dutch tax purposes, are subject to Dutch income tax on a deemed return
regardless of the actual income derived from a note or gain or loss realized
upon disposal or redemption of a note, provided that the note is a portfolio
investment and is not held in the context of any business or substantial
interest. The deemed return amounts to 4 percent of the average value of the
holder's net assets in the relevant fiscal year (including the notes) and is
taxed at a flat rate of 30 percent.
Corporate holders that are resident or deemed to be resident in The
Netherlands, without being exempt from Dutch corporate tax, will be subject to
Dutch corporate tax on all income and gains realized in connection with the
notes.
NON-DUTCH RESIDENT HOLDERS
Non-Dutch resident holders normally will not be subject to Dutch income or
corporate taxation with respect to income or capital gains realized in
connection with a note, unless there is a specific connection with The
Netherlands, such as an enterprise or part thereof which is carried on through a
permanent establishment in The Netherlands or a substantial interest or deemed
substantial interest in the Bank.
A holder will not become resident or deemed to be resident in The
Netherlands by reason only of the holding of a note.
REGISTRATION TAXES, STAMP DUTY, ETC.
There is no Dutch registration tax, capital tax, customs duty, stamp duty or
any other similar tax or duty payable by the holder in The Netherlands in
connection with the notes.
WITHHOLDING TAX
All payments by the Bank to the holder in respect of the notes can be made
free of any Dutch withholding tax, unless the notes qualify as debt as referred
to in Article 10, paragraph 1 sub d of the Dutch Corporate Income Tax Act (Wet
op de Vennootschapsbelasting 1969).
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UNITED STATES FEDERAL TAXATION
Based on the advice of Davis Polk & Wardwell, special tax counsel to the
Bank ("Tax Counsel"), the following summary accurately describes the principal
U.S. federal income tax consequences of ownership and disposition of the notes.
Except as specifically noted below, this discussion applies only to:
o notes purchased on original issuance at the issue price (as defined
below); and
o notes held as capital assets.
This discussion does not describe all of the tax consequences that may be
relevant in light of a holder's particular circumstances or to holders subject
to special rules, such as:
o certain financial institutions;
o insurance companies;
o dealers or certain traders in securities, commodities, or foreign
currencies;
o persons holding notes as part of a hedging transaction, "straddle,"
conversion transaction or other integrated transaction;
o regulated investment companies;
o real estate investment trusts;
o tax-exempt entities;
o U.S. holders (as defined below) whose functional currency is not the
U.S. dollar;
o partnerships or other entities classified as partnerships for U.S.
federal income tax purposes;
o holders that are not U.S. holders (as defined below), if income from
payments on a note, or gain recognized on a disposition of a note, is
effectively connected with such holders' conduct of a trade or business
in the United States; or
o individual holders who are not U.S. holders (as defined below) and are
present in the United States for 183 days or more in the taxable year of
the sale, exchange or retirement.
This summary is based on the Internal Revenue Code of 1986, as amended to
the date hereof (the "Code"), administrative pronouncements, judicial decisions
and final, temporary and proposed Treasury Regulations, changes to any of which
subsequent to the date of this Prospectus Supplement may affect the tax
consequences described below. Persons considering the purchase of the notes
should consult the applicable pricing supplement for any additional discussion
regarding U.S. federal income taxation and their tax advisers with regard to the
application of the U.S. federal income tax laws to their particular situations
as well as any tax consequences arising under the laws of any state, local or
foreign taxing jurisdiction.
This discussion does not apply to currency-linked notes or, except as
specifically noted below, mandatorily exchangeable notes. The tax treatment of
these instruments will be specified in the relevant pricing supplement.
THIS DISCUSSION APPLIES ONLY TO NOTES ISSUED IN COMPLIANCE WITH CERTAIN
GUIDELINES PROVIDED TO US BY TAX COUNSEL. TO THE EXTENT THAT THIS DISCUSSION
DOES NOT APPLY TO A PARTICULAR ISSUANCE OF NOTES AS A RESULT OF ANY DEVIATION
FROM SUCH GUIDELINES, DISCLOSURE REGARDING THE U.S. FEDERAL INCOME TAXATION OF
SUCH ISSUANCE WILL BE INCLUDED IN THE APPLICABLE PRICING SUPPLEMENT.
ACCORDINGLY, YOU SHOULD ALSO CONSULT THE APPLICABLE PRICING
S-25
SUPPLEMENT FOR ANY ADDITIONAL DISCUSSION REGARDING U.S. FEDERAL INCOME TAXATION
WITH RESPECT TO THE SPECIFIC NOTES OR SECURITIES OFFERED THEREUNDER.
TAX CONSEQUENCES FOR U.S. HOLDERS
As used herein, the term "U.S. holder" means a beneficial owner of a note
that is for U.S. federal income tax purposes:
o a citizen or individual resident of the United States;
o a corporation created or organized in or under the laws of the United
States or of any political subdivision thereof; or
o an estate or trust the income of which is subject to U.S. federal income
taxation regardless of its source.
The term "U.S. holders" also includes certain former citizens and residents
of the United States.
If an entity that is classified as a partnership for U.S. federal income tax
purposes holds notes, the U.S. federal income tax treatment of a partner will
generally depend on the status of the partner and upon the activities of the
partnership. Partners of partnerships holding notes should consult with their
tax advisers.
PAYMENTS OF INTEREST
Interest paid on a note will be taxable to a U.S. holder as ordinary
interest income at the time it accrues or is received in accordance with the
holder's method of accounting for federal income tax purposes, provided that the
interest is "qualified stated interest" (as defined below). Interest income
earned by a U.S. holder with respect to a note will constitute foreign source
income for U.S. federal income tax purposes, which may be relevant in
calculating the holder's foreign tax credit limitation. The limitation on
foreign taxes eligible for credit is calculated separately with respect to
specific classes of income. For this purpose, interest paid on the notes will
constitute "passive income." Special rules governing the treatment of payments
made with respect to short-term notes, original issue discount notes, contingent
payment debt instruments and certain exchangeable notes are described under
"--Interest on Short-Term Notes," "--Original Issue Discount," "--Contingent
Payment Debt Instruments," "--Optionally Exchangeable Notes" and "--Mandatorily
Exchangeable Notes--Reverse Exchangeable and Knock-in Reverse Exchangeable
Securities."
INTEREST ON SHORT-TERM NOTES
A note that matures (after taking into account the last possible date that
the note could be outstanding under the terms of the note) one year or less from
its date of issuance (a "short-term note") will be treated as being issued at a
discount and none of the interest paid on the note will be treated as qualified
stated interest (as defined below). In general, a cash-method U.S. holder of a
short-term note is not required to accrue the discount for U.S. federal income
tax purposes unless it elects to do so. If a cash method U.S. holder does not
make this election, the holder should include interest payments as ordinary
income upon receipt. Holders who elect to accrue the discount, and certain other
holders, including those who report income on the accrual method of accounting
for federal income tax purposes, are required to include the discount in income
as it accrues on a straight-line basis, unless another election is made to
accrue the discount according to a constant-yield method based on daily
compounding. In the case of a U.S. holder who is not required and who does not
elect to include the discount in income currently, any gain realized on the
sale, exchange, or retirement of the short-term note will generally be ordinary
income to the extent of the discount accrued on a straight-line basis (or, if
elected, according to a constant yield method based on daily compounding)
through the date of sale, exchange or retirement. In addition, those U.S.
holders will be required to defer deductions for any interest paid on
indebtedness incurred to purchase or carry short-term notes in an amount not
exceeding the accrued discount until the accrued discount is included in income.
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ORIGINAL ISSUE DISCOUNT
A note that has an "issue price" that is less than its "stated redemption
price at maturity" will be considered to have been issued at an original
discount for federal income tax purposes (and will be referred to in this
section as an "original issue discount note") unless the note satisfies a DE
MINIMIS threshold (as described below) or is a short-term note (as defined
above). The "issue price" of a note will be the first price at which a
substantial amount of the notes are sold to the public (not including sales to
bond houses, brokers or similar persons or organizations acting in the capacity
of underwriters, placement agents or wholesalers). The "stated redemption price
at maturity" of a note generally will equal the sum of all payments required
under the note other than payments of "qualified stated interest." "Qualified
stated interest" is stated interest unconditionally payable (other than in debt
instruments of the issuer) at least annually during the entire term of the note
and equal to the outstanding principal balance of the note multiplied by a
single fixed rate of interest. In addition, qualified stated interest includes,
among other things, stated interest on a "variable rate debt instrument" (as
defined in the applicable U.S. Treasury regulations) that is unconditionally
payable (other than in debt instruments of the issuer) at least annually at a
single qualified floating rate of interest or at a rate that is determined at 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. For this
purpose, if a floating rate note provides for stated interest at a fixed rate
for an initial period of one year or less followed by a variable rate and if the
variable rate on the floating rate note's issue date is intended to approximate
the fixed rate (E.G., the value of the variable rate on the issue date does not
differ from the value of the fixed rate by more than 0.25%), then the fixed rate
and the variable rate together will constitute a single variable rate.
If the difference between a note's stated redemption price at maturity and
its issue price is less than a DE MINIMIS amount, I.E., 1/4 of 1 percent of the
stated redemption price at maturity multiplied by the number of complete years
to maturity, the note will not be considered to have original issue discount.
U.S. holders of notes with a DE MINIMIS amount of original issue discount will
include this original issue discount in income, as capital gain, on a PRO RATA
basis as principal payments are made on the note.
A U.S. holder of original discount notes will be required to include any
qualified stated interest payments in income in accordance with the holder's
method of accounting for federal income tax purposes. U.S. holders of original
issue discount notes (other than short-term notes, as defined above) will be
required to include in income for federal income tax purposes the sum of the
daily portions of the original issue discount for each day on which the holder
held the note. The U.S. holder will be required to include such original issue
discount as it accrues in accordance with a constant yield method based on a
compounding of interest, regardless of whether cash attributable to this income
is received.
A U.S. holder may make an election to include in gross income all interest
that accrues on any note (including stated interest, acquisition discount,
original issue discount, DE MINIMIS original issue discount, market discount, DE
MINIMIS market discount and unstated interest, as adjusted by any amortizable
bond premium or acquisition premium) in accordance with a constant yield method
based on the compounding of interest (a "constant yield election").
We may have an unconditional option to redeem, or holders may have an
unconditional option to require us to redeem, a note prior to its stated
maturity date. Under applicable regulations, if we have an unconditional option
to redeem a note prior to its stated maturity date, this option will be presumed
to be exercised if the exercise of the option will lower the yield on the note.
Conversely, if holders have an unconditional option to require us to redeem a
note prior to its stated maturity date, this option will be presumed to be
exercised if the exercise of the option will increase the yield on the note. If
an option discussed above is "deemed" exercised, but is not in fact exercised,
the note will be treated solely for purposes of calculating original issue
discount as if it were redeemed, and a new note were issued, on the presumed
exercise date for an amount equal to the note's adjusted issue price on that
date. The adjusted issue price of an original issue discount note is defined as
the sum of the issue price of the note and the aggregate amount of previously
accrued original issue discount, less any prior payments other than payments of
qualified stated interest.
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SALE, EXCHANGE OR RETIREMENT OF THE NOTES
Upon the sale, exchange or retirement of a note, a U.S. holder will
recognize taxable gain or loss equal to the difference between the amount
realized on the sale, exchange or retirement and the holder's adjusted tax basis
in the note. Gain or loss, if any, will generally be U.S. source income for
purposes of computing a U.S. holder's foreign tax credit limitation. Amounts
attributable to accrued interest or discount are treated as interest as
described under "-- Payment of Interest," "--Interest on Short-Term Notes" and
"--Original Issue Discount" above.
Except as described below, gain or loss realized on the sale, exchange or
retirement of a note will generally be capital gain or loss and will 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. Exception to this general rule
applies to the extent of any accrued discount not previously included in the
holder's taxable income. See "--Interest on Short-Term Notes" and "--Original
Issue Discount" above. In addition, other exceptions to this general rule apply
in the case of contingent payment debt instruments, optionally exchangeable
notes and mandatorily exchangeable notes. See "--Contingent Payment Debt
Instruments," "--Optionally Exchangeable Notes" and "--Mandatorily Exchangeable
Notes--Reverse Exchangeable Securities and Knock-In Reverse Exchangeable
Securities" below.
CONTINGENT PAYMENT DEBT INSTRUMENTS
We may issue notes or securities that will be treated as "contingent payment
debt instruments" for U.S. federal income tax purposes.
If a note or a security is treated as a contingent payment debt instrument,
no payment on such instrument qualifies as qualified stated interest. Rather, a
U.S. holder must account for interest for U.S. federal income tax purposes based
on a "comparable yield" and the differences between actual payments on the
contingent payment debt instrument and the instrument's "projected payment
schedule" as described below. The comparable yield is determined by us at the
time of issuance of the contingent payment debt instrument and takes into
account the yield at which we could issue a fixed rate debt instrument with no
contingent payments, but with terms and conditions otherwise similar to those of
the contingent payment debt instrument. The comparable yield may be greater than
or less than the stated interest, if any, with respect to the instrument.
Solely for the purpose of determining the amount of interest income that a
U.S. holder will be required to accrue on a contingent payment debt instrument,
we will be required to construct a "projected payment schedule" that represents
a series of payments the amount and timing of which would produce a yield to
maturity on the instrument equal to the comparable yield used.
NEITHER THE COMPARABLE YIELD NOR THE PROJECTED PAYMENT SCHEDULE CONSTITUTES
A REPRESENTATION BY US OR HOLDING REGARDING THE ACTUAL AMOUNT, IF ANY, THAT THE
CONTINGENT PAYMENT DEBT INSTRUMENT WILL PAY.
For U.S. federal income tax purposes, a U.S. holder will be required to use
the comparable yield and projected payment schedule established by us in
determining interest accruals and adjustments in respect of a contingent payment
debt instrument, unless the holder timely discloses and justifies the use of a
different comparable yield and projected payment schedule to the Internal
Revenue Service ("IRS").
A U.S. holder, regardless of the holder's method of accounting for U.S.
federal income tax purposes, will be required to accrue interest income on a
contingent payment debt instrument at the comparable yield, adjusted upward or
downward to reflect the difference, if any, between the actual and the projected
amount of any contingent payments on the instrument (as set forth below).
A U.S. 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 a contingent payment debt instrument for a
taxable year. A net negative adjustment, I.E., the excess of projected payments
over actual payments, in respect of a contingent payment debt instrument for a
taxable year:
o will first reduce the amount of interest in respect of the contingent
payment debt instrument that a holder would otherwise be required to
include in income in the taxable year; and
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o any excess will give rise to an ordinary loss to the extent that the
amount of all previous interest inclusions under the contingent payment
debt instrument exceeds the total amount of the U.S. holder's net
negative adjustments treated as ordinary loss on the contingent payment
debt instrument in prior taxable years.
A net negative adjustment is not subject to the two percent floor limitation
imposed on miscellaneous deductions. Any net negative adjustment in excess of
the amounts described above will be carried forward to offset future interest
income in respect of the contingent payment debt instrument or to reduce the
amount realized on a sale, exchange or retirement of the instrument.
Upon a sale, exchange or retirement of a contingent payment debt instrument
(including a delivery of property pursuant to the terms of the instrument), a
U.S. 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 adjusted basis in the contingent payment debt instrument. If we
deliver property, other than cash, to a U.S. holder in retirement of a
contingent payment debt instrument, 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 U.S. 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 in excess of the total net
negative adjustments previously taken into account as ordinary losses, and the
balance as capital loss. The deductibility of capital losses is subject to
limitations. In addition, if a holder recognizes loss above certain thresholds,
the holder may be required to file a disclosure statement with the IRS.
A U.S. holder will have a tax basis in any property, other than cash,
received upon the retirement of a contingent payment debt instrument, including
in satisfaction of a conversion right or a call right, equal to the fair market
value of the property determined at the time of retirement. The holder's holding
period for the property will commence on the day immediately following its
receipt.
Special rules will apply if one or more contingent payments on a contingent
payment debt instrument become fixed. For purposes of the preceding sentence, a
payment (including an amount payable at maturity) will be treated as fixed if
(and when) all remaining contingencies with respect to it are remote or
incidental within the meaning of the applicable Treasury regulations. If one or
more contingent payments on a contingent payment debt instrument become fixed
more than six months prior to the date the payment is due, a U.S. holder would
be required to make a positive or negative adjustment, as appropriate, equal to
the difference between the present value of the amounts that are fixed, using
the comparable yield as the discount rate, and the projected amounts of the
contingent payments relevant as provided in the projected payment schedule. If
all remaining scheduled contingent payments on a contingent payment debt
instrument become fixed substantially contemporaneously, a U.S. holder would be
required to make adjustments to account for the difference between the amounts
so treated as fixed and the projected payments in a reasonable manner over the
remaining term of the contingent payment debt instrument. A U.S. holder's tax
basis in the contingent payment debt instrument and the character of any gain or
loss on the sale of the instrument would also be affected. U.S. holders are
urged to consult their tax advisers concerning the application of these special
rules.
CPI RATE NOTES
Depending on the terms of each CPI Rate Note, a CPI Rate Note will be
treated as either a "variable rate debt instrument," or a "contingent payment
debt instrument." For a description of the contingent payment debt instrument
rules, see the discussion under "--Contingent Payment Debt Instruments" above.
Unless otherwise provided in the applicable pricing supplement, a CPI Rate Note
will be treated as a variable rate debt instrument for U.S. federal income tax
purposes. The discussion below assumes that the CPI Rate Notes will qualify as a
variable rate debt instruments. If a CPI Rate Note qualifies as a variable rate
debt instrument, the tax consequences to a U.S. holder will generally be the
same as the tax consequences to a U.S. holder holding a fixed rate note and are
summarized below under this section "--CPI Rate Notes".
PAYMENT OF INTEREST. Each interest payment will be taxable to a U.S. holder
as ordinary interest income at the time it accrues or is received in accordance
with the U.S. holder's method of accounting for U.S. federal income tax
purposes. See "--Payment of Interest." If the CPI Rate Note qualifies as a
short-term note (as defined above),
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interest payment on the CPI Rate Note will be taxable to a U.S. holder as
described in "--Interest on Short-Term Notes" above.
If a CPI Rate Note is issued with original issue discount (i.e., the issue
price of the CPI Rate Note is less than its stated principal amount, and the
difference between the issue price and the stated principal amount exceeds the
DE MINIMIS amount described in "--Original Issue Discount" above), the amount of
qualified stated interest and the amount of original issue discount that accrues
during an accrual period on such CPI Rate Note would be determined by applying
the rules described in "--Original Issue Discount" above, assuming that the
stated variable interest rate for which the CPI Rate Note provide is a fixed
rate that reflects the yield that is reasonably expected for the CPI Rate Note.
SALE OR EXCHANGE OF THE NOTES. Upon a sale or exchange of CPI Rate Notes,
a U.S. holder will recognize capital gain or loss equal to the difference
between the amount realized on the sale or exchange and the U.S. holder's tax
basis in the notes. This gain or loss will generally be long-term capital gain
or loss if the U.S. holder held the CPI Rate Note for more than one year at the
time of disposition. Amounts attributable to accrued but unpaid interest will be
treated as interest as described under "--Payment of Interest," or under
"--Interest on Short-Term Notes" above if the CPI Rate Note is a short-term note
(as defined above).
OPTIONALLY EXCHANGEABLE NOTES
Unless otherwise noted in the applicable pricing supplement, optionally
exchangeable notes will be treated as "contingent payment debt instruments" for
U.S. federal income tax purposes. See "--Contingent Payment Debt Instruments"
above.
MANDATORILY EXCHANGEABLE NOTES--REVERSE EXCHANGEABLE AND KNOCK-IN REVERSE
EXCHANGEABLE SECURITIES
Unless otherwise provided in the applicable pricing supplement, we and every
holder of Reverse Exchangeable Securities, which we refer to as "REXs", or
Knock-In Reverse Exchangeable Securities, which we refer to as "Knock-In REXs",
will agree (in the absence of an administrative determination or judicial ruling
to the contrary) to characterize each such security for U.S. federal income tax
purposes as consisting of the following components (the "Components"):
o a put option (the "Put Option") that requires the holder of the REXs or
the Knock-In REXs to buy the underlying shares from us for an amount
equal to the Deposit (as defined below); and
o a deposit with us of cash, in an amount equal to the principal amount of
the REXs or the Knock-In REXs (the "Deposit"), to secure the holder's
potential obligation to purchase the underlying shares.
In the case of REXs, under this characterization the Put Option would be
treated as exercised if the closing price of the underlying share on the
determination date was lower than its closing price on the pricing date. In the
case of Knock-In REXs, under this characterization the Put Option would be
treated as exercised if the closing price of the underlying share on the
determination date is lower than its closing price on the pricing date and in
addition, the closing price of the underlying shares falls to or below the
knock-in level at any time from the pricing date to and including the
determination date.
Under this characterization, a portion of the stated interest payments on
REXs or Knock-In REXs is treated as interest on the Deposit, and the remainder
is treated as attributable to the holder's sale of the Put Option to us (the
"Put Premium"). Based on our judgment as to, among other things, our normal
borrowing cost and the value of the Put Option, we will specify in the pricing
supplement for each REXs and Knock-In REXs the portion of the stated payments on
such security that we will treat as constituting interest on the Deposit. We
will treat the remaining portion as the Put Premium.
NOTWITHSTANDING OUR AGREEMENT TO TREAT THE REXS AND KNOCK-IN REXS AS
DESCRIBED ABOVE, THE U.S. FEDERAL INCOME TAX TREATMENT OF THE REXS AND KNOCK-IN
REXS IS UNCERTAIN. DUE TO THE ABSENCE OF STATUTORY, JUDICIAL OR ADMINISTRATIVE
AUTHORITIES THAT DIRECTLY ADDRESS INSTRUMENTS SIMILAR TO THE REXS AND KNOCK-IN
REXS, TAX COUNSEL IS UNABLE TO RENDER AN OPINION AS TO WHETHER THE TREATMENT
DESCRIBED ABOVE WILL BE RESPECTED. THE U.S. FEDERAL INCOME TAX TREATMENT OF THE
REXS AND KNOCK-IN REXS DESCRIBED ABOVE AND OUR
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ALLOCATION OF INTEREST AND PUT PREMIUM ARE NOT BINDING ON THE IRS OR THE COURTS,
AND NO RULING IS BEING REQUESTED FROM THE IRS WITH RESPECT TO THESE SECURITIES.
ACCORDINGLY, NO ASSURANCE CAN BE GIVEN THAT THE IRS OR A COURT WILL AGREE WITH
THE TAX TREATMENT DESCRIBED ABOVE AND SIGNIFICANT ASPECTS OF THE U.S. FEDERAL
INCOME TAX CONSEQUENCES OF AN INVESTMENT IN REXS OR KNOCK-IN REXS ARE UNCERTAIN.
PROSPECTIVE PURCHASERS OF REXS OR KNOCK-IN REXS ARE URGED TO CONSULT THEIR
TAX ADVISERS REGARDING THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF AN INVESTMENT
IN SUCH SECURITIES (INCLUDING ALTERNATIVE CHARACTERIZATIONS OF THE SECURITIES)
AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR
FOREIGN TAXING JURISDICTION.
THE DISCUSSION BELOW DOES NOT ADDRESS THE U.S. FEDERAL INCOME TAX
CONSEQUENCES OF THE OWNERSHIP OR DISPOSITION OF THE STOCK UNDERLYING REXS OR
KNOCK-IN REXS SHOULD A HOLDER RECEIVE SUCH UNDERLYING STOCK AT MATURITY.
PROSPECTIVE PURCHASERS OF REXS OR KNOCK-IN REXS ARE URGED TO CONSULT THEIR TAX
ADVISERS REGARDING THE POTENTIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE
OWNERSHIP OR DISPOSITION OF THE UNDERLYING STOCK.
Assuming the treatment of the REXs and Knock-In REXs as set forth above, the
following U.S. federal income tax consequences should result to a U.S. holder:
STATED INTEREST PAYMENTS ON REXS OR KNOCK-IN REXS. Yield attributable to the
Deposit will be treated as interest. Accordingly, if a REXs or a Knock-In REXs
matures (after taking into account the last possible date that the security
could be outstanding under the terms of the security) one year or less from its
date of issuance (a "short-term REX"), the Deposit will be treated as a
short-term obligation for U.S. federal income tax purposes. Interest on the
Deposit component of a short-term REX will be treated as described in
"--Interest on Short Term Notes" above.
If a REXs or a Knock-In REXs is not a short-term REX, interest on the
Deposit will be treated as described in "--Payments of Interest" above.
Receipt of the Put Premium will not be taxable to a U.S. holder upon
receipt.
EXERCISE OR EXPIRATION OF THE PUT OPTION. If the Put Option expires
unexercised (I.E., a cash payment of the principal amount of the REXs or
Knock-In REXs is made to a U.S. holder at maturity), the U.S. holder will
recognize in respect of the Put Option short term capital gain equal to the
total Put Premium received.
In the event that the Put Option is exercised (I.E., the final payment on
the REXs or the Knock-In REXs is paid in underlying shares), a U.S. holder will
not recognize any gain or loss in respect of the Put Option (other than in
respect of cash received in lieu of fractional shares), and the holder will have
an aggregate adjusted tax basis in the underlying shares (including any
fractional shares) received equal to:
o the Deposit minus
o the total Put Premium received.
The holding period for any underlying shares a U.S. holder receives will
start on the day after the delivery of the underlying shares.
In the event that we deliver cash in lieu of fractional underlying shares, a
U.S. holder will generally recognize a short-term capital gain or loss in an
amount equal to the difference between:
o the amount of cash received in respect of the fractional shares; and
o the basis in such shares, as determined above.
SALE OR EXCHANGE OF REXS OR KNOCK-IN REXS. Upon a sale of REXs or Knock-In
REXs for cash, a U.S. holder will be required to apportion the amount received
between the Deposit and the Put Option on the basis of their
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respective values on the date of sale. The U.S. holder will generally recognize
gain or loss with respect to the Deposit in an amount equal to the difference
between:
o the amount received that is apportioned to the Deposit; and
o the holder's adjusted basis in the Deposit, which will generally be
equal to the principal amount of the holder's REXs or Knock-In REXs (and
in the case of a short-term REX increased by the amount of any income
the holder has recognized in connection with the Deposit and decreased
by the amount of any payments made to the holder with respect to the
Deposit).
Except to the extent attributable to accrued discount on the Deposit (in the
case of a short-term REX), or to accrued interest on the Deposit (if the REXs or
the Knock-In REXs is not a short-term REX), which will be taxed as described
above under "Stated Interest Payments on REXs or Knock-In REXs," such gain or
loss will be capital gain or loss (and will be short-term capital gain or loss
in the case of a short-term REX, or if the REXs or the Knock-In REXs has been
held by the disposing holder for one year or less). The amount of cash that a
U.S. holder receives that is apportioned to the Put Option (together with the
total Put Premium previously received) will be treated as short-term capital
gain. If the value of the Deposit on the date of the sale is in excess of the
amount the holder receives upon such sale, the holder will be treated as having
made a payment to the purchaser equal to the amount of such excess in exchange
for the purchaser's assumption of the holder's rights and obligations under the
Put Option. In such a case, the selling holder will recognize short-term capital
gain or loss in an amount equal to the difference between the total Put Premium
the holder previously received in respect of the Put Option and the amount of
the deemed payment made by the holder with respect to the assumption of the Put
Option. The amount of the deemed payment will also be treated as an amount
received in connection with the Deposit in determining the U.S. holder's gain or
loss in respect of the Deposit.
POSSIBLE ALTERNATIVE TAX TREATMENTS OF AN INVESTMENT IN REXS OR KNOCK-IN
REXS. Due to the absence of authorities that directly address the proper tax
treatment of the REXs and Knock-In REXs, no assurance can be given that the IRS
will accept, or that a court will uphold, the characterization and treatment
described above. A successful assertion of an alternative characterization of
the REXs or Knock-In REXs by the IRS could affect the timing and the character
of any income or loss with respect to such securities. It is possible, for
instance, that the entire coupon on the securities could be treated as giving
rise to ordinary income. Alternatively, if a REXs or a Knock-In REXs is not a
short-term REX, the IRS could seek to treat the REXs and Knock-In REXs as
contingent payment debt instruments. See "--Contingent Payment Debt Instruments"
above. Even if the Contingent Payment Regulations do not apply to the
securities, other alternative U.S. federal income tax characterizations or
treatments of the securities are also possible, which if applied could
significantly affect the timing and character of the income or loss with respect
to the securities.
U.S. holders are urged to consult their own tax advisers regarding the U.S.
federal income tax consequences of an investment in a REXs or a Knock-In REXs.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Information returns may be filed with the IRS in connection with payments on
the notes and the proceeds from a sale or other disposition of the notes. A U.S.
holder may be subject to U.S. backup withholding on these payments if it fails
to provide its tax identification number to the paying agent and comply with
certain certification procedures or otherwise establish an exemption from backup
withholding. The amount of any backup withholding from a payment to a U.S.
holder will be allowed as a credit against the holder's U.S. federal income tax
liability and may entitle the holder to a refund, provided that the required
information is furnished to the IRS.
TAX CONSEQUENCES FOR NON-U.S. HOLDERS
Unless otherwise noted in the applicable pricing supplement, a holder that
is not a U.S. holder will not be subject to U.S. withholding tax with respect to
payments on notes or securities, but may be subject to generally applicable
information reporting, and may also be subject to backup withholding
requirements with respect to such payments unless the holder complies with
certain certification and identification requirements as to the holder's foreign
status or an exception to the information reporting and backup withholding rules
otherwise applies.
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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 ADVISERS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE OWNERSHIP AND DISPOSITION OF THE NOTES AND THE
UNDERLYING STOCK, 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 and Holding are offering the ABN Notes(SM) and related guarantees on a
continuing basis exclusively through ABN AMRO Incorporated and LaSalle Financial
Services, Inc. to the extent either or both of them are named in the applicable
pricing supplement. In addition, we and Holding may offer the notes and related
guarantees through certain other agents to be named in the applicable pricing
supplement. The agents have 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. Each
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 an agent, in connection with sales of these securities resulting from a
solicitation that agent made or an offer to purchase the agent received, a
commission ranging from 0.5% 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 and Holding may also sell these securities to an agent as principal for
its own account at discounts to be agreed upon at the time of sale. That 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 that agent determines and as we will specify in
the applicable pricing supplement. An agent may offer the securities it has
purchased as principal to other dealers. That 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.
Each of the agents may be deemed to be an "underwriter" within the meaning
of the Securities Act of 1933, as amended. We and Holding have agreed to
indemnify the agents against certain liabilities, including liabilities under
the Securities Act of 1933, or to contribute to payments made in respect of
those liabilities.
To the extent the total aggregate principal amount of securities offered
pursuant to a pricing supplement is not purchased by investors, one or more of
our affiliates may agree to purchase the unsold portion and hold such securities
for its own investment.
We estimate that we will spend approximately $350,000 for printing, rating
agency, trustee 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. We have been advised by certain agents that they intend to make a
market in these securities, as applicable laws and regulations permit. The
agents are not obligated to make a market in these securities, however, and the
agents 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.
LFS and AAI are wholly owned indirect subsidiaries of the Bank. To the
extent either or both are named in the applicable pricing supplement, LFS and
AAI 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, LFS and AAI may offer and sell those securities in the
course of their businesses as broker-dealers. LFS and AAI 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. LFS and AAI may
use this prospectus supplement in connection with any of those transactions.
Neither LFS or AAI is obligated to make a market in any of these securities and
each may discontinue any market-making activities at any time without notice.
In addition, we may, at our sole option, extend the offering period for
securities offered pursuant to a pricing supplement. One or more of our or
Holding's affiliates may agree to purchase, for its own investment, any
securities that are not sold during the extended offering period. During an
extended offering period, securities will be offered at prevailing market prices
which may be above or below the initial issue price set forth in the applicable
pricing
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supplement. Our affiliates will not make a market in those securities during
that period, and are not obligated to do so after the distribution is complete.
Neither of the agents 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 agents 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 agents may sell more
securities than they are 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 over-allotment option.
The agents can close out a covered short sale by exercising an 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 agents will
consider, among other things, the open market price of these securities compared
to the price available under the over-allotment option. The agents may also sell
these securities or any other securities in excess of the over-allotment option,
creating a naked short position. The agents 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 agents 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 agents 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 agents
are not required to engage in these activities, and may end any of these
activities at any time.
Other selling group members include broker-dealers and other securities
firms that have executed dealer agreements with LFS and/or AAI. In the dealer
agreements, the selling group members have agreed to market and sell notes in
accordance with the terms of those agreements and all applicable laws and
regulations.
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LEGAL MATTERS
Davis Polk & Wardwell will pass upon the validity of the offered securities
with respect to United States Federal and New York law. Clifford Chance Limited
Liability Partnership will pass upon the validity of the offered securities with
respect to Dutch law. Davis Polk & Wardwell has in the past represented ABN AMRO
Holding N.V. and its affiliates, including us, and continues to represent ABN
AMRO Holding N.V. and its affiliates on a regular basis and in a variety of
matters.
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PROSPECTUS
DEBT SECURITIES
ABN AMRO BANK N.V.
FULLY AND UNCONDITIONALLY GUARANTEED BY
ABN AMRO HOLDING N.V.
We, ABN AMRO Bank N.V., may offer from time to time debt securities that are
fully and unconditionally guaranteed by ABN AMRO Holding N.V. This prospectus
describes the general terms of these securities and the general manner in which
we will offer these 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.
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE NOT
APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The securities are not insured by the Federal Deposit Insurance Corporation or
any other federal agency.
SEPTEMBER 29, 2006
TABLE OF CONTENTS
-----------------
Page
About This Prospectus..........................................................1
Where You Can Find Additional Information......................................2
Cautionary Statement on Forward-Looking Statements.............................3
Consolidated Ratios of Earnings to Fixed Charges...............................4
ABN AMRO Bank N.V..............................................................5
ABN AMRO Holding N.V...........................................................6
Use of Proceeds................................................................7
Description of Debt Securities.................................................8
Forms of Securities...........................................................19
The Depositary................................................................20
Plan of Distribution..........................................................22
Legal Matters.................................................................25
Experts.......................................................................26
Benefit Plan Investor Considerations..........................................27
Enforcement of Civil Liabilities..............................................28
ABOUT THIS PROSPECTUS
This prospectus is part of a Registration Statement that we, ABN AMRO Holding
N.V. and LaSalle Funding LLC filed with the Securities and Exchange Commission
(the "Commission") utilizing a "shelf" registration process. Under this shelf
process, we and Holding may, from time to time, sell the debt securities and
related guarantees described in the prospectus in one or more offerings in U.S.
dollars, foreign currencies or foreign currency units.
This prospectus provides you with a general description of the debt securities
and the related guarantees. Each time we and Holding 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, certain
affiliates of ours and Holding may offer and sell those securities in the course
of their businesses as broker-dealers. Such affiliates may act as 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 EFFECTENVERKEER).
As used in this prospectus, the "Bank," "we," "us," and "our" refer to ABN AMRO
Bank N.V. and "Holding" refers to ABN AMRO Holding N.V.
1
WHERE YOU CAN FIND ADDITIONAL INFORMATION
Holding is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in accordance therewith,
Holding files reports and other information with the Commission. You may read
and copy these documents at the SEC Headquarters Public Reference Room at 100 F
Street, NE, Washington, D.C. 20549 (tel: 202-551-8090). Copies of this material
can also be obtained from the Public Reference Room of the SEC at 100 F Street,
NE, 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 Holding that are filed through the SEC's Electronic Data Gathering,
Analysis and Retrieval (EDGAR) System. This website can be accessed at
www.sec.gov. You can find information Holding has filed with the SEC by
reference to file number 1-14624.
This prospectus is part of a registration statement we, Holding and LaSalle
Funding LLC 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 Holding and the securities we and Holding are
offering. Statements in this prospectus concerning any document we and Holding
filed as an exhibit to the registration statement or that Holding 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 Holding
files with it, which means that we and Holding can disclose important
information to you by referring you to those publicly available documents. The
information that we and Holding incorporate by reference in this prospectus is
considered to be part of this prospectus. Because we and Holding 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 and Holding 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, all subsequent
Annual Reports filed on Form 20-F and any future filings we or Holding make with
the SEC (including any Form 6-Ks Holding subsequently files with the SEC and
specifically incorporates by reference into this prospectus) under Section
13(a), 13(c), 14 or 15(d) of the Exchange Act that are identified in such filing
as being specifically incorporated by reference into the Registration Statement
of which this prospectus is a part until we and Holding 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) Annual Report on Form 20-F of ABN AMRO Holding N.V. for the year ended
December 31, 2005, filed on April 3, 2006; and
(b) Reports on Form 6-K of ABN AMRO Holding N.V. dated April 26, 2006 (2
filings: (i) ABN AMRO first quarter results and consolidated ratio of
earnings to fixed charges, and (ii) ABN AMRO pro-forma 2005 results
under new structure), June 12, 2006, June 30, 2006, August 2, 2006,
August 9, 2006 (ABN AMRO first half-year results and consolidated
ratio of earnings to fixed charges), August 15, 2006 (ABN AMRO to
start buying back its own shares in line with earlier announcement),
September 13, 2006 and September 14, 2006.
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
Gustav Mahlerlaan 10
P.O. Box 283
1000 EA Amsterdam, The Netherlands
(31-20) 6 28 78 35
2
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
Certain statements included in this prospectus are forward-looking statements.
We also may make forward-looking statements in other documents filed with the
SEC that are incorporated by reference into this prospectus. Forward-looking
statements can be identified by the use of forward-looking terminology such as
"believe", "expect", "may", "intend", "will", "should", "anticipate",
"Value-at-Risk", or by the use of similar expressions or variations on such
expressions, or by the discussion of strategy or objectives. Forward-looking
statements are based on current plans, estimates and projections, and are
subject to inherent risks, uncertainties and other factors which could cause
actual results to differ materially from the future results expressed or implied
by such forward-looking statements.
In particular, this prospectus and certain documents incorporated by reference
into this prospectus include forward-looking statements relating but not limited
to management objectives, implementation of our strategic initiatives, trends in
results of operations, margins, costs, return on equity, and risk management,
including our potential exposure to various types of risk including market risk,
such as interest rate risk, currency risk and equity risk. For example, certain
of the market risk disclosures are dependent on choices about key model
characteristics, assumptions and estimates, and are subject to various
limitations. By their nature, certain market risk disclosures are only estimates
and could be materially different from what actually occurs in the future.
Some of the risks inherent in forward-looking statements are identified in "Item
3. Key Information - D. Risk factors" in Holding's annual report on Form 20-F
for the year ended December 31, 2005. Other factors that could cause actual
results to differ materially from those estimated by the forward-looking
statements in this prospectus include, but are not limited to:
o general economic and business conditions in the Netherlands, Italy,
the European Union, the United States, Brazil and other countries or
territories in which we operate;
o changes in applicable laws and regulations, including taxes;
o regulations and monetary, interest rate and other policies of central
banks, particularly the Dutch Central Bank, the Bank of Italy, the
European Central Bank, the US Federal Reserve Board and the Brazilian
Central Bank;
o changes or volatility in interest rates, foreign exchange rates
(including the Euro-US dollar rate), asset prices, equity markets,
commodity prices, inflation or deflation;
o the effects of competition and consolidation in the markets in which
we operate, which may be influenced by regulation, deregulation or
enforcement policies;
o changes in consumer spending and savings habits, including changes in
government policies which may influence investment decisions;
o our ability to hedge certain risks economically;
o our success in managing the risks involved in the foregoing, which
depends, among other things, on our ability to anticipate events that
cannot be captured by the statistical models we use; and
o force majeure and other events beyond our control.
Other factors could also adversely affect our results or the accuracy of
forward-looking statements in this prospectus, and you should not consider the
factors discussed here or in Item 3 of Holding's annual report on Form 20-F for
the year ended December 31, 2005 to be a complete set of all potential risks or
uncertainties. We have economic, financial market, credit, legal and other
specialists who monitor economic and market conditions and government policies
and actions. However, because it is difficult to predict with accuracy any
changes in economic or market conditions or in governmental policies and
actions, it is difficult for us to anticipate the effects that such changes
could have on our financial performance and business operations.
The forward-looking statements made in this prospectus speak only as of the date
of this prospectus. We do not intend to publicly update or revise these
forward-looking statements to reflect events or circumstances after the date of
this prospectus, and we do not assume any responsibility to do so. You should,
however, consult any further disclosures of a forward-looking nature we made in
other documents filed with the SEC that are incorporated by reference into this
prospectus. This discussion is provided as permitted by the Private Securities
Litigation Reform Act of 1995.
3
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth Holding's consolidated ratios of earnings to
fixed charges for the periods indicated under U.S. GAAP.
YEAR ENDED DECEMBER 31,
--------------------------------------------
2005 2004 2003 2002 2001
-------- -------- -------- -------- --------
Excluding Interest on Deposits(1) 1.49 1.46 2.66 1.89 1.45
Including Interest on Deposits(1) 1.15 1.13 1.36 1.21 1.08
---------------------
(1) Deposits include bank and total customer accounts. See the consolidated
financial statements incorporated by reference herein.
4
ABN AMRO BANK N.V.
We are a prominent international banking group offering a wide range of banking
products and financial services on a global basis through our network of 3,557
offices and branches in 58 countries and territories as of year-end 2005. We are
one of the largest banking groups in the world, with total consolidated assets
of (euro) 880.8 billion at December 31, 2005. We are the largest banking group
in the Netherlands and we have a substantial presence in Brazil and the
Midwestern United States. We are one of the largest foreign banking groups in
the United States, based on total assets held as of December 31, 2005. Our
principal executive offices are at Gustav Mahlerlaan 10, 1082 PP Amsterdam, The
Netherlands, and our telephone number is (31-20) 628 9393.
5
ABN AMRO HOLDING N.V.
ABN AMRO Holding N.V. is incorporated under the laws of The Netherlands by deed
of May 30, 1990 as the holding company of the Bank. The Articles of Association
of Holding were last amended by a notarial deed executed by Mr. van Helden,
civil law notary in Amsterdam, on June 9, 2005. Holding's main purpose is to own
the Bank and its subsidiaries. Holding owns 100 percent of the shares of the
Bank and is jointly and severally liable for all liabilities of the Bank.
Holding is listed on Euronext and the New York Stock Exchange. All of the
securities issued by the Bank hereunder after the date hereof will be fully and
unconditionally guaranteed by Holding. Holding's principal executive offices are
at Gustav Mahlerlaan 10, 1082 PP Amsterdam, The Netherlands, and Holding's
telephone number is (31-20) 628 9393.
6
USE OF PROCEEDS
Unless the applicable prospectus supplement states otherwise, we will use the
net proceeds from the sale of the securities we offer by this prospectus for
general corporate purposes. General corporate purposes may include additions to
working capital, investments in or extensions of credit to our subsidiaries and
the repayment of indebtedness.
7
DESCRIPTION OF DEBT SECURITIES
The following description of debt securities sets forth the material terms and
provisions of the debt securities to which any prospectus supplement may relate.
Our senior debt securities would be issued under a senior indenture dated
September 15, 2006 among us, Wilmington Trust Company, as trustee, Citibank,
N.A., as securities administrator, and Holding, as guarantor, a copy of which
has been filed as an exhibit to the registration statement of which this
prospectus is a part. Our subordinated debt securities would be issued under a
subordinated indenture between us, a trustee and a securities administrator,
each to be named in the applicable prospectus supplement. The subordinated
indenture, a form of which has been filed as an exhibit to the registration
statement of which this prospectus is a part, will be executed at the time we
issue any debt securities thereunder. Any supplemental indentures will be filed
with the SEC on a Form 6-K or by a post-effective amendment to the registration
statement of which this prospectus is a part.
All of the indentures are sometimes referred to in this prospectus collectively
as the "indentures" and each, individually, as an "indenture." The senior
indenture is sometimes referred to in this prospectus as the "senior indenture."
The subordinated indenture is sometimes referred to in this prospectus as the
"subordinated indenture." The particular terms of the debt securities offered by
any prospectus supplement, and the extent to which the general provisions
described below may apply to the offered debt securities, will be described in
the applicable prospectus supplement. The indentures will be qualified under the
Trust Indenture Act of 1939, as amended. The terms of the debt securities will
include those stated in the indentures and those made part of the indentures by
reference to the Trust Indenture Act.
Because the following summaries of the material terms and provisions of the
indentures and the related debt securities are not complete, you should refer to
the forms of the indentures and the debt securities for complete information on
some of the terms and provisions of the indentures, including definitions of
some of the terms used below, and the debt securities. The senior indenture and
subordinated indenture are substantially identical to one another, except for
specific provisions relating to subordination contained in the subordinated
indenture.
GENERAL
The senior debt securities will be our direct, unsecured and unsubordinated
general obligations and will have the same rank in liquidation as all of our
other unsecured and unsubordinated debt. The subordinated debt securities will
be our unsecured obligations, subordinated in right of payment to the prior
payment in full of all our senior indebtedness with respect to such series, as
described below under "Subordination of the Subordinated Debt Securities" and in
the applicable prospectus supplement.
GUARANTEE
Holding will fully and unconditionally guarantee payment in full to the holders
of our debt securities. The guarantee is set forth in, and forms part of, the
indenture under which our debt securities will be issued. If, for any reason, we
do not make any required payment in respect of our debt securities when due, the
guarantor will cause the payment to be made to or to the order of the applicable
trustee. The guarantee will be on a senior basis when the guaranteed debt
securities are issued under the senior indenture, and on a subordinated basis to
the extent the guaranteed debt securities are issued under the subordinated
indenture. The extent to which the guarantee is subordinated to other
indebtedness of Holding will be substantially the same as the extent to which
our subordinated debt is subordinated to our other indebtedness as described
below under "--Subordination of the Subordinated Debt Securities." Holders of
our debt securities may sue Holding to enforce its rights under the guarantee
without first suing us or any other person or entity. Holding may, without the
consent of the holders of the debt securities, assume all of our rights and
obligations under the debt securities and upon such assumption, we will be
released from our liabilities under the Indenture and the debt securities.
PAYMENTS
We may issue debt securities from time to time in one or more series. The
provisions of the indentures allow us to "reopen" a previous issue of a series
of debt securities and issue additional debt securities of that series. The debt
8
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, a floating
rate, or a rate which varies during the lifetime of the debt security. 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 THE APPLICABLE PROSPECTUS SUPPLEMENT
The applicable prospectus supplement will contain, where applicable, the
following terms of and other information relating to any offered debt
securities:
o the specific designation;
o the aggregate principal amount, purchase price and denomination;
o the currency in which the debt securities are denominated and/or in
which principal, premium, if any, and/or interest, if any, is payable;
o the 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;
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 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 applicable trustees,
depositaries, authenticating or paying agents, transfer agents or
registrars;
o certain United States federal income tax consequences and Netherlands
income tax consequences;
o whether certain payments on the debt securities will be guaranteed
under a financial insurance guaranty policy and the terms of that
guaranty;
o any applicable selling restrictions; and
o any other specific terms of the debt securities, including any
modifications to or additional events of default, covenants or
modified or eliminated acceleration rights, and any terms required by
or advisable
9
under applicable laws or regulations, including laws and regulations
relating to attributes required for the debt securities to be afforded
certain capital treatment for bank regulatory or other purposes.
Some of the debt securities may be issued as original issue discount debt
securities. Original issue discount securities bear no interest or are issued at
a price which represents a discount to their principal amount. The applicable
prospectus supplement 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 or requirements
provided in the applicable indenture or the supplemental indenture or issuer
order under which that series of debt securities is issued. 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 indentures provide that neither we nor Holding will merge or consolidate
with any other person and will not sell, lease or convey all or substantially
all of its assets to any other person, unless:
o we or Holding, as applicable, will be the continuing legal entity; or
o the successor legal entity or person that acquires all or substantially all
of our or Holding's assets, as applicable (i) will expressly assume all of
our or Holding's obligations, as applicable, under the applicable indenture
and the debt securities issued under such indenture, and (ii) will be
incorporated and existing under the laws of the Netherlands, or a member
state of the European Union or the Organization for Economic Co-Operation
and Development, or, provided no adverse U.S. tax consequences to U.S.
holders result therefrom, any other jurisdiction; and
o immediately after the merger, consolidation, sale, lease or conveyance,
that person or that successor legal entity will not be in default in the
performance of the applicable covenants and conditions of the applicable
indenture.
ABSENCE OF PROTECTIONS AGAINST ALL POTENTIAL ACTIONS OF THE BANK OR HOLDING
There are no covenants or other provisions in the indentures that would afford
holders of debt securities additional protection in the event of a
recapitalization transaction, a change of control of us or Holding 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 us or
Holding or a sale, lease or conveyance of all or substantially all of our or
Holding's, as the case may be, 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
Each indenture provides holders of debt securities with remedies if we or
Holding, as the case may be, fail to perform specific obligations, such as
making payments on our debt securities, or if we or Holding, as the case may be,
become bankrupt. Holders should review these provisions and understand which of
our or Holding's actions trigger an event of default and which actions do not.
Each 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 each indenture, with respect to any series
of debt securities issued under that indenture, as any one or more of the
following events, subject to modification in a supplemental indenture, each of
which we refer to in this prospectus as an event of default, having occurred and
be continuing:
10
o default is made for more than 30 days in the payment of interest,
premium or principal in respect of the securities;
o we or Holding, as the case may be, fail to perform or observe any
other obligations applicable to us or Holding, respectively, under the
securities, and such failure has continued for a period of 60 days
next following the service on us and Holding of notice requiring the
same to be remedied except that the failure to file with the
applicable Trustee certain information required to be filed with such
Trustee pursuant to the Trust Indenture Act of 1939, as amended, shall
not constitute an event of default and does not give a right under the
applicable indenture to accelerate or declare any security issued
under such indenture due and payable. Although the Trustee may bring
suit to enforce such filing obligation, the applicable indenture would
not provide for a remedy of acceleration in that circumstance.
o we or Holding, as the case may be, are declared bankrupt, or a
declaration in respect of us or Holding is made under Chapter X of the
Act on the Supervision of the Credit System (WET TOEZICHT KREDIETWEZEN
1992) of The Netherlands;
o an order is made or an effective resolution is passed for our or
Holding's winding up or liquidation, as the case may be, unless this
is done in compliance with the "Covenant Restricting Mergers and Other
Significant Corporate Actions" described above; or
o any other event of default provided in the supplemental indenture or
issuer order, if any, under which that series of debt securities is
issued.
ACCELERATION OF DEBT SECURITIES UPON AN EVENT OF DEFAULT
Each indenture provides that, unless otherwise set forth in a supplemental
indenture:
o if an event of default occurs due to the default in payment of
principal of, or any premium or interest on, any series of debt
securities issued under such indenture, or due to the default in the
performance or breach of any other covenant or warranty of us or
Holding, as the case may be, applicable to that series of debt
securities but not applicable to all outstanding debt securities
issued under that indenture, other than a covenant for which the
applicable indenture specifies that violation thereof does not give a
right to accelerate or declare due and payable any security issued
under such indenture, occurs and is continuing, either the applicable
trustee or the holders of not less than 25% in aggregate principal
amount of the outstanding debt securities of each affected series
issued under that indenture, voting as one class, by notice in writing
to us, may declare the principal of and accrued interest on the debt
securities of such affected series (but not any other debt securities
issued under that indenture) to be due and payable immediately; and
o if an event of default occurs due to specified events of bankruptcy of
us or Holding or due to an order or effective resolution for our or
Holding's liquidation or winding up, as the case may be, or due to a
default in the performance of any other of the covenants or agreements
in such indenture applicable to all outstanding debt securities issued
under that indenture, other than a covenant or agreement for which the
applicable indenture specifies that violation thereof does not give a
right to accelerate or declare due and payable any security issued
under such indenture, occurs and is continuing, either the applicable
trustee or the holders of not less than 25% in aggregate principal
amount of all outstanding debt securities issued under that indenture
for which any applicable supplemental indenture does not prevent
acceleration under the relevant circumstances, voting as one class, by
notice in writing to us, may declare the principal of all debt
securities issued under that indenture and interest accrued on those
debt securities to be due and payable immediately.
ANNULMENT OF ACCELERATION AND WAIVER OF DEFAULTS
In some circumstances, if any and all events of default under the applicable
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 affected outstanding
11
debt securities issued under that indenture, voting as one class, may annul past
declarations of acceleration or waive past defaults of the debt securities.
INDEMNIFICATION OF TRUSTEE FOR ACTIONS TAKEN ON YOUR BEHALF
Each indenture provides that the applicable 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. In addition, each indenture contains a
provision entitling the applicable trustee, subject to the duty of the trustee
to act with the required standard of care during a default, to be indemnified by
the holders of debt securities issued under the indenture before proceeding to
exercise any right or power at the request of holders. Subject to these
provisions and specified 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.
LIMITATION ON ACTIONS BY YOU AS AN INDIVIDUAL HOLDER
Each indenture provides that no individual holder of debt securities may
institute any action against us or Holding 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 applicable
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 issued under that
indenture, treated as one class, must have:
o requested the applicable trustee to institute that action, and
o offered the applicable trustee reasonable indemnity;
o the applicable 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 issued under that indenture, voting
as one class, must not have given directions to the applicable trustee
inconsistent with those of the holders referred to above.
Each indenture contains a covenant that we will file annually with the
applicable trustee a certificate of no default or a certificate specifying any
default that exists.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
We and Holding each have the ability to eliminate most or all of our obligations
on any series of debt securities prior to maturity if we or Holding, as
applicable, comply with the following provisions:
DISCHARGE OF INDENTURE. We or Holding may discharge all of our obligations,
other than as to transfer and exchanges, under the applicable indenture after we
have or it has, as applicable:
o paid or caused to be paid the principal of and interest on all of the
outstanding debt securities issued under that indenture in accordance
with their terms;
o delivered to the applicable securities administrator or applicable
trustee for cancellation all of the outstanding debt securities issued
under that indenture; or
o irrevocably deposited with the applicable securities administrator or
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 applicable indenture that have either
12
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. However, 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
applicable indenture relating only to that series of debt securities.
DEFEASANCE OF A SERIES OF SECURITIES AT ANY TIME. We or Holding 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
in this prospectus. We and Holding may be released with respect to any
outstanding series of debt securities from the obligations imposed by 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 or Holding irrevocably deposit with the relevant applicable trustee
or securities administrator 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; and
o we or Holding deliver to the relevant applicable 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.
REDEMPTIONS AND REPURCHASES OF DEBT SECURITIES
OPTIONAL REDEMPTION. The prospectus supplement will indicate the terms of our
option to redeem the debt securities, if any. Unless otherwise provided in the
applicable prospectus supplement, we will mail a notice of redemption 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 prospectus supplement, to the depositary, as holder
of the global debt securities. The debt securities will not be subject to any
sinking fund.
REPAYMENT AT OPTION OF HOLDER. If applicable, the prospectus supplement relating
to a debt security will indicate that the holder has the option to have us repay
that debt security on a date or dates specified prior to its maturity date.
Unless otherwise specified in the applicable prospectus supplement, the
repayment price will be equal to 100% of the principal amount of the debt
security, together with accrued interest to the date of repayment. For debt
securities issued with original issue discount, the prospectus supplement will
specify the amount payable upon repayment.
Unless otherwise provided in the applicable prospectus supplement, for us to
repay a debt security, the paying agent must receive the following at least 15
days but not more than 30 days prior to the repayment date:
o the debt security with the form entitled "Option to Elect Repayment"
on the reverse of the debt security 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 debt
security, the principal amount of the debt security, the principal
amount of the debt security to be repaid, the certificate number or a
description of the tenor and
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terms of the debt security, a statement that the option to elect
repayment is being exercised and a guarantee that the debt security to
be repaid, together with the duly completed form entitled "Option to
Elect Repayment" on the reverse of the debt security, 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 debt security 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 debt security will be
irrevocable. Unless otherwise specified in the applicable prospectus supplement,
the holder may exercise the repayment option for less than the entire principal
amount of the debt security but, in that event, the principal amount of the debt
security remaining outstanding after repayment must be an authorized
denomination.
SPECIAL REQUIREMENTS FOR OPTIONAL REPAYMENT OF GLOBAL DEBT SECURITIES. If a debt
security is represented by a global debt security, the depositary or the
depositary's nominee will be the holder of the debt security 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 debt security, the beneficial owner of the debt security must
instruct the broker or other direct or indirect participant through which it
holds an interest in the debt security 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 debt security 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 debt securities at any price in the open
market or otherwise. Debt securities so purchased by us may, at our discretion,
be held or resold or surrendered to the relevant applicable trustee for
cancellation.
MODIFICATION OF THE INDENTURES
MODIFICATION WITHOUT CONSENT OF HOLDERS. We, Holding and the relevant applicable
trustee may enter into supplemental indentures without the consent of the
holders of debt securities issued under the applicable indenture to:
o secure any debt securities issued under that indenture;
o evidence the assumption by a successor corporation of our or
Holding's, as the case may be, obligations under that indenture;
o add covenants for the protection of the holders of debt securities
issued under that indenture;
o cure any ambiguity or correct any inconsistency;
o establish the forms or terms of debt securities of any series to be
issued under that indenture; or
o evidence the acceptance of appointment by a successor applicable
trustee.
MODIFICATION WITH CONSENT OF HOLDERS. We, Holding and the applicable 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 issued
under the applicable indenture, voting as one class, may add any provisions to,
or change in any manner or eliminate any of the provisions of, that indenture or
modify in any manner the rights of the holders of those debt securities.
However, we, Holding and the applicable trustee may not make any of the
following changes to any outstanding debt security issued under the applicable
indenture without the consent of each holder of debt securities issued under
that indenture that would be affected by the change:
o extend the final maturity of the security;
o reduce the principal amount;
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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 on the security 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 issued under
that indenture may convert or exchange those debt securities for stock
or other securities 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 those
debt securities;
o impair the right of any holder of debt securities issued under that
indenture to institute suit for the enforcement of any payment on any
such debt security or the guarantee when due; or
o reduce the percentage of debt securities issued under that indenture
the consent of whose holders is required for modification of that
Indenture.
SUBORDINATION OF THE SUBORDINATED DEBT SECURITIES
Our subordinated debt securities will, to the extent set forth in the applicable
subordinated indenture, be subordinate in right of payment to the prior payment
in full of all our senior indebtedness, whether outstanding at the date of the
subordinated indenture or incurred after that date. In the event of:
o our insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in
connection therewith, or relative to our creditors, as such, or to our
assets; or
o our voluntary or involuntary liquidation, dissolution or other winding
up, whether or not involving insolvency or bankruptcy; or
o any assignment for the benefit of creditors or any other marshalling
of our assets and liabilities,
then the holders of our senior indebtedness will be entitled to receive payment
in full of all amounts due or to become due on or in respect of all our senior
indebtedness, or provision will be made for the payment in cash, before the
holders of our subordinated debt securities are entitled to receive or retain
any payment on account of principal of, or any premium or interest on, or any
additional amounts with respect to, the subordinated debt securities. The
holders of our senior indebtedness will be entitled to receive, for application
to the payment of the senior indebtedness, any payment or distribution of any
kind or character, whether in cash, property or securities, including any
payment or distribution which may be payable or deliverable by reason of the
payment of any of our other indebtedness being subordinated to the payment of
our subordinated debt securities. This payment may be payable or deliverable in
respect of our subordinated debt securities in any case, proceeding,
dissolution, liquidation or other winding up event.
By reason of subordination, in the event of our liquidation or insolvency,
holders of our senior indebtedness and holders of our other obligations that are
not subordinated to our senior indebtedness may recover more ratably than the
holders of our subordinated debt securities.
Subject to the payment in full of all our senior indebtedness, the rights of the
holders of our subordinated debt securities will be subrogated to the rights of
the holders of our senior indebtedness to receive payments or distributions of
cash, our property or securities applicable to our senior indebtedness until the
principal of, any premium and interest on, and any additional amounts with
respect to, our subordinated debt securities have been paid in full.
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No payment of principal, including redemption and sinking fund payments, of, or
any premium or interest on, or any additional amounts with respect to our
subordinated debt securities, or payments to acquire these securities, other
than pursuant to their conversion, may be made:
o if any of our senior indebtedness is not paid when due and any
applicable grace period with respect to the default has ended and the
default has not been cured or waived or ceased to exist, or
o if the maturity of any of our senior indebtedness has been accelerated
because of a default.
The subordinated indentures do not limit or prohibit us from incurring
additional senior indebtedness, which may include indebtedness that is senior to
our subordinated debt securities, but subordinate to our other obligations.
The subordinated indentures provide that these subordination provisions, insofar
as they relate to any particular issue of our subordinated debt securities, may
be changed prior to the issuance. Any change would be described in the
applicable prospectus supplement.
REPLACEMENT OF DEBT SECURITIES
At the expense of the holder, we will replace any debt securities that become
mutilated, destroyed, lost or stolen or are apparently destroyed, lost or
stolen. The mutilated debt securities must be delivered to the applicable
securities administrator or agent or satisfactory evidence of the destruction,
loss or theft of the debt securities must be delivered to us, Holding, the
applicable securities administrator and trustee and any agent. At the expense of
the holder, an indemnity that is satisfactory to us and our agents, Holding, the
applicable securities administrator and trustee and any agent may be required
before a replacement note will be issued.
NOTICES
Notices to holders of the securities will be given by mailing such notices to
each holder by first class mail, postage prepaid, or by overnight delivery,
courier or facsimile, at the respective address of each holder as that address
appears upon our books. Notices given to the Depositary, as holder of the
registered debt 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.
TAX REDEMPTION
Unless otherwise specified in the applicable prospectus supplement, if we are
obligated to pay additional amounts under the applicable indenture as set forth
below, we may redeem, in whole but not in part, any of our debt securities
issued under that indenture at our option at any time prior to maturity, upon
the giving of a notice of redemption as described below, at a redemption price
equal to 100% of the principal amount of those debt securities (or if the debt
securities are issued with original issue discount, a portion of the principal,
as specified in the applicable prospectus supplement) together with accrued
interest to the date fixed for redemption and any additional amounts (as defined
below), or at any redemption price otherwise specified in the applicable
prospectus supplement, if we determine that, as a result of any change in or
amendment to the laws affecting taxation after the date of the relevant
prospectus supplement or, if applicable, pricing supplement relating thereto (or
any regulations or rulings promulgated thereunder) of The Netherlands or of any
political subdivision or taxing authority thereof or therein (or the
jurisdiction of residence or incorporation of any successor corporation), or any
change in official position regarding the application or interpretation of those
laws, regulations or rulings, which change or amendment becomes effective on or
after the date of the applicable prospectus supplement or, if applicable,
pricing supplement relating thereto, we have or will become obligated to pay
additional amounts (as defined below under "-- Payment of Additional Amounts")
with respect to any of those debt securities as described below under "--
Payment of Additional Amounts." Prior to the giving of any notice of redemption
pursuant to this paragraph, we shall deliver to the applicable trustee and the
applicable securities administrator:
o a certificate stating that we are entitled to effect the redemption
and setting forth a statement of facts showing that the conditions
precedent to our right to so redeem have occurred; and
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o an opinion of independent counsel reasonably satisfactory to the
applicable trustee and the applicable securities administrator to the
effect that we are entitled to effect the redemption based on the
statement of facts set forth in the certificate.
Notice of redemption will be given not less than 30 nor more than 60 days prior
to the date fixed for redemption, which date and the applicable redemption price
will be specified in the notice; PROVIDED that no notice of redemption shall be
given earlier than 60 days prior to the earliest date on which we would be
obligated to pay the additional amounts if a payment in respect of those debt
securities were then due. Notice will be given in accordance with "-- Notices"
above.
PAYMENT OF ADDITIONAL AMOUNTS
Except to the extent otherwise specified in the applicable prospectus
supplement, we will, with respect to any of our debt securities and subject to
certain exceptions and limitations set forth below, pay such additional amounts
(the "additional amounts") to holders of the debt securities as may be necessary
in order that the net payment of the principal of the securities and any other
amounts payable on the debt securities, after withholding for or on account of
any present or future tax, assessment or governmental charge imposed upon or as
a result of such payment by The Netherlands, or the jurisdiction of residence or
incorporation of any successor corporation, or any political subdivision or
taxing authority thereof or therein (a "relevant jurisdiction"), will not be
less than the amount provided for in the debt securities to be then due and
payable. We will not, however, be required to make any payment of additional
amounts for or on account of:
o any such tax, assessment or other governmental charge that would not
have been so imposed but for (i) the existence of any present or
former connection between such holder (or between a fiduciary,
settlor, beneficiary, member or shareholder, if such holder is an
estate, a trust, a partnership or a corporation) and The Netherlands
and its possessions or any other relevant jurisdiction, including,
without limitation, such holder (or such fiduciary, settlor,
beneficiary, member or shareholder) being or having been a citizen or
resident thereof, being or having been engaged in a trade or business
or present therein or having, or having had, a permanent establishment
therein, or (ii) the presentation, where presentation is required, by
the holder of a debt security for payment on a date more than 30 days
after the date on which such payment became due and payable or the
date on which payment thereof is duly provided for, whichever occurs
later;
o any capital gain, estate, inheritance, gift, sales, transfer or
personal property tax or any similar tax, assessment or governmental
charge;
o any tax, assessment or other governmental charge that is payable
otherwise than by withholding from payments on or in respect of the
debt securities;
o any tax, assessment or other governmental charge that is imposed on a
payment to an individual and that is required to be made pursuant to
European Council Directive 2003/48/EC or any other directive
implementing the conclusions of the ECOFIN Council meeting of November
26-27, 2000 on the taxation of savings income, or any law implementing
or complying with, or introduced in order to conform to, such
directives;
o any tax, assessment or other governmental charge required to be
withheld by any paying agent from any payment of principal or other
amounts payable, or interest on the debt securities, to the extent
that such payment can be made without such withholding by presentation
of the debt securities to any other paying agent;
o any tax, assessment or other governmental charge that would not have
been imposed but for a holder's failure to comply with a request
addressed to the holder or, if different, the direct nominee of a
beneficiary of the payment, to comply with certification, information
or other reporting requirements concerning the nationality, residence
or identity of the holder or beneficial owner of securities, if such
compliance is required by statute or by regulation of the relevant
jurisdiction, as a precondition to relief or exemption from such tax,
assessment or other governmental charge; or
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o any combination of the items listed above;
nor shall we pay additional amounts with respect to any payment on the debt
securities to a holder who is a fiduciary, an entity treated as a partnership or
any other person that is not the sole beneficial owner of such debt security to
the extent such payment would be required by the laws of the relevant
jurisdiction to be included in the income, for tax purposes, of a beneficiary or
settlor with respect to such fiduciary or a member of such partnership or a
beneficial owner who would not have been entitled to the additional amounts had
such beneficiary, settlor, member or beneficial owner been the holder of the
debt securities.
NEW YORK LAW TO GOVERN
The indentures and the debt securities will be governed by, and construed in
accordance with, the laws of the State of New York.
INFORMATION CONCERNING THE APPLICABLE TRUSTEE
Information about the applicable indenture trustee for the subordinated
indenture will be set forth in the applicable prospectus supplement. The trustee
under one indenture may also serve as trustee under the other indenture. We and
our subsidiaries maintain ordinary banking relationships and custodial
facilities with the trustee under the senior indenture and affiliates of the
trustee.
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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 in registered form, where
our and Holding's obligation runs to the holder of the security named on the
face of the security. Definitive securities name you or your nominee as the
owner of the security 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 applicable 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. 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 under "--Global
Securities."
Our obligations, as well as the obligations of the applicable trustee under any
indenture and the obligations, if any, of any agents of ours or any agents of
such trustee run only to the persons or entities named as holders of the
securities in the relevant security register. Neither we nor any applicable
trustee, other agent of ours or agent of such trustee have obligations to
investors who hold beneficial interest in global securities, in street name or
by any other indirect means.
Upon making a payment or giving a notice to the holder as required by the terms
of that security, we will have no further responsibility for that payment or
notice even if that holder is required, under agreements with depositary
participants or customers or by law, to pass it along to the indirect owners of
beneficial interests in that security but does not do so. Similarly, if we want
to obtain the approval or consent of the holders of any securities for any
purpose, we would seek the approval only from the holders, and not the indirect
owners, of the relevant securities. Whether and how the holders contact the
indirect owners would be governed by the agreements between such holders and the
indirect owners.
References to "you" in this prospectus refer to those who invest in the
securities being offered by this prospectus, whether they are the direct holders
or only indirect owners of beneficial interests in those 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 its 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.
We anticipate that the provisions described under "The Depositary" below will
apply to all depositary arrangements, unless otherwise described in the
prospectus supplement relating to those securities.
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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 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 direct participants, and it facilitates the settlement of transactions among
its direct 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 direct participants
include both U.S. and non-U.S. securities brokers and dealers, including the
agents, banks, trust companies, clearing corporations and other organizations,
some of whom and/or their representatives own the depositary. Access to the
depositary's book-entry system is also available to others, such as both U.S.
and non-U.S. brokers and dealers, banks, trust companies and clearing
corporations, such as the Euroclear operator and Clearstream, Luxembourg, that
clear through or maintain a custodial relationship with a participant, either
directly or indirectly. The rules applicable to the depositary and its
participants are on file with the SEC.
Purchases of the securities under the depositary's system must be made by or
through its direct participants, which will receive a credit for the securities
on the depositary's records. The ownership interest of each actual purchaser of
each security (the "beneficial owner") is in turn to be recorded on the records
of direct and indirect participants. Beneficial owners will not receive written
confirmation from the depositary of their purchase, but beneficial owners are
expected to receive written confirmations providing details of the transaction,
as well as periodic statements of their holdings, from the direct or indirect
participants through which the beneficial owner entered into the transaction.
Transfers of ownership interests in the securities are to be made by entries on
the books of direct and indirect participants acting on behalf of beneficial
owners. Beneficial owners will not receive certificates representing their
ownership interests in securities, except in the event that use of the
book-entry system for the securities is discontinued.
To facilitate subsequent transfers, all securities deposited with the depositary
are registered in the name of the depositary's partnership nominee, Cede & Co,
or such other name as may be requested by the depositary. The deposit of
securities with the depositary and their registration in the name of Cede & Co.
or such other nominee of the depositary do not effect any change in beneficial
ownership. The depositary has no knowledge of the actual beneficial owners of
the securities; the depositary's records reflect only the identity of the direct
participants to whose accounts the securities are credited, which may or may not
be the beneficial owners. The participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by the depositary to direct
participants, by direct participants to indirect participants, and by direct
participants and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Neither the depositary nor Cede & Co. (nor such other nominee of the depositary)
will consent or vote with respect to the securities unless authorized by a
direct participant in accordance with the depositary's procedures. Under its
usual procedures, the depositary mails an omnibus proxy to us as soon as
possible after the applicable record date. The omnibus proxy assigns Cede &
Co.'s consenting or voting rights to those direct participants identified in a
listing attached to the omnibus proxy to whose accounts the securities are
credited on the record date.
Redemption proceeds, distributions, and dividend payments on the securities will
be made to Cede & Co or such other nominee as may be requested by the
depositary. The depositary's practice is to credit direct participants' accounts
upon the depositary's receipt of funds and corresponding detail information from
us or any agent of ours, on the date payable in accordance with their respective
holdings shown on the depositary's records. Payments by participants to
beneficial owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of customers in
bearer form or registered in "street name," and will be the responsibility of
such participant and not of the depositary or its nominee, the applicable
trustee, any agent of ours, or us, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payments of
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redemption proceeds, distributions, and dividend payments to Cede & Co. or such
other nominee as may be requested by the depositary is the responsibility of us
or of any paying agent of ours, disbursement of such payments to direct
participants will be the responsibility of the depositary, and disbursement of
such payments to the beneficial owners will be the responsibility of direct and
indirect participants.
The depositary may discontinue providing its services as depositary with respect
to the securities at any time by giving reasonable notice to us or our agent.
Under such circumstances, in the event that a successor depositary is not
obtained by us within 90 days, security certificates are required to be printed
and delivered. In addition, under the terms of the indentures, 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. We understand, however,
that, under current industry practices, the depositary would notify its
participants of our request, but will only withdraw beneficial interests from a
global security at the request of each participant. We would issue definitive
certificates in exchange for any such interests withdrawn. 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, warrant agent, unit agent 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.
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.
The information in this section concerning the depositary and depositary's
book-entry system has been obtained from sources we believe to be reliable, but
we take no responsibility for the accuracy thereof. The depositary may change or
discontinue the foregoing procedures at any time.
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PLAN OF DISTRIBUTION
We and Holding may sell the securities being offered by this prospectus in four
ways: (1) through selling agents, (2) through underwriters, (3) through dealers
and/or (4) directly to purchasers. Any of these selling agents, underwriters or
dealers in the United States or outside the United States may include affiliates
of ours. We and Holding are offering the securities through LaSalle Financial
Services, Inc. and ABN AMRO Incorporated to the extent either or both of them
are named in the applicable prospectus supplement.
We may designate selling 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 and Holding
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 a selling
agent -- in each case, less other expenses attributable to issuance and
distribution.
Offers to purchase securities may be solicited directly by us and the sale of
those securities may be made by us directly to institutional investors or
others, who may be deemed to be underwriters within the meaning of the
Securities Act of 1933 with respect to any resale of those securities. The terms
of any sales of this type will be described in the related prospectus
supplement.
One or more firms, referred to as "remarketing firms," may also offer or sell
the securities, if the prospectus supplement so indicates, in connection with a
remarketing arrangement upon their purchase. Remarketing firms will act as
principals for their own accounts or as agents for Holding, us or any of our
subsidiaries. These remarketing firms will offer or sell the securities in
accordance with a redemption or repayment pursuant to the terms of the
securities. The prospectus supplement will identify any remarketing firm and the
terms of its agreement, if any, with Holding, us or any of our subsidiaries and
will describe the remarketing firm's compensation. Remarketing firms may be
deemed to be underwriters in connection with the securities they remarket.
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
securities 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
22
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.
Selling agents, underwriters, dealers and remarketing firms 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 selling 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 will be subject only to those
conditions described in the prospectus supplement, and the prospectus supplement
will state the commission payable for solicitation of these offers.
Any underwriter, selling 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.
To the extent an initial offering of the securities will be distributed by an
affiliate of ours each such 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 distribution of securities of an affiliate. Following the
initial distribution of any of these securities, affiliates of ours may offer
and sell these securities in the course of their businesses as broker-dealers.
Such 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. Such affiliates may also use this prospectus in connection
with these transactions. None of our affiliates is obligated to make a market in
any of these securities and may discontinue any market-making activities at any
time without notice.
Underwriting discounts and commissions on securities sold in the initial
distribution will not exceed 8% of the offering proceeds.
SELLING RESTRICTIONS
EUROPEAN ECONOMIC AREA
SECURITIES THAT QUALIFY AS SECURITIES WITHIN THE MEANING OF THE PROSPECTUS
DIRECTIVE.
To the extent that the debt securities qualify as securities within the meaning
of the Prospectus Directive, the following selling restriction shall apply:
In relation to each Member State of the European Economic Area which has
implemented the Prospectus Directive (each, a "Relevant Member State"), with
effect from and including the date on which the Prospectus Directive is
implemented in that Relevant Member State (the "Relevant Implementation Date")
the debt securities will be offered to the public in that Relevant Member State
of the European Economic Area, except that the debt securities may, with effect
from and including the Relevant Implementation Date, be offered to the public in
that Relevant Member State:
(a) in (or in Germany, where the offer starts within) the period beginning
on the date of publication of a prospectus in relation to those debt
securities which has been approved by the competent authority in that
Relevant Member State or, where appropriate, approved in another
Relevant Member State and notified to the competent authority in that
Relevant Member State, all in accordance with the Prospectus Directive
and ending on the date which is 12 months after the date of such
publication;
(b) at any time to legal entities which are authorised or regulated to
operate in the financial markets or, if not so authorised or
regulated, whose corporate purpose is solely to invest in securities;
23
(c) at any time to any legal entity which has two or more of (1) an
average of at least 250 employees during the last financial year; (2)
a total balance sheet of more than (euro)43,000,000 and (3) an annual
net turnover of more than (euro)50,000,000, as shown in its last
annual or consolidated accounts; or
(d) at any time in any other circumstances which do not require the
publication by us of a prospectus pursuant to Article 3 of the
Prospectus Directive.
For the purposes of this provision, the expression "an offer of debt securities
to the public" in relation to any debt securities in any Relevant Member State
means the communication in any form and by any means of sufficient information
on the terms of the offer and the debt securities to be offered so as to enable
an investor to decide to purchase or subscribe the debt securities, as the same
may be varied in that Relevant Member State by any measure implementing the
Prospectus Directive in that Member State and the expression "Prospectus
Directive" means Directive 2003/71/EC and includes any relevant implementing
measure in each Relevant Member State.
SECURITIES THAT DO NOT QUALIFY AS SECURITIES WITHIN THE MEANING OF THE
PROSPECTUS DIRECTIVE.
To the extent that the debt securities do not qualify as securities within the
meaning of the Prospectus Directive, the following selling restriction shall
apply:
The debt securities are offered exclusively to individuals and legal
entities who or which:
(1) are professional investors (which includes, without limitation,
banks, securities firms, insurance companies, pension funds,
investment institutions, central governments, large international
and supranational organisations, other institutional investors
and other parties, including treasury departments of commercial
enterprises, which as an ancillary activity regularly trade or
invest in securities, hereafter "Professional Investors")
situated in The Netherlands; or
(2) are established, domiciled or have their residence (collectively,
"are resident") outside the Netherlands;
provided that (A) the offer, the applicable prospectus supplement and
pricing supplement and each announcement of the offer states that the
offer is and will only be made to persons or entities who are
professional investors situated in The Netherlands or who are not
resident in The Netherlands, (B) the offer, the prospectus, the
applicable prospectus supplement and pricing supplement and each
announcement of the offer comply with the laws and regulations of any
state where persons to whom the offer is made are resident and (C) a
statement by us that those laws and regulations are complied with is
submitted to the Netherlands Authority for the Financial Markets
(STICHTING AUTORITEIT FINANCIELE MARKTEN; the "AFM") before the offer
is made and is included in the applicable prospectus supplement and
pricing supplement and each such announcement.
24
LEGAL MATTERS
Davis Polk & Wardwell will pass upon the validity of the offered securities with
respect to United States Federal and New York law. Clifford Chance Limited
Liability Partnership will pass upon the validity of the offered securities with
respect to Dutch law. Davis Polk & Wardwell has in the past represented Holding
and its affiliates, including us, and continues to represent Holding and its
affiliates on a regular basis and in a variety of matters.
25
EXPERTS
The consolidated financial statements and the related financial statement
schedules of Holding incorporated in this prospectus by reference to the Annual
Report on Form 20-F for the year ended December 31, 2005 have been so
incorporated in reliance on the report of Ernst & Young, independent registered
public accounting firm, given on the authority of the firm as experts in
accounting and auditing.
26
BENEFIT PLAN INVESTOR CONSIDERATIONS
A fiduciary of a pension, profit-sharing or other employee benefit plan subject
to the Employment Retirement Income Security Act of 1974, as amended ("ERISA"),
including entities such as collective investment funds, partnerships and
separate accounts whose underlying assets include the assets of such plans
(collectively, "ERISA Plans") should consider the fiduciary standards of ERISA
in the context of the ERISA Plans' particular circumstances before authorizing
an investment in the debt securities. Among other factors, the fiduciary should
consider whether the investment would satisfy the prudence and diversification
requirements of ERISA and would be consistent with the documents and instruments
governing the ERISA Plan.
Section 406 of ERISA and Section 4975 of the Code prohibit ERISA Plans, as well
as individual retirement accounts and Keogh plans subject to Section 4975 of the
Code (together with ERISA Plans, "Plans"), from engaging in certain transactions
involving the "plan assets" with persons who are "parties in interest" under
ERISA or "disqualified persons" under the Code ("Parties in Interest") with
respect to such Plans. As a result of our business, we and/or certain of our
affiliates are each a Party in Interest with respect to many Plans. Where we are
a Party in Interest with respect to a Plan (either directly or by reason of
ownership of our subsidiaries), the purchase and holding of the debt securities
by or on behalf of the Plan would be a prohibited transaction under Section
406(a)(1) of ERISA and Section 4975(c)(1) of the Code, unless exemptive relief
were available under an applicable administrative exemption (as described
below).
Accordingly, the debt securities may not be purchased or held by any Plan, any
entity whose underlying assets include "plan assets" by reason of any Plan's
investment in the entity (a "Plan Asset Entity") or any person investing "plan
assets" of any Plan, unless such purchaser or holder is eligible for the
exemptive relief available under Prohibited Transaction Class Exemption ("PTCE")
96-23, 95-60, 91-38, 90-1 or 84-14 issued by the U.S. Department of Labor or the
service provider exemption provided by new Section 408(b)(17) of ERISA and
Section 4975(d)(20) of the Code. Unless the applicable prospectus supplement
explicitly provides otherwise, each purchaser or holder of the debt securities
or any interest therein will be deemed to have represented by its purchase of
the debt securities that (a) its purchase and holding of the debt securities is
not made on behalf of or with "plan assets" of any Plan or (b) its purchase and
holding of the debt securities will not result in a prohibited transaction under
Section 406 of ERISA or Section 4975 of the Code.
Employee benefit plans that are governmental plans (as defined in Section 3(32)
of ERISA), certain church plans (as defined in Section 3(33) of ERISA) and
non-U.S. plans (as described in Section 4(b)(4) of ERISA) are not subject to
these "prohibited transaction" rules of ERISA or Section 4975 of the Code, but
may be subject to similar rules under other applicable laws or documents
("Similar Laws"). Accordingly, each purchaser or holder of the debt securities
shall be required to represent (and deemed to constitute a representation) that
such purchase and holding is not prohibited under applicable Similar Laws. Due
to the complexity of the applicable rules, it is particularly important that
fiduciaries or other persons considering purchasing the debt securities on
behalf of or with "plan assets" of any Plan consult with their counsel regarding
the relevant provisions of ERISA, the Code or any Similar Laws and the
availability of exemptive relief under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14
or the service provider exemption under Section 408(b)(17) of ERISA and Section
4975(d)(20) of the Code.
Each purchaser and holder of the debt securities has exclusive responsibility
for ensuring that its purchase and holding of the debt securities does not
violate the fiduciary or prohibited transaction rules of ERISA, the Code or any
Similar Laws. The sale of any debt securities to any Plan is in no respect a
representation by us or any of our affiliates or representatives that such an
investment meets all relevant legal requirements with respect to investments by
Plans generally or any particular Plan, or that such an investment is
appropriate for Plans generally or any particular Plan.
27
ENFORCEMENT OF CIVIL LIABILITIES
We and Holding are organized under the laws of The Netherlands and the members
of our and Holding's Supervisory Board, with two exceptions, and our and
Holding's Managing Board are residents of The Netherlands or other countries
outside the United States. Although we and some of our affiliates, including
LaSalle Bank, have substantial assets in the United States, substantially all of
our and Holding's assets and the assets of the members of the respective
Supervisory Boards and Managing Boards are located outside the United States. As
a result, it may not be possible for investors to effect service of process
within the United States upon us, Holding or these persons or to enforce against
us, Holding or these persons judgments of U.S. courts predicated upon the civil
liability provisions of U.S. securities laws. The United States and The
Netherlands do not currently have a treaty providing for reciprocal recognition
and enforcement of judgments in civil and commercial matters. Therefore, a final
judgment for the payment of money rendered by any federal or state court in the
United States based on civil liability, whether or not predicated solely upon
U.S. federal securities laws, would not be enforceable in The Netherlands.
However, if the party in whose favor such judgment is rendered brings a new suit
in a competent court in The Netherlands, that party may submit to a Dutch court
the final judgment which has been rendered in the United States, in which case
the Dutch court may give such effect to this judgment as it deems appropriate.
If the Dutch court finds that the jurisdiction of the federal or state court in
the United States has been based on grounds that are internationally acceptable
and that the final judgment concerned results from proceedings compatible with
Dutch concepts of due process, to the extent that the Dutch court is of the
opinion that reasonableness and fairness so require, the Dutch court would, in
principle, under current practice, recognize the final judgment that has been
rendered in the United States and generally grant the same claim without
relitigation on the merits, unless the consequences of the recognition of such
judgment contravene public policy in The Netherlands or conflicts with an
existing Dutch judgment.
28
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
IN THIS PRICING SUPPLEMENT, THE PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT OR ADDITIONAL
INFORMATION. WE ARE OFFERING TO SELL THESE SECURITIES AND SEEKING OFFERS TO BUY
THESE SECURITIES ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED.
NEITHER THE DELIVERY OF THIS PRICING SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS
SUPPLEMENT AND PROSPECTUS, NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF ABN AMRO BANK N.V. OR ABN AMRO HOLDING 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.
--------------------------------------------------------------------------------
TABLE OF CONTENTS
PRICING SUPPLEMENT
PAGE
----
Summary of Pricing Supplement............... PS-3
Risk Factors................................ PS-8
Hypothetical Sensitivity Analysis of Total Return of
the Securities at Maturity................ PS-12
Incorporation of Documents by Reference..... PS-14
Public Information Regarding the Underlying Shares PS-15
Description of Securities................... PS-17
Use of Proceeds............................. PS-26
Taxation.................................... PS-26
Plan of Distribution........................ PS-27
PROSPECTUS SUPPLEMENT
PAGE
----
About This Prospectus Supplement............ S-1
Risk Factors................................ S-2
Description of Notes........................ S-4
Taxation in the Netherlands................. S-24
United States Federal Taxation.............. S-25
Plan of Distribution........................ S-34
Legal Matters............................... S-36
PROSPECTUS
PAGE
----
About This Prospectus....................... 1
Where You Can Find Additional Information... 2
Cautionary Statement on
Forward-Looking Statements................ 3
Consolidated Ratios of Earnings
to Fixed Charges.......................... 4
ABN AMRO Bank N.V........................... 5
ABN AMRO Holding N.V........................ 6
Use of Proceeds............................. 7
Description of Debt Securities.............. 8
Forms of Securities......................... 19
The Depositary.............................. 20
Plan of Distribution........................ 22
Legal Matters............................... 25
Experts..................................... 26
Benefit Plan Investor Considerations........ 27
Enforcement of Civil Liabilities............ 28
ABN AMRO BANK N.V.
$1,000,000
FULLY AND UNCONDITIONALLY GUARANTEED BY
ABN AMRO HOLDING N.V.
11.75% (ANNUALIZED) KNOCK-IN REVERSE EXCHANGEABLE SECURITIES
DUE APRIL 24, 2008
LINKED TO COMMON STOCK OF
CATERPILLAR INC.
PRICING SUPPLEMENT
(TO PROSPECTUS DATED
SEPTEMBER 29, 2006 AND
PROSPECTUS SUPPLEMENT
DATED SEPTEMBER 29, 2006)
ABN AMRO INCORPORATED
================================================================================