0000950149-01-501434.txt : 20011009
0000950149-01-501434.hdr.sgml : 20011009
ACCESSION NUMBER: 0000950149-01-501434
CONFORMED SUBMISSION TYPE: 424B3
PUBLIC DOCUMENT COUNT: 1
FILED AS OF DATE: 20010925
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: ABN AMRO BANK NV
CENTRAL INDEX KEY: 0000897878
STANDARD INDUSTRIAL CLASSIFICATION: COMMERCIAL BANKS, NEC [6029]
STATE OF INCORPORATION: P7
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 424B3
SEC ACT: 1933 Act
SEC FILE NUMBER: 333-49198
FILM NUMBER: 1744112
BUSINESS ADDRESS:
STREET 1: FOPPINGADREEF 22
STREET 2: 1102 BS AMSTERDAM, ZUID OOST
CITY: THE NETHERLANDS
STATE: P7
BUSINESS PHONE: 0113120628
MAIL ADDRESS:
STREET 1: FOPPINGADREEF 22
STREET 2: 1102 BS AMSTERDAM, ZUID OOST
CITY: THE NETHERLANDS
STATE: P7
424B3
1
f75599ge424b3.txt
ABM AMRO FORM 424B3
1
PRICING SUPPLEMENT PRICING SUPPLEMENT NO. 8 TO
(TO PROSPECTUS DATED NOVEMBER 22, 2000 AND REGISTRATION STATEMENT NO. 333-49198
PROSPECTUS SUPPLEMENT DATED SEPTEMBER 21, 2001
DATED NOVEMBER 27, 2000) RULE 424(B)(3)
[ABN AMRO LOGO]
$20,000,000
ABN AMRO BANK N.V.
MEDIUM-TERM NOTES, SERIES A
SENIOR FIXED RATE NOTES
---------------------
11.50% REVERSE EXCHANGEABLE SECURITIES DUE SEPTEMBER 26, 2002
LINKED TO COMMON STOCK OF WAL-MART STORES, INC.
The Securities do not guarantee any return of principal at maturity. Instead, if
the closing price of the shares of common stock of Wal-Mart Stores, Inc., which
we refer to as the Underlying Shares, is below a certain level on the third
business day prior to the maturity date, which we refer to as the determination
date, we will exchange each Security for a predetermined number of Underlying
Shares. THE MARKET VALUE OF THOSE SHARES WILL BE LESS THAN THE PRINCIPAL AMOUNT
OF EACH SECURITY AND COULD BE ZERO.
SECURITIES 11.50% Reverse Exchangeable Securities due September 26,
2002
PRINCIPAL AMOUNT $20,000,000
UNDERLYING SHARES Common stock, par value $0.10 per share of Wal-Mart Stores,
Inc.
INTEREST RATE 11.50% per annum, payable semi-annually in arrear on March 26,
2002 and September 26, 2002
ISSUE PRICE 100%
PROPOSED ORIGINAL September 26, 2001
ISSUE DATE (SETTLEMENT DATE)
September 26, 2001
MATURITY DATE September 26, 2002
INITIAL PRICE The closing price per Underlying Share on September 21, 2001,
the date we priced the Securities, subject to adjustment for
certain corporate events affecting the Underlying Shares,
which we describe in "Description of Securities -- Adjustment
Events."
STOCK REDEMPTION
AMOUNT 22.391 Underlying Shares for each $1,000 principal amount of
the Securities, which is equal to $1,000 divided by the
initial price.
DETERMINATION DATEThe third business day prior to the maturity date, subject to
adjustment in certain circumstances which we describe in
"Description of the Securities -- Determination Date".
PAYMENT AT MATURITY
The payment at maturity is based on the closing price of the
Underlying Shares on the determination date.
- If the closing price per Underlying Share on the
determination date is at or above the initial price, we will
pay the principal amount of each Security in cash.
- If the closing price per Underlying Share on the
determination date is below the initial price, we will
deliver to you, in exchange for each $1,000 principal amount
of the Securities, a number of Underlying Shares equal to
the stock redemption amount.
- You will receive cash in lieu of fractional shares.
DENOMINATIONS The Securities may be purchased in denominations of $1,000 and
integral multiples thereof.
FORM OF SECURITIESThe Securities will be represented by a single registered
global security, deposited with the Depository Trust Company.
NO AFFILIATION WITH
WAL-MART STORES,
INC. Wal-Mart Stores, Inc., which we refer to as Wal-Mart, is not
an affiliate of ours and is not involved with this offering in
any way. The obligations represented by the Securities are our
obligations not those of Wal-Mart. Investing in the Securities
is not equivalent to investing in Wal-Mart common stock.
LISTING The Securities have been approved for listing on the American
Stock Exchange LLC subject to official notice of issuance and
resumption of trading. The American Stock Exchange LLC symbol
for the Securities is "REX.E".
THE SECURITIES INVOLVE RISKS NOT ASSOCIATED WITH AN INVESTMENT IN CONVENTIONAL
DEBT SECURITIES. SEE "RISK FACTORS" BEGINNING ON PS-8.
You should read the more detailed description of the Securities in this Pricing
Supplement. In particular, you should review and understand the descriptions in
"Summary of Pricing Supplement", "Description of Securities" and "Taxation".
The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities, or determined if this Pricing
Supplement or the accompanying Prospectus Supplement is truthful or complete.
Any representation to the contrary is a criminal offense.
THE FULL AGGREGATE PRINCIPAL AMOUNT OF THE SECURITIES BEING OFFERED WAS NOT
PURCHASED BY INVESTORS IN THE OFFERING. ONE OF OUR AFFILIATES HAS AGREED TO
PURCHASE THE UNSOLD PORTION WHICH DOES NOT EXCEED $10,000,000 AND TO HOLD SUCH
SECURITIES FOR INVESTMENT FOR A PERIOD OF AT LEAST 30 DAYS. SEE "HOLDING OF THE
SECURITIES BY OUR AFFILIATES AND FUTURE SALES" UNDER THE HEADING "RISK FACTORS".
This Pricing Supplement and the accompanying Prospectus Supplement and
Prospectus may be used by our affiliates in connection with offers and sales of
the Securities in market-making transactions.
PRICE $1,000 PER SECURITY
PRICE TO AGENTS' PROCEEDS TO
PUBLIC COMMISSIONS COMPANY
----------- ----------- -----------
Per Security.................. $1,000 $ 17.50 $ 982.50
Total......................... $20,000,000 $350,000 $19,650,000
ABN AMRO FINANCIAL SERVICES, INC.
ABN AMRO INCORPORATED
FIRST INSTITUTIONAL SECURITIES, LLC
FIRST UNION SECURITIES, INC.
H & R BLOCK FINANCIAL ADVISORS
LADENBURG THALMANN & CO., INC.
SEPTEMBER 21, 2001
2
The Securities may not be offered, transferred or sold as part of their
initial distribution, or at any time thereafter, to or for the benefit of any
person (including legal entities) established, domiciled, incorporated or
resident in The Netherlands.
The Securities are securities (effecten) within the meaning of article 1 of
The Netherlands' Securities Market Supervision Act 1995 (Wet toezicht
effectenverkeer 1995). The Securities may be offered in certain countries
excluding The Netherlands. Any offer of these Securities, any announcements
thereof and all offer notices, publications, advertisements and other documents
in which an offer of the Securities is made, or a forthcoming offer is
announced, will comply with all applicable laws and regulations of the
jurisdiction in which such an offer is made from time to time. A statement to
the effect that the offering of the Securities will comply with all applicable
rules in the countries in which such offering takes place will be submitted to
the Securities Board of The Netherlands (Stichting Toezicht Effectenverkeer)
pursuant to article 3, paragraph 2 of the Exemption Regulation pursuant to The
Netherlands' Securities Market Supervision Act, before any Securities are
offered.
These restrictions shall cease to apply from the date on which the
Securities Board of The Netherlands (Stichting Toezicht Effectenverkeer) shall
have granted a dispensation on the offering of the Securities pursuant to this
Pricing Supplement and the accompanying Prospectus Supplement and the
Prospectus.
In this pricing supplement, the "Bank," "we," "us" and "our" refer to ABN
AMRO Bank N.V.
PS-2
3
SUMMARY
The following summary answers some questions that you might have regarding
the securities in general terms only. It does not contain all the information
that may be important to you. You should read the summary together with the more
detailed information that is contained in the rest of this Pricing Supplement
and in the accompanying Prospectus and Prospectus Supplement. You should
carefully consider, among other things, the matters set forth in "Risk Factors".
In addition, we urge you to consult with your investment, legal, accounting, tax
and other advisors with respect to any investment in the Securities.
WHAT ARE THE SECURITIES?
The Securities are interest paying, non-principal protected securities
issued by us, ABN AMRO Bank N.V. The Securities are the medium-term notes of ABN
AMRO Bank N.V. and have a maturity of one year. These Securities combine certain
features of debt and equity by offering a fixed interest rate on the principal
amount while the payment at maturity is determined based on the performance of
the Underlying Shares. Therefore your principal is at risk.
WHY IS THE INTEREST RATE ON THE SECURITIES HIGHER THAN THE INTEREST RATE PAYABLE
ON YOUR CONVENTIONAL DEBT SECURITIES WITH THE SAME MATURITY?
The Securities offer a higher interest rate than the yield that would be
payable on a conventional debt security with the same maturity issued by us or
an issuer with a comparable credit rating. This is because you, the investor in
the Securities, indirectly sell a put option to us on the Underlying Shares. The
premium due to you for this put option is combined with a market interest rate
on our senior debt to produce the higher interest rate on the Securities.
WHAT ARE THE CONSEQUENCES OF THE INDIRECT PUT OPTION THAT I HAVE SOLD YOU?
The put option you indirectly sell to us creates the feature of
exchangeability. If on the determination date, the closing price per Underlying
Share is equal to or greater than the strike price of the put, which we call the
initial price, you will receive $1,000 for each $1,000 principal amount of the
Securities. If the closing price per Underlying Share on the determination date
is less than the initial price, you will receive a fixed number of Underlying
Shares, which we call the stock redemption amount. Because of this
exchangeability of the Securities, and because we will determine whether you
will receive cash or Underlying Shares by reference to the closing price of the
Underlying Shares on the determination date, we call the Securities "reverse
exchangeable securities".
WHAT WILL I RECEIVE AT MATURITY OF THE SECURITIES?
The payment at maturity of the Securities will be based on the closing
price of the Underlying Shares on the determination date which is the third
business day prior to maturity, subject to adjustment in certain circumstances.
- If the closing price per Underlying Share on the determination date is at or
above the initial price, we will pay the principal amount of each Security in
cash.
- If the closing price per Underlying Share on the determination date is below
the initial price, we will deliver to you, in exchange for each $1,000
principal amount of the Securities, the stock redemption amount.
HOW IS THE STOCK REDEMPTION AMOUNT CALCULATED?
The stock redemption amount for each $1,000 principal amount of the
Securities is equal to $1,000 divided by the initial price. The value of any
fractional shares you are entitled to receive, after aggregating your total
holdings of the Securities, will be paid in cash.
PS-3
4
WHAT INTEREST PAYMENTS CAN I EXPECT ON THE SECURITIES?
The Securities pay interest at a rate of 11.50% per annum. The interest
rate is fixed at issue and is payable semi-annually in arrear. This means that
irrespective of whether the Securities are redeemed at maturity for cash or the
stock redemption amount, you will be entitled to semi-annual interest payments
on the full principal amount of the Securities you hold, payable in cash.
CAN YOU GIVE ME AN EXAMPLE OF THE PAYMENT AT MATURITY?
If, for example, the initial price of the Underlying Shares were $44.66,
then the stock redemption amount would be 22.391 Underlying Shares, or $1,000
divided by $44.66. If the closing price of the Underlying Shares on the
determination date is $60 per share at maturity, you will receive $1,000 in cash
for each $1,000 principal amount of the Securities. In addition, over the life
of the Securities you would have received interest payments at a rate of 11.50%
per annum. If the closing price of the Underlying Shares on the determination
date is $10 per share at maturity, you will receive 22.391 Underlying Shares for
each $1,000 principal amount of the Securities. In addition over the life of the
Securities you would have received interest payments at a rate of 11.50% per
annum. The market value of those Underlying Shares which we will deliver to you
on the maturity date for each $1,000 principal amount of the Securities will be
$223.91, which is less than the principal amount of $1,000 and you will have
lost a portion of your initial investment. The value of any fractional shares
you are entitled to receive after aggregating your total holdings of the
Securities will be paid in cash.
THIS EXAMPLE IS FOR ILLUSTRATIVE PURPOSES ONLY. WE WILL SET THE INITIAL
PRICE (SUBJECT TO ADJUSTMENT PER CERTAIN CORPORATE EVENTS AFFECTING THE
UNDERLYING SHARES) ON THE DATE WE PRICE THE SECURITIES. IT IS NOT POSSIBLE
HOWEVER TO PREDICT THE MARKET PRICE OF THE UNDERLYING SHARES ON THE
DETERMINATION DATE.
In this Pricing Supplement, we have provided under the heading
"Hypothetical Sensitivity Analysis of Total Return of the Securities at
Maturity" the total return of owning the Securities through maturity for various
closing prices of the Underlying Shares on the determination date.
DO I GET ALL MY PRINCIPAL BACK AT MATURITY?
You are not guaranteed to receive any return of principal at maturity. If
the Underlying Shares close below the initial price on the determination date,
we will deliver to you Underlying Shares. The market value of the Underlying
Shares at the time you receive those shares will be less than the principal
amount of the Securities and could be zero.
IS THERE A LIMIT TO HOW MUCH I CAN EARN OVER THE LIFE OF THE SECURITIES?
Yes. The amount payable under the terms of the Securities will never exceed
the principal amount of the Securities payable at maturity plus interest
payments you earn over the life of the Securities.
DO I BENEFIT FROM ANY APPRECIATION IN THE UNDERLYING SHARES OVER THE LIFE OF THE
SECURITIES?
No. The amount paid at maturity for each $1,000 principal amount of the
Securities will not exceed $1,000. If the closing price of the Underlying Shares
on the determination date is equal to or exceeds the initial price, you will not
receive the Underlying Shares or any other asset equal to the value of the
Underlying Shares. Instead, you will receive the principal amount of the
Securities. As a result, if the Underlying Shares have appreciated above their
price level at September 21, 2001, the payment you receive at maturity will not
reflect that appreciation. UNDER NO CIRCUMSTANCES WILL YOU RECEIVE A PAYMENT AT
MATURITY GREATER THAN THE
PS-4
5
PRINCIPAL AMOUNT OF THE SECURITIES THAT YOU HOLD AT THAT TIME.
WHAT IS THE MINIMUM REQUIRED PURCHASE?
You can purchase Securities in $1,000 denominations or in integral
multiples thereof.
IS THERE A SECONDARY MARKET FOR THE SECURITIES?
Although they are not required to do so, our affiliates currently intend to
act as market makers for the Securities when this offering is complete. Our
affiliates may stop making a market in the Securities at any time.
In addition, the Securities have been approved for listing on the American
Stock Exchange LLC subject to official notice of issuance and resumption of
trading. You should note, however, that even though the Securities have been
approved for listing, it is not possible to predict whether the Securities will
trade in the secondary markets. Accordingly, you should be willing to hold your
Securities until the maturity date.
TELL ME MORE ABOUT ABN AMRO BANK N.V.
We are a banking group offering a wide range of commercial and investment
banking products and services on a global basis through our network of
approximately 3,600 offices and branches in 74 countries and territories. We are
one of the largest banking groups in the world, with total consolidated assets
of EUR 543.2 billion at December 31, 2000. In addition to being the largest
banking group based in The Netherlands, we also have a substantial presence in
the United States, as one of the largest foreign banking groups based on total
assets held in the country. We also have a significant presence in Brazil, which
together with The Netherlands and the Midwestern United States, is one of the
our three "home" markets.
DO YOU HAVE PRIOR EXPERIENCE IN ISSUING REVERSE EXCHANGEABLE SECURITIES?
Over the past three years we have issued over $3 billion of reverse
exchangeable securities to individual investors throughout Europe and Asia. With
over 100 issues to date, each offering has ranged from $5 million to in excess
of $175 million. Our previous reverse exchangeable security issues have had, as
the underlying shares, the stock of a variety of large corporations which are
listed on exchanges around the world.
WHERE CAN I FIND OUT MORE ABOUT WAL-MART?
Because the Underlying Shares are registered under the Exchange Act,
Wal-Mart is required to periodically file certain financial and other
information specified by the Commission which is available to the public. You
should read "Public Information Regarding the Underlying Shares" in this Pricing
Supplement to learn how to obtain public information regarding the Underlying
Shares and other important information. The historical high and low closing
prices of the Underlying Shares since 1998 are set forth under the heading
"Public Information Regarding the Underlying Shares" in this Pricing Supplement.
WHO WILL DETERMINE THE CLOSING PRICE PER UNDERLYING SHARE ON THE DETERMINATION
DATE?
We have appointed ABN AMRO Incorporated, which we refer to as AAI, to act
as calculation agent for the Chase Manhattan Bank, the trustee for the
Securities. As calculation agent, AAI will determine the closing price of the
Underlying Shares on the determination date and the stock redemption amount. The
calculation agent may adjust the initial price of the Underlying Shares which we
describe in the section called "Description of Securities -- Adjustment Events."
PS-5
6
WHO INVESTS IN THE SECURITIES?
The Securities are not suitable for all investors. The Securities might be
considered by investors who:
- Seek a higher interest rate than the current dividend yield on the Underlying
Shares or the yield on a conventional debt security with the same maturity
issued by us or an issuer with a comparable credit rating;
- Are willing to accept the risk of owning equity in general and the Underlying
Shares in particular and the risk that they could lose their entire
investment; and
- Do not expect to participate in any appreciation in the price of the
Underlying Shares.
You should carefully consider whether the Securities are suited to your
particular circumstances before you decide to purchase them. In addition, we
urge you to consult with your investment, legal, accounting, tax and other
advisors with respect to any investment in the Securities.
WHAT ARE SOME OF THE RISKS IN OWNING THE SECURITIES?
Investing in the Securities involves a number of risks. We have described
the most significant risks relating to the Securities under the heading "Risk
Factors" in this Pricing Supplement which you should read before making an
investment in the Securities.
Some selected risk considerations include:
- Credit Risk. Because you are purchasing a security from us, you are assuming
our credit risk.
- Principal Risk. The Securities are not principal protected, which means there
is no guaranteed return of principal. If the market price of the Underlying
Shares on the determination date is less than the initial price, we will
deliver to you a fixed number of Underlying Shares with a market value less
than the principal amount of the Securities you hold which value may be zero.
- Market Risk. The value of the Securities in the secondary market will be
subject to many unpredictable factors, including then prevailing market
conditions.
WHAT IF I HAVE MORE QUESTIONS?
You should read the "Description of Securities" in this Pricing Supplement
for a detailed description of the terms of the Securities. The Securities are
senior notes issued as part of our Series A medium-term note program. The
Securities will constitute our unsecured and unsubordinated obligations and rank
pari passu without any preference among them and with all our other present and
future unsecured and unsubordinated obligations. You can find a general
description of our Series A medium-term note program in the accompanying
Prospectus Supplement. We also describe the basic features of this type of note
in the sections called "Description of Notes" and "Notes Linked to Commodity
Prices, Single Securities, Baskets of Securities or Indices".
You may contact our principal executive offices at Gustav Mahleraan 10,
1082 PP Amsterdam, The Netherlands. Our telephone number is (31-20) 628-9393.
PS-6
7
HYPOTHETICAL SENSITIVITY ANALYSIS OF TOTAL RETURN
OF THE SECURITIES AT MATURITY
The following table sets out the total return to maturity of a Security,
based on various closing prices for the Underlying Shares on the determination
date after giving effect to the assumptions outlined below. The information in
the table is based on hypothetical market values for the Underlying Shares. We
cannot predict the market price of the Underlying Shares on the determination
date. THE ASSUMPTIONS EXPRESSED BELOW ARE FOR ILLUSTRATIVE PURPOSES ONLY AND THE
RETURNS SET FORTH IN THE TABLE MAY OR MAY NOT BE THE ACTUAL RATES APPLICABLE TO
A PURCHASER OF THE SECURITIES.
ASSUMPTIONS
Initial Price: $44.66 (the closing price on September 21,
2001, the date we priced the Securities; the
initial price and consequently the stock
redemption amount is subject to change as
described under "Description of
Securities -- Adjustable Events")
Annual Interest on the
Securities: 11.50%
Term of the Securities: 12 months
-------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN
ASSUMED TWO
WAL-MART VALUE OF SEMI-ANNUAL
STOCK PRICE PAYMENT AT INTEREST ------------------------------------------
AT MATURITY MATURITY(A) PAYMENTS $ %
-------------------------------------------------------------------------------------------------------------------------------
$44.66+ $1,000.00 $115.00 $1,115.00 11.50%
$44.66 $1,000.00 $115.00 $1,115.00 11.50%
$42.43 $ 950.00 $115.00 $1,065.00 6.50%
$40.19 $ 900.00 $115.00 $1,015.00 1.50%
$39.52 $ 885.00 $115.00 $1,000.00 0.00%
$37.96 $ 850.00 $115.00 $ 965.00 -3.50%
$30.00 $ 671.74 $115.00 $ 786.74 -21.33%
$20.00 $ 447.83 $115.00 $ 562.83 -43.72%
$10.00 $ 223.91 $115.00 $ 338.91 -66.11%
$ 0.00 $ 0.00 $115.00 $ 115.00 -88.50%
-------------------------------------------------------------------------------------------------------------------------------
-------------------------
(a) Based on the assumptions set forth above, if the price of the Underlying
Shares is $44.66 or more, the payment at maturity will be made in cash. If
the price of the Underlying Shares is less than $44.66, the payment at
maturity will be made in Underlying Shares.
PS-7
8
RISK FACTORS
The Securities are not secured debt and are riskier than ordinary debt
securities. There is no guaranteed return of principal. Investing in the
Securities is not the equivalent of investing directly in the Underlying Shares.
This section describes the most significant risks relating to the Securities.
YOU SHOULD CAREFULLY CONSIDER WHETHER THE SECURITIES ARE SUITED TO YOUR
PARTICULAR CIRCUMSTANCES BEFORE YOU DECIDE TO PURCHASE THEM. IN ADDITION, WE
URGE YOU TO CONSULT WITH YOUR INVESTMENT, LEGAL, ACCOUNTING, TAX AND OTHER
ADVISORS WITH RESPECT TO ANY INVESTMENT IN THE SECURITIES.
THE SECURITIES ARE NOT ORDINARY SENIOR NOTES; THERE IS NO GUARANTEED RETURN OF
PRINCIPAL
The Securities combine limited features of debt and equity. The terms of
the Securities differ from those of ordinary debt securities in that we will not
pay you a fixed amount at maturity if the market price of the Underlying Shares
on the determination date is less than the initial price. In such an event, we
will exchange each Security for a number of Underlying Shares equal to $1,000
divided by the initial price as determined by the calculation agent. If,
therefore, the market price of the Underlying Shares on the determination date
is less than the initial price, we will deliver to you a number of Underlying
Shares with a market value less than the principal amount of the Securities and
which may be zero. You cannot predict the future performance of the Underlying
Shares based on its historical performance. Accordingly, you could lose some or
all of the amount you invest in the Securities.
THE SECURITIES WILL NOT PAY MORE THAN THE STATED PRINCIPAL AMOUNT AT MATURITY
The amount paid at maturity of the Securities in cash or Underlying Shares
will not exceed the principal amount of the Securities. If the market price of
the Underlying Shares on the determination date is equal to or exceeds the
initial price, you will not receive Underlying Shares or any other asset equal
to the value of the Underlying Shares. Instead, you will receive the principal
amount of the Securities. As a result, if the Underlying Shares have appreciated
above their price level at September 21, 2001, the payment you receive at
maturity will not reflect that appreciation. UNDER NO CIRCUMSTANCES WILL YOU
RECEIVE A PAYMENT AT MATURITY GREATER THAN THE PRINCIPAL AMOUNT OF THE
SECURITIES THAT YOU HOLD AT THAT TIME.
SECONDARY TRADING MAY BE LIMITED
You should be willing to hold your Securities until the maturity date.
There may be little or no secondary market for the Securities. Although the
Securities have been approved for listing on the American Stock Exchange LLC
subject to official notice of issuance and resumption of trading, it is not
possible to predict whether the Securities will trade in the secondary markets.
Even if there is a secondary market, it may not provide enough liquidity to
allow you to trade or sell the Securities easily. Our affiliates currently
intend to act as market makers for the Securities but they are not required to
do so. Our affiliates may stop making a market in the Securities at any time. In
addition, the full principal amount of the Securities being offered was not
purchased by investors in the offering. One of our affiliates has agreed to
purchase the unsold portion which does not exceed $10 million for investment.
Such affiliate or affiliates intend to hold the Securities for at least 30 days
after the issue date, which may affect the supply of Securities available for
secondary trading.
PS-8
9
MARKET PRICE OF THE SECURITIES INFLUENCED BY MANY UNPREDICTABLE FACTORS
The value of the Securities may move up and down between the date you
purchase them and the determination date when the calculation agent determines
the amount to be paid to the holders of the Securities on the maturity date.
Several factors, many of which are beyond our control, will influence the
value of the Securities, including:
- the market price of the Underlying Shares;
- the volatility (frequency and magnitude of changes) in the price of the
Underlying Shares;
- the dividend rate on the Underlying Shares. While dividend payments on
the Underlying Shares, if any, are not paid to holders of the Securities,
such payments may have an influence on the market price of the Underlying
Shares and therefore on the Securities;
- interest and yield rates in the market;
- economic, financial, political and regulatory or judicial events that
affect the stock markets generally and which may affect the market price
of the Underlying Shares and/or the Securities;
- the time remaining to the maturity of the Securities; and
- our creditworthiness.
Some or all of these factors will influence the price that you will receive
if you sell your Securities prior to maturity. For example, you may have to sell
your Securities at a substantial discount from the principal amount if at the
time of sale the market price of the Underlying Shares is at, below, or not
sufficiently above the initial price.
AN INCREASE IN THE VALUE OF THE UNDERLYING SHARES WILL NOT INCREASE THE RETURN
ON YOUR INVESTMENT
Owning the Securities is not the same as owning the Underlying Shares.
Accordingly, the market value of your Securities may not have a direct
relationship with the market price of the Underlying Shares, and changes in the
market price of the Underlying Shares may not result in a comparable change in
the market value of your Securities. If the price per Underlying Share increases
above the initial price, the market value of the Securities may not increase. It
is also possible for the price of the Underlying Shares to increase while the
market price of the Securities declines.
POTENTIAL CONFLICTS OF INTEREST; NO SECURITY INTEREST IN THE UNDERLYING SHARES
HELD BY US
We and other affiliates may carry out activities that minimize our risks
related to the Securities, including trading in the Underlying Shares. In
particular, on the date of this pricing supplement, we, through our subsidiaries
and others, hedged our anticipated exposure in connection with the Securities by
taking positions in options contracts on Underlying Shares listed on major
securities markets and positions in other instruments that we deemed appropriate
in connection with such hedging. Such hedging was carried out in a manner
designed to minimize any impact on the price of the Underlying Shares. Our
purchase activity could potentially have increased the price of the Underlying
Shares, and therefore effectively have increased the levels below which a
decline in the Underlying Shares would cause us to deliver to you at maturity a
number of Underlying Shares with a value less than the principal amount of your
Securities. Through our subsidiaries, we are likely to modify our hedge position
throughout the life of the Securities by purchasing and selling
PS-9
10
Underlying Shares, options contracts on Underlying Shares listed on major
securities markets or positions in other securities or instruments that we may
wish to use in connection with such hedging. Although we have no reason to
believe that our hedging activity or other trading activities that we, or any of
our affiliates, engaged in or may engage in has had or will have a material
impact on the price of the Underlying Shares, we cannot give any assurance that
we have not or will not affect such price as a result of our hedging or trading
activities and it is possible that we or one of more of our affiliates could
receive substantial returns from these hedging activities while the value of the
Securities may decline. We or one or more of our affiliates may also engage in
trading the Underlying Shares and other investments relating to Wal-Mart on a
regular basis as part of our or its general broker-dealer and other businesses,
for proprietary accounts, for other accounts under management or to facilitate
transactions for customers, including block transactions. Any of these
activities could adversely affect the price of the Underlying Shares and,
therefore, the value of the Securities. We or one or more of our affiliates may
also issue or underwrite other securities or financial or derivative instruments
with returns linked or related to changes in the value of the Underlying Shares.
By introducing competing products into the marketplace in this manner, we or one
or more of our affiliates could adversely effect the value of the Securities. It
is also possible that any advisory services that we or our affiliates provide in
the course of any business with Wal-Mart or its affiliates could lead to actions
on the part of the issuer of the stock which might adversely affect the value of
the Underlying Shares.
The indenture governing the Securities does not contain any restriction on
our ability or the ability of any of our affiliates to sell, pledge or otherwise
convey all or any portion of the Underlying Shares acquired by us or our
affiliates. Neither we nor any of our affiliates will pledge or otherwise hold
Underlying Shares for the benefit of holders of the Securities in order to
enable the holders to exchange their Securities for Underlying Shares under any
circumstances. Consequently, in the event of a bankruptcy, insolvency or
liquidation involving us, any Underlying Shares that we own will be subject to
the claims of our creditors generally and will not be available specifically for
the benefit of the holders of the Securities.
NO SHAREHOLDER RIGHTS IN THE UNDERLYING SHARES
As a holder of the Securities, you will not have voting rights or rights to
receive dividends or other distributions or other rights that holders of
Underlying Shares would have.
Because we and our affiliates are not affiliated with Wal-Mart, we have no
ability to control or predict the actions of Wal-Mart, including any corporate
actions of the type that would require the calculation agent to adjust the
initial price and consequently the stock redemption amount, and have no ability
to control the public disclosure of these corporate actions or any other events
or circumstances affecting Wal-Mart. WAL-MART IS NOT INVOLVED IN THE OFFER OF
THE SECURITIES IN ANY WAY AND HAS NO OBLIGATION TO CONSIDER YOUR INTEREST AS AN
OWNER OF THE SECURITIES IN TAKING ANY CORPORATE ACTIONS THAT MIGHT AFFECT THE
VALUE OF YOUR SECURITIES. NONE OF THE MONEY YOU PAY FOR THE SECURITIES WILL GO
TO WAL-MART.
INFORMATION REGARDING WAL-MART
Neither we nor any of our affiliates assumes any responsibility for the
adequacy of the information about Wal-Mart contained in this pricing supplement
or in any of Wal-Mart publicly available filings. As an investor in the
Securities, you should make your own investigation into Wal-Mart. ABN AMRO AND
ITS AFFILIATES HAVE NO AFFILIATION WITH WAL-MART, AND ARE NOT RESPONSIBLE FOR
WAL-MART PUBLIC DISCLOSURE OF INFORMATION, WHETHER CONTAINED IN SEC FILINGS OR
OTHERWISE. We do not have any non-public information about Wal-Mart
PS-10
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as of the date of this pricing supplement although we or our subsidiaries may
currently or from time to time engage in business with Wal-Mart, including
extending loans to, or making equity investments in, or providing investment
advisory services to Wal-Mart including merger and acquisition advisory
services.
LIMITED ANTIDILUTION PROTECTION
AAI, as calculation agent will adjust the initial price and consequently
the stock redemption amount for certain events affecting the Underlying Shares,
such as stock splits and corporate actions. The calculation agent is not
required to make an adjustment for every corporate action which affects the
Underlying Shares. For example, the calculation agent is not required to make
any adjustments if Wal-Mart or anyone else makes a partial tender or partial
exchange offer for the Underlying Shares. IF AN EVENT OCCURS THAT DOES NOT
REQUIRE THE CALCULATION AGENT TO ADJUST THE AMOUNT OF THE UNDERLYING SHARES
PAYABLE AT MATURITY, THE MARKET PRICE OF THE SECURITIES MAY BE MATERIALLY AND
ADVERSELY AFFECTED.
HOLDINGS OF THE SECURITIES BY OUR AFFILIATES AND FUTURE SALES
One of our affiliates has agreed to purchase for investment the portion of
the Securities that has not been purchased in this offering, which it intends to
hold for a period of at least 30 days. As a result, our affiliate owns up to 50%
of the principal amount of the Securities. Circumstances may occur in which our
interests or those of our affiliate could be in conflict with your interests. In
this case, our affiliate may have the ability to control matters submitted to
the holders of Securities for approval, including, for example, certain rights
under the Indenture upon an event of default as described in the accompanying
Prospectus under the heading "Description of Debt Securities -- Events of
Default."
In addition, if a substantial portion of the Securities held by our
affiliates were to be sold in the secondary market following this offering, the
market price of the Securities may fall. The negative effect of such sales on
the price of the Securities could be more pronounced if secondary trading in the
Securities is limited or illiquid.
POTENTIAL CONFLICTS OF INTEREST BETWEEN SECURITYHOLDERS AND THE CALCULATION
AGENT
As calculation agent, AAI will calculate the payout to you at maturity of
the Securities. AAI and other affiliates may carry out hedging activities
related to the Securities, including trading in the Underlying Shares, as well
as in other instruments related to the Underlying Shares. AAI and some of our
other affiliates also trade the Underlying Shares on a regular basis as part of
their general broker dealer businesses. Any of these activities could influence
AAI's determinations as calculation agent and any such trading activity could
potentially affect the price of the Underlying Shares and, accordingly could
effect the payout on the Securities. AAI IS AN AFFILIATE OF ABN AMRO BANK N.V.
TAX TREATMENT
You should also consider the tax consequences of investing in the
Securities. Significant aspects of the tax treatment of Securities are
uncertain. We do not plan to request a ruling from the Internal Revenue Service
(the "IRS") or from the Dutch authorities regarding the tax treatment of the
Securities, and the IRS or a court may not agree with the tax treatment
described in this pricing supplement. Please read carefully the section entitled
"Taxation" in this pricing supplement. You should consult your tax advisor about
your own situation.
PS-11
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INCORPORATION OF DOCUMENTS BY REFERENCE
The Securities and Exchange Commission (the "Commission") allows us to
incorporate by reference much of the information we file with them, which means
that we can disclose important information to you by referring you to those
publicly available documents. The information that we incorporate by reference
in this pricing supplement is considered to be part of this pricing supplement.
Because we are incorporating by reference future filings with the Commission,
this pricing supplement is continually updated and those future filings may
modify or supersede some of the information included or incorporated in this
pricing supplement. This means that you must look at all of the Commission
filings that we incorporate by reference to determine if any of the statements
in this pricing supplement or in any document previously incorporated by
reference have been modified or superseded. This pricing supplement incorporates
by reference the documents listed below and any future filings we make with the
Commission (including any Form 6-K's we subsequently file with the SEC and
specifically incorporate by reference into this pricing supplement) under
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") until we complete our offering of the securities to be issued
hereunder or, if later, the date on which any of our affiliates cease offering
and selling these securities:
(a) the Annual Report on Form 20-F of ABN AMRO Holding N.V. and ABN
AMRO Bank N.V. for the year ended December 31, 2000;
(b) the Report on Form 6-K dated May 16, 2001 (press release of ABN
AMRO Holding N.V. announcing the financial results for the first quarter of
the year 2001); and
(c) the Report on Form 6-K dated August 17, 2001 (press release of ABN
AMRO Holding N.V. announcing the financial results for the second quarter
of the year 2001).
You may request, at no cost to you, a copy of these documents (other than
exhibits not specifically incorporated by reference) by writing or telephoning
us at: ABN AMRO Bank N.V., ABN AMRO Investor Relations Department, Hoogoorddreef
66-68, P.O. Box 283, 1101 BE Amsterdam, The Netherlands (Telephone: (31-20) 628
3842).
PS-12
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PUBLIC INFORMATION REGARDING THE UNDERLYING SHARES
According to publicly available documents, Wal-Mart Stores, Inc. operates
discount stores, Supercenters, Neighborhood Markets and SAM'S CLUBS in the
United States. The Company's securities are listed on the New York and Pacific
Stock Exchanges under the symbol WMT.
The Underlying Shares are registered under the Exchange Act. Companies with
securities registered under the Exchange Act are required to periodically file
certain financial and other information specified by the Commission. Information
provided to or filed with the Commission can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 or at its Regional Offices located at Suite
1400, Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661 and at
Seven World Trade Center, 13th Floor, New York, New York 10048, and copies of
such material can be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
In addition, information provided to or filed with the Commission electronically
can be accessed through a Website maintained by the Commission. The address of
the Commission's Website is http://www.sec.gov. Information provided to or filed
with the Commission by Wal-Mart pursuant to the Exchange Act can be located by
reference to Commission file number 1-06991. In addition, information regarding
Wal-Mart may be obtained from other sources including, but not limited to, press
releases, newspaper articles and other publicly disseminated documents. We make
no representation or warranty as to the accuracy or completeness of such
reports.
THIS PRICING SUPPLEMENT RELATES ONLY TO THE SECURITIES OFFERED HEREBY AND
DOES NOT RELATE TO THE UNDERLYING SHARES OR OTHER SECURITIES OF WAL-MART. WE
HAVE DERIVED ALL DISCLOSURES CONTAINED IN THIS PRICING SUPPLEMENT REGARDING
WAL-MART FROM THE PUBLICLY AVAILABLE DOCUMENTS DESCRIBED IN THE PRECEDING
PARAGRAPH. NEITHER WE NOR THE AGENTS HAS PARTICIPATED IN THE PREPARATION OF SUCH
DOCUMENTS OR MADE ANY DUE DILIGENCE INQUIRY WITH RESPECT TO WAL-MART IN
CONNECTION WITH THE OFFERING OF THE SECURITIES. NEITHER WE NOR THE AGENTS MAKES
ANY REPRESENTATION THAT SUCH PUBLICLY AVAILABLE DOCUMENTS OR ANY OTHER PUBLICLY
AVAILABLE INFORMATION REGARDING WAL-MART ARE ACCURATE OR COMPLETE. FURTHERMORE,
WE CANNOT GIVE ANY ASSURANCE THAT ALL EVENTS OCCURRING PRIOR TO THE DATE HEREOF
(INCLUDING EVENTS THAT WOULD AFFECT THE ACCURACY OR COMPLETENESS OF THE PUBLICLY
AVAILABLE DOCUMENTS DESCRIBED IN THE PRECEDING PARAGRAPH) THAT WOULD AFFECT THE
TRADING PRICE OF THE UNDERLYING SHARES (AND THEREFORE THE INITIAL PRICE AND THE
STOCK REDEMPTION AMOUNT) HAVE BEEN PUBLICLY DISCLOSED. SUBSEQUENT DISCLOSURE OF
ANY SUCH EVENTS OR THE DISCLOSURE OF OR FAILURE TO DISCLOSE MATERIAL FUTURE
EVENTS CONCERNING WAL-MART COULD AFFECT THE VALUE RECEIVED ON THE MATURITY DATE
WITH RESPECT TO THE SECURITIES AND THEREFORE THE TRADING PRICES OF THE
SECURITIES.
NEITHER WE NOR ANY OF OUR AFFILIATES MAKES ANY REPRESENTATION TO YOU AS TO
THE PERFORMANCE OF THE UNDERLYING SHARES.
We and/or our subsidiaries may presently or from time to time engage in
business with Wal-Mart, including extending loans to, or making equity
investments in, or providing advisor services to Wal-Mart, including merger and
acquisition advisory services. In the course of such business, we and/or our
subsidiaries may acquire non-public information with respect to Wal-Mart and, in
addition, one or more of our affiliates may publish research reports with
respect to Wal-Mart. The statement in the preceding sentence is not intended to
affect the rights of holders of the Securities under the securities laws. As a
prospective purchaser of a Security, you should undertake such independent
investigation of General Electric as in your judgment is appropriate to make an
informed decision with respect to an investment in the Underlying Shares.
PS-13
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The following table sets forth the published high and low closing prices of
the Underlying Shares since 1998. The closing price on September 21, 2001 was
$44.66. We obtained the closing prices listed below from Bloomberg Financial
Markets and we believe such information to be accurate. You should not take the
historical prices of the Underlying Shares as an indication of future
performance. We cannot give any assurance that the price of the Underlying
Shares will not decrease, such that we will deliver Underlying Shares at
maturity.
PERIOD HIGH LOW CLOSING PRICE
------ -------- -------- -------------
1998
First Quarter.................................. $26.1250 $18.7813 $25.4063
Second Quarter................................. $31.4375 $24.0938 $30.3750
Third Quarter.................................. $34.9063 $26.9375 $27.3125
Fourth Quarter................................. $41.3750 $26.2188 $40.7188
1999
First Quarter.................................. $49.1875 $38.6875 $46.0938
Second Quarter................................. $53.4063 $41.0000 $48.2500
Third Quarter.................................. $51.0000 $38.8750 $47.5625
Fourth Quarter................................. $70.2500 $47.5625 $69.1250
2000
First Quarter.................................. $69.0000 $43.4375 $56.5000
Second Quarter................................. $64.9375 $49.5000 $57.6250
Third Quarter.................................. $62.9375 $46.8750 $48.1250
Fourth Quarter................................. $55.9375 $41.4375 $53.1250
2001
First Quarter.................................. $58.7500 $45.2000 $50.5000
Second Quarter................................. $54.7500 $47.4100 $48.8000
Third Quarter (through September 21, 2001)..... $56.7700 $41.5000 $44.6600
We make no representation as to the amount of dividends, if any, that
Wal-Mart will pay in the future. In any event, as a holder of a Security, you
will not be entitled to receive dividends, if any, that may be payable on the
Underlying Shares.
PS-14
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DESCRIPTION OF SECURITIES
Capitalized terms not defined herein have the meanings given to such terms
in the accompanying Prospectus Supplement. The term "Security" refers to each
$1,000 principal amount of our 11.50% Reverse Exchangeable Securities due
September 26, 2002 linked to the common stock of Wal-Mart.
Principal Amount:............. $20,000,000
Underlying Shares............. Common Stock, par value $0.10 of Wal-Mart
Stores, Inc.
Original Issue Date
(Settlement Date)............. September 26, 2001
Issue Price................... 100%
Initial Price................. The closing price per Underlying Share when we
priced the Securities on September 21, 2001,
divided by the exchange factor.
Maturity Date................. September 26, 2002
Specified Currency............ U.S. Dollars
CUSIP......................... 00079FAF9
Denominations................. The Securities may be purchased in
denominations of $1,000 and integral multiples
thereof.
Interest Rate................. 11.50% per annum, payable semi-annually in
arrear on March 26, 2002 and September 26,
2002, which shall represent (a) an interest
coupon of 3.65% per annum and (b) an option
premium of 7.85% per annum.
Payment at Maturity........... At maturity, we will pay or deliver for each
$1,000 principal amount of Securities, either
(i) a cash payment equal to $1,000, if the
determination price on the determination date
of the Underlying Shares is at or above the
initial price, or (ii) a number of Underlying
Shares equal to the stock redemption amount, if
the determination price on the determination
date of the Underlying Shares is lower than the
initial price. We will pay cash in lieu of
delivering fractional Underlying Shares in an
amount equal to the corresponding fractional
closing price of the Underlying Shares as
determined by the calculation agent on the
determination date.
Stock Redemption Amount....... The calculation agent will determine the stock
redemption amount on the determination date by
dividing $1,000 by the initial price of the
Underlying Shares. The initial price and
consequently the stock redemption amount may be
adjusted for certain corporate events affecting
Wal-Mart. The interest payment on the
Securities will not be converted into
Underlying Shares at maturity.
Determination Date............ The third business day prior to the maturity
date, or if such day is not a trading day, the
immediately succeeding trading day;
PS-15
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provided that the determination date shall be
no later than the second scheduled trading day
preceding the maturity date, notwithstanding
the occurrence of a market disruption event on
such second scheduled trading day.
Determination Price........... The closing price per Underlying Share on the
determination date, as determined by the
calculation agent.
Closing Price................. If the Underlying Shares (or any other security
for which a closing price must be determined)
are listed on a U.S. securities exchange
registered under the Exchange Act, are
securities of The Nasdaq National Market or are
included in the OTC Bulletin Board Service,
which we refer to as the OTC Bulletin Board,
operated by the National Association of
Securities Dealers, Inc., the closing price for
one Underlying Share (or one unit of any such
other security) on any Trading Day means (i)
the last reported sale price, regular way, on
such day on the principal securities exchange
on which the Underlying Shares (or any such
other security) are listed or admitted to
trading or (ii) if not listed or admitted to
trading on any such securities exchange or if
such last reported sale price is not obtainable
(even if the Underlying Shares (or other such
security) are listed or admitted to trading on
such securities exchange), the last reported
sale price on the over-the-counter market as
reported on The Nasdaq National Market or OTC
Bulletin Board on such day. If the last
reported sale price is not available pursuant
to clause (i) or (ii) of the preceding
sentence, the closing price for any Trading Day
shall be the mean, as determined by the
calculation agent, of the bid prices for the
Underlying Shares (or any such other security)
obtained from as many dealers in such security
(which may include AAI or any of our other
subsidiaries or affiliates), but not exceeding
three, as will make such bid prices available
to the calculation agent. A "security of The
Nasdaq National Market" shall include a
security included in any successor to such
system and the term "OTC Bulletin Board
Service" shall include any successor service
thereto.
Trading Day................... A day, as determined by the calculation agent,
on which trading is generally conducted on the
New York Stock Exchange, the American Stock
Exchange LLC, the Nasdaq National Market, the
Chicago Mercantile Exchange, and the Chicago
Board of Options Exchange and in the
over-the-counter market for equity securities
in the United States and on which a market
disruption event has not occurred.
Book Entry Note or
Certificated Note............. Book Entry
PS-16
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Trustee....................... The Chase Manhattan Bank
Agents........................ In addition to AAI, we have appointed ABN AMRO
Financial Services, Inc. ("AAFS"), First
Institutional Securities, First Union
Securities, Inc. LLC, H & R Block Financial
Advisors and Ladenburg Thalmann & Co., Inc., as
agents for this offering. AAI and AAFS are
wholly owned subsidiaries of the Bank. AAI and
AAFS will conduct this offering in compliance
with the requirements of Rule 2720 of the NASD
regarding an NASD member firm's distributing
the securities of an affiliate. Following the
initial distribution of the Securities, AAI and
AAFS may offer and sell those securities in the
course of their business as broker-dealers. AAI
and AAFS may act as principals or agents in
those transactions and will make any sales at
varying prices related to prevailing market
prices at the time of sale or otherwise. AAI
and AAFS may use this Prospectus Supplement and
the accompanying Prospectus and Prospectus
Supplements in connection with any of those
transactions. AAI and AAFS are not obligated to
make a market in any of these securities and
may discontinue any market-making activities at
any time without notice.
Market Disruption Event....... Means, with respect to the Underlying Shares:
(i) a suspension, absence or material
limitation of trading of the Underlying
Shares on the primary market for the
Underlying Shares for more than two hours
of trading or during the one-half hour
period preceding the close of trading in
such market; or a breakdown or failure in
the price and trade reporting systems of
the primary market for the Underlying
Shares as a result of which the reported
trading prices for the Underlying Shares
during the last one-half hour preceding
the closing of trading in such market are
materially inaccurate; or the suspension,
absence or material limitation on the
primary market for trading in options
contracts related to the Underlying
Shares, if available, during the one-half
hour period preceding the close of trading
in the applicable market, in each case as
determined by the calculation agent in its
sole discretion; and
(ii) a determination by the calculation agent
in its sole discretion that the event
described in clause (i) above materially
interfered with our ability or the ability
of any of our affiliates to unwind or
adjust all or a material portion of the
hedge with respect to the Securities.
PS-17
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For purposes of determining whether a market
disruption event has occurred: (1) a limitation
on the hours or number of days of trading will
not constitute a market disruption event if it
results from an announced change in the regular
business hours of the relevant exchange, (2) a
decision to permanently discontinue trading in
the relevant option contract will not
constitute a market disruption event, (3)
limitations pursuant to New York Stock Exchange
Inc. Rule 80A (or any applicable rule or
regulation enacted or promulgated by the New
York Stock Exchange Inc., any other
self-regulatory organization or the Commission
of similar scope as determined by the
calculation agent) on trading during
significant market fluctuations shall
constitute a suspension, absence or material
limitation of trading, (4) a suspension of
trading in an options contract on the
Underlying Shares by the primary securities
market trading in such options, if available,
by reason of (x) a price change exceeding
limits set by such securities exchange or
market, (y) an imbalance of orders relating to
such contracts or (z) a disparity in bid and
ask quotes relating to such contracts will
constitute a suspension, absence or material
limitation of trading in options contracts
related to the Underlying Shares and (5) a
suspension, absence or material limitation of
trading on the primary securities market on
which options contracts related to the
Underlying Shares are traded will not include
any time when such securities market is itself
closed for trading under ordinary
circumstances.
The calculation agent shall as soon as
reasonably practicable under the circumstances
notify us, the trustee, the Depository Trust
Company and the Agents of the existence or
occurrence of a market disruption event on any
day that but for the occurrence or existence of
a market disruption event would have been the
determination date.
Exchange Factor............... The exchange factor will be set initially at
1.0, but will be subject to adjustment upon the
occurrence of certain corporate events
affecting the Underlying Shares. See
"Adjustment Events" below.
Adjustment Events............. The exchange factor or the amounts paid at
maturity will be adjusted as follows:
1. If the Underlying Shares are subject to a
stock split or reverse stock split, then
once such split has become effective, the
exchange factor will be adjusted to equal
the product of the prior exchange factor and
the number of shares issued in such stock
split or reverse stock split with respect to
one Underlying Share.
PS-18
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2. If the Underlying Shares are subject (i) to
a stock dividend (issuance of additional
Underlying Shares) that is given ratably to
all holders of the Underlying Shares or (ii)
to a distribution of the Underlying Shares
as a result of the triggering of any
provision of the corporate charter of
Wal-Mart, then once the dividend has become
effective and the Underlying Shares are
trading ex-dividend, the exchange factor
will be adjusted so that the new exchange
factor shall equal the prior exchange factor
plus the product of (i) the number of shares
issued with respect to one Underlying Share
and (ii) the prior exchange factor.
3. There will be no adjustments to the exchange
factor to reflect cash dividends or other
distributions paid with respect to the
Underlying Shares other than Extraordinary
Dividends as described below. A cash
dividend or other distribution with respect
to the Underlying Shares will be deemed to
be an "Extraordinary Dividend" if such
dividend or other distribution exceeds the
immediately preceding non-Extraordinary
Dividend for the Underlying Shares by an
amount equal to at least 10% of the closing
price of the Underlying Shares (as adjusted
for any subsequent corporate event requiring
an adjustment hereunder, such as a stock
split or reverse stock split) on the trading
day preceding the ex-dividend date for the
payment of such Extraordinary Dividend (the
"ex-dividend date"). If an Extraordinary
Dividend occurs with respect to the
Underlying Shares, the exchange factor with
respect to the Underlying Shares will be
adjusted on the ex-dividend date with
respect to such Extraordinary Dividend so
that the new exchange factor will equal the
product of (i) the then current exchange
factor and (ii) a fraction, the numerator of
which is the closing price on the trading
day preceding the ex-dividend date, and the
denominator of which is the amount by which
the closing price on the trading day
preceding the ex-dividend date exceeds the
Extraordinary Dividend Amount. The
"Extraordinary Dividend Amount" with respect
to an Extraordinary Dividend for the
Underlying Shares will equal (i) in the case
of cash dividends or other distributions
that constitute regular dividends, the
amount per share of such Extraordinary
Dividend minus the amount per share of the
immediately preceding non-Extraordinary
Dividend for the Underlying Shares or (ii)
in the case of cash dividends or other
distributions that do not constitute regular
dividends, the amount per share of such
Extraordinary Dividend. To the extent an
Extraordinary Dividend is not paid
PS-19
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in cash, the value of the non-cash component
will be determined by the calculation agent,
whose determination shall be conclusive. A
distribution on the Underlying Shares
described in clause (i), clause (iv) or
clause (v) of paragraph 5 below that also
constitutes an Extraordinary Dividend shall
not cause an adjustment to the exchange
factor pursuant to this paragraph 3.
4. If Wal-Mart issues rights or warrants to all
holders of the Underlying Shares to subscribe
for or purchase the Underlying Shares at an
exercise price per share less than the
closing price of the Underlying Shares on
both (i) the date the exercise price of such
rights or warrants is determined and (ii) the
expiration date of such rights or warrants,
and if the expiration date of such rights or
warrants precedes the maturity of the
Securities, then the exchange factor will be
adjusted to equal the product of the prior
exchange factor and a fraction, the numerator
of which shall be the number of Underlying
Shares outstanding immediately prior to the
issuance of such rights or warrants plus the
number of additional Underlying Shares
offered for subscription or purchase pursuant
to such rights or warrants and the
denominator of which shall be the number of
Underlying Shares outstanding immediately
prior to the issuance of such rights or
warrants plus the number of additional
Underlying Shares which the aggregate
offering price of the total number of
Underlying Shares so offered for subscription
or purchase pursuant to such rights or
warrants would purchase at the closing price
on the expiration date of such rights or
warrants, which shall be determined by
multiplying such total number of shares
offered by the exercise price of such rights
or warrants and dividing the product so
obtained by such closing price.
5. If (i) there occurs any reclassification or
change with respect to the Underlying
Shares, including, without limitation, as a
result of the issuance of any tracking stock
by Wal-Mart, (ii) Wal-Mart or any surviving
entity or subsequent surviving entity of
Wal-Mart (an "Wal-Mart Successor") has been
subject to a merger, combination or
consolidation and is not the surviving
entity, (iii) any statutory exchange of
securities of Wal-Mart or any Wal-Mart
Successor with another corporation occurs
(other than pursuant to clause (ii) above),
(iv) Wal-Mart is liquidated, (v) Wal-Mart
issues to all of its shareholders equity
securities of an issuer other than Wal-Mart
(other than in a transaction described in
clauses (ii), (iii) or (iv) above) (a
PS-20
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"Spin-off Event") or (vi) a tender or
exchange offer or going-private transaction
is consummated for all the outstanding
Underlying Shares (any such event in clauses
(i) through (vi) a "Reorganization Event"),
each holder of Securities will receive at
maturity, in respect of each $1,000
principal amount of each Security,
securities, cash or any other assets
distributed to holders of the Underlying
Shares in any such Reorganization Event,
including, in the case of the issuance of
tracking stock, the reclassified the
Underlying Shares and, in the case of a
Spin-off Event, the Underlying Shares with
respect to which the spun-off security was
issued (collectively, the "Exchange
Property") or at our option, cash, in an
amount with a value equal to the lesser of:
(i) $1,000 and (ii) the product of the stock
redemption amount times the Transaction
Value. If Exchange Property consists of more
than one type of property, holders of
Securities will receive at maturity a pro
rata share of each such type of Exchange
Property. If Exchange Property includes a
cash component, holders will not receive any
interest accrued on such cash component.
"Transaction Value" at any date means (i)
for any cash received in any such
Reorganization Event, the amount of cash
received per Underlying Share, (ii) for any
property other than cash or securities
received in any such Reorganization Event,
the market value, as determined by the
calculation agent, as of the date of
receipt, of such Exchange Property received
for each Underlying Share and (iii) for any
security received in any such Reorganization
Event, an amount equal to the closing price,
as of the date on which the Transaction
Value is determined, per share of such
security multiplied by the quantity of such
security received for each Underlying Share.
In the event Exchange Property consists of
securities, those securities will, in turn,
be subject to the antidilution adjustments
set forth in paragraphs 1 through 5.
For purposes of paragraph 5 above, in the
case of a consummated tender or exchange
offer or going-private transaction involving
Exchange Property of a particular type,
Exchange Property shall be deemed to include
the amount of cash or other property paid by
the offeror in the tender or exchange offer
with respect to such Exchange Property (in
an amount determined on the basis of the
rate of exchange in such tender or exchange
offer or going-private transaction). In the
event of a tender or exchange offer or a
going-private transaction with respect to
Exchange Property in which an offeree may
elect to
PS-21
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receive cash or other property, Exchange
Property shall be deemed to include the kind
and amount of cash and other property
received by offerees who elect to receive
cash.
No adjustments to the exchange factor will
be required unless such adjustment would
require a change of at least 0.1% in the
exchange factor then in effect. The exchange
factor resulting from any of the adjustments
specified above will be rounded to the
nearest one hundred-thousandth with five
one-millionths being rounded upward.
No adjustments to the exchange factor or
method of calculating the exchange factor
will be required other than those specified
above. However, we may, at our sole
discretion, cause the calculation agent to
make additional changes to the exchange
factor upon the occurrence of corporate or
other similar events that affect or could
potentially affect market prices of, or
shareholders' rights in, the Underlying
Shares (or other Exchange Property) but only
to reflect such changes, and not with the
aim of changing relative investment risk.
The adjustments specified above do not cover
all events that could affect the market
price or the closing price of the Underlying
Shares, including, without limitation, a
partial tender or partial exchange offer for
the Underlying Shares.
The calculation agent shall be solely
responsible for the determination and
calculation of any adjustments to the
exchange factor or method of calculating the
exchange factor and of any related
determinations and calculations with respect
to any distributions of stock, other
securities or other property or assets
(including cash) in connection with any
corporate event described in paragraph 5
above, and its determinations and
calculations with respect thereto shall be
conclusive.
The calculation agent will provide
information as to any adjustments to the
exchange factor or method of calculating the
exchange factor upon written request by any
holder of the Securities.
Alternate Exchange Calculation
in case of an Event of
Default....................... In case an Event of Default with respect to the
Securities shall have occurred and be
continuing, the amount declared due and payable
upon any acceleration of any Security shall be
determined by AAI, as calculation agent, and
shall be equal to the principal amount of the
Security plus any accrued interest to but not
including the date of acceleration.
PS-22
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Calculation Agent............. AAI. All determinations made by the calculation
agent will be at the sole discretion of the
calculation agent and will, in the absence of
manifest error, be conclusive for all purposes
and binding on you and on us.
Additional Amounts............ We will, subject to certain exceptions and
limitations set forth below, pay such
additional amounts (the "Additional Amounts")
to holders of the Securities as may be
necessary in order that the net payment of the
principal of the Securities and any other
amounts payable on the Securities, after
withholding for or on account of any present or
future tax, assessment or governmental charge
imposed upon or as a result of such payment by
The Netherlands (or any political subdivision
or taxing authority thereof or therein) or the
jurisdiction of residence or incorporation of
any successor corporation or any jurisdiction
from or through which any amount is paid by us
or a successor corporation, will not be less
than the amount provided for in the Securities
to be then due and payable. We will not,
however, be required to make any payment of
Additional Amounts to any such holder for or on
account of:
(a) any such tax, assessment or other
governmental charge that would not have
been so imposed but for (i) the existence
of any present or former connection between
such holder (or between a fiduciary,
settlor, beneficiary, member or shareholder
of such holder, if such holder is an
estate, a trust, a partnership or a
corporation) and The Netherlands and its
possessions, including, without limitation,
such holder (or such fiduciary, settlor,
beneficiary, member or shareholder) being
or having been a citizen or resident
thereof or being or having been engaged in
a trade or business or present therein or
having, or having had, a permanent
establishment therein or (ii) the
presentation, where presentation is
required, by the holder of a Securities for
payment on a date more than 30 days after
the date on which such payment became due
and payable or the date on which payment
thereof is duly provided for, whichever
occurs later;
(b) any estate, inheritance, gift, sales,
transfer or personal property tax or any
similar tax, assessment or governmental
charge;
(c) any tax, assessment or other governmental
charge that is payable otherwise than by
withholding from payments on or in respect
of the Securities;
PS-23
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(d) any tax, assessment or other governmental
charge required to be withheld by any
paying agent from any payment of principal
of, or supplemental redemption amount on,
the Securities, if such payment can be made
without such withholding by presentation of
the Securities to any other paying agent;
(e) any tax, assessment or other governmental
charge that would not have been imposed but
for a holder's failure to comply with a
request addressed to the holder or, if
different, the beneficiary of the payment,
to comply with certification, information
or other reporting requirements concerning
the nationality, residence or identity of
the holder or beneficial owner of a
Securities, if such compliance is required
by statute or by regulation of The
Netherlands (or other relevant
jurisdiction), or of any political
subdivision or taxing authority thereof or
therein, as a precondition to relief or
exemption from such tax, assessment or
other governmental charge; or
(f) any combination of items (a), (b), (c), (d)
or (e); nor shall Additional Amounts be
paid with respect to any payment on the
Securities to a holder who is a fiduciary
or partnership or other than the sole
beneficial owner of such payment to the
extent such payment would be required by
the laws of The Netherlands (or other
relevant jurisdiction), or any political
subdivision thereof, to be included in the
income, for tax purposes, of a beneficiary
or settlor with respect to such fiduciary
or a member of such partnership or a
beneficial owner who would not have been
entitled to the Additional Amounts had such
beneficiary, settlor, member or beneficial
owner been the holder of the Securities.
PS-24
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USE OF PROCEEDS
The net proceeds we receive from the sale of the Securities will be used
for general corporate purposes and, in part, by us or one or more of our
affiliates in connection with hedging our obligations under the Securities. See
also "Risk Factors -- Potential Conflicts of Interest; No Security Interest in
the Underlying Shares Held by Us" in this pricing supplement and "Use of
Proceeds" in the accompanying Prospectus.
ERISA MATTERS
We and certain of our affiliates, including AAI, may each be considered a
"party in interest" within the meaning of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or a "disqualified person" within
the meaning of the Internal Revenue Code of 1986, as amended (the "Code") with
respect to many employee benefit plans. Prohibited transactions within the
meaning of ERISA or the Code may arise, for example, if the Securities are
acquired by or with the assets of a pension or other employee benefit plan with
respect to which AAI or any of its affiliates is a service provider, unless the
Securities are acquired pursuant to an exemption from the prohibited transaction
rules.
The acquisition of the Securities may be eligible for one of the exemptions
noted below if such acquisition:
(a)(i) is made solely with the assets of a bank collective investment
fund and (ii) satisfies the requirements and conditions of Prohibited
Transaction Class Exemption ("PTCE") 91-38 issued by the Department of
Labor ("DOL");
(b)(i) is made solely with assets of an insurance company pooled
separate account and (ii) satisfies the requirements and conditions of PTCE
90-1 issued by the DOL;
(c)(i) is made solely with assets managed by a qualified professional
asset manager and (ii) satisfies the requirements and conditions of PTCE
84-14 issued by the DOL;
(d) is made solely with assets of a governmental plan (as defined in
Section 3(32) of ERISA) which is not subject to the provisions of Section
401 of the Code;
(e)(i) is made solely with assets of an insurance company general
account and (ii) satisfies the requirements and conditions of PTCE 95-60
issued by the DOL; or
(f)(i) is made solely with assets managed by an in-house asset manager
and (ii) satisfies the requirements and conditions of PTCE 96-23 issued by
the DOL.
Under ERISA, the assets of a pension or other employee benefit plan may
include assets held in the general account of an insurance company which has
issued an insurance policy to such plan or assets of an entity in which the plan
has invested. If you are a pension or other employee benefit plan, you should
consult your legal advisor regarding the application of ERISA and the Code.
PS-25
26
TAXATION
The following summary is a general description of certain United States and
Dutch tax considerations relating to the ownership and disposition of
Securities. It does not purport to be a complete analysis of all tax
considerations relating to the Securities. Prospective purchasers of Securities
should consult their tax advisers as to the consequences of acquiring, holding
and disposing of Securities under the tax laws of the country of which they are
resident for tax purposes as well as under the laws of any state, local or
foreign jurisdiction. This summary is based upon the law as in effect on the
date of this pricing supplement and is subject to any change in law that may
take effect after such date.
UNITED STATES FEDERAL INCOME TAXATION
The following discussion is based on the advice of Davis Polk & Wardwell,
our special tax counsel ("Tax Counsel"), and is a general discussion of the
principal potential U.S. federal income tax consequences to U.S. Holders (as
defined below) who purchase the Securities at initial issuance for the stated
principal amount and who will hold the Securities and each Component (as defined
below) as capital assets within the meaning of Section 1221 of the U.S. Internal
Revenue Code of 1986, as amended (the "Code").
This summary is based on the Code, administrative pronouncements, judicial
decisions and currently effective and proposed Treasury Regulations, changes to
any of which subsequent to the date of this pricing supplement may affect the
tax consequences described in this discussion. This summary does not address all
aspects of the U.S. federal income taxation that may be relevant to you in light
of your individual circumstances or if you are subject to special treatment
under the U.S. federal income tax laws (e.g., certain financial institutions,
tax-exempt organizations, dealers in options or securities, or persons who hold
Securities as a part of a hedging transaction, straddle, conversion or other
integrated transaction).
As the law applicable to the U.S. federal income taxation of instruments
such as the Securities is technical and complex, the discussion below
necessarily represents only a general summary. Moreover, the effect of any
applicable state, local or foreign tax laws is not discussed.
As used herein, you are a "U.S. Holder" if you are an owner of Securities
that is, for U.S. federal income tax purposes:
- a citizen or resident of the United States;
- a corporation organized under the laws of the United States or any
political subdivision thereof; or
- an estate or trust the income of which is subject to United States
federal income taxation regardless of its source.
GENERAL
Pursuant to the terms of the Securities, we and every holder of a Security
agree (in the absence of an administrative determination or judicial ruling to
the contrary) to characterize a Security for all tax purposes as consisting of
the following components (the "Components"):
- a put option (the "Put Option") that requires the holder of the Security
to buy the Underlying Shares from us for an amount equal to the Deposit
(as defined below) if the determination price is lower than the initial
price; and
PS-26
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- a deposit with us of cash, in an amount equal to the principal amount of
a Security (the "Deposit"), to secure the holder's potential obligation
to purchase the Underlying Shares.
Under this characterization a portion of the stated interest payments on a
Security is treated as interest on the Deposit, and the remainder is treated as
attributable to the holder's sale of the Put Option to us (the "Put Premium").
Based on our judgment as to, among other things, our normal borrowing cost and
the value of the Put Option, we have determined that annual payments equaling
3.65% of the stated principal amount of a Security constitutes interest on the
Deposit and 7.85% constitutes Put Premium.
The treatment of the Securities described above is not binding on the IRS
or the courts. No statutory, judicial or administrative authority directly
addresses the characterization of the Securities or instruments similar to the
Securities for U.S. federal income tax purposes, and no ruling is being
requested from the IRS with respect to the Securities.
TAX COUNSEL HAS ADVISED US THAT IT IS REASONABLE TO ADOPT THE TREATMENT OF
THE SECURITIES DESCRIBED ABOVE. NONETHELESS, TAX COUNSEL IS UNABLE TO RENDER AN
OPINION AS TO WHETHER SUCH TREATMENT WILL BE RESPECTED DUE TO THE ABSENCE OF
AUTHORITIES THAT DIRECTLY ADDRESS INSTRUMENTS SIMILAR TO THE SECURITIES. AS A
RESULT, SIGNIFICANT ASPECTS OF THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF AN
INVESTMENT IN THE SECURITIES ARE NOT CERTAIN, AND NO ASSURANCE CAN BE GIVEN THAT
THE IRS OR A COURT WILL AGREE WITH THE CHARACTERIZATION DESCRIBED IN THIS
DISCUSSION. ACCORDINGLY, YOU ARE URGED TO CONSULT YOUR TAX ADVISORS REGARDING
THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF AN INVESTMENT IN THE SECURITIES
(INCLUDING ALTERNATIVE CHARACTERIZATIONS OF THE SECURITIES) AND WITH RESPECT TO
ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN
TAXING JURISDICTION. UNLESS OTHERWISE STATED, THE FOLLOWING DISCUSSION IS BASED
ON THE TREATMENT AND THE ALLOCATION DESCRIBED ABOVE.
TAX TREATMENT OF THE SECURITIES
Assuming the characterization of the Securities as set forth above, the
following U.S. federal income tax consequences should result.
Semi-Annual Payments on the Securities. The Deposit will be treated as a
short-term obligation for U.S. federal income tax purposes. Under the applicable
U.S. Treasury Regulations, the Deposit will be treated as being issued at a
discount, the amount of which will equal the semi-annual payments attributable
to interest on the Deposit. A cash method U.S. Holder is not required to accrue
the discount for U.S. federal income tax purposes unless it elects to do so. A
cash method U.S. Holder who does not make this election should include the
portion of the semi-annual payments on the securities attributable to the
Deposit as income upon their receipt. U.S. Holders who so elect and certain
other Holders, including those who report income on an accrual method of
accounting for U.S. federal income tax purposes, are required to include the
discount in income as it accrues on a straight-line basis, unless they make an
election to accrue the discount according to a constant yield method based on
daily compounding.
A Holder who is not required and who does not elect to include the discount
in income currently will be required to defer deductions for any interest paid
on indebtedness incurred to purchase or carry the Securities in an amount not
exceeding the accrued interest until it is included in income.
In the case of a Holder who is not required and who does not elect to
include the discount in income currently, any gain realized on the Deposit upon
the sale, exchange or retirement (including upon maturity) of
PS-27
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the Securities will be ordinary income to the extent of the discount accrued on
a straight-line basis (or, if elected, according to a constant yield method
based on daily compounding) not previously included in income through the date
of sale, exchange or retirement.
Receipt of the Put Premium will not be taxable to you upon receipt.
Exercise or Expiration of the Put Option. If the Put Option expires
unexercised (i.e., a cash payment of the principal amount of the Securities is
made), you will recognize in respect of the Put Option the total Put Premium
received as short term capital gain at such time.
In the event that the Put Option is exercised (i.e., the final payment on
the Securities is paid in Underlying Shares), you will not recognize any gain or
loss in respect of the Put Option (other than in respect of cash received in
lieu of fractional shares), and you will have an adjusted tax basis in any
Underlying Shares received equal to:
- the Deposit minus
- the total Put Premium received.
Your holding period for any Underlying Shares you receive will start on the
day after the delivery of the Underlying Shares.
In the event that we deliver cash in lieu of fractional Underlying Shares,
a U.S. Holder will generally recognize a short-term capital gain or loss in an
amount equal to the difference between:
- the amount of cash you receive in respect of such shares; and
- your basis in the fractional shares (as determined in the manner
described above).
Sale or Exchange of the Securities.
Upon a sale of your Securities for cash, you will be required to apportion
the amount you receive between the Deposit and the Put Option on the basis of
their respective values on the date of the sale. You will generally recognize
gain or loss with respect to the Deposit in an amount equal to the difference
between:
- the amount apportioned to the Deposit; and
- your adjusted U.S. federal income tax basis in the Deposit (which will
generally be equal to the principal amount of your Securities as an
initial purchaser of your Securities increased by the amount of any
income recognized in connection with the payments attributable to the
Deposit and decreased by the amount of any payments made that are
attributable to the Deposit).
Except to the extent attributable to accrued discount with respect to the
Deposit, which will be taxed as described above under "-- Semi-Annual Payments
on the Securities," such gain or loss will be short-term capital gain or loss.
The amount of cash that you receive that is apportioned to the Put Option
(together with the total Put Premium previously received) will be treated as
short-term capital gain. If the value of the Deposit on the date of the sale of
your Securities is in excess of the amount you receive upon such sale, you will
be treated as having made a payment to the purchaser equal to the amount of such
excess in order to assume your rights and obligations under the Put Option. In
such a case, you will recognize short-term capital gain or loss in an amount
equal to the difference between the total Put Premium you previously received in
PS-28
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respect of the Put Option and the amount of the deemed payment made by you with
respect to the assumption of the Put Option. The amount of the deemed payment
will be added to the amount apportioned to the Deposit in determining your gain
or loss in respect of the Deposit.
POSSIBLE ALTERNATIVE TAX TREATMENTS OF AN INVESTMENT IN THE SECURITIES
Due to the absence of authorities that directly address the proper
characterization of the Securities, no assurance can be given that the IRS will
accept, or that a court will uphold, the characterization and tax treatment
described above. A successful assertion of an alternate characterization of the
securities by the IRS could affect the timing and the character of the income or
loss with respect to the Securities. It is possible, for instance, the entire
coupon on the Securities could be treated as ordinary income. Accordingly,
prospective purchasers are urged to consult their tax advisors regarding the
U.S. federal income tax consequences of an investment in the Securities.
BACKUP WITHHOLDING AND INFORMATION REPORTING
You may be subject to information reporting and to backup withholding of
the amounts paid to you, unless you provide proof of an applicable exemption or
a correct taxpayer identification number, and otherwise comply with applicable
requirements of the backup withholding rules. The amounts withheld under the
backup withholding rules are not an additional tax and may be refunded, or
credited against your U.S. federal income tax liability, provided the required
information is furnished to the IRS.
Non-United States Holders
If you are not a United States Holder, you will not be subject to United
States withholding tax with respect to payments on your Securities but you will
be subject to generally applicable information reporting and backup withholding
requirements with respect to payments on your Securities unless you comply with
certain certification and identification requirements as to your foreign status.
DUTCH TAX CONSIDERATIONS
The following is a general summary of the Dutch taxes discussed as at the
date hereof in relation to payments made under the Securities. It is not
exhaustive and holders of the Securities who are in doubt as to their tax
position should consult their professional advisers.
(a) All payments of principal and interest by us in respect of the
Securities can be made free of withholding or deduction for or on account of any
taxes of whatsoever nature imposed, levied, withheld, or assessed by The
Netherlands or any political subdivision or taxing authority thereof or therein.
(b) A holder of a Security or a holder of an Underlying Share who derives
income from a Security or an Underlying Share respectively or who realises a
gain on the disposal or redemption of a Security or an Underlying Share
respectively will not be subject to Dutch taxation on income or capital gains
unless:
(i) the holder is, or is deemed to be, resident in The Netherlands or
has elected to be treated as a Dutch resident for Dutch income tax
purposes; or
(ii) such income or gain is attributable to an enterprise or part
thereof which is carried on through a permanent establishment or a
permanent representative in The Netherlands; or
PS-29
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(iii) the holder has, directly or indirectly, a substantial interest
or a deemed substantial interest in us and/or Wal-Mart and such interest or
the Security or Underlying Shares do not form part of the assets of an
enterprise; or
(iv) the holder is an individual not having a substantial interest or
a deemed substantial interest in us and/or Wal-Mart, but any of certain
connected persons has a substantial interest or a deemed substantial
interest in us and/or Wal-Mart and such interest or the Security or
Underlying Shares do not form part of the assets of an enterprise; or
(v) such income or gain is attributable to activities carried out in
The Netherlands by the holder and such activities exceed "normal investment
activities".
Individual holders resident or deemed to be resident in The Netherlands or who
have elected to be treated as a Dutch resident holder for Dutch tax purposes are
subject to Dutch income tax on a deemed return regardless of actual income
derived from a Security or an Underlying Share or gain or loss realised upon
disposal or redemption of a Security or an Underlying Share, provided that the
Security or Underlying Share is a portfolio investment and not held in the
context of any business or substantial interest.
The deemed return amounts to 4% of the average value of the holder's net
assets in the relevant fiscal year (including the Securities or the Underlying
Shares). The average value of the holder's net assets in a fiscal year is equal
to the sum of the value of the net assets at the beginning of the fiscal year
and at the end of the fiscal year divided by two. Taxation only occurs to the
extent the average value of the holder's net assets exceeds the "exempt net
asset amount" (heffingsvrij vermogen) which is, for the year 2001, in principle
EUR 17,600. The deemed return is reduced by the portion of the personal
allowances on annual income the holder is entitled to. As so reduced, the deemed
return shall be taxed at a rate of 30%.
If the Underlying Shares are delivered upon redemption of the Securities,
dividends paid on these shares to a holder, who is an individual resident or
deemed to be resident in The Netherlands will be subject to U.S. dividend
withholding tax at a US domestic tax rate of 30%. The US dividend withholding
tax rate may be reduced to 15% under the provisions of the Convention between
the United States of America and the Kingdom of The Netherlands for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect
to Taxes on Income (the "Convention"). Such holders are entitled to credit any
US withholding tax on the dividends against Dutch income tax payable.
(c) Dutch gift, estate or inheritance taxes will not be levied on the
occasion of the transfer of a Security or Underlying Share by way of gift, or on
the death of a holder of a Security or Underlying Share unless:
(i) the holder is, or is deemed to be, resident in The Netherlands; or
(ii) the transfer is construed as a gift or as an inheritance made by
or on behalf of a person who, at the time of the gift or death, is or is
deemed to be, resident in The Netherlands; or
(iii) such Security or Underlying Share is attributable to an
enterprise or part thereof which is carried on through a permanent
establishment or a permanent representative in The Netherlands.
(d) There is no Dutch registration tax, capital tax, customs duty, stamp
duty or any other similar tax or duty other than court fees payable in The
Netherlands in respect of or in connection with the execution, delivery and/or
enforcement by legal proceedings (including any foreign judgement in the courts
of The
PS-30
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Netherlands) of the Securities or Underlying Shares or the performance of our
obligations under the Securities.
(e) A holder of a Security or a holder of an Underlying Share will not
become resident or deemed to be resident in The Netherlands by reason only of
the holding of the Security or Underlying Share or the execution, performance,
delivery and/or enforcement of the Security or Underlying Share.
PS-31
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33
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
IN THIS PRICING SUPPLEMENT, THE PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT OR ADDITIONAL
INFORMATION. WE ARE OFFERING TO SELL THESE SECURITIES AND SEEKING OFFERS TO BUY
THESE SECURITIES ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED.
NEITHER THE DELIVERY OF THIS PRICING SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS
SUPPLEMENT AND PROSPECTUS, NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF ABN AMRO BANK N.V. SINCE THE DATE HEREOF OR THAT THE INFORMATION
CONTAINED OR INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
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TABLE OF CONTENTS
PRICING SUPPLEMENT
PAGE
-----
Summary of Pricing Supplement................... PS-3
Hypothetical Sensitivity Analysis of Total
Return of the Securities at Maturity.......... PS-7
Risk Factors.................................... PS-8
Incorporation of Documents by Reference......... PS-12
Public Information Regarding the Underlying
Shares........................................ PS-13
Description of Securities....................... PS-15
Use of Proceeds................................. PS-25
ERISA Matters................................... PS-25
Taxation........................................ PS-26
PROSPECTUS SUPPLEMENT
PAGE
-----
About This Prospectus........................... S-2
Foreign Currency Risks.......................... S-3
Description of Notes............................ S-5
The Depositary.................................. S-27
Series A Notes Offered on a Global Basis........ S-27
United States Federal Taxation.................. S-31
Plan of Distribution............................ S-42
Legal Matters................................... S-44
PROSPECTUS
PAGE
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About This Prospectus........................... 2
Where You Can Find Additional Information....... 3
Consolidated Ratio of Earnings to Fixed
Charges....................................... 5
ABN AMRO Bank N.V............................... 6
Use of Proceeds................................. 7
Description of Debt Securities.................. 8
Form of Securities.............................. 14
Plan of Distribution............................ 19
Legal Matters................................... 20
Experts......................................... 20
ERISA Matters for Pension Plans and Insurance
Companies..................................... 20
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ABN AMRO BANK N.V.
$20,000,000
11.50% REVERSE EXCHANGEABLE SECURITIES
DUE SEPTEMBER 26, 2002
LINKED TO
COMMON STOCK OF
WAL-MART STORES, INC.
PRICING SUPPLEMENT
(TO PROSPECTUS DATED NOVEMBER 22, 2000 AND PROSPECTUS SUPPLEMENT
DATED NOVEMBER 27, 2000)
ABN AMRO FINANCIAL SERVICES, INC.
ABN AMRO INCORPORATED
FIRST INSTITUTIONAL SECURITIES, LLC
FIRST UNION SECURITIES, INC.
H & R BLOCK FINANCIAL ADVISORS
LADENBURG THALMANN & CO., INC.
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