FILED PURSUANT TO RULE NO. 424(b)(3)
REGISTRATION NO. 333-40880
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED AUGUST 31, 2001
U.S. $26,475,600,650
General Electric Capital Corporation
Global Medium-Term Notes, Series A
Due From 9 Months to 60 Years From Date of Issue
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General Electric Capital Corporation may offer at various times up to U.S.
$26,475,600,650 of global medium-term notes. We will offer these notes in
series, starting with Series A, and in U.S., foreign, and composite
currencies. If we offer original issue discount notes, we will use their
initial offering prices to calculate when we reach U.S. $26,475,600,650.
The following terms may apply to the notes. We will provide the final terms
for each note in a pricing supplement.
. The notes will mature in 9 months to 60 years.
. The notes may be subject to redemption at our option or repayment at the
option of the holder.
. The notes will bear interest at either a fixed or floating rate. The
floating interest rate formula may be based on:
.Treasury Rate
.CD Rate
.Prime Rate
.Commercial Paper Rate
.CMT Rate
.Federal Funds Rate
.Eleventh District Cost of Funds Rate
.LIBOR
. The notes may be issued as indexed notes, dual currency notes, renewable
notes, extendible notes or amortizing notes.
. The notes will be in certificated or book-entry form.
. Interest will be paid on fixed rate notes on March 15 and September 15
of each year or as otherwise specified in the applicable pricing
supplement. Interest will be paid on floating rate notes on dates
specified in the applicable pricing supplement.
. The notes will have minimum denominations of $1,000 for book-entry notes
and $100,000 for certificated notes, in each case increased in multiples
of $1,000, or other specified denominations and multiples for a foreign
or composite currency.
We expect to receive between $26,462,362,850 and $26,316,747,046 of
proceeds from the sale of the notes after paying the agents' commissions of
between $13,237,800 and $158,853,604. The exact proceeds from each note will
be set at the time of issuance. We do not expect that any of the notes will be
listed on an exchange and a market for any particular series of notes may not
develop.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus supplement. Any representation to the
contrary is a criminal offense.
Deutsche Banc Alex. Brown
GECC Capital Markets Group, Inc.
Goldman, Sachs & Co.
Lehman Brothers
Merrill Lynch & Co.
JPMorgan
Salomon Smith Barney
UBS Warburg
The date of this prospectus supplement is September 5, 2001.
RISKS OF FOREIGN CURRENCY NOTES AND INDEXED NOTES
This prospectus supplement does not describe all of the risks of an
investment in the notes. You should consult your own financial and legal
advisors about the risks entailed by an investment in the notes and the
suitability of your investment in the notes in light of your particular
circumstances. Notes denominated in a foreign currency are not an appropriate
investment for investors who are unsophisticated with respect to foreign
currency transactions. Indexed notes are not an appropriate investment for
investors who are unsophisticated with respect to the type of index or formula
used to determine the amount payable. You should also consider carefully, among
other factors, the matters described below.
Exchange Rates and Exchange Controls
An investment in a note denominated in a currency other than U.S. dollars
entails significant risks. These risks include the possibility of significant
changes in rates of exchange between the U.S. dollar and such currency and the
possibility of the imposition or modification of foreign exchange controls by
either the United States or foreign governments. These risks generally depend
on factors over which we have no control, such as economic and political events
and the supply of and demand for the relevant currencies. In recent years,
rates of exchange between the U.S. dollar and certain currencies have been
highly volatile, and you should be aware that volatility may occur in the
future. Fluctuations in any particular exchange rate that have occurred in the
past, however, are not necessarily indicative of fluctuations in the rate that
may occur during the term of any note. Depreciation of the specified currency
for a note against the U.S. dollar would result in a decrease in the effective
yield of such note (on a U.S. dollar basis) below its coupon rate and, in
certain circumstances, could result in a loss to you on a U.S. dollar basis.
Except as set forth below, if payment in respect of a note is required to be
made in a currency other than U.S. dollars and such currency is unavailable to
us due to the imposition of exchange controls or other circumstances beyond our
control or is no longer used by the government of the relevant country or union
or for the settlement of transactions by public institutions of or within the
international banking community, then all payments in respect of such note will
be made in U.S. dollars until such currency is again available to us or so
used. The amounts payable on any date in such currency will be converted into
U.S. dollars on the basis of the most recently available market exchange rate
for such currency or as otherwise indicated in the applicable pricing
supplement. Any payment in respect of such note so made in U.S. dollars will
not constitute an event of default under the Indenture. However, if we cannot
make payment in a specified currency solely because that currency has been
replaced by the euro, then, beginning with the date the replacement becomes
effective, we will be able to satisfy our obligations under those notes by
making payment in euro.
The paying agent will make all determinations referred to above at its sole
discretion. All determinations will, in the absence of clear error, be binding
on holders of the notes.
The information set forth in this prospectus supplement with respect to
foreign currency risks is general in nature. We disclaim any responsibility to
advise prospective purchasers of foreign currency notes with respect to any
matters that may affect the purchase, holding or receipt of payments of
principal of, premium, if any, and interest on such notes. Such persons should
consult their own counsel with regard to such matters.
Any pricing supplement relating to notes denominated in a specified currency
other than U.S. dollars will contain information concerning historical exchange
rates for that currency against the U.S. dollar and a brief description of any
relevant exchange controls.
Foreign Currency Judgments
The notes will be governed by and construed in accordance with the internal
laws of the State of New York. New York courts will normally enter judgments or
decrees for money damages in the foreign currency in which notes are
denominated. These amounts are then converted into U.S. dollars at the rate of
exchange in effect on the date the judgment or decree is entered. Courts in the
United States outside New York customarily have not rendered judgments for
money damages denominated in any currency other than the U.S. dollar.
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Risks Associated with Indexed Notes
An investment in indexed notes entails significant risks that are not
associated with an investment in a conventional fixed rate debt security.
Indexation of the interest rate of a note may result in an interest rate that
is less than that payable on a conventional fixed rate debt security issued at
the same time, including the possibility that no interest will be paid.
Indexation of the principal of and/or premium on a note may result in an amount
of principal and/or premium payable that is less than the original purchase
price of the note, including the possibility that no amount will be paid. The
secondary market for indexed notes will be affected by a number of factors,
independent of our creditworthiness. Such factors include the volatility of the
index selected, the time remaining to the maturity of the notes, the amount
outstanding of the notes and market interest rates. The value of an index can
depend on a number of interrelated factors, including economic, financial and
political events, over which we have no control. In addition, if the formula
used to determine the amount of principal, premium and/or interest payable with
respect to indexed notes contains a multiple or leverage factor, the effect of
any change in the index will be increased. The historical experience of an
index should not be taken as an indication of its future performance.
Accordingly, you should consult your own financial and legal advisors as to the
risks entailed by an investment in indexed notes.
Credit Ratings
The credit ratings assigned to our medium-term note program reflect the
rating agencies' opinion of our ability to make payments on the notes when due.
The ratings do not take into account fluctuations in the market value of the
notes or the possibility that payments on indexed notes may be less than
anticipated because of changes in the specified index.
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DESCRIPTION OF NOTES
General
The following description of terms of the notes supplements the general
description of the debt securities provided in the prospectus. However, the
pricing supplement for each offering of notes will contain the specific
information and terms for that offering. The pricing supplement may also add,
update or change information contained in this prospectus supplement. It is
important for you to consider the information contained in the prospectus, the
prospectus supplement and the pricing supplement in making your investment
decision.
This section describes some technical concepts, and thus we occasionally use
defined terms. You will find an alphabetized glossary at the end of this
prospectus supplement that defines all of the capitalized terms used in this
section that are not defined in this section.
The Indenture. We will issue the notes under the Indenture between us and
The Chase Manhattan Bank ("CMB"). Since we have only summarized the most
significant portions of the Indenture below, you may want to refer to the
Indenture for more detailed information.
Ranking. The notes will be unsecured and will rank equally with all our
other unsecured and unsubordinated debt obligations. The notes and the
Indenture will not limit us from incurring additional debt and will not place
any other financial restrictions on us.
Amount. The amount of notes we may offer with this prospectus supplement
will be reduced to the extent we issue other debt securities, preferred stock,
warrants or support obligations under the prospectus. As of September 5, 2001,
we have issued and outstanding $28,272,661,000 of notes. The amount of
additional notes that we may offer with this prospectus supplement is
$26,475,600,650. In addition, we may further increase the amount of notes of
this series that we may issue from time to time. The Indenture does not limit
the amount of notes that we may offer. If a note is an Original Issue Discount
Note, we will use its initial offering price to calculate the amount issued.
Reopening of Issue. We may, from time to time, reopen an issue of notes and
issue additional notes with the same terms (including Maturity and interest
payment terms) as notes issued on an earlier date. After such additional notes
are issued they will be fungible with the previously issued notes to the extent
specified in the applicable pricing supplement.
Maturity. Each note will mature on any day from 9 months to 60 years from
its date of issue. However, each note may also be subject to redemption at our
option and repayment at your option (see "Optional Redemption" below).
Pricing Supplement. The pricing supplement relating to a note will describe
the following terms:
. the specified currency;
. whether the note is a fixed rate note, a floating rate note, an indexed
note, a dual currency note, a renewable note, an extendable note or an
amortizing note;
. the issue price;
. the original issue date;
. the stated maturity date;
. for a fixed rate note, the rate per annum at which it will bear
interest, if any, and the date on which interest will be payable if
other than March 15 and September 15;
. for a floating rate note, the base rate, the initial interest rate, the
interest reset period, the interest payment dates, the Index Maturity,
the Designated LIBOR Currency, if any, the maximum interest rate, if
any, the minimum interest rate, if any, the Spread and/or Spread
Multiplier, if any, and any other terms relating to the particular
method of calculating the interest rate for the note;
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. whether the note is an Original Issue Discount Note;
. for an indexed note, the manner in which interest payments and the
principal amount payable at Maturity will be determined;
. if such note is an amortizing note, an amortization schedule;
. whether the note may be redeemed at our option, or repaid at the
holder's option prior to the stated maturity date as described further
under "Optional Redemption" below, and if so, the terms of the
redemption or repayment;
. for notes issued in currencies that may be replaced by the euro,
redenomination provisions, if any (see "Euro Redenomination" below);
. whether the notes are a reopening of notes previously issued; and
. any other terms that do not conflict with the provisions of the
Indenture.
Form of the Notes. We will issue the notes either in certificated form or
pursuant to a book-entry system.
Book-entry notes. When we issue notes in book-entry form, we will issue
one or more global certificates representing the entire issue of notes. All
of the notes that have been issued previously have been issued in book-
entry form. These certificates will name a nominee of The Depository Trust
Company, New York, New York ("DTC") as the owner of the notes. DTC
maintains a computerized system that will reflect your ownership of the
notes through an account you will maintain with your broker/dealer, bank,
trust company or other representative.
DTC's nominee will be considered the owner of your note in our records
and will be the entity entitled to cast a vote regarding your note.
However, DTC and the broker/dealers, banks, trust companies and other
representatives that are part of DTC's computerized system are required to
contact you for voting instructions.
Certificated notes. When we issue notes in certificated form, you will
receive a certificate evidencing your note. CMB will issue certificated
notes on our behalf and will only prepare such certificated notes at our
request. The certificate will name you as the owner of the note, unless you
choose to have your broker/dealer, bank, trust company or other
representative hold these certificates for you. If your name appears on the
certificate evidencing your note, then you will be considered the owner of
your 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,
you will be asked to cast the vote regarding your 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. However, this entity is required to
contact you for voting instructions.
Exchanges. Certificated notes cannot be exchanged for book-entry notes.
Book-entry notes can be exchanged for certificated notes only if (i) DTC
notifies us that it is unwilling or unable to hold global certificates and
another depositary is not appointed or (ii) we elect not to have the notes
represented by global certificates held by a depositary. In these limited
circumstances, we will issue to you certificated notes in exchange for the
book-entry notes. There will be no service charge for this exchange, but if
a tax or other governmental charge is imposed, we may require you to pay
it.
Denominations. The notes will have minimum denominations of $1,000 for book-
entry notes and $100,000 for certificated notes, in each case increased in
multiples of $1,000. The authorized denominations of notes denominated in a
foreign or composite currency will be described in the pricing supplement. DTC
currently limits the maximum denomination of any single global note to
$500,000,000.
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Registration and Transfer of Notes.
Book-entry notes. If you transfer your note while it is in book-entry
form, the transfer will be reflected on the computerized system at DTC.
Your broker/dealer, bank, trust company or other representative will
arrange for the transfer to be reflected on DTC's records.
Certificated notes. In addition to acting as trustee under the
Indenture, CMB also acts as our registrar for notes issued in certificated
form. You may go to CMB's office at 55 Water Street, Room 234, North
Building, New York, New York 10041 if you want to:
. register the transfer of any certificated note;
. exchange certificated notes for notes of different denominations;
. deliver payment instructions;
. obtain a new note to replace a note that has been lost or destroyed
(you may be required to provide a document to CMB and us agreeing to
return the new certificate if the missing one is found);
. present notes that have matured or been redeemed in exchange for
payment.
Depository.
Each note will be deposited with, or on behalf of, DTC, as depository, and
registered in the name of Cede & Co. (DTC's partnership nominee). Investors may
elect to hold interests in the notes through DTC (in the United States) or, if
the notes are eligible, through Clearstream Banking, societe anonyme
("Clearstream, Luxembourg"), or Euroclear Bank S.A./N.V., as operator (the
"Euroclear Operator") of the Euroclear System ("Euroclear"), if they are
participants in such systems or indirectly through organizations which are
participants in such systems. Clearstream, Luxembourg and the Euroclear
Operator will hold interests on behalf of their participants through customers'
securities accounts in Clearstream, Luxembourg's and the Euroclear Operator's
names on the books of their respective depositaries, which in turn will hold
such interests in customers' securities accounts in the depositaries' names on
the books of the DTC. Citibank, N.A. will act as depositary for Clearstream,
Luxembourg and CMB will act as depositary for the Euroclear Operator (in such
capacities, the "U.S. Depositaries").
Clearstream, Luxembourg advises that it is incorporated under the laws of
Luxembourg as a professional depositary. Clearstream, Luxembourg holds
securities for its participating organizations ("Clearstream Participants") and
facilitates the clearance and settlement of securities transactions between
Clearstream Participants through electronic book-entry changes in accounts of
Clearstream Participants, thereby eliminating the need for physical movement of
certificates. Clearstream, Luxembourg provides to Clearstream Participants,
among other things, services for safekeeping, administration, clearance and
settlement of internationally traded securities and securities lending and
borrowing. Clearstream, Luxembourg interfaces with domestic markets in several
countries. As a professional depositary, Clearstream, Luxembourg is subject to
regulation by the Luxembourg Monetary Institute. Clearstream Participants are
recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations and may include the underwriters named in this
prospectus supplement. Indirect access to Clearstream, Luxembourg is also
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a Clearstream
Participant either directly or indirectly.
Distributions with respect to the notes held beneficially through
Clearstream, Luxembourg will be credited to cash accounts of Clearstream
Participants in accordance with its rules and procedures, to the extent
received by the U.S. Depositary for Clearstream, Luxembourg.
The Euroclear Operator advises that Euroclear was created in 1968 to hold
securities for participants of Euroclear ("Euroclear Participants") and to
clear and settle transactions between Euroclear Participants through
simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk from
lack of simultaneous transfers of securities and cash. Euroclear
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includes various other services, including securities lending and borrowing and
interfaces with domestic markets in several countries. Euroclear is operated by
the Euroclear Operator under contract with Euro-clear Clearance Systems S.C., a
Belgian cooperative corporation (the "Cooperative"). All operations are
conducted by the Euroclear Operator, and all Euroclear securities clearance
accounts and Euroclear cash accounts are accounts with the Euroclear Operator,
not the Cooperative. The Cooperative establishes policy for Euroclear on behalf
of Euroclear Participants. Euroclear Participants include banks (including
central banks), securities brokers and dealers and other professional financial
intermediaries and may include the underwriters named in this prospectus
supplement. Indirect access to Euroclear is also available to other firms that
clear through or maintain a custodial relationship with a Euroclear
Participant, either directly or indirectly.
The Euroclear Operator was granted a banking license by the Belgian Banking
and Finance Commission in 2000, authorizing it to carry out banking activities
on a global basis. It took over operation of Euroclear from the Brussels,
Belgium office of Morgan Guaranty Trust Company of New York on December 31,
2000.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities
and cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions with respect to notes held beneficially through Euroclear will
be credited to the cash accounts of Euroclear Participants in accordance with
the Terms and Conditions, to the extent received by the U.S. Depositary for
Euroclear.
Global Clearance and Settlement Procedures
Initial settlement for the notes will be made in immediately available
funds. Secondary market trading between DTC Participants will occur in the
ordinary way in accordance with the DTC's rules and will be settled in
immediately available funds using the DTC's Same-Day Funds Settlement System.
Secondary market trading between Clearstream Participants and/or Euroclear
Participants will occur in the ordinary way in accordance with the applicable
rules and operating procedures of Clearstream, Luxembourg and Euroclear and
will be settled using the procedures applicable to conventional eurobonds in
immediately available funds.
Cross-market transfers between persons holding directly or indirectly
through the DTC on the one hand, and directly or indirectly through Clearstream
or Euroclear Participants, on the other, will be effected in the DTC in
accordance with the DTC's rules on behalf of the relevant European
international clearing system by its U.S. Depositary; however, such cross-
market transactions will require delivery of instructions to the relevant
European international clearing system by the counterparty in such system in
accordance with its rules and procedures and within its established deadlines
(European time). The relevant European international clearing system will, if
the transaction meets its settlement requirements, deliver instructions to its
U.S. Depositary to take action to effect final settlement on its behalf by
delivering or receiving notes in the DTC, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
the DTC. Clearstream Participants and Euroclear Participants may not deliver
instructions directly to the DTC.
Because of time-zone differences, credits of notes received in Clearstream,
Luxembourg or Euroclear as a result of a transaction with a DTC Participant
will be made during subsequent securities settlement processing and will be
credited the business day following the DTC settlement date. Such credits or
any transactions in such notes settled during such processing will be reported
to the relevant Euroclear Participants or Clearstream
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Participants on such business day. Cash received in Clearstream, Luxembourg or
Euroclear as a result of sales of notes by or through a Clearstream, Luxembourg
Participant or a Euroclear Participant to a DTC Participant will be received
with value on the DTC settlement date but will be available in the relevant
Clearstream, Luxembourg or Euroclear cash account only as of the business day
following settlement in the DTC.
Although the DTC, Clearstream, Luxembourg and the Euroclear Operator have
agreed to the foregoing procedures in order to facilitate transfers of notes
among participants of the DTC, Clearstream, Luxembourg and Euroclear, they are
under no obligation to perform or continue to perform such procedures and such
procedures may be discontinued at any time.
Methods of Payment. CMB also acts as our paying agent, and will make all
payments on the notes on our behalf.
Book-entry notes. CMB will make payments of principal and interest on
book-entry notes to the account of DTC's nominee by wire transfer of
immediately available funds. Neither we nor CMB will make any payments to
owners of beneficial interests in book-entry notes. Instead, DTC will
credit the funds to which you are entitled to the account of the
broker/dealer, bank, trust company or other participant of DTC through
which you hold your note. That participant, in turn, will credit these
funds to your account (or the account of any other intermediary through
which you hold your note).
We understand that DTC's current practice is to credit interest payments
(including interest payable at Maturity) and principal payments in
immediately available funds. These payments and credits will be made
pursuant to the rules of DTC, in accordance with any standing instructions
you have with your broker/dealer, bank, trust company or other participant
in DTC through which you hold your notes and with customary practice in the
broker/dealer industry. Neither we nor CMB will be involved with, or
responsible for, the movement of funds once CMB has paid DTC.
Certificated notes. If you hold certificated notes, payments of
principal and interest due at Maturity or earlier redemption will be paid
by wire transfer of immediately available funds after you present the
matured or redeemed note at CMB's office (the address is given above).
Interest payable at any other time will be paid by check mailed to your
address as it appears in CMB's records. If you own $5,000,000 or more of
notes having the same terms and conditions, we will pay you interest prior
to Maturity by wire transfer of immediately available funds if you give the
appropriate instructions to CMB at least 10 calendar days before the
applicable interest payment date.
Special payment provisions for notes denominated in a foreign
currency. Purchasers of notes denominated in a foreign currency must pay
for their notes in that currency. If you prefer to pay in U.S. dollars, the
agents will convert U.S. dollars into the foreign currency on your behalf
to enable you to make payment in that currency. You must notify the agents
that you would like them to provide this service for you at least three
Business Days before the date of delivery of the note. These services are
available only in connection with the initial distribution of notes
denominated in a foreign currency.
Regardless of whether the notes are in book-entry or certificated form,
all payments of principal and interest on foreign currency notes (other
than dual currency notes) will be made in U.S. dollars based on the Noon
Buying Rate. CMB will convert these U.S. dollar payments into the currency
of the notes on your behalf if you request the conversion at least ten
calendar days before the applicable payment date.
Any currency conversion will be based upon a firm bid quotation in New
York City received by CMB at approximately 11:00 a.m., Eastern Time, on the
second Business Day preceding the applicable payment date from a recognized
foreign exchange dealer (which may be CMB). If CMB cannot obtain a bid
quotation for the conversion of U.S. dollars into the relevant foreign
currency, then payments on the note will be made in U.S. dollars.
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If you request an interest payment in a foreign currency (other than
euro), or, in the case of a dual currency note, interest payments are to be
made in a foreign currency (other than euro) the payment will be paid by
check mailed to your address as it appears in CMB's records. If you request
that the principal payment on your note, including any interest payable at
Maturity, be in a foreign currency (other than euro), or, in the case of a
dual currency note, the principal payment, including any interest payable
at Maturity, is to be made in a foreign currency (other than euro), such
payment will be paid by check after you present the matured or redeemed
note at CMB's office (the address is given above). Checks in foreign
currencies (other than euro) will be drawn from banks located outside the
U.S. If you hold $1,000,000 or more of notes denominated in a foreign
currency having the same terms and conditions, you can request that CMB
make payments in the foreign currency by wire transfer. You must request
wire transfers no later than the record date for interest payments and, in
the case of payments of principal, no later than fifteen calendar days
prior to Maturity. Foreign currency wire transfers must be made to banks
located outside the U.S.
All payments in respect of notes denominated in or, in the case of dual
currency notes, payable in, euro must be made by wire transfer (not by
check) to a euro-denominated account (or any other account to which euro
may be credited or transferred) specified by the payee.
DTC will not accept foreign currency payments. You may elect to receive
foreign currency payments in respect of book-entry notes by notifying your
broker/dealer, bank, trust company or other participant in DTC through which
you hold notes at least 15 days prior to the payment date that you have
elected to receive all or a portion of the foreign currency payment in that
foreign currency and by providing your broker/dealer, bank, trust company or
other participant in DTC with wire transfer instructions to an account
maintained in that foreign currency. The DTC participant in turn will notify
DTC of your election and wire transfer instructions and DTC will pass those on
to CMB. If CMB receives those instructions from DTC in time, you will receive
payment in the foreign currency, after deduction of CMB's currency conversion
and other costs. Otherwise, you will receive payment in U.S. dollars through
DTC.
You will be responsible for the costs of any currency conversion
effected by CMB on your behalf.
Recipients of Payments
Payments of interest on notes are generally payable to the person in whose
name the note is registered at the close of business on the record date before
each interest payment date. However, interest will be payable at Maturity,
redemption or repayment to the person to whom principal is payable. The first
interest payment on any note originally issued between a record date and an
interest payment date or on an interest payment date will be made on the
interest payment date after the next record date. The record date for any
interest payment date for a floating rate note will be the date (whether or
not a Business Day) 15 calendar days immediately before the interest payment
date, and for a fixed rate note will be the last day of February or August
(whether or not a Business Day) immediately before the interest payment date
or Maturity, unless otherwise specified in the applicable pricing supplement.
Optional Redemption or Repayment. We may issue notes that permit us to
redeem them prior to their Maturity ("calls") or that permit you to require us
to repay them prior to their Maturity ("puts"). Any such redemption or
repayment provisions, including the date(s) on which the call or put may occur
and whether redemptions or repayments may be made in whole or in part, will be
described in the pricing supplement relating to the specific notes.
If we are permitted to call any notes, we will give notice of redemption to
you (or the entity that is the registered holder of your notes) by mail at
least 30 calendar days and not more than 60 calendar days prior to the date
set for redemption.
If you are permitted to put any notes, you must notify CMB at least 30
calendar days and not more than 60 calendar days prior to the date set for
repayment. For any note to be repaid, CMB must receive (i) in the
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case of a certificated note, the note with the attached "Option to Elect
Repayment" form completed, or a letter from a broker/dealer, bank or trust
company notifying CMB of your intent to elect repayment of your notes and
guaranteeing that you will deliver the note and the attached "Option to Elect
Repayment" form not later than five Business Days after the date set for
repayment or (ii) in the case of a book-entry note, instructions to such effect
from the beneficial owner of the note to DTC and forwarded by DTC to CMB.
Any notice of redemption delivered by you or by us will be irrevocable.
Open-market Purchases. We may, at any time, purchase notes at any price from
holders of notes or in the open market. If we purchase any of our notes, we may
hold them, resell them or surrender them to CMB for cancellation.
Interest and Interest Rates
The interest rates we will offer with respect to the notes may differ
depending on, among other things, the aggregate principal amount of notes
purchased in a single transaction.
Fixed Rate Notes
Each fixed rate note will bear interest at the annual rate specified in the
note and in the applicable pricing supplement. Interest on the fixed rate notes
will be paid on March 15 and September 15 of each year or as specified in the
applicable pricing supplement. Interest on fixed rate notes will be computed
and paid on the basis of a 360-day year of twelve 30-day months or as specified
in the applicable pricing supplement. In the event that any Interest Payment
Date (as defined below) or Maturity for any fixed rate note is not a Business
Day, principal and/or interest on such fixed rate note will be paid on the next
succeeding Business Day; however, we will not pay any additional interest due
to the delay in payment.
Floating Rate Notes
General
Each floating rate note will have an interest rate formula. The formula may
be based on:
.the CD Rate
.CMT Rate
.the Commercial Paper Rate
.the Eleventh District Cost of Funds Rate
.the Federal Funds Rate
.LIBOR
.the Prime Rate
.the Treasury Rate
.such other rate specified in the applicable pricing supplement.
The applicable pricing supplement will also indicate the Spread and/or
Spread Multiplier, if any. In addition, any floating rate note may have a
maximum or minimum interest rate limitation.
Date of Interest Rate Change
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"). Unless we state otherwise in the applicable pricing supplement,
the Interest Reset Dates will be:
. for floating rate notes that reset daily, each Business Day;
. for floating rate notes (other than Treasury Rate notes) that reset
weekly, Wednesday of each week;
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. for Treasury Rate notes that reset weekly, Tuesday of each week;
. for floating rate notes (other than Eleventh District Cost of Funds Rate
Notes) that reset monthly, the third Wednesday of each month;
. for Eleventh District Cost of Funds Rate Notes, all of which reset
monthly, the first calendar day of each month;
. for floating rate notes that reset quarterly, the third Wednesday of
March, June, September and December of each year;
. for floating rate notes that reset semiannually, the third Wednesday of
each of the two months specified in the pricing supplement; and
. for floating rate notes that reset annually, the third Wednesday of the
month specified in the 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 LIBOR note, if that Business Day is in the next calendar
month, the Interest Reset Date will be the immediately preceding Business Day.
How Interest Is Calculated
We will appoint a calculation agent to calculate interest rates on the
floating rate notes. Unless we choose a different party in the pricing
supplement, the lead agent for an issue of notes will be the calculation agent
for those notes. Floating rate notes will accrue interest from and including
the original issue date or the last date to which interest has been paid or
provided for, as the case may be, to but excluding the applicable Interest
Payment Date, as described below, or Maturity, as the case may be.
Accrued interest on floating rate notes will be calculated by multiplying
the principal amount of such note (or, in the case of an indexed note, unless
otherwise specified in the pricing supplement, the face amount of such indexed
note) by an accrued interest factor. The accrued interest factor will be
computed by adding the interest factors calculated for each day in the period
for which accrued interest is being calculated. The interest factor (expressed
as a decimal calculated to seven decimal places without rounding) for each day
will be computed by dividing the interest rate in effect on that day by 360, in
the case of CD Rate notes, Commercial Paper Rate notes, the Eleventh District
Cost of Funds Rate notes, Federal Funds rate notes, LIBOR notes and Prime Rate
notes, or by the actual number of days in the year, in the case of Treasury
Rate notes or CMT Rate notes. For these calculations, the interest rate in
effect on any Interest Reset Date will be the new reset rate.
The calculation agent will round all percentages resulting from any
calculation of the rate of interest on a floating rate note, if necessary, to
the nearest 1/100,000 of 1% (.0000001), with five one-millionths of a
percentage point rounded upward (e.g., 9.876545% (or .9876545) would be rounded
to 9.87655% (or .987655)) and all currency amounts used in or resulting from
any calculation on floating rate notes will be rounded to the nearest one-
hundredth of a unit (with .005 of a unit being rounded upward).
When Interest Is Paid
Unless we state otherwise in the applicable pricing supplement, we will pay
interest on floating rate notes as follows:
(a) for notes that reset daily, weekly or monthly, on the third
Wednesday of each month or on the third Wednesday of March, June,
September and December of each year specified in the pricing
supplement;
(b) for notes that reset quarterly, on the third Wednesday of March,
June, September, and December of each year specified in the pricing
supplement;
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(c) for notes that reset semiannually, on the third Wednesday of each
of two months of each year specified in the pricing supplement; and
(d) for notes that reset annually, on the third Wednesday of one
month of each year specified in the pricing supplement.
Each of the above dates is an "Interest Payment Date". We will also pay
interest on all notes at Maturity.
If an Interest Payment Date (other than at Maturity) for any floating rate
note falls on a day that is not a Business Day, it will be postponed to the
following Business Day and interest thereon will continue to accrue, except
that, in the case of 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 Maturity for a floating rate note falls on a day that is not a
Business Day, we will make the payment of principal and interest on the next
Business Day, without additional interest.
References below to information services include any successor information
services.
CMT Rate Notes
Each CMT Rate note will bear interest at a specified rate that will be
reset periodically based on the CMT Rate and any Spread or Spread Multiplier.
"CMT Rate" means, with respect to any Interest Determination Date, the rate
displayed on the Designated CMT Telerate Page under the caption
". . . Treasury Constant Maturities . . . Federal Reserve Board Release H.15
. . . Mondays Approximately 3:45 p.m.", under the column for the specified
Index Maturity for:
(1) if the Designated CMT Telerate Page is 7051, the rate for the
Interest Determination Date; or
(2) if the Designated CMT Telerate Page is 7052, the weekly or
monthly average, as applicable, ended immediately preceding the week or
month, as applicable, in which the Interest Determination Date occurs.
The following procedures will apply if the rate cannot be set as described
above:
(a) if we do not specify any page, the Designated CMT Telerate Page
will be 7052 for the most recent week. If that rate is no longer
displayed on the relevant page, or if it is not displayed by 3:00 p.m.,
New York City time, on the Calculation Date, then the CMT Rate will be
the Treasury constant maturity rate for the specified Index Maturity as
published in the relevant H.15(519).
(b) If the rate is no longer published in H.15(519), or is not
published by 3:00 p.m., New York City time, on the Calculation Date,
then the CMT Rate for that determination date will be the Treasury
constant maturity rate for the specified Index Maturity (or other U.S.
Treasury rate for such Index Maturity for that Interest Determination
Date) as may then be published by either the Federal Reserve Board or
the U.S. Department of the Treasury that the calculation agent
determines to be comparable to the rate formerly displayed on the
Designated CMT Telerate Page and published in the relevant H.15(519).
(c) If that information is not provided by 3:00 p.m., New York City
time, on the Calculation Date, then the CMT Rate will be calculated as a
yield to maturity, based on the average of the secondary market closing
bid side prices as of approximately 3:30 p.m., New York City time, on
that Interest Determination Date reported, according to their written
records, by three leading primary U.S. government securities dealers
(each, a "Reference Dealer") in The City of New York selected by the
calculation agent. These dealers will be selected from five Reference
Dealers.
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The calculation agent will eliminate the highest quotation (or,
in the event of equality, one of the highest) and the lowest
quotation (or, in the event of equality, one of the lowest), for the
most recently issued direct noncallable fixed rate obligations of
the United States ("Treasury Notes") with an original maturity of
approximately the specified Index Maturity and a remaining term to
maturity of not less than the specified Index Maturity minus one
year.
If two Treasury notes with an original maturity as described in
the preceding sentence have remaining terms to maturity equally
close to the specified Index Maturity, the quotes for the Treasury
Note with the shorter remaining term to maturity will be used.
(d) If the calculation agent cannot obtain three Treasury note
quotations, the CMT Rate will be calculated as a yield to maturity
based on the average of the secondary market bid side prices as of
approximately 3:30 p.m., New York City time, on that Interest
Determination Date of three Reference Dealers in The City of New York
selected by the calculation agent using the same method described
above, for Treasury notes with an original maturity of the number of
years that is the next highest to the specified Index Maturity with a
remaining term to maturity closest to such Index Maturity and in an
amount of at least $100,000,000.
If three or four (and not five) of the Reference Dealers are
providing quotes, then the CMT Rate will be based on the average of
the offer prices obtained, and neither the highest nor the lowest of
such quotes will be eliminated.
(e) If fewer than three Reference Dealers are providing quotes, the
rate of interest on CMT Rate notes will be the same as the rate of
interest thereon in the prior interest period.
CD Rate Notes
Each CD Rate note will bear interest at a specified rate that will be reset
periodically based on the CD Rate and any Spread and/or Spread Multiplier.
"CD Rate" means, with respect to any Interest Determination Date, the rate
on that Interest Determination Date for negotiable certificates of deposit
having the specified Index Maturity as published in H.15(519) under the heading
"CDs (secondary market)".
The following procedures will apply if the rate cannot be set as described
above:
(a) If the rate is not published in H.15(519) prior to 3:00 p.m.,
New York City time, on the Calculation Date, then the CD Rate will be
the rate for negotiable certificates of deposit having the specified
Index Maturity as published in H.15 Daily Update, or such other
recognized electronic source used for the purpose of displaying such
rate, under the caption "CDs (secondary market)."
(b) If the rate is not yet published in H.15(519), H.15 Daily Update
or another recognized electronic source by 3:00 p.m., New York City
time, on the Calculation Date, the CD Rate will be the average of the
secondary market offered rates, as of 10:00 a.m., New York City time,
of three leading nonbank dealers of negotiable U.S. dollar certificates
of deposit in The City of New York selected by the calculation agent
for negotiable certificates of deposit of major money market banks with
a remaining maturity closest to the specified Index Maturity in a
denomination of $5,000,000.
(c) If fewer than three dealers are providing quotes, the rate of
interest on the CD Rate note will be the same as the rate of interest
thereon in the prior interest period.
Commercial Paper Rate Notes
Each Commercial Paper Rate note will bear interest at a specified rate that
will be reset periodically based on the Commercial Paper Rate and any Spread
and/or Spread Multiplier.
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"Commercial Paper Rate" means, with respect to any Interest Determination
Date, the Money Market Yield of the rate on that Interest Determination Date
for commercial paper having the specified Index Maturity as published in
H.15(519) under the heading "Commercial Paper--Nonfinancial".
The following procedures will apply if the rate cannot be set as described
above:
(a) If the rate is not published in H.15(519) prior to 3:00 p.m., New
York City time, on the Calculation Date, then the Commercial Paper Rate
will be the Money Market Yield of the rate for commercial paper having the
specified Index Maturity as published in H.15 Daily Update, or such other
recognized electronic source used for the purpose of displaying such rate,
under the caption "Commercial Paper-Nonfinancial".
(b) If the rate is not published in H.15(519), H.15 Daily Update or
another recognized electronic source by 3:00 p.m., New York City time, on
the Calculation Date, the Commercial Paper Rate will be the Money Market
Yield of the average for 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
for commercial paper having the specified Index Maturity placed for an
industrial issuer whose bond rating is "AA", or the equivalent, by a
nationally recognized rating agency.
(c) If fewer than three dealers are providing quotes, the rate of
interest on the Commercial Paper Rate note will be the same as the rate of
interest thereon in the prior interest period.
Eleventh District Cost of Funds Rate Notes.
Each Eleventh District Cost of Funds Rate note will bear interest at a
specified rate that will be reset periodically based on the Eleventh District
Cost of Funds Rate and any Spread and/or Spread Multiplier).
"Eleventh District Cost of Funds Rate" means, with respect to any Interest
Determination Date, the rate equal to the monthly weighted average cost of
funds for the calendar month preceding such Interest Determination Date as set
forth under the caption "11th District" on Telerate on page 7058 (or such other
page as is specified in the applicable pricing supplement) as of 11:00 a.m.,
San Francisco time, on such Interest Determination Date. If such rate does not
so appear, the Eleventh District Cost of Funds Rate shall be the FHLB Index for
the calendar month preceding the date of such announcement. If the Federal Home
Loan Bank of San Francisco fails to announce such rate for the calendar month
next preceding such Interest Determination Date, then the rate of interest on
the Eleventh District Cost of Funds Rate notes will be the same as the rate of
interest thereon in the prior interest period.
Federal Funds Rate Notes
Each Federal Funds Rate note will bear interest at a specified rate that
will be reset periodically based on the Federal Funds Rate and any Spread
and/or Spread Multiplier.
"Federal Funds Rate" means, with respect to any Interest Determination Date,
the rate on specified dates for Federal Funds published in H.15(519) prior to
11:00 a.m., New York City time, under the heading "Federal Funds Effective", as
such rate is displayed on Telerate Page 120.
The following procedures will apply if the rate cannot be set as described
above:
(a) If the rate does not appear on Telerate Page 120 or is not published
in H.15(519) prior to 11:00 a.m., New York City time, on the Calculation
Date, then the Federal Funds Rate will be the rate on such Interest
Determination Date published in H.15 Daily Update, or such other recognized
electronic source used for the purpose of displaying such rate, under the
caption "Federal Funds (Effective)".
(b) If the rate does not appear on Telerate Page 120 or is not published
in H.15(519), H.15 Daily Update or another recognized electronic source by
3:00 p.m., New York City time, on the Calculation Date, the Federal Funds
Rate will be the average of the rates, as of 11:00 a.m., New York City
time, on that Interest Determination Date, for the last transaction in
overnight federal funds arranged by three leading brokers of federal funds
transactions in The City of New York selected by the calculation agent.
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(c) If fewer than three brokers are providing quotes, the rate of
interest on the Federal Funds Rate notes will be the same as the rate of
interest thereon in the prior interest period.
LIBOR Notes
Each LIBOR note will bear interest at a specified rate that will be reset
periodically based on LIBOR and any Spread and/or Spread Multiplier.
The calculation agent will determine LIBOR on each Interest Determination
Date as follows:
(a) With respect to any Interest Determination Date, LIBOR will be
generally determined as either:
(1) If "LIBOR Reuters" is specified in the pricing supplement, the
average of the offered rates for deposits in the Designated LIBOR
Currency having the specified Index Maturity beginning on the second
London Business Day immediately after the Interest Determination Date,
that appear on the Designated LIBOR page 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; or
(2) If LIBOR Telerate is specified in the pricing supplement, or if
neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the
applicable pricing supplement, the rate for deposits in the Designated
LIBOR Currency having the specified Index Maturity beginning on the
second London Business Day immediately after such date (or, if pounds
sterling is the Designated LIBOR Currency, beginning on such date or, if
euro is the Designated LIBOR Currency, beginning on the second TARGET
Settlement Day immediately after such date), that appears on the
Designated LIBOR Page as of 11:00 a.m., London time, on that Interest
Determination Date.
Where (1) above applies, if fewer than two offered rates appear on the
Designated LIBOR Page, or, where (2) above applies, if no rate appears on
the Designated LIBOR Page, LIBOR for that Interest Determination Date will
be determined based on the rates on that Interest Determination Date at
approximately 11:00 a.m., London time, at which deposits on that date in
the Designated LIBOR Currency for the period of the specified Index
Maturity are offered to prime banks in the London interbank market by four
major banks in that market selected by the calculation agent and in a
principal amount of not less than $1,000,000 (or its foreign currency
equivalent) that in the calculation agent's judgment is representative for
a single transaction in the Designated LIBOR Currency in such market at
such time (a "Representative Amount"). The offered rates must begin on the
second London Business Day immediately after the Interest Determination
Date (or if pounds sterling is the Designated LIBOR Currency, commencing on
such Interest Determination Date or, if euro is the Designated LIBOR
Currency, beginning on the second TARGET Settlement Day immediately after
such date).
The calculation agent will request the principal London office of each
of these banks to quote its rate. If the calculation agent receives at
least two quotations, LIBOR will be the average of those quotations.
(b) If the calculation agent receives fewer than two quotations, LIBOR
will be the average of the rates quoted at approximately 11:00 a.m., New
York City time, on the Interest Determination Date by three major banks in
the Principal Financial Center selected by the calculation agent. The rates
will be for loans in the Designated LIBOR Currency to leading European
banks having the specified Index Maturity beginning on the second London
Business Day after that date (or, if pounds sterling is the Designated
LIBOR Currency, commencing on such date or, if euro is the Designated LIBOR
Currency, beginning on the second TARGET Settlement Day immediately after
such date) and in a Representative Amount.
(c) If fewer than three banks provide quotes, the rate of interest on
the LIBOR notes will be the same as the rate of interest thereon in the
prior interest period.
Prime Rate Notes
Each Prime Rate note will bear interest at a specified rate that will be
reset periodically based on the Prime Rate and any Spread and/or Spread
Multiplier.
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"Prime Rate" means, with respect to any Interest Determination Date, the
rate set forth on that Interest Determination Date in H.15(519) under the
heading "Bank Prime Loan".
The following procedures will apply if the rate cannot be set as described
above:
(a) If the rate is not published in H.15(519) by 3:00 p.m., New York
City time, on the Calculation Date, then the Prime Rate will be the rate as
published on such Interest Determination Date in H.15 Daily Update, or such
other recognized electronic source used for the purpose of displaying such
rate under the caption "Bank Prime Loan".
(b) If the rate is not published in H.15(519), H.15 Daily Update or
another recognized electronic source by 3:00 p.m., New York City time, on
the Calculation Date, then the Prime Rate will be the average (rounded
upwards, if necessary, to the next higher one-hundred thousandth of a
percentage point) of the rates publicly announced by each bank on the
Reuters Screen USPRIME1 Page as its prime rate or base lending rate for
that Interest Determination Date.
(c) If fewer than four, but more than one, rates appear on the Reuters
Screen USPRIME1 Page, the Prime Rate will be the average of the prime rates
(quoted on the basis of the actual number of days in the year divided by a
360-day year) as of the close of business on the Interest Determination
Date by four major money center banks in The City of New York selected by
the calculation agent.
(d) If fewer than two rates appear, the Prime Rate will be determined
based on the rates furnished in The City of New York by the appropriate
number of substitute banks or trust companies organized and doing business
under the laws of the United States, or any State thereof, having total
equity capital of at least $500 million and being subject to supervision or
examination by a Federal or State authority, as selected by the calculation
agent.
(e) If no banks are providing quotes, the rate of interest on the Prime
Rate notes will be the same as the rate of interest thereon for the prior
interest period.
Treasury Rate Notes
Each Treasury Rate note will bear interest at a specified rate that will be
reset periodically based on the Treasury Rate and any Spread and/or Spread
Multiplier.
"Treasury Rate" means, with respect to any Interest Determination Date, the
rate from the most recent auction of direct obligations of the United States
("Treasury bills") having the specified Index Maturity as it appears under the
caption "Investment Rate" on Telerate Page 56 or Telerate Page 57 (or any other
pages as may replace such pages on such service).
The following procedures will apply if the rate cannot be set as described
above:
(a) If, by 3:00 p.m., New York City time, on the Calculation Date for an
Interest Reset Period, Treasury bills of the specified Index Maturity have
been auctioned on an Interest Determination Date during that Interest Reset
Period, but the rate for such Interest Determination Date does not appear
on either Telerate Page 56 or Telerate Page 57, the rate will be the Bond
Equivalent Yield on such Interest Determination Date of the rate for
Treasury bills of the specified Index Maturity as set forth in H.15 Daily
Update, or such other recognized electronic source used for the purpose of
displaying such rate, for that day under the caption "U.S. Government
securities/Treasury bills/Auction high."
(b) If the rate cannot be set as described in (a) above by 3:00 p.m.,
New York City time, on the Calculation Date, then the rate will be the Bond
Equivalent Yield on such Interest Determination Date of the auction rate
for Treasury bills of the specified Index Maturity as announced by the U.S.
Department of the Treasury.
(c) If the rate cannot be set as described in (b) above by 3:00 p.m.,
New York City time, on the Calculation Date, then the rate will be the Bond
Equivalent Yield, on such Interest Determination Date, of
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the rate for Treasury bills of the specified Index Maturity as set forth in
H.15(519), under the caption "U.S. Government securities/Treasury
bills/Secondary Market."
(d) If the rate cannot be set as described in (c) above by 3 p.m., New
York City time, on the Calculation Date, then the rate will be the Bond
Equivalent Yield, on such Interest Determination Date, of the rate for
Treasury bills of the specified Index Maturity as set forth in H.15 Daily
Update, or such other recognized electronic source used for the purpose of
displaying such rate, under the caption "U.S. Government
securities/Treasury bills/Secondary Market."
(e) If the rate cannot be set as described in (d) above by 3 p.m., New
York City time, on the Calculation Date, then the rate will be the average
of the secondary market bid rates as of approximately 3:30 p.m., New York
City time, on the Interest Determination Date, of three leading primary
U.S. government securities dealers in The City of New York selected by the
calculation agent for the issue of Treasury bills with the remaining
maturity closest to the specified Index Maturity.
(f) If the rate cannot be set as described in (e) above, then the rate
of interest on the Treasury Rate notes will be the same as the rate of
interest thereon in the prior interest period.
Indexed Notes
We may offer indexed notes under which principal or interest is determined
by reference to an index related to:
(a) the rate of exchange between the specified currency for such note
and the Designated LIBOR Currency;
(b) the difference in the price of a specified commodity on specified
dates;
(c) the difference in the level of a specified stock index, which may be
based on U.S. or foreign stocks, on specified dates; or
(d) any other objective price or economic measures described in the
pricing supplement.
We will describe the manner of determining principal and interest amounts in
the pricing supplement. We will also include historical and other information
regarding the index or indexes and information concerning tax consequences to
holders of indexed notes.
Interest payable on an indexed note will be based on the face amount of the
note. The pricing supplement will describe whether the principal payable upon
redemption or repayment prior to Maturity will be the face amount, the index
principal amount at the time of redemption or repayment or some other amount.
Dual Currency Notes
We may offer dual currency notes under which we have the option to make all
payments in a currency that is different than the currency in which the notes
were issued. We can only exercise this option with respect to all dual currency
notes issued on the same day with the same terms.
The pricing supplement will include related tax information and will specify
the date on which we may exercise our option.
If we elect to exercise our option to make scheduled payments in the
alternate currency, we will notify you by mail within two Business Days. We
will not be able to withdraw such notice once it has been mailed to you.
Because of fluctuating exchange rates, you may receive less in interest
and/or principal in the alternate currency than you would if we made payments
in the notes' original currency. For further information regarding certain
risks inherent in notes denominated in currencies other than U.S. dollars, see
"Risks of Foreign Currency Notes and Indexed Notes" above.
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Renewable Notes
We may issue renewable notes which will bear interest at a specified rate
that will be reset based on a base rate and any Spread and/or Spread
Multiplier.
The Maturity of a renewable note will be automatically extended for a twelve
month period on each maturity date unless you elect to terminate the automatic
extension. To terminate the automatic extension of your renewable note, you
must notify CMB within the time frame specified in the pricing supplement. You
may choose to maintain the automatic extension provision for a portion of your
note so long as that portion equals at least $100,000 (or its foreign currency
equivalent). The Maturity of the renewable notes cannot be extended beyond the
final maturity date specified in the pricing supplement. If you elect to
terminate the automatic extension of any portion of your renewable note, you
will receive payment of principal on that portion on an interest payment date
falling approximately six months after the date on which the note was scheduled
to be extended.
You may revoke your election to terminate the automatic extension or any
portion of your renewable note if such portion equals at least $100,000 (or its
foreign currency equivalent). To revoke your election you must notify CMB prior
to the fifteenth calendar day before the portion is scheduled to mature. An
election to terminate the automatic extension of a renewable note will be
binding on any subsequent holder of the note unless it is properly revoked.
We may elect to redeem the total amount or a portion of a renewable note at
a redemption price of 100% of its principal amount plus accrued interest. If we
decide to redeem a renewable note we will notify you by first class mail at
least 30 calendar days but, not more than 60 calendar days prior to the
redemption date.
We may also issue renewable notes under which the Spread and/or Spread
Multiplier is reset by a remarketing agent using remarketing procedures
included in the pricing supplement.
Extendible Notes
We may issue extendible fixed rate notes under which we have the option to
extend the notes' stated maturity date for one or more whole years up to a date
specified in the pricing supplement. If we elect to extend the notes, we must
notify CMB at least 45 calendar days and not more than 60 calendar days prior
to the notes' original stated maturity date. CMB will notify you of our
decision to extend the Maturity of the notes by first class mail. The notice
will specify the notes' new Maturity date, the interest rate applicable to the
extension period and any applicable redemption provisions.
We can increase the interest rate for the extension period by notifying CMB
at any time prior to 10:00 a.m., New York City time, on the twentieth calendar
day before the extended notes are scheduled to mature. CMB will send you notice
of the increase in interest rate in a manner agreed upon by us and CMB. We
cannot revoke our election to increase the interest rate.
If we elect to extend the Maturity of an extendible note, you have the
option to require us to repay such note on the Maturity date then in effect at
a price equal to the principal amount of the note plus any accrued interest to
such date. To exercise this option you must notify CMB at least 25 calendar
days but not more than 60 calendar days prior to the date the notes are
scheduled to mature. You may notify CMB either by delivering to CMB the note
with the attached "Option to Elect Repayment" form completed, or by delivering
to CMB a letter from a broker/dealer, bank or trust company notifying CMB of
your intent to redeem your notes and guaranteeing that you will deliver the
note and the attached "Option to Elect Repayment" form not later than five
Business Days after the date set for redemption. You may revoke your election
to be repaid at any time before 3:00 p.m., New York City time, on the twentieth
calendar day prior to the date the notes are scheduled to mature.
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Amortizing Notes
We may offer amortizing notes. Unless otherwise specified in the applicable
Pricing Supplement, interest on an amortizing note will be computed on the
basis of a 360-day year of twelve 30-day months. Payments on amortizing notes
will be applied first to interest due and payable thereon and then to the
reduction of the unpaid principal amount. Further information about amortizing
notes including an amortization schedule will be included in the pricing
supplement.
Original Issue Discount Notes
We may issue Original Issue Discount Notes. Original Issue Discount Notes
are notes issued at a discount from the principal amount payable at Maturity.
Certain additional considerations relating to Original Issue Discount Notes may
be described in the pricing supplement.
Other Provisions, Addenda
We may modify any provision of a note by using the section marked "Other
Provisions" or by providing an addendum to the note.
Euro Redenomination
If notes are denominated in a foreign currency which may be replaced by
euro, we may include provisions in the pricing supplement allowing for the
redenomination of the notes from the original currency to euro.
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UNITED STATES TAX CONSIDERATIONS
The following is a summary of the principal United States federal income tax
considerations that may be relevant to you. The summary is based upon the
advice of James M. Kalashian, our senior tax counsel. This summary is based on
the Internal Revenue Code of 1986, administrative pronouncements, judicial
decisions and existing and proposed Treasury regulations, all of which may
change after the date of this prospectus supplement. This summary assumes that
you will hold notes as capital assets. It does not discuss all of the tax
considerations that may be relevant to holders that may be subject to special
tax rules, such as certain financial institutions, insurance companies, dealers
in securities or foreign currencies, U.S. holders whose "functional currency"
is not the U.S. dollar, persons holding notes in connection with a hedging
transaction, a "straddle" transaction, conversion transaction or other
integrated transaction, traders in securities that elect to mark-to-market,
holders liable for alternative minimum tax or persons who have ceased to be
United States citizens or to be taxed as resident aliens.
You should consult your tax advisor about the tax consequences of holding
notes, including the application of the United States federal income tax laws
to your particular situation as well as any tax considerations arising under
any State, local or other tax law.
U.S. Holders
As used herein, a "U.S. holder" means a beneficial owner of a note that is
for United States federal income tax purposes (i) a citizen or resident of the
United States that is an individual, (ii) a corporation (or an entity treated
as a corporation for U.S. Federal income tax purposes) created or organized in
or under the laws of the United States, any state thereof or the District of
Columbia, (iii) an estate the income of which is subject to United States
federal income taxation regardless of its source, or (iv) a trust if a court
within the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust, or if such trust
has a valid election in effect under applicable U.S. Treasury regulations to be
treated as United States person. If a partnership holds a note, the tax
treatment of a partner will generally depend on the status of the partner and
on the activities of the partnership. Partners in partnerships that hold notes
should consult their tax advisors.
Payments of Interest
Payments of interest on a note generally will be taxable to a U.S. holder as
ordinary interest income at the time such holder accrues or receives such
payments (in accordance with the holder's method of tax accounting). Under the
OID Regulations, interest on a note that matures one year or less from the date
it is issued will be taxed as described below under "Original Issue Discount
Notes." Special rules concerning the payment of interest on original issue
discount notes, certain floating rate notes and foreign currency notes, are
described under "Original Issue Discount Notes" and "Foreign Currency Notes"
below.
Sale, Exchange and Retirement of 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 transaction and the holder's adjusted tax basis in the note.
The amount realized does not include any amount attributable to accrued
interest on the note that has not previously been included in income. Amounts
attributable to accrued interest are treated as interest as described under
"Payments of Interest" above. A U.S. holder's adjusted tax basis in a note will
equal the cost of the note to such holder, increased by the amounts of any
original issue discount and market discount previously included in income by
the holder with respect to such note and reduced by any amortized premium and
any principal payments received by the holder and, in the case of an Original
Issue Discount Note, by the amounts of any payments that do not constitute
qualified stated interest (as defined below).
Subject to the discussion regarding "Foreign Currency Notes" below, gain or
loss realized by a U.S. holder on the sale, exchange or retirement of a note
will be capital gain or loss (except to the extent of any accrued market
discount or, in the case of a short-term note (notes which have a maturity of
one year or less), to the extent of any original issue discount not previously
included in the holder's taxable income), and will be
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long-term capital gain or loss if at the time of the transaction, the note has
been held for more than one year. The excess of net long-term capital gains
over net short-term capital losses is taxed at a lower rate than ordinary
income for certain non-corporate taxpayers. The distinction between capital
gain or loss and ordinary income or loss is also relevant for purposes of,
among other things, limitations on the deductibility of capital losses.
Original Issue Discount Notes
A U.S. holder of a note, other than a short-term note, issued with original
issue discount must include original issue discount in income as ordinary
interest for United States federal income tax purposes as it accrues under a
constant yield method in advance of receipt of the cash payments attributable
to such income, regardless of such holder's regular method of tax accounting.
For United States federal income tax purposes, original issue discount is the
excess of the stated redemption price at maturity of a note over its issue
price, if such excess equals or exceeds a de minimis amount (generally 1/4 of
1% of the note's stated redemption price at maturity multiplied by the number
of complete years to its maturity from its issue date or, in the case of a note
providing for a payment of any amount other than qualified stated interest
prior to maturity, multiplied by the weighted average maturity of such note).
The issue price of each note in an issue of notes equals the first price at
which a substantial amount of such notes has been sold for money (ignoring
sales to bond houses, brokers, or similar persons or organizations acting in
the capacity of underwriters, placement agents or wholesalers). The stated
redemption price at maturity of a note is the sum of all payments provided by
the note other than qualified stated interest payments. The term "qualified
stated interest" generally means stated interest that is unconditionally
payable in cash or property (other than debt instruments of the issuer) at
least annually at a single fixed rate or, as described below, certain floating
rates. If, however, a note bears interest for one or more accrual periods at a
rate below the rate applicable for the remaining term of such note (e.g., notes
with teaser rates or interest holidays) and neither the resulting foregone
interest on such note nor any discount created by the note's stated principal
amount being in excess of its issue price equals or exceeds the de minimis
amount described above, then the stated interest on the note will be treated as
qualified stated interest. Holders of a note having de minimis original issue
discount generally must include a proportionate amount of each payment of
stated principal in income as gain realized on retirement of the note.
In general, the amount of original issue discount included in income by the
initial U.S. holder of a note issued with original issue discount is the sum of
the daily portions of original issue discount with respect to such note for
each day during the taxable year (or portion of the taxable year) in which such
holder held such note. The "daily portion" of original issue discount on any
note issued with original issue discount is determined by allocating to each
day in any accrual period a ratable portion of the original issue discount
allocable to that accrual period. An accrual period may be of any length and
the accrual period may vary in length over the term of the note, provided that
each accrual period is no longer than one year and each scheduled payment of
principal or interest occurs either on the final day of an accrual period or on
the first day of an accrual period. The amount of original issue discount
allocable to each accrual period is generally equal to the difference between
(i) the product of the note's adjusted issue price at the beginning of such
accrual period and its yield to maturity (determined on the basis of
compounding at the close of each accrual period and appropriately adjusted to
take into account the length of the particular accrual period), and (ii) the
amount of any qualified stated interest payments allocable to such accrual
period. The "adjusted issue price" of a note issued with original issue
discount at the beginning of any accrual period is the sum of the issue price
of the note plus the amount of original issue discount previously includible in
the gross income of any holder minus the amount of any prior payments on the
note that were not qualified stated interest payments. Under these rules, U.S.
holders generally will have to include in income increasingly greater amounts
of original issue discount in successive accrual periods.
A U.S. holder who purchases a note issued with original issue discount for
an amount that is greater than its adjusted issue price as of the purchase date
and less than or equal to the sum of all amounts payable on the
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note after the purchase date other than payments of qualified stated interest
will be considered to have purchased the note at an "acquisition premium".
Under the acquisition premium rules, the amount of original issue discount
which such U.S. holder must include in its gross income with respect to such
note for any taxable year (or portion thereof in which the holder holds the
note) will be reduced (but not below zero) by the portion of the acquisition
premium properly allocable to the period.
Under the OID Regulations, floating rate notes are subject to special rules
whereby a floating rate note will qualify as a variable rate debt instrument if
(a) its issue price does not exceed the total non-contingent principal payments
due under the floating rate note by more than a specified de minimis amount,
and (b) it provides for stated interest, paid or compounded at least annually,
at current values of (i) one or more qualified floating rates, (ii) a single
fixed rate and one or more qualified floating rates, (iii) a single objective
rate, or (iv) a single fixed rate and a single objective rate that is a
qualified inverse floating rate.
A "qualified floating rate" is any variable rate where variations in the
value of such rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
floating rate note is denominated. Although a multiple of a qualified floating
rate will generally not itself constitute a qualified floating rate, a variable
rate equal to the product of a qualified floating rate and a fixed multiple
that is greater than 0.65 but not more than 1.35 will constitute a qualified
floating rate. A variable rate equal to the product of a qualified floating
rate and a fixed multiple that is greater than 0.65 but not more than 1.35,
increased or decreased by a fixed rate, will also constitute a qualified
floating rate. In addition, two or more qualified floating rates that can
reasonably be expected to have approximately the same values throughout the
term of the floating rate note (e.g., two or more qualified floating rates with
values within 25 basis points of each other as determined on the floating rate
note's issue date) will be treated as a single qualified floating rate.
Notwithstanding the foregoing, a variable rate that would otherwise constitute
a qualified floating rate but which is subject to one or more restrictions such
as a maximum stated interest rate (i.e., a cap), a minimum stated interest rate
(i.e., a floor) or an interest rate governor may, under certain circumstances,
fail to be treated as a qualified floating rate unless such cap, floor or
governor is fixed throughout the term of the note or certain other conditions
are met. An "objective rate" is a rate (other than a qualified floating rate)
that is determined using a single fixed formula and that is based upon
objective financial or economic information (other than information that is
within the control of, or unique to the circumstances of, the issuer or a
related party). The OID Regulations also provide that other variable interest
rates may be treated as objective rates if so designated by the IRS in the
future. Despite the foregoing, a variable rate of interest on a floating rate
note will not constitute an objective rate if it is reasonably expected that
the average value of such rate during the first half of the floating rate
note's term will be either significantly less than or significantly greater
than the average value of the rate during the final half of the floating rate
note's term. A "qualified inverse floating rate" is any objective rate where
such rate is equal to a fixed rate minus a qualified floating rate, as long as
variations in the rate can reasonably be expected to inversely reflect
contemporaneous variations in the qualified floating rate. The OID Regulations
also provide that if a floating rate note provides for stated interest at a
fixed rate for an initial period of less than one year followed by a variable
rate that is either a qualified floating rate or an objective 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 25 basis points), then the
fixed rate and the variable rate together will constitute either a single
qualified floating rate or objective rate, as the case may be.
If a floating rate note that provides for stated interest at either a single
qualified floating rate or a single objective rate throughout the term thereof
qualifies as a "variable rate debt instrument", then any stated interest on
such note which is unconditionally payable in cash or property (other than debt
instruments of the issuer) at least annually will constitute qualified stated
interest and will be taxed accordingly. Thus, a floating rate note that
provides for stated interest at either a single qualified floating rate or a
single objective rate throughout the term thereof and that qualifies as a
"variable rate debt instrument" under the OID Regulations will generally not be
treated as having been issued with original issue discount unless the floating
rate note is issued at a "true" discount (i.e., at a price below the note's
stated principal amount) in excess of a specified
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de minimis amount. Original issue discount on such a floating rate note arising
from "true" discount is allocated to an accrual period using the constant yield
method described above by assuming that the variable rate is a fixed rate equal
to (i) in the case of a qualified floating rate or qualified inverse floating
rate, the value as of the issue date of the qualified floating rate or
qualified inverse floating rate, or (ii) in the case of an objective rate
(other than a qualified inverse floating rate), a fixed rate that reflects the
yield that is reasonably expected for the floating rate note. The qualified
stated interest allocable to an accrual period is increased (or decreased) if
the interest actually paid during an accrual period exceeds (or is less than)
the interest assumed to be paid during the accrual period pursuant to the
foregoing rules.
In general, any other floating rate note that qualifies as a "variable rate
debt instrument" will be converted into an "equivalent" fixed rate debt
instrument for purposes of determining the amount and accrual of original issue
discount and qualified stated interest on the floating rate note. The OID
Regulations generally require that such a floating rate note be converted into
an "equivalent" fixed rate debt instrument by substituting any qualified
floating rate or qualified inverse floating rate provided for under the terms
of the floating rate note with a fixed rate equal to the value of the qualified
floating rate or qualified inverse floating rate, as the case may be, as of the
floating rate note's issue date. Any objective rate (other than a qualified
inverse floating rate) provided for under the terms of the floating rate note
is converted into a fixed rate that reflects the yield that is reasonably
expected for the floating rate note. In the case of a floating rate note that
qualifies as a "variable rate debt instrument" and provides for stated interest
at a fixed rate in addition to either one or more qualified floating rates or a
qualified inverse floating rate, the fixed rate is initially converted into a
qualified floating rate (or a qualified inverse floating rate, if the floating
rate note provides for a qualified inverse floating rate). Under such
circumstances, the qualified floating rate or qualified inverse floating rate
that replaces the fixed rate must be such that the fair market value of the
floating rate note as of the floating rate note's issue date is approximately
the same as the fair market value of an otherwise identical debt instrument
that provides for either the qualified floating rate or qualified inverse
floating rate rather than the fixed rate. Subsequent to converting the fixed
rate into either a qualified floating rate or a qualified inverse floating
rate, the floating rate note is then converted into an "equivalent" fixed rate
debt instrument in the manner described above.
Once the floating rate note is converted into an "equivalent" fixed rate
debt instrument pursuant to the foregoing rules, the amount of original issue
discount and qualified stated interest, if any, are determined for the
"equivalent" fixed rate debt instrument by applying the general original issue
discount rules to the "equivalent" fixed rate debt instrument and a U.S. holder
of the floating rate note will account for such original issue discount and
qualified stated interest as if the holder held the "equivalent" fixed rate
debt instrument. Each accrual period, appropriate adjustments will be made to
the amount of qualified stated interest or original issue discount assumed to
have been accrued or paid with respect to the "equivalent" fixed rate debt
instrument in the event that such amounts differ from the actual amount of
interest accrued or paid on the floating rate note during the accrual period.
If a floating rate note does not qualify as a "variable rate debt
instrument" under the OID Regulations, then the floating rate note would be
treated as a contingent payment debt instrument ("CPDI"). In general, the CPDI
regulations would cause the timing and character of income, gain or loss
reported on a contingent payment debt instrument to substantially differ from
the timing and character of income, gain or loss reported on such instrument
under general principles of United States federal income tax law. Specifically,
the CPDI regulations generally require a U.S. holder of such an instrument to
include future contingent and noncontingent interest payments in income as such
interest accrues based upon a projected payment schedule. Adjustments are made
to the extent actual payments differ from the projected payment schedule.
Moreover, in general, under the CPDI regulations, any gain recognized by a U.S.
holder on the sale, exchange, or retirement of a contingent payment debt
instrument will be treated as ordinary income rather than as capital gain and
all or a portion of any loss realized could be treated as ordinary loss as
opposed to capital loss (subject to certain limitations). If you are a U.S.
holder and plan to purchase indexed notes or floating rate notes providing for
contingent payments you should review the discussion regarding taxation in the
applicable pricing supplement and you should consult your tax adviser about the
federal income tax consequences of owning and disposing of such notes.
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Certain of the notes (i) may be redeemable at our option prior to their
stated maturity (a "call"), and/or (ii) may be repayable at the option of the
holder prior to their stated maturity (a "put"). Notes containing such features
may be subject to rules that differ from the general rules discussed above. If
you intend to purchase notes with these features you should consult your tax
advisor, since the original issue discount consequences will depend, in part,
on the particular terms and features of the notes you buy.
If you are a U.S. holder, you can generally elect to include in income all
interest (including stated interest, acquisition discount, original issue
discount, de minimis original issue discount, market discount, de minimis
market discount, and unstated interest, as adjusted by any amortizable bond
premium or acquisition premium) that accrues on a note by using the constant
yield method applicable to original issue discount subject to certain
limitations and exceptions. If you make such an election, you may be deemed to
have made the elections described below in "Premium and Market Discount."
Short-Term Notes
Short-term notes will be treated as having been issued with original issue
discount. All payments of interest on a short-term note will be included in the
stated redemption price at maturity of the note. In general, a U.S. holder of a
short-term note that uses the cash method of tax accounting is not required to
accrue original issue discount unless the holder elects to do so. If such
election is not made, any gain recognized by the holder on the sale, exchange
or maturity of the short-term note will be ordinary income to the extent of the
original issue discount accrued on a straight-line basis, or upon election,
under the constant yield method (based on daily compounding), reduced by any
interest received, through the date of sale or maturity, and a portion of the
deductions otherwise allowable to the holder for any interest on borrowings
allocable to the short-term note will be deferred until a corresponding amount
of income is realized. U.S. holders who report income for federal income tax
purposes under the accrual method, and certain other holders including banks
and dealers in securities, are required to accrue original issue discount on a
short-term note on a straight-line basis unless an election is made to accrue
the original issue discount under a constant yield method (based on daily
compounding).
Premium and Market Discount
If a U.S. holder purchases a note for an amount that is greater than the
"remaining redemption amount" (the total of all future payments to be made on
the note other than payments of qualified stated interest) the holder will be
considered to have purchased the note with "amortizable bond premium" equal in
amount to such excess, and may elect to amortize such premium over the
remaining term of the note, based on the holder's yield to maturity with
respect to the note as determined under the bond premium rules. A U.S. holder
may generally use the amortizable bond premium allocable to an accrual period
to offset qualified stated interest required to be included in the holder's
income with respect to the note in that accrual period. Moreover, where the
amortizable bond premium allocable to an accrual period exceeds the amount of
qualified stated interest allocable to such accrual period, such excess would
be allowed as a deduction for such accrual period, but only to the extent of
the U.S. holder's prior interest inclusions on the note. Any excess is
generally carried forward and is treated as bond premium allocable to the next
accrual period. A holder who elects to amortize bond premium must reduce his
tax basis in the note as described above under "Sale, Exchange and Retirement
of Notes". An election to amortize bond premium applies to all taxable debt
obligations held by the U.S. holder at the beginning of the first taxable year
to which the election applies or thereafter acquired and may be revoked only
with consent of the IRS. If a U.S. holder makes an election to include in
income all interest that accrues on a note by using the constant yield method
in respect of a note with amortizable bond premium, the holder will be deemed
to make the election described above to amortize bond premium for all of the
holder's debt instruments with amortizable bond premium, which may be revoked
only with the permission of the IRS.
If a U.S. holder purchases a note, other than a short-term note, for an
amount that is less than its stated redemption price at maturity or, in the
case of a note issued with original issue discount, its adjusted issue price as
of the purchase date, the amount of the difference will be treated as "market
discount," unless such
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difference is less than a specified de minimis amount (generally 1/4 of 1% of
the note's stated redemption price at maturity multiplied by the number of
complete years to maturity from the date the holder purchased such note).
Under the market discount rules, a U.S. holder will be required to treat any
partial principal payment (or, in the case of a note issued with original issue
discount, any payment that does not constitute qualified stated interest) on,
or any gain realized on the sale, exchange, retirement or other disposition of,
a note as ordinary income to the extent of the market discount which has not
previously been included in income and is treated as having accrued on such
note at the time of such payment or disposition. Market discount will be
considered to accrue ratably during the period from the date of acquisition to
the maturity date of the note, unless the holder elects to accrue market
discount on the basis of a constant yield method. In addition, if such note is
disposed of in certain non-taxable transactions accrued market discount will be
includible as ordinary income to the U.S. holder as if such holder had sold the
note at its then fair market value.
A U.S. holder will be required to defer the deduction for all or a portion
of the interest paid or accrued on any indebtedness incurred or continued to
purchase or carry a note with market discount until the maturity of the note or
its earlier disposition. A U.S. holder may elect to include market discount in
income currently as it accrues (on either a ratable or constant interest rate
basis), in which case the rules described above regarding the treatment as
ordinary income of gain upon the disposition of the note and upon the receipt
of certain cash payments and regarding the deferral of interest deductions will
not apply. Such election will generally apply to all taxable debt obligations
acquired in the taxable year for which such election is made or thereafter by
the holder and may not be revoked without the consent of the IRS. If a U.S.
holder makes an election to include in income all interest that accrues on a
note by using the constant yield method in respect of a note with market
discount, the holder will be deemed to have made the election described in the
preceding two sentences. Generally, such currently included market discount is
treated as interest for federal income tax purposes.
Foreign Currency Notes
The following summary relates to "foreign currency notes" (notes denominated
in or providing for payments determined by reference to a specified currency
other than the U.S. dollar).
A U.S. holder who uses the cash method of accounting for United States
federal income tax purposes and who receives a payment of interest with respect
to a foreign currency note (including any qualified stated interest on an
original issue discount note) will be required to include in income the U.S.
dollar value of the foreign currency payment (determined on the date such
payment is received) regardless of whether the payment in fact is converted to
U.S. dollars at that time. To the extent foreign currency is received, the U.S.
dollar value will be the U.S. holder's tax basis in the foreign currency.
A U.S. holder who uses the accrual method of accounting for federal income
tax purposes, or who otherwise is required to accrue interest (including
original issue discount) prior to receipt, will be required to include in
income the U.S. dollar value of the amount of interest income (including
original issue discount or market discount and reduced by amortizable bond
premium or acquisition premium to the extent applicable) that is required to be
accrued with respect to a foreign currency note during an accrual period. The
U.S. dollar value of such accrued income will be determined by translating such
income at the average rate of exchange for the accrual period or, with respect
to an accrual period that spans two taxable years, at the average rate for the
partial period within the taxable year. A U.S. holder may also elect to
translate accrued interest income using the rate on exchange of the last day of
the accrual period or, with respect to an accrual period that spans two taxable
years, using the rate of exchange on the last day of the taxable year. If the
last day of an accrual period is within five Business Days of the date of
receipt of the accrued interest, a U.S. holder may translate such interest
using the rate of exchange on the date of receipt. The above election will
apply to all other debt obligations held by the holder and may not be changed
without the consent of the IRS. U.S. holders should consult their own tax
advisors before making the above election. A U.S. holder will recognize
exchange gain or loss (which will be treated as ordinary income or loss) with
respect to accrued interest income on the date the holder receives such income.
The amount of ordinary income or loss recognized will equal the difference, if
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any, between the U.S. dollar value of the foreign currency payment received
(determined on the date such payment is received) in respect of such accrual
period and the U.S. dollar value of interest income that has accrued during
such accrual period (as determined above).
With respect to a foreign currency note issued with amortizable bond
premium, such premium is determined in the relevant foreign currency and
reduces interest income in units of the foreign currency. A U.S. holder should
recognize exchange gain or loss equal to the difference between the U.S. dollar
value of the bond premium amortized with respect to a period, determined on the
date the interest attributable to such period is received, and the U.S. dollar
value of the bond premium determined on the date of the acquisition of the
foreign currency note.
A U.S. holder who purchases a foreign currency note with previously owned
foreign currency will recognize ordinary income or loss in an amount equal to
the difference, if any, between such holder's tax basis in the foreign currency
and the U.S. dollar fair market value of the foreign currency used to purchase
the foreign currency note, determined on the date of purchase.
Upon the sale, exchange or retirement of a foreign currency note, a U.S.
holder generally will recognize income, gain or loss as described above. If a
U.S. holder receives foreign currency on such a sale, exchange or retirement,
the amount realized will be based on the U.S. dollar value of the foreign
currency on (i) the date of the receipt of the foreign currency in the case of
a cash basis U.S. holder, and (ii) the date of disposition in the case of an
accrual basis U.S. holder. In the case of a note that is denominated in a
foreign currency and is traded on an established securities market, a cash
basis U.S. holder (or, upon election, an accrual basis U.S. holder) will
determine the U.S. dollar value of the amount realized by translating the
foreign currency payment at the spot rate of exchange on the settlement date of
the sale. An accrual basis taxpayer making such an election must apply it
consistently and cannot change such election without consent of the IRS. A U.S.
holder's adjusted tax basis in a foreign currency note will equal the cost of
the foreign currency note to such holder, increased by the amounts of any
market discount or original issue discount previously included in income by the
holder with respect to such foreign currency note and reduced by any amortized
acquisition or other premium and any principal payments received by the holder.
A U.S. holder's tax basis in a foreign currency note will be the U.S. dollar
value of the foreign currency amount paid for such foreign currency note, or of
the foreign currency amount of the adjustment, determined on the date of such
purchase. Subsequent adjustments to such holder's tax basis related to original
issue or market discount generally is made at the currency exchange rate for
the accrual period to which such discount relates (unless the U.S. holder has
made an election to use a different method).
Gain or loss realized upon the sale, exchange or retirement of a foreign
currency note that is attributable to fluctuations in currency exchange rates
will be ordinary income or loss which will not be treated as interest income or
expense. Gain or loss attributable to fluctuations in exchange rates will equal
the difference between (i) the U.S. dollar value of the foreign currency
principal amount of the foreign currency note, and any payment with respect to
accrued interest, determined on the date such payment is received or the
foreign currency note is disposed of, and (ii) the U.S. dollar value of the
foreign currency principal amount of the foreign currency note, determined on
the date the U.S. holder acquired the note, and the U.S. dollar value of the
accrued interest received, determined by translating such interest at the
average exchange rate (or at a spot rate when applicable as described above)
for the accrual period. Such foreign currency gain or loss will be recognized
only to the extent of the total gain or loss realized by the U.S. holder on the
sale, exchange or retirement of the foreign currency note. The source of such
foreign currency gain or loss will be determined by reference to the residence
of the U.S. holder or the "qualified business unit" of the U.S. holder on whose
books the note is properly reflected. Any gain or loss realized by the U.S.
holder in excess of such foreign currency gain or loss will generally be
capital gain or loss (except, in the case of a short-term note, to the extent
of any original issue discount not previously included in the holder's income).
A U.S. holder will have a tax basis in any foreign currency received as
interest or on the sale, exchange or retirement of a foreign currency note
equal to the U.S. dollar value of such foreign currency, determined at the
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time such interest is received or at the time of the sale, exchange or
retirement. Any gain or loss realized by a U.S. holder on a sale or other
disposition of foreign currency (including its exchange for U.S. dollars or its
use to purchase foreign currency notes) will be ordinary income or loss.
Certain Other Notes
The United States federal income tax consequences to a holder of the
ownership and disposition of indexed notes, dual currency notes, amortizing
notes, renewable notes, and extendible notes may vary depending upon the exact
terms of the notes and such consequences are not described herein. If you plan
to purchase these types of notes you should refer to the tax information
included in the pricing supplement for additional information.
Backup Withholding
Certain noncorporate U.S. holders may be subject to backup withholding on
payments of principal, premium and interest (including original issue discount,
if any) on, and the proceeds of disposition of, a note. Backup withholding will
apply only if the holder (i) fails to furnish its taxpayer identification
number, which, for an individual, is his Social Security number, (ii) furnishes
an incorrect tax identification number, (iii) is notified by the IRS that it
has failed to properly report payments of interest or dividends, or (iv) under
certain circumstances, fails to certify, under penalties of perjury, that the
holder has furnished a correct tax identification number and that the holder
has not been notified by the IRS that it is subject to backup withholding for
failure to report interest or dividend payments. You should consult your tax
adviser regarding your ability to qualify for an exemption from backup
withholding and the procedure for obtaining such an exemption.
In addition, upon the sale of a note to (or through) a broker, the broker
must collect backup withholding tax with respect to the entire purchase price,
unless either (i) the broker determines that the seller is a corporation or
other exempt recipient, or (ii) the seller provides, in the required manner,
certain identifying information. Such a sale must also be reported by the
broker to the IRS, unless the broker determines that the seller is an exempt
recipient.
Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States federal income tax provided the required
information is furnished to the IRS.
Non-U.S. Holders
Under present United States federal tax law, and subject to the discussion
below concerning backup withholding:
(a) payments of principal, interest (including original issue discount,
if any) and premium on notes by us or our paying agent to any holder that
is not a U.S. holder (a "non-U.S. holder") will be exempt from the 30%
United States federal withholding tax (or such lower rate as determined
under applicable treaty), provided that (i) such holder does not own,
actually or constructively, 10% or more of the total combined voting power
of all classes of our stock entitled to vote, is not a controlled foreign
corporation related, directly or indirectly, to us through stock ownership,
and is not a bank receiving interest described in Section 881(c)(3)(A) of
the Code and (ii) the statement requirement set forth in Section 871(h) or
Section 881(c) of the Code has been fulfilled with respect to the
beneficial owner, as discussed below;
(b) a non-U.S. holder of a note will not be subject to United States
federal income tax on gain realized on the sale, exchange or other
disposition of such note, unless (i) such holder is an individual who is
present in the United States for 183 days or more in the taxable year of
the disposition, and either the gain is attributable to an office or other
fixed place of business maintained by such individual in the United States,
or, generally, such individual has a "tax home" in the United States, or
(ii) such gain is effectively connected with the holder's conduct of a
trade or business in the United States; and
S-27
(c) a note held by an individual who is not, for United States estate
tax purposes, a resident or citizen of the United States at the time of his
death generally will not be subject to United States federal estate tax as
a result of such individual's death, provided that the individual does not
own, actually or constructively, 10% or more of the total combined voting
power of all classes of our stock entitled to vote and, at the time of such
individual's death, payments with respect to such note would not have been
effectively connected to the conduct by such individual of a trade or
business in the United States.
The rules described in subparagraphs (a) and (c) above will not apply to
contingent interest if the amount of such interest is described in Section
871(h)(4) of the Code (generally, interest determined with reference to the
profitability or similar indicia of our financial performance or the financial
performance of a related person).
The statement requirement referred to in subparagraph (a) will be fulfilled
if the beneficial owner of a note certifies on IRS Form W-8BEN (or successor
form), under penalties of perjury, that it is not a United States person and
provides its name and address and (i) such beneficial owner files such Form W-
8BEN (or successor form) with the withholding agent, or (ii) in the case of a
note held by a securities clearing organization, bank or other financial
institution holding customers' securities in the ordinary course of its trade
or business holding the note on behalf of the beneficial owner, such financial
institution files with the withholding agent a statement that it has received
the Form W-8BEN (or successor form) from the holder and furnishes the
withholding agent with a copy thereof. With respect to notes held by a foreign
partnership, the foreign partnership will be required, in addition to providing
Form W-8IMY (or successor form), to attach an appropriate certification by each
partner. Prospective investors, including foreign partnerships and their
partners, should consult their tax advisers regarding possible additional
reporting requirements.
If a non-U.S. holder of a note is engaged in a trade or business in the
United States, and if interest (including original issue discount) on the note
(or gain realized on its sale, exchange or other disposition) is effectively
connected with the conduct of such trade or business, the non-U.S. holder,
although exempt from the withholding tax discussed in the preceding paragraphs,
will generally be subject to regular United States income tax on such
effectively connected income in the same manner as if it were a U.S. holder
(see "U.S. Holders" above). In lieu of the certificate described in the
preceding paragraph, such a holder will be required to provide to the
withholding agent a properly executed IRS Form W-8ECI (or successor form) to
claim an exemption from withholding tax. In addition, if such non-U.S. holder
is a foreign corporation, it may be subject to a 30% branch profits tax (unless
reduced or eliminated by an applicable treaty) on its earnings and profits for
the taxable year attributable to such effectively connected income, subject to
certain adjustments.
Backup withholding will not apply to payments made on a note if the
statement required by Sections 871(h) and 881(c) are received, provided that we
or our paying agent, as the case may be, does not have actual knowledge that
the payee is a United States person.
Payments on the sale, exchange or other disposition of a note made to or
through a foreign office of a broker generally will not be subject to backup
withholding. However, if such broker is (i) a United States person, (ii) a
controlled foreign corporation for United States federal income tax purposes,
(iii) a foreign person 50 percent or more of whose gross income is effectively
connected with a United States trade or business for a specified three-year
period, or (iv) a foreign partnership with certain connections to the United
States, then information reporting will be required unless the broker has in
its records documentary evidence that the beneficial owner is not a United
States person and certain other conditions are met or the beneficial owner
otherwise establishes an exemption. Backup withholding may apply to any payment
that such broker is required to report if the broker has actual knowledge that
the payee is a United States person. Payments to or through the United States
office of a broker will be subject to backup withholding and information
reporting unless the holder certifies, under penalties of perjury, that it is
not a United States person or otherwise establishes exemption.
If you are not a U.S. holder you should consult your tax adviser regarding
the application of information reporting and backup withholding to your
particular situation, the availability of an exemption therefrom, and
S-28
the procedure for obtaining such an exemption, if available. Any amounts
withheld from a payment to a non-U.S. holder under the backup withholding rules
will be allowed as a credit against such holder's United States federal income
tax liability and may entitle such holder to a refund, provided that the
required information is furnished to the IRS.
PLAN OF DISTRIBUTION
General
We are offering the notes on a continuous basis through agents that have
agreed to use their reasonable best efforts to solicit orders. We have the
right to accept orders or reject proposed purchases in whole or in part. The
agents also have the right, using their reasonable discretion, to reject any
proposed purchase of the notes in whole or in part. We expect to pay an agent a
commission ranging from 0.05% to 0.60% of the principal amount of notes they
sell. The exact commission paid will be determined by the stated maturity of
the notes sold. The following table describes the potential proceeds we will
receive but does not include expenses payable by us which we estimate to be
$4,564,500, including SEC filing fees:
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Price to Agents' Proceeds to
Public Commissions Us
-------------------------------------------------------------------------------
Per Note... 100% 0.05% - 0.60% 99.40% - 99.95%
-------------------------------------------------------------------------------
$13,237,800 - $26,316,747,046 -
Total...... $26,475,600,650 $158,853,604 $26,462,362,850
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
We may arrange for notes to be sold through any agent or may sell notes
directly to investors. If we sell notes directly to investors, no commission or
discount will be paid. We also may sell notes to any agent as principal for the
agent's account at a price agreed upon at the time of sale. These notes may be
resold by the agent to investors at a fixed public offering price or at
prevailing market prices or at a related price, as determined by the agent.
Unless otherwise specified in the pricing supplement, any note sold to an agent
as principal will be purchased at a price equal to 100% of the principal amount
minus a discount equal to the commission that would be paid on an agency sale
of a note of identical Maturity.
Agents may sell notes purchased from us as principal to other dealers for
resale to investors and other purchasers and may provide any portion of the
discount received in connection with their purchase from us to such dealers.
After the initial public offering of the notes, the public offering price, the
concession and the discount may be changed.
The notes will not have an established trading market when issued. Also, the
notes will not be listed on any securities exchange. The agents may make a
market in the notes, but are not obligated to do so and may discontinue any
market-making at any time without notice. We cannot assure you that a secondary
market for any notes will develop or that any notes will be sold.
In connection with the offering of notes, the agents may engage in certain
transactions that stabilize the price of notes. Such transactions may consist
of bids or purchases for the purpose of pegging, fixing or maintaining the
price of notes. If the agents create a short position in notes, i.e., if they
sell notes in an aggregate principal amount exceeding that set forth in the
applicable pricing supplement, the agents may reduce that short position by
purchasing notes in the open market. In general, purchases of notes for the
purpose of stabilization or to reduce a short position could cause the price of
notes to be higher than it might be in the absence of such purchases.
Neither we nor any of the agents makes any representation or prediction as
to the direction or magnitude of any effect that the transactions described in
the immediately preceding paragraph may have on the price of notes. In
addition, neither we nor any of the agents makes any representation that the
agents will engage in any such transactions or that such transactions, once
commenced, will not be discontinued without notice.
S-29
The agents may be deemed to be "underwriters" within the meaning of the
Securities Act. We have agreed to indemnify the agents against certain
liabilities, including liabilities under the Securities Act, or to contribute
to payments that they may be required to make in connection with such
indemnification.
We are offering the notes through the following agents: Deutsche Banc Alex.
Brown Inc., GECC Capital Markets Group, Inc., Goldman Sachs & Co., Lehman
Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan
Securities Inc., Salomon Smith Barney Inc. and UBS Warburg LLC. We may also
sell notes from time to time through one or more additional agents on
substantially the same terms as those applicable to the agents named above.
The agents and dealers and their affiliates may engage in transactions with,
or perform services for, us or our affiliates in the ordinary course of their
businesses. GECC owns all of the common stock of GECC Capital Markets Group,
Inc., one of the agents. Each offering of the notes in which GECC Capital
Markets Group, Inc. participates will be conducted in compliance with the
requirements of Rule 2720 of the NASD regarding an NASD member firm
distributing the securities of an affiliate. The maximum commission or discount
to be received by any NASD member or independent agent will not be greater than
8% of the principal amount of notes they sell.
LEGAL OPINIONS
Nancy E. Barton, our General Counsel or David P. Russell, our Counsel,
Treasury Operations, will issue an opinion about the legality of the notes for
us. Davis Polk & Wardwell, New York, New York will issue an opinion for the
agents. Ms. Barton, Mr. Russell and Mr. Kalashian (who is referred to under
"United States Tax Considerations"), together with members of their families,
each owns, has options to purchase and has other interests in shares of common
stock of General Electric Company.
S-30
GLOSSARY
The following is a glossary of terms used in this prospectus supplement.
"Bond Equivalent Yield" means the rate for which is quoted on a bank
discount basis, a yield (expressed as a percentage) calculated in accordance
with the following formula:
DxN
Bond Equivalent Yield = --------- X 100
360-DxM
where "D" refers to the per annum rate for the security, quoted on a bank
discount basis and expressed as a decimal; "N" refers to 365 or 366, as the
case may be and "M" refers to the actual number of days in the period for which
interest is being calculated.
"Business Day" means any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which commercial banks are authorized or
required by law, regulation or executive order to close in The City of New
York; provided, however, that, with respect to notes denominated in a foreign
currency, such day is also not a day on which commercial banks are authorized
or required by law, regulation or executive order to close in the Principal
Financial Center of the country issuing the specified currency (or, if the
specified currency is euro, such day is also a day on which the Trans-European
Automated Real-Time Gross Settlement Express Transfer (TARGET) System is open);
provided, further, that, with respect to LIBOR notes (other than those
denominated in euro), such day is also a London Business Day.
"Calculation Date" means the date by which the calculation agent calculates
an interest rate for a floating rate note, which will be in respect of any
Interest Determination Date, the earlier of (i) the tenth day after the
Interest Determination Date or, if such day is not a Business Day, the next
Business Day, or (ii) the Business Day immediately before the applicable
interest payment date or Maturity, as the case may be (except in the case of a
LIBOR note where the Calculation Date is the Interest Determination Date).
"CMB" means The Chase Manhattan Bank which is our indenture trustee and
paying agent and registrar for the notes.
"Designated CMT Telerate Page" means the display on Telerate (or any
successor service) on the page designated in the applicable pricing supplement
(or any other page as may replace such page on such service. If no such page is
specified in the applicable pricing supplement, the Designated CMT Telerate
Page shall be 7052, for the most recent week.
"Designated LIBOR Currency" means the currency (including composite
currencies and euro) specified in the pricing supplement as to which LIBOR
shall be calculated. If no such currency is specified in the pricing
supplement, the Designated LIBOR Currency will be U.S. dollars.
"Designated LIBOR Page" means either (a) if "LIBOR Reuters" is specified in
the applicable pricing supplement, the display on the Reuters Monitor Money
Rates Service for the purpose of displaying the London interbank rates of major
banks for the applicable Designated LIBOR Currency, or (b) if "LIBOR Telerate"
is specified in the applicable pricing supplement or neither "LIBOR Reuters"
nor "LIBOR Telerate" is specified as the method for calculating LIBOR, the
display on Telerate (or any successor service) for the purpose of displaying
the London interbank rates of major banks for the applicable Designated LIBOR
Currency.
"DTC" means The Depository Trust Company.
"euro" means the lawful currency of the member states of the European Union
that adopt the single currency in accordance with the Treaty establishing the
European Communities, as amended.
"FHLB Index" means the monthly weighted average cost of funds paid by member
institutions of the Eleventh Federal Home Loan Bank District most recently
announced by the Federal Home Loan Bank.
S-31
"H.15(519)" means the publication entitled "Statistical Release H.15(519),
Selected Interest Rates", or any successor publication published by the Board
of Governors of the Federal Reserve System.
"H.15 Daily Update" means the daily update of H.15(519), available through
the world-wide-web site of the Board of Governors of the Federal Reserve System
at http://www.bog.frb.fed.us/releases/h15/update, or any successor site or
publication.
"Indenture" means the Third Amended and Restated Indenture dated as of
February 27, 1997 between us and The Chase Manhattan Bank, as successor
trustee, as supplemented by the First Supplemental Indenture dated as of May 3,
1999 and the Second Supplemental Indenture dated as of July 2, 2001.
"Index Maturity" for any note is the period of maturity of the instrument,
obligation or index from which the interest rate is calculated.
"Interest Determination Date" with respect to the CD Rate and the CMT Rate
will be the second Business Day immediately preceding the applicable Interest
Reset Date; the "Interest Determination Date" with respect to the Commercial
Paper Rate, the Federal Funds Rate and the Prime Rate will be the Business Day
immediately preceding the applicable Interest Reset Date; the "Interest
Determination Date" with respect to the Eleventh District Cost of Funds Rate
will be the last working day of the month immediately preceding the applicable
Interest Reset Date on which the Federal Home Loan Bank of San Francisco
publishes the FHLB Index; and the "Interest Determination Date" with respect to
LIBOR will be the second London Business Day immediately preceding the
applicable Interest Reset Date, unless the Index Currency is (i) pounds
sterling, in which case the "Interest Determination Date" will be the
applicable Interest Reset Date or (ii) euro, in which case the Interest
Determination Date will be the second TARGET Settlement Date preceding such
Interest Reset Date. With respect to the Treasury Rate, the "Interest
Determination Date" will be the day in the week in which the applicable
Interest Reset Date falls on which day Treasury bills are normally auctioned
(Treasury bills are normally sold at an auction held on Monday of each week,
unless such Monday is a legal holiday, in which case the auction is normally
held on the immediately succeeding Tuesday although such auction may be held on
the preceding Friday); provided, however, that if an auction is held on Friday
of the week preceding the applicable Interest Reset Date, the "Interest
Determination Date" will be such preceding Friday. The "Interest Determination
Date" pertaining to a floating rate note the interest rate of which is
determined by reference to two or more Interest rate bases will be the most
recent Business Day which is at least two Business Days prior to the applicable
Interest Reset Date for such floating rate note on which each Interest rate
basis is determinable. Each Interest rate basis will be determined as of such
date, and the applicable interest rate will take effect on the applicable
Interest Reset Date.
"London Business Day" means a day on which commercial banks are open for
business (including dealings in the Designated LIBOR Currency) in London.
"Maturity" means the date on which the principal of a note or an installment
of principal becomes due and payable as provided in the note or in the
Indenture, whether at stated maturity or by declaration of acceleration, call
for redemption or otherwise.
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the period for which accrued interest is being
calculated.
D x 360 x 100
Money Market Yield = -----------
360 - (D x M)
"Noon Buying Rate" means the noon U.S. dollar buying rate in The City of New
York for cable transfers of the specified foreign currency as certified by the
Federal Reserve Bank of New York as determined by CMB.
S-32
"OID Regulations" means regulations issued by the IRS concerning the
treatment of debt instruments issued with original issue discount.
"Original Issue Discount Note" means any note that provides for an amount
less than the principal amount thereof to be due and payable upon a declaration
of acceleration of the Maturity thereof pursuant to the Indenture.
"Principal Financial Center" means (i) the capital city of the country
issuing the currency in which the notes are denominated or (ii) the capital
city of the country to which the Designated LIBOR Currency relates, as
applicable, except, in the case of (i) or (ii) above, that with respect to the
following currencies, the "Principal Financial Center" will be as indicated
below:
Currency Principal Financial Center
-------- --------------------------
United States dollars................ The City of New York
Australian dollars................... Sydney
Canadian dollars..................... Toronto
South African rand................... Johannesburg
Swiss francs......................... Zurich
"Reuters Screen PRIME 1 Page" means the display on the Reuter Monitor Money
Rates Service (or any successor service) on the "US PRIME 1" page (or such
other page as may replace the US PRIME 1 page on such service) for the purpose
of displaying prime rates or base lending rates of major United States banks.
"Spread" means the number of basis points (one basis point equals one-
hundredth of a percentage point) to be added to or subtracted from the interest
rate of a floating rate note.
"Spread Multiplier" means the percentage of the interest rate that may be
specified in the applicable pricing supplement by which the interest rate or a
floating rate note will be multiplied.
"TARGET Settlement Date" means any day on which the Trans-European Automated
Real-Time Gross Settlement Express Transfer (TARGET) System is open.
"Telerate" means Bridge Telerate, Inc. (or any successor service).
"Telerate Page 120" means page 120 of Telerate, or any other page as may
replace such page on such service.
S-33
PROSPECTUS
General Electric Capital Corporation
Debt Securities
Warrants to Purchase Debt Securities
Preferred Stock
Guarantees, Letters of Credit and Promissory Notes or Loan Obligations,
Including Interests Therein
General Electric Capital Corporation may offer from time to time:
. senior, unsecured debt securities,
. warrants to purchase any of the debt securities,
. variable cumulative preferred stock, par value $100 per share, which may
be issued in the form of depositary shares evidenced by depositary
receipts,
. preferred stock, par value $.01 per share, which may be issued in the
form of depositary shares evidenced by depositary receipts and
. senior, unsecured guarantees, direct-pay letters of credit and
indebtedness evidenced by promissory notes or loan obligations,
including in each case interests therein.
We will provide specific terms of these securities in supplements to this
prospectus. You should read this prospectus and any prospectus supplement
carefully before you invest.
----------------
These securities have not been approved by the SEC or any State securities
commission, nor have these organizations determined that this prospectus is
accurate or complete. Any representation to the contrary is a criminal
offense.
----------------
August 31, 2001
You should rely only on the information incorporated by reference or
provided in this prospectus and the prospectus supplement. We have authorized
no one to provide you with different information. We are not making an offer
of these securities in any state where the offer is not permitted. You should
not assume that the information in this prospectus or the prospectus
supplement is accurate as of any date other than the date on the front of the
document.
References in this prospectus to "GECC", "we", "us" and "our" are to General
Electric Capital Corporation.
----------------
WHERE YOU CAN GET MORE
INFORMATION ON GECC
GECC files annual, quarterly and current reports with the SEC. You may
obtain any document we file with the SEC at the SEC's Public Reference Rooms
in Washington, D.C., Chicago, Illinois and New York, New York. You may obtain
information on the operation of the Public Reference Room by calling the SEC
at 1-800-SEC-0330. Our SEC filings are also accessible through the Internet at
the SEC's Web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" into this prospectus the
information in documents we file with it, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is considered to be a part of this
prospectus, and later information that we file with the SEC will update and
supersede this information. We incorporate by reference the documents listed
below and any future filings we make with the SEC under Section 13(a), 13(c),
14, or 15(d) of the Securities Exchange Act of 1934 until our offering is
completed:
(i) GECC's Annual Report on Form 10-K for the year ended December 31, 2000;
(ii) GECC's Quarterly Reports on Form 10-Q for the quarters ended March 31,
2001 and June 30, 2001; and
(iii) GECC's Current Report on Form 8-K dated as of July 2, 2001.
You may request a copy of these filings at no cost. Requests should be
directed to David P. Russell, Counsel--Treasury Operations and Assistant
Secretary, General Electric Capital Corporation, 260 Long Ridge Road,
Stamford, Connecticut 06927, Telephone No. (203) 357-4000.
2
THE COMPANY
General Electric Capital Corporation was incorporated in 1943 in the State
of New York, under the provisions of the New York Banking Law relating to
investment companies, as successor to General Electric Contracts Corporation,
which was formed in 1932. Until November 1987, our name was General Electric
Credit Corporation. On July 2, 2001, General Electric Capital Corporation was
reincorporated and changed its domicile from the State of New York to the
State of Delaware. All of our outstanding common stock is owned by General
Electric Capital Services, Inc. ("GE Capital Services") formerly General
Electric Financial Services, Inc., the common stock of which is in turn wholly
owned directly or indirectly by General Electric Company ("GE Company"). Our
business originally related principally to financing the distribution and sale
of consumer and other products of GE Company. Currently, however, the types
and brands of products we finance and the services we offer are significantly
more diversified. Very few of the products we finance are manufactured by GE
Company.
We operate in five operating segments: consumer services, equipment
management, mid-market financing, specialized financing and specialty
insurance. Our operations are subject to a variety of regulations in their
respective jurisdictions.
We offer our services primarily throughout the United States, Canada, Europe
and the Pacific Basin. GECC's principal executive offices are located at 260
Long Ridge Road, Stamford, Connecticut 06927 (telephone number (203) 357-
4000). At December 31, 2000, GECC employed approximately 90,200 persons.
Consolidated Ratio of Earnings to Fixed Charges
Year Ended December 31,
------------------------------------------------------- Six Months Ended
1996 1997 1998 1999 2000 June 30, 2001
---- ---- ---- ---- ---- ----------------
1.53 1.48 1.50 1.60 1.52 1.60
Consolidated Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends
Year Ended December 31,
------------------------------------------------------- Six Months Ended
1996 1997 1998 1999 2000 June 30, 2001
---- ---- ---- ---- ---- ----------------
1.51 1.46 1.48 1.58 1.50 1.58
For purposes of computing the consolidated ratios of earnings to fixed
charges and earnings to combined fixed charges and preferred stock dividends,
earnings consist of net earnings adjusted for the provision for income taxes,
minority interest, interest capitalized (net of amortization) and fixed
charges. Fixed charges consist of interest on all indebtedness and one-third
of rentals, which we believe is a reasonable approximation of the interest
factor of such rentals.
USE OF PROCEEDS
Unless otherwise specified in the prospectus supplement accompanying this
prospectus, we will add the net proceeds from the sale of the securities to
which this prospectus and the prospectus supplement relate to our general
funds which we will use for financing our operations. We can conduct
additional financings at any time.
3
PLAN OF DISTRIBUTION
We may sell our securities through agents, underwriters, dealers or directly
to purchasers.
We may designate agents to solicit offers to purchase our securities.
. We will name any agent involved in offering or selling our securities,
and any commissions that we will pay to the agent, in our prospectus
supplement.
. Unless we indicate otherwise in our prospectus supplement, our agents
will act on a best efforts basis for the period of their appointment.
. Our agents may be deemed to be underwriters under the Securities Act of
1933 of any of our securities that they offer or sell.
We may use an underwriter or underwriters in the offer or sale of our
securities.
. If we use an underwriter or underwriters, we will execute an
underwriting agreement with the underwriter or underwriters at the time
that we reach an agreement for the sale of our securities.
. We will include the names of the specific managing underwriter or
underwriters, as well as any other underwriters, and the terms of the
transactions, including the compensation the underwriters and dealers
will receive, in our prospectus supplement.
. The underwriters will use our prospectus supplement to sell our
securities.
We may use a dealer to sell our securities.
. If we use a dealer, we, as principal, will sell our securities to the
dealer.
. The dealer will then sell our securities to the public at varying prices
that the dealer will determine at the time it sells our securities.
. We will include the name of the dealer and the terms of our transactions
with the dealer in our prospectus supplement.
We may solicit directly offers to purchase our securities, and we may
directly sell our securities to institutional or other investors. We will
describe the terms of our direct sales in our prospectus supplement.
We may indemnify agents, underwriters, and dealers against certain
liabilities, including liabilities under the Securities Act of 1933. Our
agents, underwriters, and dealers, or their affiliates, may be customers of,
engage in transactions with or perform services for us, in the ordinary course
of business.
We may authorize our agents and underwriters to solicit offers by certain
institutions to purchase our securities at the public offering price under
delayed delivery contracts.
. If we used delayed delivery contracts, we will disclose that we are
using them in the prospectus supplement and will tell you when we will
demand payment and delivery of the securities under the delayed delivery
contracts.
. These delayed delivery contracts will be subject only to the conditions
that we set forth in the prospectus supplement.
. We will indicate in our prospectus supplement, the commission that
underwriters and agents soliciting purchases of our securities under
delayed contracts will be entitled to receive.
Unless otherwise provided in the prospectus supplement accompanying this
prospectus, neither the support obligations nor the interests therein will be
offered or sold separately from the underlying securities to which they
relate. The underlying securities will be offered and sold under a separate
offering document.
4
GECC Capital Markets Group, Inc. is one of GECC's subsidiaries and may
participate in offerings of our securities. As a result, we will conduct any
offering of securities in which GECC Capital Markets Group, Inc. participates
in compliance with the applicable provisions of Rule 2720 of the Conduct Rules
of the National Association of Securities Dealers, Inc. Under this rule, no
underwriter or dealer may confirm sales of securities to accounts over which
they exercise discretionary authority.
SECURITIES OFFERED
Using this prospectus, we may offer debt securities, variable cumulative
preferred stock, preferred stock, and warrants to purchase debt securities. In
addition, we may issue guarantees, direct-pay letters of credit and
indebtedness evidenced by promissory notes or loan obligations, including
interests therein. We registered these securities with the SEC using a "shelf"
registration statement. This "shelf" registration statement allows us to offer
any combination of these securities. Each time we offer securities, we must
provide a prospectus supplement that describes the specific terms of the
securities. The prospectus supplement may also provide new information or
update the information in the prospectus.
DESCRIPTION OF DEBT SECURITIES
General
The description below of the general terms of the debt securities will be
supplemented by the more specific terms in the prospectus supplement.
We will issue the debt securities under one or more separate indentures
between us and a banking institution organized under the laws of the United
States or a state (each a "Trustee"). None of the indentures limits the amount
of debt securities or other unsecured, senior debt which we may issue.
In addition to the following description of the debt securities, you should
refer to the detailed provisions of each indenture, copies of which are filed
as exhibits to the registration statement.
The prospectus supplement will specify the following terms of such issue of
debt securities:
. the designation, the aggregate principal amount and the authorized
denominations if other than $1,000 and integral multiples of $1,000;
. the percentage of their principal amount at which the debt securities
will be issued;
. the date or dates on which the debt securities will mature;
. the currency, currencies or currency units in which we will make
payments on the debt securities;
. the rate or rates at which the debt securities will bear interest, if
any, or the method of determination of such rate or rates;
. the date or dates from which such interest, if any, shall accrue, the
dates on which such interest, if any, will be payable and the method of
determining holders to whom interest shall be payable;
. the prices, if any, at which, and the dates at or after which, we may or
must repay, repurchase or redeem the debt securities;
. the exchanges, if any, on which the debt securities may be listed;
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. the trustee under the indenture pursuant to which the debt securities
are to be issued. (Sections 2.02 and 2.02A. section references refer to
the sections in the applicable indenture.); and
. any other terms of the debt securities not inconsistent with the
provisions of the applicable indenture.
Unless otherwise specified in the prospectus supplement, we will compute
interest payments on the basis of a 360-day year consisting of twelve 30-day
months. (Section 2.10.)
The debt securities will be unsecured and will rank equally with all other
unsecured and unsubordinated indebtedness of GECC.
Some of the debt securities may be issued as discounted debt securities to
be sold at a substantial discount below their stated principal amount. The
prospectus supplement will contain any Federal income tax consequences and
other special considerations applicable to discounted debt securities.
The indentures do not contain any provisions that limit:
. our ability to incur indebtedness, or
. provide protection in the event GE Company, as sole indirect stockholder
of GECC, causes GECC to engage in a highly leveraged transaction,
reorganization, restructuring, merger or similar transaction.
Payment and Transfer
We will issue debt securities only as registered securities, which means
that the name of the holder will be entered in a register which will be kept
by the Trustee or another agent of GECC. Unless we state otherwise in a
prospectus supplement, we will make principal and interest payments at the
office of the paying agent or agents we name in the prospectus supplement or
by mailing a check to you at the address we have for you in the register.
Unless we describe other procedures in a prospectus supplement, you will be
able to transfer registered debt securities at the office of the transfer
agent or agents we name in the prospectus supplement. You may also exchange
registered debt securities at the office of the transfer agent for an equal
aggregate principal amount of registered debt securities of the same series
having the same maturity date, interest rate and other terms as long as the
debt securities are issued in authorized denominations.
Neither GECC nor the Trustee will impose any service charge for any transfer
or exchange of a debt security, however, we may ask you to pay any taxes or
other governmental charges in connection with a transfer or exchange of debt
securities.
Global Notes, Delivery and Form
Unless otherwise specified in the prospectus supplement accompanying this
prospectus, the debt securities will be issued in the form of one or more
fully registered Global Notes that will be deposited with, or on behalf of,
The Depository Trust Company, New York, New York (the "Depository") and
registered in the name of the Depository's nominee. The Depository currently
limits the maximum denomination of any single Global Note to $500,000,000.
Global Notes are not exchangeable for definitive Note certificates except in
the specific circumstances described below. For purposes of this Prospectus,
"Global Note" refers to the Global Note or Global Notes representing an entire
issue of debt securities.
Except as set forth below, a Global Note may be transferred, in whole and
not in part, only to another nominee of the Depository or to a successor of
the Depository or its nominee.
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The Depository has advised us as follows:
. The Depository is
. a limited purpose trust company organized under the laws of the
State of New York
. 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
. a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934;
. The Depository was created to hold securities of its participants and to
facilitate the clearance and settlement of securities transactions among
its participants through electronic book entry changes in accounts of
its participants, eliminating the need for physical movements of
securities certificates;
. The Depository participants include securities brokers and dealers,
banks, trust companies, clearing corporations and others, some of whom
own the Depository;
. Access to the Depository book-entry system is also available to others
that clear through or maintain a custodial relationship with a
participant, either directly or indirectly;
. Where we issue a Global Note in connection with the sale thereof to an
underwriter or underwriters, the Depository will immediately credit the
accounts of participants designated by such underwriter or underwriters
with the principal amount of the debt securities purchased by such
underwriter or underwriters; and
. ownership of beneficial interests in a Global Note and the transfers of
ownership will be effected only through records maintained by the
Depository (with respect to participants), by the participants (with
respect to indirect participants and certain beneficial owners) and by
the indirect participants (with respect to all other beneficial owners).
The laws of some states require that certain purchasers of securities
take physical delivery in definitive form of securities they purchase.
These laws may limit your ability to transfer beneficial interests in a
Global Note.
So long as a nominee of the Depository is the registered owner of a Global
Note, such nominee for all purposes will be considered the sole owner or
holder of such debt securities under the indenture. Except as provided below,
you will not be entitled to have debt securities registered in your name, will
not receive or be entitled to receive physical delivery of debt securities in
definitive form, and will not be considered the owners or holders thereof
under the indenture.
Neither GECC, the Trustee, any paying agent nor any registrar of the debt
securities will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in a Global Note, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
We will make payment of principal of, and interest on, debt securities
represented by a Global Note to the Depository or its nominee, as the case may
be, as the registered owner and holder of the Global Note representing those
debt securities. The Depository has advised us that upon receipt of any
payment of principal of, or interest on, a Global Note, the Depository will
immediately credit accounts of participants with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of that Global Note, as shown in the records of the Depository. Standing
instructions and customary practices will govern payments by participants to
owners of beneficial interests in a Global Note held through those
participants, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name". Those payments will
be the sole responsibility of those participants, subject to any statutory or
regulatory requirements that may be in effect from time to time.
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Neither we, the Trustee nor any of our respective agents will be responsible
for any aspect of the records of the Depository, any nominee or any
participant relating to, or payments made on account of, beneficial interests
in a Global Note or for maintaining, supervising or reviewing any of the
records of the Depository, any nominee or any participant relating to those
beneficial interests.
As described above, we will issue debt securities in definitive form in
exchange for a Global Note only in the following situations:
. if the Depository is at any time unwilling or unable to continue as
depository and a successor depository is not appointed by us within 90
days, or
. if we choose to issue definitive debt securities.
In either instance, an owner of a beneficial interest in a Global Note will be
entitled to have debt securities equal in principal amount to such beneficial
interest registered in its name and will be entitled to physical delivery of
debt securities in definitive form. Debt securities in definitive form will be
issued in denominations of $1,000 and integral multiples thereof and will be
issued in registered form only, without coupons. We will maintain in the
Borough of Manhattan, The City of New York, one or more offices or agencies
where debt securities may be presented for payment and may be transferred or
exchanged. You will not be charged a fee for any transfer or exchange of such
debt securities, but we may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Same-Day Settlement in Respect of Global Notes
Global Notes held by the Depository will trade in the Depository's Same-Day
Funds Settlement System until maturity and secondary market trading activity
in the debt securities will settle in immediately available funds. No
assurance can be given as to the effect, if any, of settlement in immediately
available funds on the trading activity in the debt securities.
Modification of the Indentures
In general, our rights and obligations and the rights of the holders under
the indentures may be modified if the holders of not less than 2/3rds in
aggregate principal amount of the outstanding debt securities of each series
affected by the modification consent to it. However, Section 10.02 of each
indenture provides that, unless each affected holder agrees, we cannot
. make any adverse change to any payment term of a debt security such as
. extending the maturity date
. extending the date on which we have to pay interest or make a
sinking fund payment
. reducing the interest rate
. reducing the amount of principal we have to repay
. changing the currency in which we have to make any payment of
principal premium or interest
. modifying any redemption or repurchase right to the detriment of the
holder
. impairing any right of a holder to bring suit for payment
. reduce the percentage of the aggregate principal amount of debt
securities needed to make any amendment to the indenture or to waive
any covenant or default
. waive any past payment default
. make any change to Section 10.02.
However, if we and the Trustee agree, we can amend the indentures without
notifying any holders or seeking their consent if the amendment does not
materially and adversely affect any holder.
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Events of Default
Each indenture defines an Event of Default with respect to any series of
debt securities as any of the following:
. default in any payment of principal or premium, if any, on any debt
security of such series;
. default for 30 days in payment of any interest, if any, on any debt
security of such series;
. default in the making or satisfaction of any sinking fund payment or
analogous obligation on the debt securities of such series;
. default for 60 days after written notice to GECC in performance of any
other covenant in respect of the debt securities of such series
contained in such indenture;
. a default, as defined, with respect to any other series of debt
securities outstanding under the relevant Indenture or as defined in any
other indenture or instrument evidencing or under which GECC has
outstanding any indebtedness for borrowed money, as a result of which
such other series or such other indebtedness of GECC shall have been
accelerated and such acceleration shall not have been annulled within 10
days after written notice thereof (provided, that the resulting Event of
Default with respect to such series of debt securities may be remedied,
cured or waived by the remedying, curing or waiving of such other
default under such other series or such other indebtedness); or
. certain events in bankruptcy, insolvency or reorganization. (Section
6.01.)
Each indenture requires us to deliver to the Trustee annually a written
statement as to the presence or absence of certain defaults under the terms
thereof. (Section 4.06.) An Event of Default under one series of debt
securities does not necessarily constitute an Event of Default under any other
series of debt securities. Each Indenture provides that the Trustee may
withhold notice to the holders of any series of debt securities issued
thereunder of any default if the Trustee considers it in the interest of such
Noteholders to do so provided the Trustee may not withhold notice of default
in the payment of principal, premium, if any, or interest, if any, on any of
the debt securities of such series or in the making of any sinking fund
instalment or analogous obligation with respect to such series. (Section
6.08).
Each indenture provides that if an Event of Default occurs and is continuing
with respect to any series of debt securities, either the Trustee or the
holders of not less than 25% in aggregate principal amount of the outstanding
debt securities of such series may declare the principal, or in the case of
discounted debt securities, a portion of the principal amount, of all such
debt securities to be due and payable immediately. Under certain conditions
such declaration may be annulled by the holders of a majority in principal
amount of such debt securities then outstanding. The holders of a majority in
principal amount of such debt securities then outstanding may also waive on
behalf of all holders past defaults with respect to a particular series of
debt securities except, unless previously cured, a default in payment of
principal, premium, if any, or interest, if any, on any of the debt securities
of such series, or the payment of any sinking fund instalment or analogous
obligation on the debt securities of such series (Sections 6.01 and 6.07).
Other than the duties of a trustee during a default, the Trustee is not
obligated to exercise any of its rights or powers under the indenture at the
request, order or direction of any holders of debt securities of any series
issued thereunder unless such holders shall have offered to the Trustee
reasonable indemnity. (Sections 7.01 and 7.02). Subject to such
indemnification provision, each indenture provides that the holders of a
majority in principal amount of the debt securities of any series issued
thereunder at the time outstanding shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee thereunder, or exercising any trust or power conferred on such Trustee
with respect to the debt securities of such series. However, the Trustee may
decline to act if it has not been offered reasonable indemnity or if it
determines that the proceedings so directed would be illegal or involve it in
any personal liability. (Section 6.07).
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Concerning the Trustee
The Chase Manhattan Bank, as successor to The Bank of New York, acts as
Trustee under (i) an Amended and Restated Indenture with us dated as of
February 27, 1997, as supplemented by a Supplemental Indenture with us dated
as of May 3, 1999 and a Second Supplemental Indenture with us dated as of July
2, 2001, (ii) an Amended and Restated Indenture with us dated as of February
28, 1997, as supplemented by a First Supplemental Indenture with us dated as
of July 2, 2001, (iii) an indenture with us dated as of June 3, 1994, as
amended and supplemented, and (iv) an indenture with us dated as of October 1,
1991, as amended and supplemented. The Chase Manhattan Bank also acts as
Trustee under certain other indentures with us. A number of our series of
senior, unsecured notes are presently outstanding under each of such
indentures. Debt securities may be issued under either of the indentures
referred to in clauses (i) and (ii) above.
We will describe in the prospectus supplement, any material business and
other relationships (including additional trusteeships), other than the
trusteeships under the Indentures, between, on the one hand, GECC, GE Company
and other affiliates of GE Company and, on the other hand, each Trustee under
any indenture.
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DESCRIPTION OF WARRANTS
General
We may issue warrants to purchase debt securities either alone or together
with debt securities. In addition to this summary, you should refer to the
detailed provisions of the specific warrant agreement for complete terms of
the warrants and the warrant agreement. Each warrant agreement will be between
GECC and a banking institution organized under the laws of the United States
or a state. A form of warrant agreement was filed as an exhibit to the
Registration Statement.
The warrants will be evidenced by warrant certificates. Unless otherwise
specified in the prospectus supplement, the warrant certificates may be traded
separately from the debt securities, if any, with which the warrant
certificates were issued. Warrant certificates may be exchanged for new
warrant certificates of different denominations at the office of an agent that
we will appoint. Until a warrant is exercised, the holder of a warrant does
not have any of the rights of a debtholder and is not entitled to any payments
on, any debt securities issuable upon exercise of the warrants.
We may issue warrants in one or more series. The prospectus supplement
accompanying this prospectus relating to the particular series of warrants,
will contain terms of the warrants, including:
. the title and the aggregate number of warrants;
. the debt securities for which each warrant is exercisable;
. the date or dates on which such warrants will expire;
. the price or prices at which such warrants are exercisable;
. the currency or currencies in which such warrants are exercisable;
. the periods during which and places at which such warrants are
exercisable;
. the terms of any mandatory or optional call provisions;
. the price or prices, if any, at which the warrants may be redeemed at
the option of the holder or will be redeemed upon expiration;
. the identity of the warrant agent; and
. the exchanges, if any, on which such warrants may be listed.
Exercise of Warrants
You may exercise warrants by payment to our warrant agent of the exercise
price, in each case in such currency or currencies as are specified in the
warrant, and giving your identity and the number of warrants to be exercised.
Once you pay our warrant agent and deliver the properly completed and executed
warrant certificate to our warrant agent at the specified office, our warrant
agent will, as soon as practicable, forward notes to you in authorized
denominations. If you exercise less than all of the warrants evidenced by your
warrant certificate, you will be issued a new warrant certificate for the
remaining amount of warrants.
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DESCRIPTION OF THE PREFERRED STOCK
General
Our Board of Directors has authorized the issuance of preferred stock. The
terms of the preferred stock will be stated and expressed in a resolution or
resolutions to be adopted by our Board of Directors (or any duly authorized
committee of the Board of Directors) consistent with our restated organization
certificate. The preferred stock, when issued and sold, will be fully paid and
non-assessable and will have no pre-emptive rights.
As of the date of this prospectus, our capital stock as authorized by our
sole common stockholder consists of:
. 3,866,000 shares of Common Stock, par value of $.01 per share,
. 33,000 shares of Variable Cumulative Preferred Stock, par value $100 per
share, and
. 750,000 shares of Preferred Stock, par value $.01 per share.
In order to distinguish between our two classes of preferred stock, we will
refer to the first class of our preferred stock as "Variable Cumulative
Preferred Stock" and to the second class as our "second class of preferred
stock". When we refer to both classes we use the phrase "preferred stock".
3,837,825 shares of Common Stock and 26,000 shares of Variable Cumulative
Preferred Stock are presently outstanding. There are no shares of our second
class of preferred stock currently outstanding. Each Series of Variable
Cumulative Preferred Stock ranks equally with each other Series of Variable
Cumulative Preferred Stock as to dividend and liquidation preference.
We will describe the particular terms of any series of preferred stock being
offered by use of this prospectus in the prospectus supplement relating to
that series of preferred stock. Those terms may include:
. the designation, number of shares and stated value per share;
. the amount of liquidation preference;
. the initial public offering price at which shares of such series of
preferred stock will be sold;
. the dividend rate or rates (or method of determining the dividend rate);
. the dates on which dividends shall be payable, the date from which
dividends shall accrue and the record dates for determining the holders
entitled to such dividends;
. any redemption or sinking fund provisions;
. any voting rights;
. any conversion or exchange provisions;
. any provisions to issue the shares of such series as depositary shares
evidenced by depositary receipts; and
. any additional dividend, redemption, liquidation or other preferences or
rights and qualifications, limitations or restrictions thereof.
If the terms of any series of preferred stock being offered differ from the
terms set forth below, we will also disclose those terms in the prospectus
supplement relating to that series of preferred stock. In addition to this
summary, you should refer to our organization certificate for the complete
terms of preferred stock being offered.
We will specify the transfer agent, registrar, dividend disbursing agent and
redemption agent for each series of preferred stock in the prospectus
supplement relating to that series.
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Dividend Rights
If you purchase preferred stock being offered of this prospectus, you will
be entitled to receive, when, and as declared by our board of directors, cash
or other dividends at the rates, or as determined by the method described in,
and on the dates set forth in, the prospectus supplement. Dividend rates may
be fixed or variable or both. Different series of preferred stock may be
entitled to dividends at different dividend rates or based upon different
methods of determination. We will pay each dividend to the holders of record
as they appear on our stock books on record dates determined by the board of
directors. Dividends on any series of the preferred stock may be cumulative or
noncumulative, as specified in the prospectus supplement. If the board of
directors fails to declare a dividend on any series of preferred stock for
which dividends are noncumulative, then your right to receive that dividend
will be lost, and we will have no obligation to pay the dividend for that
dividend period, whether or not we declare dividends for any future dividend
period. Dividends on the shares of preferred stock will accrue from the date
on which we initially issue such series of preferred stock or as otherwise set
forth in the prospectus supplement relating to such series. The prospectus
supplement relating to a series of preferred stock will describe any
adjustments to be made, if any, to the dividend rate in the event of certain
amendments to the Internal Revenue Code of 1986, as amended, with respect to
the dividends-received deduction.
In particular, the dividend payment dates on the Variable Cumulative
Preferred Stock will be the last day of each dividend period, regardless of
its length, and, in the case of dividend periods of more than 99 days, on the
following additional dates:
. if such Dividend Period is from 100 to 190 days, on the 91st day;
. if such Dividend Period is from 191 to 281 days, on the 91st and 182nd
days;
. if such Dividend Period is from 282 to 364 days, on the 91st, 182nd and
273rd days; and
. if such Dividend Period is from two to 30 years, on January 15, April
15, July 15 and October 15 of each year.
In the event a dividend payment date falls on a day that is not a business
day, then the dividend payment date shall be the business day next succeeding
such date. After the initial dividend period, each subsequent dividend period
will begin on a dividend payment date and will end 49 days later. However, we
may elect subsequent dividend periods that are longer than 49 days. We will
notify you of any such election and follow the procedures that will be set
forth in a prospectus supplement for the series of Variable Cumulative
Preferred Stock. After the initial dividend period, the dividend rates on the
Variable Cumulative Preferred Stock will be determined pursuant to an auction
method, subject to any maximum or minimum interest rate, which will be
described in the prospectus supplement relating to such series of Variable
Cumulative Preferred Stock.
The dividend payment dates and the dividend periods with respect to our
second class of preferred stock will be described in the prospectus supplement
relating to such series of our second class of preferred stock.
We may not declare any dividends on any shares of common stock, or make any
payment on account of, or set apart money for, a sinking or other analogous
fund for the purchase, redemption or other retirement of any shares of common
stock or make any distribution in respect thereof, whether in cash or property
or in obligations or our stock, other than common stock unless
. full cumulative dividends shall have been paid or declared and set apart
for payment on all outstanding shares of preferred stock and other
classes and series of our preferred stock and
. we are not in default or in arrears with respect to any sinking or other
analogous fund or other agreement for the purchase, redemption or other
retirement of any shares of our preferred stock.
In the event we have outstanding shares of more than one series of our
preferred stock ranking equally as to dividends and dividends on one or more
of such series of preferred stock are in arrears, we are required to make
dividend payments ratably on all outstanding shares of such preferred stock in
proportion to the respective
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amounts of dividends in arrears on all such preferred stock to the date of
such dividend payment. You will not be entitled to any dividend, whether
payable in cash, property or stock, in excess of full cumulative dividends on
shares of the preferred stock you own. No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or payments
which may be in arrears.
Liquidation Rights
In the event of our liquidation, either voluntary or involuntary,
dissolution or winding-up, we will be required to pay the liquidation
preference specified in the prospectus supplement relating to those shares of
preferred stock, plus accrued and unpaid dividends, before we make any
payments to holders of our common stock or any other class of our stock
ranking junior to that preferred stock. If we do not have sufficient assets to
pay the liquidation preference, plus accrued and unpaid dividends, on all
classes of preferred stock that rank equally upon liquidation, we will pay
holders of the preferred stock proportionately based on the full amount to
which they are entitled. Other than their claims to the liquidation preference
and accrued and unpaid dividends, holders of preferred stock will have no
claim to any of our other remaining assets. Neither the sale of all or
substantially all our property or business nor a merger or consolidation by us
with any other corporation will be considered a dissolution, liquidation or
winding-up of our business or affairs, if that transaction does not impair the
voting power, preferences or special rights of the holders of shares of
preferred stock.
Voting Rights
Holders of our common stock are entitled to one vote per share on all
matters which arise at any meeting of shareholders. Holders of preferred stock
being offered by this prospectus will not be entitled to vote, except as set
forth below, in a prospectus supplement or as otherwise required by law.
The holders of Variable Cumulative Preferred Stock are not entitled to vote
except as required by law or as set forth in a prospectus supplement. However,
we may not alter any of the preferences, privileges, voting powers or other
restrictions or qualifications of a series of Variable Cumulative Preferred
Stock in a manner substantially prejudicial to the holders thereof without the
consent of the holders of at least two-thirds of the total number of shares of
such series.
With respect to our second class of preferred stock, in the event that six
quarterly dividends (whether or not consecutive) payable on any series of our
second class of preferred stock shall be in arrears, the holders of each
series of our second class of preferred stock, voting separately as a class
with all other holders of preferred stock with equal voting rights, shall be
entitled at our next annual meeting of stockholders (and at each subsequent
annual meeting of stockholders), to vote for the election of two of our
directors, with the remaining directors to be elected by the holders of shares
of any other class or classes or series of stock entitled to vote therefor.
Until the arrears in payments of all dividends which permitted the election of
such directors shall cease to exist, any director who has been so elected may
be removed at any time, either with or without cause, only by the affirmative
vote of the holders of the preferred stock at the time entitled to cast a
majority of the votes entitled to be cast for the election of any such
director at a special meeting of such holders called for that purpose, and any
vacancy thereby created may be filled by the vote of such holders. The holders
of shares of our second class of preferred stock shall no longer be entitled
to vote for directors once the past due dividends have all been paid unless
dividends later become in arrears again. Once the past due dividends have all
been paid, then the directors elected by the preferred stockholders will no
longer be directors.
We may not take certain actions without the consent of at least 2/3rds of
the shares of our second class of preferred stock, voting together as a single
class without regard to series. We need such 2/3rds consent to:
. create any class or series of stock with preference as to dividends or
distributions of assets over any outstanding series of our second class
of preferred stock (other than a series which has no right to object to
such creation) or
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. alter or change the provisions of our organization certificate so as to
adversely affect the voting power, preferences or special rights of the
holders of shares of our second class of preferred stock; provided,
however, that if such creation or such alteration or change would
adversely affect the voting power, preferences or special rights of one
or more, but not all, series of our second class of preferred stock at
the time outstanding, consent of the holders of shares entitled to cast
at least 2/3rds of the votes entitled to be cast by the holders of all
of the shares of all such series so affected, voting as a class, shall
be required in lieu of the consent of all holders of 2/3rds of our
second class of preferred stock at the time outstanding.
The prospectus supplement relating to a series of preferred stock will
further describe the voting rights, if any, including the number of or
proportional votes per share.
Redemption
The applicable prospectus supplement will indicate whether the series of
preferred stock being offered is subject to redemption, in whole or in part,
whether at our option or mandatorily or otherwise and whether or not pursuant
to a sinking fund. The redemption provisions that may apply to a series of
preferred stock being offered, including the redemption dates and the
redemption prices for that series will be set forth in the prospectus
supplement.
If we fail to pay dividends on any series of preferred stock we may not
redeem that series in part and we may not purchase or otherwise acquire any
shares of such series other than by a purchase or exchange offer made on the
same terms to holders of all outstanding shares of such series.
We may redeem the shares of any series of Variable Cumulative Preferred
Stock out of legally available funds therefore, as a whole or from time to
time in part:
. on the last day of any dividend period at a redemption price of $100,000
per share, plus accumulated and unpaid dividends to the date fixed for
redemption and
. in the case of shares of Variable Cumulative Preferred Stock with a
dividend period equal to or more than two years, on any dividend payment
date for such shares at redemption prices (but not less than $100,000
per share) determined by us prior to the commencement of such dividend
period plus accumulated and unpaid dividends to the date set forth for
redemption.
Conversion Rights
No series of preferred stock will be convertible into our common stock.
DESCRIPTION OF SUPPORT OBLIGATIONS AND INTERESTS THEREIN
General
Support obligations may include guarantees, letters of credit and promissory
notes or loan obligations that are issued in connection with, and as a means
of credit support for, any part of a fixed or contingent payment obligation of
underlying securities issued by third parties. The issuers of the underlying
securities may or may not be affiliated with us. A holder of an underlying
security will also hold uncertificated interests in the related support
obligation, representing the credit enhancement of the holder's underlying
security afforded by the related support obligation.
Support obligations that are issued in the form of promissory notes or loan
obligations, and the related interests, are to be issued under an indenture,
dated as of June 3, 1994, as supplemented, between us and The Chase Manhattan
Bank, as successor trustee. To the extent that the following disclosure
summarizes certain provisions of the indenture, such summaries do not purport
to be complete, and are subject to, and are qualified in their entirety by
reference to, all the provisions of the indenture, a form of which is filed as
an exhibit to the registration statement of which this prospectus is a part.
15
The terms and conditions of any support obligations and related interests
will be determined by the terms and conditions of the related underlying
securities, and may vary from the general descriptions set forth below. A
complete description of the terms and conditions of any support obligations
and related interests issued pursuant to this prospectus will be set forth in
the accompanying prospectus supplement.
Any support obligations and related interests will be unsecured and will
rank equally and ratably with all of our other unsecured and unsubordinated
indebtedness. The terms of a particular support obligation may provide that a
different support obligation may be substituted therefor, upon terms and
conditions described in the applicable prospectus supplement, provided that
such substitution is carried out in conformity with the Securities Act of 1933
and the rules and regulations thereunder. Unless otherwise specified in the
accompanying prospectus supplement, each support obligation will be governed
by the law of the State of New York. Neither the indenture (with respect to
promissory notes and loan obligations) nor any other document or instrument
(with respect to other forms of support obligations) will limit the amount of
support obligations or interests that may be issued thereunder. Neither the
indenture (with respect to promissory notes and loan obligations) nor any
other document or instrument (with respect to other forms of support
obligations) will contain any provisions that limit our ability to incur
indebtedness or that afford holders of support obligations or interests
protection in the event GE Company, as our ultimate stockholder, causes us to
engage in a highly leveraged transaction, reorganization, restructuring,
merger or similar transaction.
Guarantees
Any guarantees that we issue from time to time for the benefit of holders of
specified underlying securities will include the following terms and
conditions, plus any additional terms specified in the accompanying prospectus
supplement.
A guarantee will provide that we unconditionally guarantee the due and
punctual payment of the principal, interest (if any), premium (if any) and all
other amounts due under the applicable underlying securities when the same
shall become due and payable, whether at maturity, pursuant to mandatory or
optional prepayments, by acceleration or otherwise, in each case after any
applicable grace periods or notice requirements, according to the terms of the
applicable underlying securities. Any guarantee shall be unconditional
irrespective of the validity or enforceability of the applicable underlying
security, any change or amendment thereto or any other circumstances that may
otherwise constitute a legal or equitable discharge or defense of a guarantor.
However, we will not waive presentment or demand of payment or notice with
respect to the applicable underlying security unless otherwise provided in the
accompanying prospectus supplement.
We shall be subrogated to all rights of the issuer of the applicable
underlying securities in respect of any amounts paid by us pursuant to the
provisions of a guarantee. The guarantee shall continue to be effective or
reinstated, as the case may be, if at any time any payment made by the issuer
of the applicable underlying security is rescinded or must otherwise be
returned upon the insolvency, bankruptcy or reorganization of GECC, the issuer
of the applicable underlying security or otherwise.
Letters of Credit
Any direct-pay letters of credit we issue from time to time relating to
specified underlying securities shall include the following terms and
conditions, plus any additional terms specified in the accompanying prospectus
supplement.
Any letter of credit will be our direct-pay obligation issued for the
account of the holders of the applicable underlying securities or, in certain
cases, an agent acting on behalf of the issuer of the applicable underlying
securities or a trustee acting on behalf of the holders. The letter of credit
will be issued in an amount that corresponds to principal and, if applicable,
interest and other payments payable with respect to the applicable underlying
securities. Drawings under the letter of credit will reduce the amount
available under the letter of credit, but drawings of a recurring nature (such
as interest) will automatically be reinstated following the date of such
payment provided that the letter of credit has not otherwise expired.
16
The letter of credit will expire at a date and time specified in the
accompanying prospectus supplement, and will also expire upon the earlier
occurrence of certain events, as described in the accompanying prospectus
supplement.
Promissory Notes or Loan Obligations
We may incur indebtedness from time to time to the issuer of underlying
securities, such indebtedness to be evidenced by promissory notes, loan
agreements or other evidences of indebtedness. The purpose of issuing any such
promissory note, loan agreement or other indebtedness will be to enable us,
directly or indirectly, to provide credit support to the applicable underlying
securities by means of our repayment obligation as evidenced by the promissory
note, loan agreement or other indebtedness. The promissory notes, loan
agreements or other indebtedness will provide that only the issuer of the
underlying securities to which such promissory notes, loan agreements or other
indebtedness relate or the issuer's assignee will be entitled to enforce such
promissory notes, loan agreements or other indebtedness against us. Holders of
the relevant underlying securities will not have any third party beneficiary
or other rights under, or be entitled to enforce, the relevant promissory
notes, loan agreements or other indebtedness. The terms and provisions of any
such note, loan agreement or other indebtedness, including principal amount,
provisions or interest and premium, if applicable, maturity, prepayment
provisions, if any, and identity of obligee, will be described in the
applicable prospectus supplement.
Modification of the Indenture
The following provisions will apply to any promissory notes or loan
obligations issued pursuant to the indenture.
In general, our rights and obligations and the rights of the holders under
the indenture may be modified if the holders of not less than 2/3rds in
aggregate principal amount of the outstanding support obligations of each
series affected by the modification consent to it. However, Section 10.2 of
the indenture provides that, unless each affected holder agrees, we cannot
. change the character of any support obligation from being payable other
than as provided in any related support obligation agreement
. reduce the principal amount of a support obligation
. change the currency in which we have to make payment on a support
obligation to a currency other than United States dollars
. reduce the percentage of the aggregate principal amount of support
obligations needed to make any amendment to the indenture
However, if we and the Trustee agree, we can amend the indenture without
notifying any holders or seeking their consent if the amendment does not
materially and adversely affect any holder.
Event of Default
The following provisions will apply to any promissory notes or loan
obligations issued pursuant to the indenture.
Any event of default with respect to any series of support obligations
issued pursuant to the indenture is defined in the indenture as being (a) a
default in any payment of principal or premium, if any, or interest on any
support obligation of such series in accordance with the terms of the related
credit support agreement; or (b) any other event of default as defined in the
related credit support agreement to the extent specifically identified
pursuant to Section 2.2 of the indenture. (Section 6.1.) The indenture
requires us to deliver to the Trustee annually a written statement as to the
presence or absence of certain defaults under the terms thereof. (Section
4.4.) No event of default with respect to a particular series of support
obligations under the indenture necessarily constitutes an event of default
with respect to any other series of support obligations issued thereunder or
other series of support obligations not entitled to the benefits of the
indenture.
17
The indenture provides that during the continuance of an event of default
with respect to any series of support obligations issued pursuant to the
indenture, either the Trustee or the holders of 25% in aggregate principal
amount of the outstanding support obligations of such series and the interests
of such series (voting together as a single class) may declare the principal
of all such support obligations to be due and payable immediately, but under
certain conditions such declaration may be annulled by the holders of a
majority in principal amount of such support obligations then outstanding. The
indenture provides that past defaults with respect to a particular series of
support obligations issued under the indenture (except, unless theretofore
cured, a default in payment of principal of, or interest on any of the support
obligations of such series) may be waived on behalf of the holders of all
support obligations of such series by the holders of a majority in principal
amount of such support obligations then outstanding. (Sections 6.1 and 6.7.)
Subject to the provisions of the indenture relating to the duties of the
Trustee in case an event of default with respect to any series of support
obligations issued pursuant to the indenture shall occur and be continuing,
the Trustee shall be under no obligation to exercise any of its rights or
powers under the indenture at the request, order or direction of any holders
of support obligations of any series issued thereunder unless such holders
shall have offered to the Trustee reasonable indemnity. (Section 6.4.) Subject
to such indemnification provision, the indenture provides that the holders of
a majority in principal amount of the support obligations of any series issued
pursuant to the indenture and the interests of such series (voting together as
a single class) thereunder at the time outstanding shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee with respect to the support obligations of such series, provided that
the Trustee may decline to follow any such direction if it has not been
offered reasonable indemnity therefor or if it determines that the proceedings
so directed would be illegal or involve it in any personal liability. (Section
6.7.)
Concerning the Trustee
The Chase Manhattan Bank, as successor to Mercantile-Safe Deposit and Trust
Company, acts as Trustee under an Indenture with us dated as of June 3, 1994,
as supplemented by a First Supplemental Indenture with us dated as of February
1, 1997 and a Second Supplemental Indenture with us dated as of July 2, 2001.
The Chase Manhattan Bank also acts as Trustee under several other indentures
with us, pursuant to which a number of series of senior, unsecured notes of
ours are presently outstanding.
We will describe in the prospectus supplement, any material business and
other relationships (including additional trusteeships), other than the
present and prospective trusteeships referred to in the foregoing paragraph,
between, on the one hand, GECC, GE Company and other affiliates of GE Company
and, on the other hand, each Trustee under any indenture.
LEGAL OPINIONS
Unless otherwise specified in the prospectus supplement accompanying this
prospectus, Nancy E. Barton, a director and Senior Vice President, General
Counsel and Secretary of GECC or David P. Russell, Counsel--Treasury
Operations and Assistant Secretary of GECC will provide an opinion for us
regarding the validity of the securities and Davis Polk & Wardwell, 450
Lexington Avenue, New York, New York 10017 will provide an opinion for the
underwriters, agents or dealers. Ms. Barton and Mr. Russell, together with
members of their families, own, have options to purchase and have other
interests in shares of common stock of GE Company.
EXPERTS
The audited financial statements incorporated in this prospectus by
reference to GECC's Annual Report on Form 10-K for the year ended December 31,
2000 have been incorporated by reference herein in reliance upon the report of
KPMG LLP, independent certified public accountants, and upon the authority of
said firm as experts in accounting and auditing.
18
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You should rely only on the information contained in this document or that
we have referred you to. We have not authorized anyone else to provide you
with information that is different. We are not making an offer of these notes
in any state where the offer is not permitted. The information in this
document is current only as of the date of this document, regardless of the
time of delivery of this document or any sale of the notes.
TABLE OF CONTENTS
Prospectus Supplement
Page
----
Risks of Foreign Currency Notes and Indexed Notes.......................... S-2
Description of Notes....................................................... S-4
United States Tax Considerations .......................................... S-20
Plan of Distribution ...................................................... S-29
Legal Opinions............................................................. S-30
Glossary................................................................... S-31
Prospectus
Where You Can Get More
Information on GECC....................................................... 2
The Company................................................................ 3
Use of Proceeds ........................................................... 3
Plan of Distribution ...................................................... 4
Securities Offered ........................................................ 5
Description of Debt Securities............................................. 5
Description of Warrants.................................................... 11
Description of the Preferred Stock......................................... 12
Description of Support Obligations and Interests Therein................... 15
Legal Opinions............................................................. 18
Experts.................................................................... 18
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US$26,475,600,650
General Electric
Capital Corporation
Global Medium-Term Notes,
Series A, Due From 9 Months to
60 Years From Date of Issue
PROSPECTUS SUPPLEMENT
Deutsche Banc Alex. Brown
GECC Capital Markets Group, Inc.
Goldman, Sachs & Co.
Lehman Brothers
Merrill Lynch & Co.
JPMorgan
Salomon Smith Barney
UBS Warburg
September 5, 2001
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