0000950149-01-501619.txt : 20011112
0000950149-01-501619.hdr.sgml : 20011112
ACCESSION NUMBER: 0000950149-01-501619
CONFORMED SUBMISSION TYPE: 424B3
PUBLIC DOCUMENT COUNT: 1
FILED AS OF DATE: 20011105
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: 1774708
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
f76668e424b3.txt
424B3
SUBJECT TO COMPLETION OR AMENDMENT
SUBJECT TO COMPLETION, DATED NOVEMBER 2, 2001
PRICING SUPPLEMENT PRICING SUPPLEMENT NO. 11 TO
(TO PROSPECTUS DATED NOVEMBER 22, 2000 AND REGISTRATION STATEMENT NO. 333-49198
PROSPECTUS SUPPLEMENT DATED NOVEMBER , 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 MAY 27, 2003
LINKED TO COMMON STOCK OF AT&T CORP.
The Securities do not guarantee any return of principal at maturity. Instead, if
the closing price of the shares of common stock of AT&T Corp., 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 May 27, 2003.
PRINCIPAL AMOUNT $20,000,000
UNDERLYING SHARES Common stock, par value $1.00 per share of AT&T Corp.
INTEREST RATE 11.50% per annum, payable semi-annually in arrear on May 26,
2002, November 26, 2002 and May 27, 2003
ISSUE PRICE 100%
PROPOSED ORIGINAL November 26, 2001
ISSUE DATE (SETTLEMENT DATE)
MATURITY DATE May 27, 2003
INITIAL PRICE $ (the closing price per Underlying Share on
November , 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 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
AT&T CORP. AT&T Corp., which we refer to as AT&T, 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 AT&T. Investing in the Securities is not
equivalent to investing in AT&T common stock.
LISTING We have applied to list the Securities on the American Stock
Exchange LLC under the symbol "REX.H".
THE SECURITIES ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER FEDERAL AGENCY.
THE SECURITIES INVOLVE RISKS NOT ASSOCIATED WITH AN INVESTMENT IN CONVENTIONAL
DEBT SECURITIES. SEE "RISK FACTORS" BEGINNING ON PS-8.
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", "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 or Prospectus Supplement is truthful
or complete. Any representation to the contrary is a criminal offense.
TO THE EXTENT THE TOTAL AGGREGATE PRINCIPAL AMOUNT OF THE SECURITIES BEING
OFFERED BY THIS PRICING SUPPLEMENT IS NOT SOLD ON THE ORIGINAL SETTLEMENT DATE,
WE MAY CONTINUE TO OFFER THE SECURITIES THROUGH THE AGENTS FOR UP TO 10 DAYS
AFTER THE ORIGINAL SETTLEMENT DATE. THE AMOUNT OF SECURITIES OFFERED DURING THE
EXTENDED OFFERING PERIOD SHALL NOT EXCEED APPROXIMATELY 10% OF THE TOTAL
AGGREGATE PRINCIPAL AMOUNT OF THE SECURITIES OFFERED BY THIS PRICING SUPPLEMENT.
DURING SUCH PERIOD, THE SECURITIES WILL BE OFFERED AT PREVAILING MARKET PRICES
WHICH MAY BE ABOVE OR BELOW THE INITIAL ISSUE PRICE SET FORTH ABOVE. THE AGENTS
ARE NOT OBLIGATED TO PURCHASE THE SECURITIES BUT HAVE AGREED TO USE REASONABLE
EFFORTS TO SOLICIT OFFERS TO PURCHASE THE SECURITIES. CERTAIN OF OUR AFFILIATES
HAVE AGREED TO PURCHASE ANY SECURITIES THAT ARE NOT SOLD DURING THE EXTENDED
OFFERING PERIOD OR, IF THE OFFERING PERIOD IS NOT EXTENDED, SECURITIES NOT SOLD
BY THE ORIGINAL SETTLEMENT DATE. ANY SUCH SECURITIES WOULD BE HELD 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" AND "PLAN OF
DISTRIBUTION."
This Pricing Supplement and the accompanying Prospectus Supplement and
Prospectus may be used by our affiliates in connection with offers and sales of
the Securities in market-making transactions.
PRICE $1,000 PER SECURITY
ABN AMRO FINANCIAL SERVICES, INC.
ABN AMRO INCORPORATED
FIRST INSTITUTIONAL SECURITIES, LLC
FIRST UNION SECURITIES,
INC.
NOVEMBER , 2001
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
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 eighteen months. These Securities combine
certain features of debt and equity by offering a fixed interest rate on the
principal amount while the payment at maturity is determined based on the
performance of the Underlying Shares. Therefore your principal is at risk.
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. As a result of these
features, 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
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 $15.04,
then the stock redemption amount would be 66.489 Underlying Shares, or $1,000
divided by $15.04. If the closing price of the Underlying Shares on the
determination date is $20 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 66.489 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
$664.89, 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
closing price level on November , 2001, the payment you receive at maturity
will not reflect that appreciation. UNDER NO CIRCUMSTANCES WILL YOU RECEIVE A
PAYMENT AT MATURITY GREATER THAN
PS-4
THE PRINCIPAL AMOUNT OF THE SECURITIES THAT YOU HOLD AT THAT TIME.
WHAT IS THE MINIMUM REQUIRED PURCHASE?
You can purchase Securities in $1,000 denominations or in integral
multiples thereof.
IS THERE A SECONDARY MARKET FOR THE SECURITIES?
Although they are not required to do so, we have been informed by our
affiliates that they intend to act as market makers for the Securities when this
offering is complete. Our affiliates may be prohibited from making a market in
the Securities, however, for up to 10 days following the original settlement
date. See "Plan of Distribution." Moreover, if our affiliates do make a market,
they may stop making a market in the Securities at any time.
In addition, we intend to list the Securities on the American Stock
Exchange LLC. You should note, however, that even though we intend to list the
Securities, 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 AT&T?
Because the Underlying Shares are registered under the Exchange Act, AT&T
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
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 Mahlelaan 10,
1082 PP Amsterdam, The Netherlands. Our telephone number is (31-20) 628-9393.
PS-6
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: $15.04 (indicative value only; the initial
price will be set on the date we price the
Securities; the closing price on November 1,
2001 was $15.04)
Annual Interest on the
Securities: 11.50%
Term of the Securities: 18 months
-------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN
ASSUMED THREE
AT&T CORP. VALUE OF SEMI-ANNUAL
STOCK PRICE PAYMENT AT INTEREST ------------------------------------------
AT MATURITY MATURITY(A) PAYMENTS $ %
-------------------------------------------------------------------------------------------------------------------------------
$15.04+ $1,000.00 $172.50 $1,172.50 17.25%
$15.04 $1,000.00 $172.50 $1,172.50 17.25%
$14.29 $ 950.00 $172.50 $1,122.50 12.25%
$13.54 $ 900.00 $172.50 $1,072.50 7.25%
$12.78 $ 850.00 $172.50 $1,022.50 2.25%
$12.45 $ 827.50 $172.50 $1,000.00 0.00%
$ 8.00 $ 531.91 $172.50 $ 704.41 -29.56%
$ 6.00 $ 398.94 $172.50 $ 571.44 -42.86%
$ 5.00 $ 332.45 $172.50 $ 504.95 -49.51%
$ 0.00 $ 0.00 $172.50 $ 172.50 -82.75%
-------------------------------------------------------------------------------------------------------------------------------
-------------------------
(a) Based on the assumptions set forth above, if the price of the Underlying
Shares is $15.04 or more, the payment at maturity will be made in cash. If
the price of the Underlying Shares is less than $15,04, the payment at
maturity will be made in Underlying Shares.
PS-7
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 November , 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 we
intend to list the Securities on the American Stock Exchange LLC, 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. Upon completion of the
offering, our affiliates have informed us that they intend to act as market
makers for the Securities but they are not required to do so. Our affiliates may
be prohibited from making a market in the Securities, however, for up to 10 days
following the original settlement date. See "Plan of Distribution." Moreover, if
our affiliates do make a market, they may stop making a market in the Securities
at any time. In addition, certain of our affiliates have agreed to purchase any
Securities that are not sold during the extended offering period. Such
affiliates intend to hold the Securities for investment for at least 30 days,
which may affect the supply of Securities available for secondary trading.
PS-8
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 our 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 affiliates,
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 the Underlying Shares and 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, however, could potentially have increased the
price of the Underlying Shares, and therefore effectively have increased the
level 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 affiliates, we are likely to
modify our hedge position throughout the life of the Securities by
PS-9
purchasing and selling Underlying Shares, options contracts on Underlying Shares
listed on major securities markets or positions in other securities or
instruments that we may wish to use in connection with such hedging. Although we
have no reason to believe that our hedging activity or other trading activities
that we, or any of our affiliates, 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
AT&T 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 AT&T or its affiliates could lead to actions on
the part of the issuer of the stock which might adversely affect the value of
the Underlying Shares.
The indenture governing the Securities does not contain any restrictions on
our ability or the ability of any of our affiliates to sell, pledge or otherwise
convey all or any portion of the Underlying Shares acquired by us or our
affiliates. Neither we nor 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 AT&T, we have no
ability to control or predict the actions of AT&T, 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 AT&T. AT&T 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 AT&T.
INFORMATION REGARDING AT&T
Neither we nor any of our affiliates assumes any responsibility for the
adequacy of the information about AT&T contained in this Pricing Supplement or
in any of AT&T's publicly available filings. As an investor in the Securities,
you should make your own investigation into AT&T. ABN AMRO BANK N.V. AND ITS
AFFILIATES HAVE NO AFFILIATION WITH AT&T, AND ARE NOT RESPONSIBLE FOR AT&T'S
PUBLIC DISCLOSURE OF INFORMATION, WHETHER CONTAINED IN SEC FILINGS OR OTHERWISE.
We do not have any non-public information about AT&T as of the date
PS-10
of this Pricing Supplement although we or our subsidiaries may currently or from
time to time engage in business with AT&T, including extending loans to, or
making equity investments in, or providing investment advisory services to,
AT&T, 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 AT&T 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
Certain of our affiliates have agreed to purchase any Securities that are
not sold during the extended offering period or, if the offering period is not
extended, Securities not sold by the original settlement date. Any such
Securities will be held for investment for a period of at least 30 days. As a
result, upon completion of this offering, our affiliates may own up to
approximately 10% of the Securities. Circumstances may occur in which our
interests or those of our affiliates could be in conflict with your interests.
In this case, our affiliates 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, our continued sales of Securities during the extended offering
period and future sales of Securities held by our affiliates in the secondary
market following this offering may cause the market price of the Securities to
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
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, as
amended (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);
(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); and
(d) the Report on Form 6-K dated September 28, 2001 (press release of
ABN AMRO Holding N.V. announcing the reconciliation of net profit and
shareholder's equity under U.S. GAAP for the first half 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
PUBLIC INFORMATION REGARDING THE UNDERLYING SHARES
According to publicly available documents, AT&T provides voice, data and
video communications services to large and small businesses, consumers and
government entities. AT&T and its subsidiaries furnish domestic and
international long distance, regional, local and wireless communications
services, cable television and Internet communications services. AT&T also
provides billing, directory, and calling card services to support its
communications business.
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 Office located at Suite
1400, Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661, and 233
Broadway, New York, New York 10279, 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. You may obtain information on the
operation of the Public Reference Room by calling 1-800-732-0330. 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 AT&T pursuant to the Exchange Act can be located by
reference to Commission file number 1-1105. In addition, information regarding
AT&T 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 AT&T. WE HAVE
DERIVED ALL DISCLOSURES CONTAINED IN THIS PRICING SUPPLEMENT REGARDING AT&T 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 AT&T 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 AT&T 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 AT&T 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 AT&T, including extending loans to, or making equity investments
in, or providing advisory services to, AT&T, 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 AT&T and, in addition, one or
more of our affiliates may publish research reports with respect to AT&T. 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,
PS-13
you should undertake such independent investigation of AT&T as in your judgment
is appropriate to make an informed decision with respect to an investment in the
Underlying Shares.
The following table sets forth the published high and low closing prices of
the Underlying Shares since 1998. The closing price on November 1, 2001 was
$15.04. 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.................................. $35.4670 $29.7050 $34.0410
Second Quarter................................. $34.8823 $29.0578 $29.5755
Third Quarter.................................. $31.7759 $25.0454 $30.2550
Fourth Quarter................................. $40.9009 $29.0901 $39.2183
1999
First Quarter.................................. $49.7671 $39.2830 $41.3216
Second Quarter................................. $48.3926 $38.8785 $43.3440
Third Quarter.................................. $45.8194 $32.4716 $33.7821
Fourth Quarter................................. $47.3726 $32.2289 $39.4610
2000
First Quarter.................................. $47.3726 $34.4131 $43.7323
Second Quarter................................. $45.6738 $24.2687 $24.7056
Third Quarter.................................. $27.3266 $21.1623 $22.5214
Fourth Quarter................................. $23.2980 $12.8139 $13.3963
2001
First Quarter.................................. $19.5135 $13.3963 $16.5416
Second Quarter................................. $18.0715 $15.3922 $17.0852
Third Quarter.................................. $21.4600 $16.5000 $19.3000
Fourth Quarter (through November 1, 2001)...... $20.0000 $14.8900 $15.0400
We make no representation as to the amount of dividends, if any, that AT&T
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
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 May
27, 2003 linked to the common stock of AT&T Corp.
Principal Amount:............. $20,000,000
Underlying Shares............. The common stock of the Underlying Company, par
value $1.00 per share.
Underlying Company............ AT&T Corp.
Original Issue Date
(Settlement Date).............
Issue Price................... 100%
Initial Price................. $ (the closing price per Underlying Share
when we priced the Securities on November ,
2001) divided by the exchange factor.
Maturity Date................. May 27, 2003
Specified Currency............ U.S. Dollars
CUSIP......................... 00079FAJ1
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 May 26, 2002, November 26, 2002, and
May 27, 2003, which shall represent (a) an
interest coupon of 2.71% per annum and (b) an
option premium of 8.79% 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
the Underlying Company. The interest payment on
the Securities will not be converted into
Underlying Shares at maturity.
PS-15
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; 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, in
the principal trading session on such day on
the principal securities exchange on which the
Underlying Shares (or any such other security)
are listed or admitted to trading or (ii) if
not listed or admitted to trading on any such
securities exchange or if such last reported
sale price is not obtainable (even if the
Underlying Shares (or other such security) are
listed or admitted to trading on such
securities exchange), the last reported sale
price in the principal trading session on the
over-the-counter market as reported on The
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, the Chicago Board
of Options Exchange and in the over-the-counter
market for equity securities
PS-16
in the United States, and on which a market
disruption event has not occurred.
Book Entry Note or
Certificated Note............. Book Entry
Trustee....................... The Chase Manhattan Bank
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.
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
PS-17
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.
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 the
Underlying Company, 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
PS-18
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 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 the Underlying Company 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
PS-19
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 the Underlying Company; (ii) the
Underlying Company or any surviving entity
or subsequent surviving entity of the
Underlying Company (an "Underlying Company
Successor") has been subject to a merger,
combination or consolidation and is not the
surviving entity; (iii) any statutory
exchange of securities of the Underlying
Company or any Underlying Company Successor
with another corporation occurs (other than
pursuant to clause (ii) above); (iv) the
Underlying Company is liquidated; (v) the
Underlying Company issues to all of its
shareholders equity securities of an issuer
other than the Underlying Company (other
than in a transaction described in clauses
(ii), (iii) or (iv) above) (a "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
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:
(a) $1,000 and
PS-20
(b) 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 above.
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 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
PS-21
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.
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
PS-22
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;
(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 juris-
PS-23
diction), 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
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" and "Plan of Distribution" 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 that 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
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 meets (for U.S. federal income tax purposes) any one of the following
criteria:
- 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
- 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
2.71% of the stated principal amount of a Security constitutes interest on the
Deposit and 8.79% 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. To the extent attributable to
interest on the Deposit, semi-annual payments on the Securities will generally
be taxable to you as ordinary income at the time accrued or received in
accordance with your method of accounting for U.S. federal income tax purposes.
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 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.
PS-27
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 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).
Except to the extent attributable to accrued but unpaid interest 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 long-
term capital gain or loss if your holding period in your Securities is greater
than one year. 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 respect 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. In particular, the IRS could seek to analyze the U.S. federal
income tax consequences of owning the Securities under Treasury Regulations
governing contingent payment debt instruments (the "Contingent Payment
Regulations").
If the IRS were successful in asserting that the Contingent Payment
Regulations applied to the Securities, the timing and character of income on the
Securities would be affected. Among other things, you would be required to
accrue as original issue discount income, subject to adjustments, at a
"comparable yield" on the principal amount of the Securities. These rules would
generally have the effect of:
- treating each payment of stated interest on your Securities in part as
taxable interest income (to the extent of the comparable yield) and
thereafter as tax-free return of capital that reduces your tax basis in
the Securities; and
PS-28
- requiring you to use an accrual (rather than cash) method of accounting
with respect to interest on your Securities.
In addition, you would recognize income upon maturity of the Securities to
the extent that the value of the Underlying Shares and cash (if any) received
exceeds your adjusted tax basis in the Securities. Furthermore, any gain
realized with respect to the Securities would generally be treated as ordinary
income.
Even if the Contingent Payment Regulations do not apply to the Securities,
other alternative federal income tax characterizations or treatments of the
Securities are possible, and if applied could also affect the timing and
character of the income or loss with respect to the Securities. It is possible,
for instance, the Securities could be treated as constituting a prepaid forward
contract. 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 on
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
(iii) the holder has, directly or indirectly, a substantial interest
or a deemed substantial interest in us and/or the Underlying Company and
such interest or the Security or Underlying Shares do not form part of the
assets of an enterprise; or
(iv) if the holder is an individual, such income or gain qualifies as
income from miscellaneous activities (belastbaar resultaat uit overige
werkzaamheden) in The Netherlands as defined in the Income Tax Act 2001
(Wet inkomstenbelasting 2001).
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. 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 Netherlands) of the Securities or Underlying Shares or the performance of
our obligations under the Securities.
PS-30
(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 an Underlying Share or the execution,
performance, delivery and/or enforcement of the Security or an Underlying Share.
PLAN OF DISTRIBUTION
In addition to AAI, we have appointed ABN AMRO Financial Services, Inc.
("AAFS"), First Institutional Securities, LLC and First Union Securities, Inc.
as agents for this offering. The agents have agreed to use reasonable best
efforts to solicit offers to purchase the Securities.
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
National Association of Securities Dealers, Inc., which is commonly referred to
as the NASD, regarding an NASD member firm's distributing the securities of an
affiliate. When the distribution of the Securities is complete, AAI 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
Pricing Supplement and the accompanying Prospectus and Prospectus Supplement in
connection with any of those transactions. AAI and AAFS are not obligated to
make a market in the Securities and may discontinue any market-making activities
at any time without notice.
To the extent the total aggregate principal amount of the Securities being
offered by this Pricing Supplement is not sold on the original settlement date,
we may continue to offer the Securities for up to 10 days after the original
settlement date. The amount of Securities offered during the extended offering
period shall not exceed approximately 10% of the total aggregate principal
amount of the Securities offered by this Pricing Supplement. During such period,
Securities will be offered at prevailing market prices which may be above or
below the initial issue price. We are not obligated to extend the offering
period and we may terminate the offering at any time without notice. Certain of
our affiliates have agreed to purchase any Securities that are not sold during
the extended offering period or, if the offering period is not extended,
Securities not sold by the original settlement date. Any such Securities would
be held for investment for a period of at least 30 days. If we continue to offer
the Securities after the original settlement date, however, our affiliates would
be prohibited from making a market in the Securities for up to 10 days following
the original settlement date.
PS-31
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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
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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
Plan of Distribution............................ PS-31
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 MAY 27, 2003
LINKED TO
COMMON STOCK OF
AT&T CORP.
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.
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