| PRODUCT SUPPLEMENT |
Product
Supplement No. 1-I to
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| (TO PROSPECTUS DATED SEPTEMBER 29, 2009 |
Registration
Statement Nos. 333-162193 and 333-162193-01
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| AND PROSPECTUS SUPPLEMENT |
Dated
September 29, 2009
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DATED
SEPTEMBER 29, 2009)
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Rule
424(b)(2)
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ABN
AMRO Bank N.V.
ABN
NotesSM
Senior
Fixed Rate Notes
fully
and unconditionally guaranteed by
ABN
AMRO Holding N.V.
Reverse
ExchangeableSM
Securities and Knock-in Reverse ExchangeableSM
Securities
linked
to the Common Stock of an Underlying Company or an Exchange-Traded
Fund
The
Reverse Exchangeable Securities and Knock-in Reverse Exchangeable Securities,
which we will each refer to as the “Securities,” pay periodic cash payments,
which we refer to as the coupon or coupon payments, at a fixed rate, which we
refer to as the coupon rate, but do not guarantee any return of principal at
maturity. Instead, the payout at maturity will be based on the performance of
(i) the common stock of an Underlying Company, which we refer to as the
Underlying Shares, or (ii) an exchange-traded fund that tracks the performance
of an underlying index or basket of securities, primarily by holding securities
or other instruments related to such underlying index or basket, which we refer
to as an Underlying Fund. In certain circumstances described below,
we will exchange each Security at maturity for a predetermined number of the
Underlying Shares or shares of the Underlying Fund, as applicable, rather than
the face amount of the Securities. As used in this Product Supplement, the term
“common stock” includes non-U.S. equity securities issued through depositary
arrangements such as American depositary shares, or ADSs. If the
Underlying Shares are ADSs, the term “issuer” refers to the issuer of the shares
underlying the ADSs, and we refer to the index that an Underlying Fund tracks as
the “Target Index.” We refer to the Underlying Shares or the
Underlying Fund, as applicable, as the Underlying. If we deliver shares of the
Underlying, the market value of such shares on the determination date will be
less than the face amount of each Security and could be
zero. Accordingly, you could lose some or all of your initial
principal investment in the Securities. You will not participate in any
appreciation of the Underlying. Any payment on the Securities is subject to the
creditworthiness (i.e., the ability to pay) of ABN AMRO
Bank. N.V. and ABN AMRO Holding N.V., as guarantor.
This
Product Supplement describes terms that will apply generally to the Securities
and supplements the terms described in the accompanying Prospectus Supplement
and Prospectus. A separate term sheet or pricing supplement, as the case may be,
will specify the Underlying to which the Securities are linked and will describe
terms that apply to any specific issue of Securities, including any changes to
the terms specified below. We refer to such term sheets and pricing supplements
generally as Pricing Supplements. If the Securities are linked to an Underlying
Fund, a separate Underlying Supplement or the relevant Pricing Supplement will
describe the Target Index. If the terms described in the relevant Pricing
Supplement are inconsistent with those described herein or in the accompanying
Underlying Supplement, if any, Prospectus Supplement or Prospectus, the terms
described in the relevant Pricing Supplement shall control.
The
Securities are our unsecured and unsubordinated obligations and are fully and
unconditionally guaranteed by ABN AMRO Holding N.V.
The
Securities are not bank deposits and are not insured or guaranteed by the
Federal Deposit Insurance Corporation, the Deposit Insurance Fund or any other
governmental agency.
The
Securities involve risks not associated with an investment in conventional debt
securities. See “Risk Factors” beginning on PS-9.
The
Securities and Exchange Commission and state securities regulators have not
approved or disapproved these Securities, or determined if this Product
Supplement, the accompanying Underlying Supplement, if any, Prospectus
Supplement or Prospectus or any relevant Pricing Supplement are truthful or
complete. Any representation to the contrary is a criminal offense.
The
agents are not obligated to purchase the Securities but have agreed to use
reasonable efforts to solicit offers to purchase the Securities. To the extent the full aggregate face
amount of the Securities being offered by the relevant Pricing Supplement is not
purchased by investors in the offering, one or more of our affiliates may agree
to purchase a part of the unsold portion, which may constitute up to 15% of the
total aggregate face amount of the Securities, and to hold such Securities for
investment purposes. See “Holding of the Securities by Our Affiliates and Future
Sales” under the heading “Risk Factors” and “Plan of Distribution.” The
relevant Pricing Supplement, this Product 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.
RBS
Securities Inc.
In this
Product Supplement, the “Bank,” “we,” “us” and “our” refer to ABN AMRO Bank N.V.
and “Holding” refers to ABN AMRO Holding N.V., our parent company. We
refer to the Securities offered by the relevant Pricing Supplement and the
related guarantees as the “Securities” and to each individual security offered
thereby as a “Security.”
Reverse
ExchangeableSM and
ABN NotesSM are
service marks of ABN AMRO Bank N.V.
Any
Securities issued, sold or distributed pursuant to the relevant Pricing
Supplement may not be offered or sold (i) to any person/entity listed on
sanctions lists of the European Union, United States or any other applicable
local competent authority; (ii) within the territory of Cuba, Sudan, Iran and
Myanmar; (iii) to residents in Cuba, Sudan, Iran or Myanmar; or (iv) to Cuban
Nationals, wherever located.
PS-1
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 Product Supplement
and in the accompanying Pricing Supplement, 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 non-principal protected securities issued by us, ABN AMRO Bank
N.V., and are fully and unconditionally guaranteed by our parent company, ABN
AMRO Holding N.V. The Securities will pay periodic cash payments at a fixed
rate. We refer to the payments as the coupon or coupon payments and
the fixed rate as the coupon rate. The Securities are senior notes of ABN AMRO
Bank N.V. and have a maturity that will be specified in the relevant Pricing
Supplement. These Securities combine certain features of debt and equity by
offering a fixed coupon rate on the face amount while the payment at maturity is
determined based on the performance during the term of the Securities of (i) the
common stock of an Underlying Company, which we refer to as the Underlying
Shares, or (ii) an exchange-traded fund that tracks the performance of an
underlying index or basket of securities, primarily by holding securities or
other instruments related to such underlying index or basket, which we refer to
as an Underlying Fund. Therefore your principal is at risk but you have no
opportunity to participate in any appreciation of the Underlying. Any payment on
the Securities is subject to the creditworthiness (i.e., the ability to pay) of
ABN AMRO Bank N.V. and ABN AMRO Holding N.V., as guarantor.
We refer
to the issuer of the Underlying Shares as the Underlying Company. As used in
this Product Supplement, the term “common stock” includes non-U.S. equity
securities issued through depositary arrangements such as American depositary
shares, or ADSs. If the Underlying Shares are ADSs, the term
“issuer” refers to the issuer of the shares underlying the ADSs. We
refer to the common stock represented by ADSs as the “ADS Underlying
Stock.” We refer to the index that an Underlying Fund tracks as the
“Target Index.” We refer to the Underlying Shares or the Underlying
Fund, as applicable, as the Underlying.
The
Securities have certain features that make them what we refer to as “Reverse
Exchangeable Securities “ or “Knock-in Reverse Exchangeable
Securities”:
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For
Reverse Exchangeable Securities, this means that if the closing price of
the Underlying on the determination date is equal to or greater than the
closing price on the pricing date (subject to adjustment), which we refer
to as the initial price, we will pay you in cash the face amount of each
Security you hold; however, if the closing price of the Underlying on the
determination date is less than the initial price, we will deliver to you,
in exchange for each $1,000 face amount of Securities, a number of shares
of the Underlying equal to the redemption
amount.
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For
Knock-in Reverse Exchangeable Securities, this means that if the closing
price of the Underlying never falls below a certain price, which we call
the knock-in level, on any trading day from but not including the pricing
date to and including the determination date (such period, the “knock-in
period”), then we will pay you in cash the face amount of each Security at
maturity. On the other hand, if the closing price of the Underlying falls
below the knock-in level on any trading day during the knock-in period,
then the payment at maturity will depend on the closing price of the
Underlying on the determination date. In this latter case, if the closing
price of the Underlying on the determination date is equal to or greater
than the initial price, we will pay you in cash the face amount of each
Security you hold; however, if the closing price of the Underlying on the
determination date is less than the initial price, we will deliver to you,
in exchange for each $1,000 face amount of Securities, a number of shares
of the Underlying equal to the redemption amount. If we deliver shares of the
Underlying, the market value of such shares on the determination date will
be less than the face amount of each Security and could be
zero. Accordingly, you could lose some or all of your initial
principal investment in the
Securities.
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PS-2
Except in
certain circumstances described under “Description of Securities — Closing Price” in
this Product Supplement, we will usually determine the closing price for any
listed Underlying by reference to the last reported sale price, during regular
trading hours (or if listed on The NASDAQ Stock Market LLC, the official closing
price), on the primary U.S. securities exchange on which shares of the
Underlying are traded.
Why
is the coupon rate on the Securities higher than the interest rate payable on
your conventional debt securities with the same maturity?
The
Securities offer a higher coupon 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 because you, the investor in the Securities,
indirectly sell a put option to us on the Underlying. The premium due to you for
this put option is combined with a market interest rate on our senior debt to
produce the higher coupon rate on the Securities. As explained below under “What
are the consequences of the indirect put option that I have sold you?” you are
being paid the premium for taking the risk that you may receive shares of the
Underlying with a market value less than the face amount of your Securities at
maturity, which would mean that you would lose some or all of your initial
principal investment.
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. This
feature could result in the delivery of shares of the Underlying to you, at
maturity, with a market value which is less than the face amount of $1,000 per
Security. For (a) Reverse Exchangeable Securities, if on the determination date
the closing price per share of the Underlying is less than the initial price or
(b) Knock-in Reverse Exchangeable Securities, if the closing price of the
Underlying falls below the knock-in level on any trading day during the knock-in
period, and on the determination date the closing price per share of the
Underlying is less than the initial price, you will receive a fixed number of
shares of the Underlying for each Security you hold, which we call the
redemption amount. The market value of the redemption amount on the
determination date will always be less than the face amount of $1,000 per
Security. On the other hand, (a) for Reverse Exchangeable Securities, if on the
determination date the closing price per share of the Underlying is equal to or
greater than the initial price or (b) for Knock-in Reverse Exchangeable
Securities, if the closing price of the Underlying falls below the knock-in
level, and on the determination date the closing price per share of the
Underlying is equal to or greater than the initial price, you will receive
$1,000 for each Security you hold. If the price of the Underlying rises above
the initial price you will not participate in any appreciation in the price of
the Underlying. Because of the exchangeability of the Securities and because we
will determine whether you will receive cash or shares of the Underlying by
reference to the closing price of the Underlying on the determination date, such
securities are generally referred to as “reverse exchangeable securities.”
However, for Knock-in Reverse Exchangeable Securities, because this feature of
exchangeability is created only if the closing price of the Underlying falls
below the knock-in level on any trading day during the knock-in period, we call
them “Knock-in Reverse Exchangeable Securities.”
What
will I receive at maturity of the Securities?
The
payment at maturity of the Reverse Exchangeable Securities will depend on the
closing price of the Underlying on the determination date.
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If
the closing price of the Underlying is at or above the initial price on
the determination date, we will pay you the face amount of each Security
in cash.
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If
the closing price of the Underlying is below the initial price on the
determination date, we will deliver to you the redemption amount, in
exchange for each Security (the market value of the redemption amount on
the determination date will always be less than the face amount of $1,000
per Security). In such a case, you will lose some or all of your initial
principal investment in the
Securities.
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The
payment at maturity of the Knock-in Reverse Exchangeable Securities will depend
on (i) whether or not the closing price of the Underlying fell below the
knock-in level on any trading day during the knock-in period, and if so, (ii)
the closing price of the Underlying on the determination date.
PS-3
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If
the closing price per share of the Underlying has not fallen below the
knock-in level on any trading day during the knock-in period, we will pay
you the face amount of each Security in
cash.
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If
the closing price per share of the Underlying has fallen below the
knock-in level on any trading day during the knock-in period, we will
either:
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deliver
to you the redemption amount, in exchange for each Security, in the event
that the closing price of the Underlying is below the initial price on the
determination date (the market value of the redemption amount on the
determination date will always be less than the face amount of $1,000 per
Security). In such a case, you will lose some or all of your
initial principal investment in the Securities;
or
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pay
you the face amount of each Security in cash, in the event that the
closing price of the Underlying is at or above the initial price on the
determination date.
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If due to
events beyond our reasonable control, as determined by us in our sole
discretion, shares of the Underlying are not available for delivery at maturity
we may pay you, in lieu of the redemption amount, the cash value of the
redemption amount, determined by multiplying the redemption amount by the
closing price of the Underlying on the determination date.
The
“redemption amount” is a number of shares of the Underlying equal to $1,000
divided by the initial price of the Underlying. The initial price and
consequently the redemption amount may be adjusted for certain events, such as a
stock split or, with respect to an Underlying Company, a merger, affecting the
Underlying Company or Underlying Fund, as applicable, which we describe in
“Description of Securities — Adjustment Events.” The “determination
date” will be specified in the relevant Pricing Supplement.
Any
payment at maturity is subject to the creditworthiness of ABN AMRO Bank N.V. and
ABN AMRO Holding N.V., as guarantor.
How
are the redemption amount and knock-in level, if applicable,
determined?
The
redemption amount for each $1,000 face amount of the Securities is equal to
$1,000 divided by the initial price. The value of any fractional Underlying
Shares you are entitled to receive, after aggregating your total holdings of the
Securities, will be paid in cash based on the closing price of the Underlying on
the determination date. Since shares of an Underlying Fund are held in book
entry form, no stock certificates are issued. Accordingly, any shares of an
Underlying Fund which are delivered to you at maturity will be delivered in book
entry form and will include any fractional shares you are entitled to receive,
after aggregating your total holdings of the Securities based on the closing
price of the Underlying Fund on the determination date.
If
applicable, the knock-in level will be a percentage of the initial price
specified in the relevant Pricing Supplement.
The
initial price and consequently the redemption amount and knock-in level are
subject to adjustment for certain corporate events affecting the Underlying,
such as a stock split or merger, which we describe in “Description of Securities
— Adjustment Events.”
What
coupon payments can I expect on the Securities?
The
Securities pay coupons at a per annum rate that will be specified in the
relevant Pricing Supplement. The coupon rate is fixed at issue and is payable
periodically as specified in the relevant Pricing Supplement in arrears. This
means that irrespective of whether the Securities are exchanged at maturity for
cash or the redemption amount, you will be entitled to periodic coupon payments
on the full face amount of the Securities you hold, payable in
cash. Coupons on the Securities will be computed and accrue on the
basis of a 360-day year of twelve 30-day months, or in the case of an incomplete
month, the actual number of days elapsed from and including the most recent
coupon payment date, or if no coupons have been paid, from the issue or other
coupon accrual date, to but excluding the earlier of the next coupon payment
date or the maturity date.
PS-4
Any
coupon payment is subject to the creditworthiness of ABN AMRO Bank N.V. and ABN
AMRO Holding N.V., as guarantor.
Can you give me an example of the
payment at maturity?
Please
refer to the relevant Pricing Supplement for an example of the payment at
maturity.
Do
I get all my principal back at maturity?
You are
not guaranteed to receive any return of principal at maturity. In the case of
Reverse Exchangeable Securities, if the closing price of the Underlying is below
the initial price on the determination date we will deliver to you shares of the
Underlying. In the case of Knock-in Reverse Exchangeable Securities, if the
closing price of Underlying falls below the knock-in level on any trading day
during the knock-in period, and the closing price of the Underlying is below the
initial price on the determination date, we will deliver to you shares of the
Underlying. In both cases, the market value of shares of the Underlying on the
determination date will be less than the face amount of the Securities and could
be zero. In such a
case you will lose some or all of your initial principal investment in the
Securities.
Is
there a limit to how much I can earn over the term of the
Securities?
Yes. The
amount payable under the terms of the Securities will never exceed the face
amount of the Securities payable at maturity plus coupon payments you earn over
the term of the Securities.
Do
I benefit from any appreciation in the Underlying over the term of the
Securities?
No. The
amount paid at maturity for each $1,000 face amount of the Securities will not
exceed $1,000. As a result, if shares of the Underlying have appreciated above
their price on the pricing date, the payment you receive at maturity will not
reflect that appreciation. Under no circumstances will you
receive a payment at maturity greater than the face amount of the Securities
that you hold at that time.
What
is the minimum required purchase?
Unless
otherwise specified in the relevant Pricing Supplement, you can purchase
Securities in $1,000 denominations (which we refer to as the face amount) or in
integral multiples thereof.
Is
there a secondary market for the Securities?
Unless
otherwise specified in the relevant Pricing Supplement, the Securities will not
be listed on any securities exchange. Accordingly, there may be little or no
secondary market for the Securities and, as such, information regarding
independent market pricing for the Securities may be extremely limited or
non-existent. You should be willing to hold your Securities until the maturity
date.
Although
it is not required to do so, we have been informed by our affiliate that when
this offering is complete, it intends to make purchases and sales of the
Securities from time to time in off-exchange transactions. If our affiliate does
make such a market in the Securities, it may stop doing so at any
time.
In
connection with any secondary market activity in the Securities, our affiliate
may post indicative prices for the Securities on a designated website or via
Bloomberg. However, our affiliate is not required to post such indicative prices
and may stop doing so at any time. Investors are advised that any prices
shown on any website or Bloomberg page are indicative prices only and, as such,
there can be no assurance that any trade could be executed at such prices.
Investors should contact their brokerage firm for further
information.
In
addition, the issue price of the Securities includes the selling agents’
commissions paid with respect to the Securities and the cost of hedging our
obligations under the Securities. The cost of hedging includes the
profit component that our affiliate has charged in consideration for assuming
the risks inherent in managing the hedging of the transactions. The
fact that the issue price of the Securities includes these commissions and
hedging costs is expected to adversely affect the secondary market prices of the
Securities. See “Risk Factors — The Inclusion of Commissions
and Cost of Hedging in the Issue Price is Likely to Adversely Affect Secondary
Market Prices” and “Use of Proceeds.”
PS-5
Tell
me more about ABN AMRO Bank N.V. and ABN AMRO Holding N.V.
ABN AMRO
Bank N.V. is an international banking group offering a wide range of banking
products and financial services worldwide through our network of offices and
branches. ABN AMRO Holding N.V., which we refer to as Holding, is the
parent company of ABN AMRO Bank N.V. Holding’s main purpose is to own
the Bank and its subsidiaries. All of the Securities issued by the
Bank hereunder are fully and unconditionally guaranteed by Holding.
On
October 17, 2007, RFS Holdings B.V., which at the time was owned by a consortium
consisting of the Royal Bank of Scotland Group plc (“RBS”), Fortis N.V., Fortis
SA/NV (“Fortis”) and Banco Santander S.A. (“Santander”), completed the
acquisition of Holding. We refer to all businesses owned by Holding
as the ABN AMRO Group. RFS Holdings B.V., which is now jointly owned
by RBS, the State of the Netherlands (the “Dutch State”) and Santander (the
“Consortium Members”), is in the process of implementing an orderly separation
of the business units of the ABN AMRO Group. Substantially all assets
and liabilities with shared ownership by the consortium have either been sold or
economically allocated to a Consortium Member.
On
November 28, 2008, UK Financial Investments Limited (“UKFI”), which is wholly
owned by the UK government, acquired approximately 57.9% of the enlarged issued
ordinary share capital of RBS and £5 billion of RBS preference
shares. On January 19, 2009, RBS announced that it had reached
agreement with the UK Treasury and UKFI to replace the £5 billion of RBS
preference shares with new RBS ordinary shares. Effective April 14,
2009, the £5 billion of RBS preference shares were replaced with new RBS
ordinary shares, resulting in UKFI holding approximately 70.3% of the enlarged
issued ordinary share capital of RBS.
The
Consortium Members continue to work on a joint plan for legally separating the
businesses that are owned by the Dutch State from the residual RBS business into
two separate banks. We expect that following the separation of the
businesses that are owned by the Dutch State, we, the existing ABN AMRO Bank
N.V., will be renamed “The Royal Bank of Scotland N.V.” (“RBS
NV”). The future RBS N.V. will be part of RBS and will principally
contain the international lending and international transaction services of
RBS. The businesses that are owned by the Dutch State will be
transferred into a new legal entity, to be named “ABN AMRO Bank N.V.”, which is
a different legal entity from the existing ABN AMRO Bank N.V. and will operate
under a separate Dutch banking license. Accordingly, once this
business separation is complete, we will be known as The Royal Bank of Scotland
N.V. Neither the new entity named ABN AMRO Bank N.V. nor the Dutch
State will insure or guarantee the debt securities offered by any Pricing
Supplement.
Similarly,
Holding expects to change its name to “RBS Holding N.V.” after the completion of
the business separation described above. Holding is no longer listed
on Euronext or the New York Stock Exchange but files periodic reports with the
SEC. “See “Risk Factors — The Securities are Subject to the Credit
Risk of ABN AMRO Bank N.V. and ABN AMRO Holding N.V., and their Credit Ratings
and Credit Spreads May Adversely Affect the Market Value of the
Securities.”
What
is the relationship between ABN Amro Bank N.V., ABN Amro Holding N.V. and RBS
Securities Inc.?
RBS
Securities Inc., which we refer to as RBSSI, is an affiliate of ABN AMRO Bank
N.V. and ABN AMRO Holding N.V. RBSSI will act as calculation agent for the
Securities, and is acting as agent for this offering. RBSSI will conduct this
offering in compliance with the requirements of NASD Rule 2720 of the Financial
Industry Regulatory Authority, which is commonly referred to as FINRA, regarding
a FINRA member firm's distribution of the securities of an affiliate. See “Risk
Factors — Potential Conflicts of Interest between Holders of Securities and the
Calculation Agent” and “Plan of Distribution (Conflicts of Interest)” in this
Product Supplement.
Where
can I find out more about the Underlying Company or the Underlying
Fund?
Because
shares of the Underlying are registered under the Securities Exchange Act of
1934, as amended, the Underlying Company or Underlying Fund, as applicable, is
required to file periodically certain financial and other information specified
by the Securities and Exchange Commission which is available to the public. You
should read “Public
Information Regarding the Underlying” in this Product Supplement to learn how to
obtain public information regarding the Underlying and other important
information. The historical highest intra-day price, lowest intra-day price and
last day closing price of the Underlying will be set forth in the relevant
Pricing Supplement.
PS-6
Who
will determine whether the closing price of the Underlying has fallen below the
knock-in level (if applicable), the closing price of the Underlying on the
determination date, the redemption amount and the initial price?
We have
appointed our affiliate, RBSSI, to act as calculation agent for the Securities.
As calculation agent, RBSSI will determine whether the closing price of the
Underlying has fallen below the knock-in level on any trading day during the
knock-in period (if applicable), the closing price of the Underlying on the
determination date, the redemption amount and the initial price. The calculation
agent may adjust the initial price of the Underlying and consequently the
redemption amount and knock-in level as a result of certain events affecting the
Underlying Company or the Underlying Fund, as applicable, which we describe in
the section called “Description of Securities — Adjustment Events.”
Who
invests in the Securities?
The Securities are not suitable for
all investors. The Securities might be considered by investors
who:
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seek
a higher interest rate than the current dividend yield on the Underlying
or the yield on a conventional debt security with the same maturity issued
by us or an issuer with a comparable credit
rating;
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are
willing to accept the risk of owning equity in general and shares of the
Underlying in particular and the risk that they could lose their entire
investment;
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do
not expect to participate in any appreciation in the price of the
Underlying; and
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are
willing to hold the Securities until
maturity.
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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 Product Supplement which you should read before making an investment in the
Securities.
Some
selected risk considerations include:
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Credit Risk. Because
you are purchasing a security from us, you are assuming our credit
risk. In addition, because the Securities are fully and
unconditionally guaranteed by Holding, you are also assuming the credit
risk of Holding in the event that we fail to make any payment or delivery
required by the terms of the
Securities.
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Principal Risk. The
Securities are not principal protected, which means there is no guaranteed
return of principal. If (a) for Reverse Exchangeable Securities, the
closing price on the determination date is less than the initial price, or
(b) for Knock-in Reverse Exchangeable Securities, the closing price of the
Underlying falls below the knock-in level on any trading day during the
term of the Securities and the closing price on the determination date is
less than the initial price, we will deliver to you a fixed number of
shares of the Underlying with a market value less than the face amount of
the Securities, which value may be zero. Accordingly, you assume the
risk that you may lose some or all of your initial principal investment in
the Securities.
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Liquidity and Market
Risk. Unless otherwise specified in the relevant Pricing
Supplement, the Securities will not be listed on any securities
exchange. Accordingly, there may be little or no secondary
market for the Securities and information regarding independent market
pricing for the Securities may be very limited or non-existent. The value
of the Securities in the secondary market, if any, will be subject to many
unpredictable factors, including then prevailing market
conditions.
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PS-7
What
if I have more questions?
You
should read “Description of Securities” in this Product Supplement for a
detailed description of the general terms of the Securities. The
relevant Pricing Supplement will describe the terms that apply specifically to
the Securities. The Securities are senior notes issued as part of our ABN
NotesSM program
and guaranteed by Holding. The Securities offered by the Bank will constitute
the Bank’s unsecured and unsubordinated obligations and rank pari passu without
any preference among them and with all our other present and future unsecured
and unsubordinated obligations. The guarantee of Holding will constitute
Holding’s unsecured and unsubordinated obligations and rank pari passu without
any preference among them and with all Holding’s other present and future
unsecured and unsubordinated obligations. You can find a general description of
our ABN NotesSM program
in the accompanying Prospectus Supplement. We also describe the basic features
of this type of note in the sections of the accompanying Prospectus Supplement
called “Description of Notes” and “Notes Linked to Commodity Prices, Single
Securities, Economic or Financial Measures and Baskets or Indices
Thereof.”
You may
contact our principal executive offices at Gustav Mahleraan 10, 1082 PP
Amsterdam, The Netherlands. Our telephone number is (31-20)
628-9393.
PS-8
RISK
FACTORS
This
section describes the most significant risks relating to the Securities. For a
discussion of certain general risks associated with your investment in the
Securities, please refer to the section entitled “Risk Factors” beginning on
page S-3 of the accompanying Prospectus Supplement. You should carefully consider whether
the Securities are suited to your particular circumstances before you decide to
purchase them. In addition, we urge you to consult with your investment, legal,
accounting, tax and other advisors with respect to any investment in the
Securities.
The
Securities Are Not Ordinary Senior Notes; There Is No Guaranteed Return of
Principal
The
Securities combine limited features of debt and equity. The terms of the
Securities differ from those of ordinary equity securities in that (i) you will
not participate in any appreciation of the Underlying even if the price of the
Underlying rises above the initial price and (ii) we will not pay you a fixed
face amount in cash at maturity if (a) for Reverse Exchangeable Securities, the
closing price on the determination date is less than the initial price, or (b)
for Knock-in Reverse Exchangeable Securities, the closing price of the
Underlying has fallen below the knock-in level on any trading day during the
knock-in period and, in addition, the closing price of the Underlying is below
the initial price on the determination date. In such event, we will exchange
each Security you hold for a number of shares of the Underlying equal to the
redemption amount. Such shares will have a market value of less than
the face amount of the Securities, and such value may be zero. You cannot
predict the future performance of the Underlying based on its historical
performance. Accordingly, you
assume the risk that you could lose some or all of the amount you invest in the
Securities.
Credit
Risk of ABN AMRO Bank N.V. and ABN AMRO Holding N.V., and their Credit Ratings
and Credit Spreads May Adversely Affect the Market Value of the
Securities
You are
dependent on ABN AMRO Bank N.V.’s ability to pay all amounts due on the
Securities, and therefore you are subject to the credit risk of ABN AMRO Bank
N.V.and to changes in the market’s view of ABN AMRO Bank N.V.’s
creditworthiness. In addition, because the Securities are unconditionally
guaranteed by ABN AMRO Bank N.V.’s parent company, ABN AMRO Holding N.V., you
are also dependent on the credit risk of ABN AMRO Holding N.V. in the event that
ABN AMRO Bank N.V. fails to make any payment or delivery required by the terms
of the Securities. Any actual or anticipated decline in ABN AMRO Bank
N.V. or ABN AMRO Holding N.V.’s credit ratings or increase in their credit
spreads charged by the market for taking credit risk is likely to adversely
affect the value of the Securities.
Our
credit ratings are an assessment, by each rating agency, of our ability to pay
our obligations, including those under the Securities. Credit ratings
are subject to revision, suspension or withdrawal at any time by the assigning
rating organization in their sole discretion. However, because the
return on the Securities is dependent upon factors in addition to our ability to
pay our obligations under the Securities, an improvement in our credit ratings
will not necessarily increase the market value of the Securities and will not
reduce market risk and other investment risks related to the
Securities. Credit ratings do not address the price, if any, at which
the Securities may be resold prior to maturity (which may be substantially less
than the issue price of the Securities) and are not recommendations to buy, sell
or hold the Securities. See “Risk Factors — Market Price of the Securities
Influenced by Many Unpredictable Factors.”
Although
We Are a Bank, the Securities Are Not Bank Deposits and Are Not Insured or
Guaranteed by the Federal Deposit Insurance Corporation, The Deposit Insurance
Fund or Any Other Government Agency
The
Securities are our obligations but are not bank deposits. In the
event of our insolvency the Securities will rank equally with our other
unsecured, unsubordinated obligations and will not have the benefit of any
insurance or guarantee of the Federal Deposit Insurance Corporation, The Deposit
Insurance Fund or any other governmental agency.
PS-9
The
Securities Will Not Pay More Than the Stated Face Amount at
Maturity
The
amount paid at maturity of the Securities in cash or shares of the Underlying
will not exceed the face amount of the Securities. If the closing price of the
Underlying on the determination date is equal to or exceeds the initial price
(regardless of whether the knock-in level, if applicable, has been previously
breached), you will receive the face amount of the Securities irrespective of
any appreciation in the share price. You will not receive shares of the
Underlying or any other asset equal to the value of shares of the Underlying. As
a result, if the Underlying has appreciated above its closing price on the
pricing date, the payment you receive at maturity will not reflect that
appreciation. Under no
circumstances will you receive a payment at maturity greater than the face
amount of the Securities that you hold at that time.
For
Knock-in Reverse Exchangeable Securities, the Protection Provided by the
Knock-In Level May Terminate on Any Day During the Term of the
Securities
For
Knock-in Reverse Exchangeable Securities, if, on any trading day during the
knock-in period, the closing price of the Underlying falls below the knock-in
level, you will be fully exposed to any depreciation in the
Underlying. We refer to this feature as a contingent
buffer. The buffer (the difference between the initial price and the
knock-in level) is contingent on the closing price of the Underlying on each
trading day during the knock-in period and on the determination
date. If the closing price has fallen below the knock-in level on any
trading day during the knock-in period and on the determination date is below
the initial price, you will receive at maturity, for each $1,000 face amount
Security, the redemption amount. Consequently, you will lose 1% of
the face amount of your investment for every 1% decline in the closing price
compared to the initial price. You will be subject to this potential
loss of principal even if, after falling below the knock-in level, the closing
price of the Underlying rises above the knock-in level on any day or above the
initial price on any day other than the determination date. This is
because, if the closing price of the Underlying has fallen below the knock-in
level on any trading day during the knock-in period, we determine the payment
you will receive at maturity based on the closing price on the determination
date.
The
Volatility of the Market Price of the Underlying Will Impact the Risk that You
Will Receive Less Than the Full Face Amount of Your Securities at
Maturity
The
likelihood of the Underlying closing or trading below the knock-in level on any
trading day during the knock-in period or the determination date is
unpredictable and will depend in large part on the volatility of the market
price of the Underlying — the frequency and magnitude of changes in the market
price of the Underlying. Recently, the equity markets have
experienced significant volatility. As a result of such increased
volatility in the markets, there is a greater risk that you will receive less
than the full face amount of your Securities at maturity.
Unless
Otherwise Specified in the Relevant Pricing Supplement, the Securities Will Not
be Listed on Any Securities Exchange; Secondary Trading May Be
Limited
You
should be willing to hold your Securities until the maturity date. Unless
otherwise specified in the relevant Pricing Supplement, the Securities will not
be listed on any securities exchange; accordingly, there may be little or no
secondary market for the Securities and information regarding independent market
pricing for the Securities may be very limited or non-existent. Even if there is
a secondary market, it may not provide enough liquidity to allow you to trade or
sell the Securities easily. Our affiliate has informed us that, upon completion
of the offering, it intends to purchase and sell the Securities from time to
time in off-exchange transactions, but it is not required to do
so. If our affiliate does make such a market in the Securities, it
may stop doing so at any time. In addition, the total face amount of the
Securities being offered by the relevant Pricing Supplement may not be purchased
by investors in the offering, and one or more of our affiliates may agree to
purchase a part of the unsold portion, which may constitute up to 15% of the
total aggregate face amount of the Securities. Such affiliate or
affiliates intend to hold the Securities for investment purposes, which may
affect the supply of Securities available for secondary trading and therefore
adversely affect the price of the Securities in any secondary
trading. If a substantial portion of any Securities held by our
affiliates were to be offered for sale following this offering, the market price
of such Securities could fall, especially if secondary trading in such
Securities is limited or illiquid.
PS-10
Market
Price of the Securities Are 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 you on the maturity date.
Several
factors, many of which are beyond our control, will influence the market value
of the Securities, including:
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the
market price of the Underlying, including, for Knock-in Reverse
Exchangeable Securities, whether the closing price of the Underlying has
fallen below the knock-in level on any trading
day;
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the
volatility (frequency and magnitude of changes) in the price of the
Underlying;
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the
dividend rate on the Underlying. While dividend payments on the
Underlying, if any, are not paid to holders of the Securities, such
payments may have an influence on the market price of the Underlying and
therefore on the Securities;
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interest
and yield rates in the market;
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economic,
financial, political and regulatory or judicial events that affect the
stock markets generally and which may affect the closing price of the
Underlying and/or the Securities;
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if
the Securities are linked to Underlying Shares that are ADSs or to a
foreign Underlying Fund, the exchange rate and volatility of the exchange
rate between the U.S. dollar and the currency of the country in which the
ADS Underlying Stock or the stocks comprising the foreign Underlying Fund
are traded, as applicable;
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the
time remaining to the maturity of the
Securities;
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the
occurrence of certain events affecting the Underlying which may require an
adjustment to the Exchange Factor (and therefore, the initial price,
redemption amount and knock-in level);
and
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the
creditworthiness of the Bank as issuer of the Securities and Holding as
the guarantor of the Bank’s obligations under the Securities. Any person
who purchases the Securities is relying upon the creditworthiness of the
Bank and Holding and has no rights against any other
person. The Securities constitute the general, unsecured and
unsubordinated contractual obligations of the Bank and
Holding.
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These
factors interrelate in complex ways, and the effect of one factor on the market
value of your Securities may offset or enhance the effect of another
factor.
Some or
all of these factors will influence the price that you will receive if you sell
your Securities in the secondary market, if any, prior to maturity. For example,
you may have to sell your Securities at a substantial discount from the face
amount if at the time of sale the market price of the Underlying is at, below,
or not sufficiently above the knock-in level. See also “Risk Factors
— The Inclusion of Commissions and Cost of Hedging in the Issue Price is Likely
to Adversely Affect Secondary Market Prices.”
As an
investor in the Securities you assume the risk that as a result of the
performance of the Underlying you may lose some or all of your initial principal
investment in the Securities.
The
Inclusion of Commissions and Cost of Hedging in the Issue Price Is Likely to
Adversely Affect Secondary Market Prices
Assuming
no change in market conditions or any other relevant factors, the price, if any,
at which the selling agents are willing to purchase Securities in secondary
market transactions will likely be lower than the issue price, since the issue
price included, and secondary market prices are likely to exclude, commissions
paid with respect to the Securities, as well as the profit component included in
the cost of hedging our obligations under the
Securities. In
addition, any such prices may differ from values determined by pricing models
used by the selling agents, as a result of dealer discounts, mark-ups or other
transaction costs.
PS-11
An
Increase in the Market Price of the Underlying Will Not Increase the Return on
Your Investment
Owning
the Securities is not the same as owning shares of the Underlying. Accordingly,
the market value of your Securities may not have a direct relationship with the
market price of the Underlying, and changes in the market price of the
Underlying may not result in a comparable change in the market value of your
Securities. If the price per share of the Underlying increases above the initial
price, the market value of the Securities may not increase. It is also possible
for the price of the Underlying to increase while the market price of the
Securities declines.
We
May Not be Able to Deliver Shares of the Underlying at Maturity
If due to
events beyond our reasonable control, as determined by us in our sole
discretion, shares of the Underlying are not available for delivery at maturity
we may pay you cash in lieu of delivering shares of the
Underlying. In such a case, the amount of cash we will deliver will
be an amount calculated by multiplying the redemption amount by the closing
price of the Underlying on the determination date. Accordingly, if you have sold
or otherwise agreed to deliver shares of the Underlying with the expectation of
receiving the redemption amount at maturity, your trade may fail in the event we
do not deliver shares of the Underlying to you.
Potential
Conflicts of Interest; No Security Interest in the Shares of the Underlying Held
by Us
We and
our affiliates may carry out hedging activities that minimize our risks related
to the Securities, including trading in shares of the Underlying. In particular,
on or prior to the date of the relevant Pricing Supplement, we, through our
affiliates, may have hedged our anticipated exposure in connection with the
Securities by taking positions in shares of the Underlying, stocks (or options
or futures contracts on the stocks) that comprise the Underlying Fund, if
applicable, options contracts on shares of the Underlying listed on major
securities markets, and/or other instruments that we deemed appropriate in
connection with such hedging. Our purchase activity, however, could potentially
have increased the initial price of the Underlying, and therefore increased the
knock-in level, below which we would be required to deliver to you at maturity
shares of the Underlying, which, in turn, would have a value less than the face
amount of your Securities.
Through
our affiliates, we are likely to modify our hedge position throughout the term
of the Securities by purchasing and selling shares of the Underlying, stocks (or
options or futures contracts on the stocks) that comprise the Underlying Fund,
if applicable, options contracts on shares of the Underlying listed on major
securities markets or positions in other securities or instruments that we may
wish to use in connection with such hedging. We cannot give you any assurance
that we have not or will not affect such price as a result of our hedging or
trading activities. Such hedging or trading activities during the
term of the Securities could adversely affect whether the price of the
Underlying decreases below the knock-in level and therefore, whether or not you
will receive the stated face amount of the Securities or shares of the
Underlying at maturity. 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 shares of the Underlying and other investments
relating to the Underlying Company or stocks that comprise the Underlying Fund,
as applicable, 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. We or one or more of our affiliates may also publish
research reports or otherwise express views about the Underlying Company, if
applicable. Any of these activities could adversely affect the price
of the Underlying 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 price of the Underlying. 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.
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 shares of the Underlying acquired by us or our
affiliates. Neither we nor Holding nor any of our affiliates will
pledge or otherwise hold shares of the Underlying for the benefit of holders of
the Securities in order to enable the holders to exchange their Securities for
shares of
the Underlying under any circumstances. Consequently, in the event of a
bankruptcy, insolvency or liquidation involving us or Holding, as the case may
be, any shares of the Underlying that we or Holding own will be subject to the
claims of our creditors or Holding’s creditors generally and will not be
available specifically for the benefit of the holders of the
Securities.
PS-12
Holdings
of the Securities by Our Affiliates and Future Sales
Certain
of our affiliates may agree to purchase for investment a portion of the
Securities that has not been purchased by investors in a particular offering of
Securities, which initially they intend to hold for investment purposes. As a
result, upon completion of such an offering, our affiliates may own up to 15% of
the aggregate face amount of the Securities. Circumstances may occur
in which our interests or those of our affiliates could be in conflict with your
interests. For example, our affiliates may attempt to sell the
Securities that they had been holding for investment purposes at the same time
that you attempt to sell your Securities, which could depress the price, if any,
at which you can sell your Securities. Moreover, the liquidity of the
market for the Securities, if any, could be substantially reduced as a result of
our affiliates holding the Securities. See “— The Securities Will Not be Listed
on any Securities Exchange; Secondary Trading May Be Limited.” In addition, our
affiliates could have substantial influence over any matter subject to consent
of the security holders.
Information
Regarding the Underlying Company or Underlying Fund, as Applicable
Neither
we nor Holding nor any of our affiliates assume any responsibility for the
accuracy or adequacy of the information about the Underlying Company or
Underlying Fund, as applicable, contained in the relevant Pricing Supplement or
in any of the Underlying Company’s or Underlying Fund’s publicly available
filings, as applicable. As an investor in the Securities, you should make your
own investigation into the Underlying Company or Underlying Fund, as applicable.
Unless otherwise disclosed in the relevant Pricing Supplement, neither we nor
Holding nor any of our affiliates have any affiliation with the Underlying
Company or Underlying Fund, as applicable, and are not responsible for the
Underlying Company’s or Underlying Fund’s public disclosure of information, as
applicable, whether contained in SEC filings or otherwise.
Market
Disruptions May Adversely Affect Your Return
The
calculation agent may, in its sole discretion, determine that the markets have
been affected in a manner that prevents it from properly determining the closing
price and calculating the payment at maturity, if any, that we are required to
pay you. These events may include disruptions or suspensions of
trading in the markets as a whole. If the calculation agent, in its
sole discretion, determines that any of these events prevents us or any of our
affiliates from properly hedging our obligations under the Securities, it is
possible that the determination date will be postponed and your return will be
adversely affected. See “Description of Securities — Market
Disruption Event.”
No
Shareholder Rights in the Shares of the Underlying
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 the Underlying
Shares, the shares of the Underlying Fund or stocks comprising the Underlying
Fund or Target Index would have, as applicable. If the Securities are linked to
ADSs representing non-U.S. equity securities issued through depositary
arrangements, you will not have the rights of owners of such ADSs or the ADS
Underlying Stock.
Limited
Antidilution Protection
As
calculation agent, RBSSI, which is our affiliate, will adjust the initial price
and consequently the redemption amount and knock-in level for certain events
affecting the shares of the Underlying, such as stock splits and other corporate
actions. The calculation agent is not required to make an adjustment for every
corporate action which affects the shares of the Underlying. For example, the
calculation agent is not required to make any adjustments if the Underlying
Company 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
shares of the Underlying payable at maturity, the market price of the Securities
may be materially and adversely affected.
PS-13
No
Affiliation with the Underlying Company, the Underlying Fund or Any Issuers of
the Stocks Comprising the Underlying Fund, as Applicable
Because
neither we nor Holding nor any of our affiliates are affiliated with the
Underlying Company, the Underlying Fund or the issuers of the stocks comprising
the Underlying Fund, as applicable, we have no ability to control or predict the
actions of the Underlying Company, the Underlying Fund or the issuers of the
stocks comprising the Underlying Fund, as applicable, including any actions of
the type that would require the calculation agent to adjust the initial price
and consequently the knock-in level, if applicable, and redemption amount, and
have no ability to control the public disclosure of these actions or any other
events or circumstances affecting the Underlying Company, the Underlying Fund or
the issuers of the stocks comprising the Underlying Fund, as applicable. The Underlying Company, the
Underlying Fund and the issuers of the stocks comprising the Underlying Fund, as
applicable, are not involved in the offer of the Securities in any way and have
no obligation to consider your interest as an owner of the Securities in taking
any actions that might affect the value of your Securities. None of the money
you pay for the Securities will go to the Underlying Company, the Underlying
Fund or the issuers of stocks comprising the Underlying Fund, as
applicable.
We
May Engage in Business with or Involving the Underlying Company, the Underlying
Fund or One or More of the Issuers of the Stocks that Comprise the Underlying
Fund, as Applicable, without Regard to Your Interests
We and/or
our affiliates may presently or from time to time engage in business with the
Underlying Company, the Underlying Fund or the issuers of the stocks comprising
the Underlying Fund, as applicable, including extending loans to, or making
equity investments in, or providing advisory services to such companies,
including merger and acquisition advisory services. These activities could lead
to actions on the part of the Underlying Company or Underlying Fund, as
applicable, which might adversely affect the price of the
Underlying. In the course of such business, we and/or our affiliates
may acquire non-public information with respect to such companies and, in
addition, one or more of our affiliates may publish research reports with
respect to such companies. The statement in the preceding sentence is not
intended to affect the rights of holders of the Securities under the securities
laws. As a prospective purchaser of a Security, you should undertake such
independent investigation of the Underlying Company or Underlying Fund, as
applicable, as in your judgment is appropriate to make an informed decision with
respect to an investment in the Underlying.
Potential
Conflicts of Interest between Holders of Securities and the Calculation
Agent
As
calculation agent, RBSSI, which is our affiliate, will calculate the payout to
you at maturity of the Securities. RBSSI and other affiliates may carry out
hedging activities related to the Securities, including trading in the shares of
the Underlying, as well as in other instruments related to the Underlying. RBSSI
and some of our other affiliates also trade the shares of the Underlying on a
regular basis as part of their general broker dealer businesses. Any of these
activities could influence RBSSI’s determinations as calculation agent and any
such trading activity could potentially affect the price of the Underlying and,
accordingly could affect the payout on the Securities. RBSSI is an affiliate of ABN AMRO
Bank N.V.
In
addition, if certain reorganization events occur as defined under “Description
of Securities — Adjustment Events” the calculation agent may adjust the initial
price and consequently the knock-in level and redemption amount to reflect the
new securities issued in such reorganization event. The calculation
agent may make such adjustment based on its assessment of the market value and
volatility of those new securities, which may adversely affect the value of the
Securities. The calculation agent’s adjustment to the Securities may
be influenced by, among other things, our or our affiliates’ hedging
transactions with respect to the Securities and our or their ability to hedge
our obligations under the Securities following those reorganization events. You
will bear the risk that a reorganization event may occur or that the calculation
agent’s adjustments upon a reorganization event may adversely affect the value
of the Securities.
Moreover,
the issue price of the Securities includes the agents’ commissions and certain
costs of hedging our obligations under the Securities. Our affiliates
through which we hedge our obligations under the Securities expect to make a
profit. Since hedging our obligations entails risk and may be
influenced by market forces beyond our affiliates’ control, such hedging may
result in a profit that is more or less than initially projected.
PS-14
The
Tax Consequences of an Investment in the Securities Are Unclear.
There is
no direct legal authority regarding the proper U.S. federal income tax treatment
of the Securities, and we do not plan to request a ruling from the Internal
Revenue Service (the “IRS”). Consequently,
significant aspects of the tax treatment of the Securities are unclear, and the
IRS or a court might not agree with the treatment of the Securities (as prepaid
financial contracts) described in the section of this Product Supplement
entitled “U.S. Federal Income Tax Consequences.” If the IRS were
successful in asserting an alternative treatment, the tax consequences of
ownership and disposition of the Securities might be affected materially and
adversely. Additionally, as described in “U.S. Federal Income Tax Consequences,”
in December 2007, Treasury and the IRS released a notice requesting comments on
various issues regarding the U.S. federal income tax treatment of “prepaid
forward contracts” and similar instruments. While it is not clear whether the
Securities would be viewed as similar to the typical prepaid forward contract
described in the notice, it is possible that any Treasury regulations or other
guidance promulgated after consideration of these issues could materially and
adversely affect the tax consequences of an investment in the Securities,
possibly with retroactive effect.
Both
U.S. and non-U.S. holders should consult their tax advisers regarding the U.S.
federal income tax consequences of an investment in the Securities (including
possible alternative treatments and the issues presented by the December 2007
notice), as well as any tax consequences arising under the laws of any state,
local or non-U.S. taxing jurisdiction.
Risks
Related to Underlying Shares
For
Securities linked to the Performance of ADSs, Fluctuations in Exchange Rates
Will Affect Your Investment
For
Securities linked to the Performance of ADSs, We Have No Control over Exchange
Rates
Foreign
exchange rates can either float or be fixed by sovereign
governments. Exchange rates of the currencies used by most
economically developed nations are permitted to fluctuate in value relative to
the U.S. dollar and to each other. However, from time to time
governments and, in the case of countries using the euro, the European Central
Bank, may use a variety of techniques, such as intervention by a central bank,
the imposition of regulatory controls or taxes or changes in interest rates to
influence the exchange rates of their currencies. Governments may
also issue a new currency to replace an existing currency or alter the exchange
rate or relative exchange characteristics by a devaluation or revaluation of a
currency. These governmental actions could change or interfere with
currency valuations and currency fluctuations that would otherwise occur in
response to economic forces, as well as in response to the movement of
currencies across borders. As a consequence, these government actions
could adversely affect an investment in a Security that is linked to ADSs, which
is quoted and traded in U.S. dollars, representing an ADS Underlying Stock that
is quoted and traded in a foreign currency.
We will
not make any adjustment or change in the terms of the notes in the event that
exchange rates should become fixed, or in the event of any devaluation or
revaluation or imposition of exchange or other regulatory controls or taxes, or
in the event of other developments affecting the U.S. dollar or any relevant
foreign currency. You will bear those risks.
PS-15
For
Securities linked to the Performance of ADSs, an Investment in the Securities Is
Subject to Risks Associated with Non-U.S. Securities Markets
An
investment in the Securities linked to the value of ADSs representing interests
in non-U.S. equity securities involves risks associated with the securities
markets in those countries where the relevant non-U.S. equity securities are
traded, including risks of market volatility, governmental intervention in those
markets and cross shareholdings in companies in certain
countries. Also, non-U.S. companies are generally subject to
accounting, auditing and financial reporting standards and requirements, and
securities trading rules different from those applicable to U.S. reporting
companies.
The
prices of securities in non-U.S. markets may be affected by political, economic,
financial and social factors in such markets, including changes in a country’s
government, economic and fiscal policies, currency exchange laws or other laws
or restrictions. Moreover, the economies of such countries may differ
favorably or unfavorably from the economy of the United States in such respects
as growth of gross national product, rate of inflation, capital reinvestment,
resources and self sufficiency. Such countries may be subjected to
different and, in some cases, more adverse economic environments.
Some or
all of these factors may influence the price of the ADSs. The impact
of any of these factors set forth above may enhance or offset some or all of any
change resulting from another factor or factors. You cannot predict
the future performance of the ADSs based on their historical
performance. The value of the ADSs may decrease such that you may not
receive any return of your investment. You will bear the risk that
the price of the ADSs may decrease so that at maturity, you will lose some or
all of your investment.
There
Are Important Differences Between the Rights of Holders of ADSs and the Rights
of Holders of the Common Stock of the Foreign Company Underlying the
ADSs
If your
Security is linked to the performance of an ADS, you should be aware that your
Security is linked to the price of the ADSs and not the ADS Underlying Stock,
and there exist important differences between the rights of holders of ADSs and
the ADS Underlying Stock. Each ADS is a security evidenced by
American Depositary Receipts that represent a specified number of shares of
common stock of a foreign issuer. Generally, the ADSs are issued
under a deposit agreement, which sets forth the rights and responsibilities of
the depositary, the foreign issuer and holders of the ADSs, which may be
different from the rights of holders of common stock of the foreign
issuer. For example, the foreign issuer may make distributions in
respect of its common stock that are not passed on to the holders of its
ADSs. Any such differences between the rights of holders of the ADSs
and holders of the ADS Underlying Stock may be significant and may materially
and adversely affect the value of the Securities.
In
Some Circumstances, the Payment You Receive on the Securities May Be Based on
the Common Stock (or ADSs, as applicable) of Another Company and not the
Underlying Shares
Following
certain corporate events, such as a merger or acquisition, relating to the
Underlying Shares where its issuer is not the surviving entity, the amount you
receive at maturity may be based on the common stock of a successor to the
Underlying Company or any cash or any other assets distributed to holders of the
Underlying Shares in such corporate event. The occurrence of these
corporate events and the consequent adjustments may materially and adversely
affect the value of the Securities. We describe the specific
corporate events that can lead to these adjustments and the procedures for
selecting Exchange Property (as described below) in the section of this Product
Supplement called “Description of Notes — Adjustment Events.”
Risks
Related to the Underlying Fund
Investment
in the Securities is Not the Same as a Direct Investment in the Underlying Fund
or in the Stocks that Comprise the Underlying Fund
An
investment in the Securities is not the same as a direct investment in the
Underlying Fund or in the stocks that comprise the Underlying
Fund. The return on your Securities could be less than if you had
invested directly in the stocks (or any other securities) comprising the
Underlying Fund because you will only participate in the change in the price of
the Underlying Fund over the term of the Securities, because, for Underlying
Funds comprised of stocks,
the return on the Securities does not account for the return associated with the
reinvestment of dividends that you would have received if you had invested
directly in the stocks (or any other securities) comprising the Underlying Fund
and because there are management fees charged by the Underlying
Fund. You will not receive any payment of dividends on any of the
stocks (or any other securities) comprising the Underlying
Fund.
PS-16
Your
Return May Be Affected by Factors Affecting International
Securities
The price
of the Underlying Fund may be computed by reference to the value of the equity
securities of companies listed on various global exchanges. Under
these circumstances, the return on the Securities will be affected by factors
affecting the prices of securities in the relevant markets. The
relevant foreign securities markets may be more volatile than United States or
other securities markets and may be affected by market developments in different
ways than United States or other securities markets. Direct or
indirect government intervention to stabilize a particular securities market and
cross-shareholdings in companies in the relevant foreign securities markets may
affect prices and the volume of trading in those markets. Also, there
is generally less publicly available information about foreign companies than
about United States companies that are subject to the reporting requirements of
the Securities and Exchange Commission. Additionally, accounting, auditing and
financial reporting standards and requirements in foreign countries differ from
those applicable to United States reporting companies.
The
prices and performance of securities of companies in foreign countries may be
affected by political, economic, financial and social factors in those
regions. In addition, recent or future changes in government,
economic and fiscal policies in the relevant jurisdictions, the possible
imposition of, or changes in, currency exchange laws or other laws or
restrictions, and possible fluctuations in the rate of exchange between
currencies, are factors that could negatively affect the relevant securities
markets. Moreover, the relevant foreign economies may differ
favorably or unfavorably from the United States economy in economic factors such
as growth of gross national product, rate of inflation, capital reinvestment,
resources and self-sufficiency.
If
the Prices of the Equity Securities Held By a Foreign Underlying Fund Are Not
Converted Into U.S. Dollars For Purposes of Calculating the Net Asset Value of
the Foreign Underlying Fund, the Amount Payable On the Securities at Maturity
Will Not Be Adjusted For Changes In Exchange Rates That Might affect the Foreign
Underlying Fund
Because
the prices of the equity securities held by a foreign Underlying Fund are not
converted into U.S. dollars for purposes of calculating the net asset value of
that foreign Underlying Fund and although the equity securities held by that
foreign Underlying Fund are traded in currencies other than U.S. dollars, and
the Securities, which are linked in whole or in part to that foreign Underlying
Fund, are denominated in U.S. dollars, the amount payable on the Securities at
maturity, if any, will not be adjusted for changes in the exchange rate between
the U.S. dollar and each of the currencies in which the equity securities held
by that foreign Underlying Fund are denominated. Changes in exchange
rates, however, may reflect changes in various non-U.S. economies that in turn
may affect the return on the Securities. The amount we pay in respect
of the Securities on the maturity date, if any, will be determined solely in
accordance with the procedures described in “Description of Securities — Payment
at Maturity.”
If
the Prices of the Equity Securities Held By a Foreign Underlying Fund Are
Converted Into U.S. Dollars For Purposes of Calculating the Net Asset Value of
That Foreign Underlying Fund, the Securities Will Be Subject To Currency
Exchange Risk
Because
the prices of the equity securities held by a foreign Underlying Fund are
converted into U.S. dollars for the purposes of calculating the net asset value
of that foreign Underlying Fund, the holders of the Securities will be exposed
to currency exchange rate risk with respect to each of the currencies in which
the equity securities held by that foreign Underlying Fund trade. An
investor’s net exposure will depend on the extent to which such currencies
strengthen or weaken against the U.S. dollar and the relative weight of the
equity securities held by that foreign Underlying Fund denominated in each such
currency. If, taking into account such weighting, the U.S. dollar
strengthens against such currencies, the net asset value of that foreign
Underlying Fund will be adversely affected and the payment at maturity of the
Securities may be reduced.
Of
particular importance to potential currency exchange risk are:
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·
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existing
and expected rates of inflation;
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·
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existing
and expected interest rate levels;
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PS-17
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·
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the
balance of payments;
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·
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the
extent of governmental surpluses or deficits in the component countries
and the United States;
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·
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government
intervention in the currency markets;
and
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·
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government
action fixing exchange rates or allowing exchange rates to
float.
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All of
these factors are in turn sensitive to the monetary, fiscal and trade policies
pursued by the governments of various component countries and the United States
and other countries important to international trade and finance.
If
the Prices of the Equity Securities Held By a Foreign Underlying Fund Are
Converted Into U.S. Dollars For Purposes of Calculating the Net Asset
Value of That Foreign Underlying Fund, Changes In the Volatility of Exchange
Rates, and the Correlation Between Those Rates and the Net Asset
Value of That Foreign Underlying Fund are Likely To affect the Market Value of
the Securities
The
exchange rate between the U.S. dollar and each of the currencies in which the
equity securities held by a foreign Underlying Fund are denominated refers to a
foreign exchange spot rate that measures the relative values of two
currencies—the particular currency in which an equity security held by that
foreign Underlying Fund and the U.S. dollar. This exchange rate
reflects the amount of the particular currency in which an equity security held
by that foreign Underlying Fund trade is denominated that can be purchased for
one U.S. dollar and thus increases when the U.S. dollar appreciates relative to
the particular currency in which that equity security is
denominated. The volatility of the exchange rate between the U.S.
dollar and each of the currencies in which the equity securities held by that
foreign Underlying Fund trade are denominated refers to the size and frequency
of changes in that exchange rate.
Because
the net asset value of a foreign Underlying Fund is calculated, in part, by
converting the closing prices of the equity securities held by that foreign
Underlying Fund into U.S. dollars, the volatility of the exchange rate between
the U.S. dollar and each of the currencies in which those equity securities are
denominated could affect the market value of the Securities.
The
correlation of the exchange rate between the U.S. dollar and each of the
currencies in which the equity securities held by a foreign Underlying Fund
trade are denominated and the net asset value of that foreign
Underlying Fund trade refers to the relationship between the percentage changes
in that exchange rate and the percentage changes in the net asset value of that
foreign Underlying Fund. The direction of the correlation (whether
positive or negative) and the extent of the correlation between the percentage
changes in the exchange rate between the U.S. dollar and each of the currencies
in which the equity securities held by that foreign Underlying Fund trade are
denominated and the percentage changes in the net asset value of that foreign
Underlying Fund trade could affect the value of the Securities.
There
Are Risks Associated With the Underlying Fund
The
Underlying Fund may have limited operating history. Even if the
Underlying Fund is listed for trading and a number of similar products have been
traded for varying periods of time on various securities exchanges, you cannot
be certain that an active trading market will continue for the shares of the
Underlying Fund or that there will be liquidity in the trading
market.
The
Underlying Fund is also subject to management risk, which is the risk that the
investment strategy of the Underlying Fund’s investment advisor, the
implementation of which is subject to a number of constraints, may not produce
the intended results. See the relevant index description in the
accompanying Underlying Supplement or the relevant Pricing Supplement for
additional information.
PS-18
The
Policies of the Investment Advisor for the Underlying Fund, and the Sponsor of
the Target Index, Could Affect the Value of the Securities
The
policies of the investment advisor concerning the calculation of the Underlying
Fund’s net asset value, additions, deletions or substitutions of stocks held by
the Underlying Fund and manner in which changes affecting the stocks held by the
Underlying Fund are reflected in the Underlying Fund could affect the market
price of the shares of the Underlying Fund and, therefore, affect the value of
the Securities. The value of the Securities could also be affected if
the investment advisor changes these policies, for example, by changing the
manner in which it calculates the Underlying Fund’s net asset value, or if the
investment advisor discontinues or suspends calculation or publication of the
Underlying Fund’s net asset value, in which case it may become difficult to
determine the value of the Securities.
In
addition, the sponsor of the Target Index is responsible for the design and
maintenance of such index. Periodically, the sponsor of the Target
Index may (i) determine that total shares outstanding have changed in one or
more component securities of the Target Index due to secondary offerings,
repurchases, conversions or other corporate actions; (ii) determine that the
available float shares of one or more of the component securities of the Target
Index may have changed due to corporate actions, purchases or sales of
securities by holders or other events, or (iii) replace one or more component
securities of the Target Index due to mergers, acquisitions, bankruptcies, or
other market conditions, or if the issuers of such component securities of the
Target Index fail to meet the criteria for inclusion in the Target
Index. The Underlying Fund generally aggregates certain of these
adjustments and changes the composition of the Underlying Fund. Any
of these actions could adversely affect the prices of the component securities
of the Target Index and/or the Underlying Fund and, consequently, the value of
the Securities.
The
Underlying Fund is Not Actively Managed
Unless
otherwise specified in the relevant Pricing Supplement, the Underlying Fund is
not actively managed by traditional methods, and therefore the adverse financial
condition of one or more issuers of stocks which comprise the Target Index will
not result in the elimination of such stock or stocks from the Underlying Fund
unless such stock or stocks are removed from the Target Index. This
may adversely affect the value of the Securities and the return, if any, on the
Securities.
The
Underlying Fund May Not Always be Able Exactly to Replicate the Performance of
the Target Index
It is
possible that, for a short period, the Underlying Fund may not fully replicate
the performance of the Target Index due to the temporary unavailability of
certain index securities in the secondary market or due to other extraordinary
circumstances. In addition, the Underlying Fund is not able to replicate exactly
the performance of the Target Index because the Target Index is a theoretical
calculation while the Underlying Fund is an actual portfolio of
stocks. Accordingly, the total return generated by the Underlying
Fund is reduced by its expenses and transaction costs incurred in adjusting the
actual balance of the Underlying Fund. This may adversely affect the
value of the Securities and the return, if any, on the Securities.
PS-19
PUBLIC
INFORMATION REGARDING THE UNDERLYING
In the
relevant Pricing Supplement, we will provide summary information regarding the
Underlying Company or the Underlying Fund, as applicable, based on its publicly
available documents. We take no responsibility for the accuracy or completeness
of such information.
The
shares of the Underlying are registered under the Securities Exchange Act of
1934, as amended, which we refer to as the “Exchange Act.” Companies
with securities registered under the Exchange Act are required periodically to
file certain financial and other information specified by the Securities and
Exchange Commission, which we refer as the “Commission.” In addition,
registered investment companies that manage exchange-traded funds are required
to provide or file periodically certain financial and other information
specified by the Commission pursuant to the Exchange Act and the Investment
Company Act of 1940, as amended. Information provided to or filed
with the Commission can be inspected and copied at the public reference
facilities maintained by the Commission at 100 F Street, N.E., Washington, D.C.
20549. Copies of this material can also be obtained from the Public
Reference Room of the Commission at 100 F Street, N.E., Washington, D.C. 20549
at prescribed rates. Please call the Commission at 1-800-SEC-0330 for further
information about the Public Reference Room. In addition, information provided
to or filed with the Commission electronically can be accessed through a website
maintained by the Commission. The address of the Commission’s website is
http://www.sec.gov. Information provided to or filed with the Commission by the
Underlying Company or the Underlying Fund, as applicable, pursuant to the
Exchange Act can be located by reference to the relevant Commission file number
for such Underlying Company or Underlying Fund, as applicable.
In
addition, information regarding the Underlying Company or Underlying Fund, as
applicable, 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
Product Supplement and the relevant Pricing Supplement relate only to the
Securities offered by us and does not relate to the Shares of the Underlying or
other securities of the Underlying Company, if applicable. We will
derive all disclosures contained in the relevant Pricing Supplement regarding
the Underlying Company or Underlying Fund, as applicable, from the publicly
available documents described above. Neither we nor Holding nor the agents have
participated in the preparation of such documents or made any due diligence
inquiry with respect to the Underlying Company or Underlying Fund, as
applicable, in connection with the offering of the Securities. Neither we nor
Holding nor the agents make any representation that such publicly available
documents or any other publicly available information regarding the Underlying
Company or Underlying Fund, as applicable, are accurate or complete.
Furthermore, neither we nor Holding can give any assurance that all events
occurring prior to the date of the relevant Pricing Supplement (including events
that would affect the accuracy or completeness of the publicly available
documents described above) that would affect the trading price of the Underlying
(and therefore the initial price and the knock-in level and redemption amount)
have been publicly disclosed. Subsequent disclosure of any such events or the
disclosure of or failure to disclose material future events concerning the
Underlying Company or Underlying Fund, as applicable, could affect the value you
will receive on the maturity date with respect to the Securities and therefore
the trading prices of the Securities. Neither we nor Holding nor any
of our affiliates have any obligation to disclose any information about the
Underlying Company or Underlying Fund, as applicable, after the date of the
relevant Pricing Supplement.
Neither
we nor Holding nor any of our affiliates makes any representation to you as to
the performance of the shares of the Underlying.
We and/or
our affiliates may presently or from time to time engage in business with the
Underlying Company, the Underlying Fund or the issuers of the stocks comprising
the Underlying Fund, as applicable, including extending loans to, or making
equity investments in, or providing advisory services to such companies,
including merger and acquisition advisory services. In the course of such
business, we and/or our affiliates may acquire non-public information with
respect to such companies and, in addition, one or more of our affiliates may
publish research reports with respect to such companies. The statement in the
preceding sentence is not intended to affect the rights of holders of the
Securities under the securities laws. As a prospective purchaser of a
Security, you should undertake such independent investigation of the Underlying
Company or Underlying Fund, as applicable, as in your judgment is appropriate to
make an informed decision with respect to an investment in the
Underlying.
PS-20
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
face amount of our Reverse Exchangeable Securities or Knock-in Reverse
Exchangeable Securities, as the case may be, and fully and unconditionally
guaranteed by Holding.
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The
Underlying
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(i)
The common stock (including ADSs) of the Underlying Company, which we
refer to as the Underlying Shares, or (ii) an exchange-traded fund that
tracks the performance of an underlying index or basket of securities,
primarily by holding securities or other instruments related to such
underlying index or basket, which we refer to as an Underlying Fund, as
specified in the relevant Pricing Supplement. We refer to the
index that an Underlying Fund tracks as the “Target Index.”
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Underlying
Company
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As
specified in the relevant Pricing Supplement, if applicable.
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Pricing
Date
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As
specified in the relevant Pricing Supplement.
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Issue
Price
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Unless
otherwise specified in the relevant Pricing Supplement, 100%.
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Initial
Price
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The
closing price of the Underlying on the Pricing Date, divided by the
Exchange Factor. The Initial Price is subject to adjustment for certain
corporate events affecting the shares of the Underlying, which we describe
in “Description of Securities — Adjustment Events.”
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Knock-in
Level
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For
Knock-in Reverse Exchangeable Securities, a price equal to a fixed
percentage of the Initial Price as specified in the relevant Pricing
Supplement. The Initial Price and consequently the Knock-in Level is
subject to adjustment for certain corporate events affecting the shares of
the Underlying, which we describe below under “— Adjustment
Events.”
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Knock-In
Period
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For
Knock-in Reverse Exchangeable Securities, unless otherwise specified in
the relevant Pricing Supplement, each Trading Day from but not including
the Pricing Date to and including the Determination Date.
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Maturity
Date
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As
specified in the relevant Pricing Supplement, subject to postponement as
described under “Description of Notes — Fixed Rate Notes — If a Payment
Date Is not a Business Day” in the accompanying Prospectus
Supplement.
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Specified
Currency
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U.S.
Dollars
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Denominations
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Unless
otherwise specified in the relevant Pricing Supplement, $1,000, which we
refer to as the face amount, and integral multiples thereof.
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Form
of Securities
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The
Securities will be represented by a single registered global security,
deposited with the Depository Trust Company.
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Guarantee
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The
payment and delivery obligations of ABN AMRO Bank N.V. under the
Securities, when and as they shall become due and payable, whether at
maturity or upon acceleration, are fully and unconditionally guaranteed by
ABN AMRO Holding N.V.
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Coupon
Rate
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A
per annum rate, payable periodically in arrears as specified in the
relevant Pricing Supplement. See “Description of Notes —
Interest and Principal Payments” and “— Fixed Rate Notes” in the
accompanying Prospectus Supplement for additional
information.
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Coupon
Payment Dates
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As
specified in the relevant Pricing Supplement, subject to postponement as
described under “Description of Notes — Fixed Rate Notes — If a Payment
Date Is not a Business Day” in the accompanying Prospectus
Supplement.
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PS-21
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Payment
at Maturity
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Unless
otherwise specified in the relevant Pricing Supplement, for Reverse
Exchangeable Securities, if the Closing Price per share of the Underlying
on the Determination Date is at or above the Initial Price, we will pay
you the face amount of each Security in cash. If the Closing Price per
share of the Underlying on the Determination Date is below the Initial
Price, we will deliver to you, in exchange for each Security, a number of
shares of the Underlying equal to the Redemption Amount.
Unless
otherwise specified in the relevant Pricing Supplement, for Knock-in
Reverse Exchangeable Securities, if the Closing Price per share of the
Underlying has not fallen below the Knock-in Level on any Trading Day
during the Knock-in Period, we will pay you the face amount of each
Security in cash. If the Closing Price per share of the Underlying has
fallen below the Knock-in Level on any Trading Day during the Knock-in
Period, then (i) if the Closing Price per share of the Underlying on the
Determination Date is below the Initial Price, we will deliver to you, in
exchange for each Security, a number of shares of the Underlying equal to
the Redemption Amount or (ii) if the Closing Price per share of the
Underlying on the Determination Date is at or above the Initial Price, we
will pay you the face amount of each Security in cash.
We
will pay cash in lieu of delivering fractional Underlying Shares in an
amount equal to the corresponding fractional Closing Price of the
Underlying Shares, as determined by the Calculation Agent on the
Determination Date. Any shares of an Underlying Fund which are delivered
to you at maturity will be delivered in book entry form and will include
any fractional shares. If due to events beyond our reasonable control, as
determined by us in our sole discretion, shares of the Underlying are not
available for delivery at maturity we may pay you, in lieu of the
Redemption Amount, the cash value of the Redemption Amount, determined by
multiplying the Redemption Amount by the Closing Price of the Underlying
on the Determination Date. Following a Reorganization Event,
the amount payable at maturity is subject to adjustments as described
below under “— Adjustment Events.”
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Redemption
Amount
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The
Calculation Agent, which is our affiliate, will determine the Redemption
Amount on the Determination Date by dividing $1,000 by the Initial Price
of the Underlying. The Initial Price and consequently the Redemption
Amount may be adjusted for certain corporate events affecting the
Underlying Company, which we described below under “— Adjustment Events.”
The coupon payment on the Securities at maturity will be paid in
cash.
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Determination
Date
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As
specified in the relevant Pricing Supplement; provided that if such
day is not a Trading Day, or if a Market Disruption Event has occurred on
such Trading Day, the Determination Date shall be the immediately
succeeding Trading Day; provided, further, that
the Determination Date shall be no later than the second scheduled Trading
Day preceding the Maturity Date, notwithstanding the occurrence of a
Market Disruption Event on such second scheduled Trading Day or that such
second scheduled Trading Day is not a Trading Day. For
information about what constitutes a Market Disruption Event, see below
under “— Market Disruption Events.”
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PS-22
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Closing
Price
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If
the Underlying Shares (or any other security for which a Closing Price
must be determined) or the Underlying Fund, as applicable, is listed on a
U.S. securities exchange registered under the Securities Exchange Act
of 1934, as amended (which we refer to as the Exchange Act),
or is included in the OTC Bulletin Board Service, which we refer to as the
OTC Bulletin Board (operated by the Financial Industry Regulatory
Authority), the Closing Price for one Underlying Share (or one unit of any
such other security) or one share of the Underlying Fund on any Trading
Day means (i) the last reported sale price, regular way (or if listed on
The NASDAQ Stock Market LLC, the official closing price), in the principal
trading session on such day on the principal securities exchange on which
the Underlying Shares (or any such other security) or shares of the
Underlying Fund are listed or admitted to trading and (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,
other such other security or shares of the Underlying Fund are listed or
admitted to trading on such securities exchange), the last reported sale
price in the principal trading session on the over-the-counter market as
reported on the Relevant Exchange or OTC Bulletin Board on such day. If
the last reported sale price is not available pursuant to clause (i) or
(ii) of the preceding sentence, the Closing Price for any Trading Day
shall be the mean, as determined by the Calculation Agent, of the bid
prices for the Underlying Shares (or any such other security) or shares of
the Underlying Fund obtained from as many dealers in such security, but
not exceeding three, as will make such bid prices available to the
Calculation Agent. Bids of RBSSI or any of our other affiliates
may be included in the calculation of the mean, but only if any such bid
is not the lowest of the bids obtained. The term “OTC Bulletin
Board Service” shall include any successor service
thereto.
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Relevant
Exchange
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With
respect to Underlying Shares (or other security), the Relevant Exchange
means the primary U.S. securities exchange or organized market of trading
for the Underlying Shares (or other security). If a
Reorganization Event has occurred or if the Underlying Shares are ADSs and
such ADSs are delisted or the ADS facility is terminated, the Relevant
Exchange will be the stock exchange or securities market on which the
Exchange Property (as defined below under “— Adjustment Events”) that is a
listed equity security is principally traded or the primary securities
exchange or organized market for trading in the ADS Underlying Stock, as
applicable, in each case as determined by the Calculation
Agent.
With
respect to an Underlying Fund, the Relevant Exchange means the primary
U.S. securities exchange or organized market of trading for shares of such
Underlying Fund.
With
respect to a Target Index, the Relevant Exchange means the primary
exchange or market of trading for any security (or any combination
thereof) then included in the Target Index.
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Trading
Day
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With
respect to Underlying Shares, a Trading Day means a day, as determined by
the Calculation Agent, on which trading is generally conducted on the
Relevant Exchange.
With
respect to an Underlying Fund, a Trading Day means a day, as determined by
the Calculation Agent, on which trading in shares of such Underlying Fund
is generally conducted on the Relevant Exchange and on which securities
comprising more than 80% of the value of the Target Index on such day are
capable of being traded on their Relevant Exchanges during the one-half
hour before the determination of the Closing Price of such Underlying
Fund.
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PS-23
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Book
Entry Note or Certificated Note
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Book
Entry
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Trustee
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Wilmington
Trust Company
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Securities
Administrator
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Citibank,
N.A.
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Market
Disruption Event
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With
respect to the Underlying Shares or any other securities (other than
shares of the Underlying Fund) for which a Closing Price must be
determined, Market Disruption Event means:
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(i) either:
(a)
the occurrence or existence of a suspension, absence or material
limitation of trading of the Underlying Shares (or such other securities)
on the Relevant Exchange for the Underlying Shares (or such other
securities) for more than two hours of trading during, or during the
one-half hour period preceding the close of, the principal trading session
on such Relevant Exchange;
(b)
a breakdown or failure in the price and trade reporting systems of the
Relevant Exchange for the Underlying Shares (or such other securities) as
a result of which the reported trading prices for the Underlying Shares
(or such other securities) during the last one-half hour preceding the
close of the principal trading session on such Relevant Exchange are
materially inaccurate; or
(c)
the suspension, absence or material limitation of trading on the primary
market for trading in futures or options contracts related to the
Underlying Shares (or such other securities), if available, during the
one-half hour period preceding the close of the principal trading session
in such market,
in
each case as determined by the Calculation Agent in its sole discretion;
and
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(ii) a
determination by the Calculation Agent in its sole discretion that the
applicable 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.
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For
purposes of determining whether a Market Disruption Event with respect to
the Underlying Shares (or such other security) 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 or the primary market for
trading in the relevant futures or options contracts; (2) a decision to
permanently discontinue trading in the relevant futures or options
contract will not constitute a Market Disruption Event; (3) limitations
pursuant NYSE Rule 80B (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 the relevant futures or options contract by the
primary market for trading in such futures or options, if available, by
reason of (x) a price change exceeding limits set by such 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 such futures or options
contracts; and (5) a suspension, absence or material limitation of trading
on the primary market on which the relevant futures or options are traded
will not include any time when such market is itself closed for trading
under ordinary circumstances.
|
PS-24
|
With
respect to an Underlying Fund, Market Disruption Event means:
(i)
either:
(a)
the occurrence or existence of a suspension, absence or material
limitation of trading of the Underlying Fund on the Relevant Exchange for
the Underlying Fund for more than two hours of trading during, or during
the one-half hour period preceding the close of, the principal trading
session on such Relevant Exchange;
(b)
a breakdown or failure in the price and trade reporting systems of the
Relevant Exchange for the Underlying Fund as a result of which the
reported trading prices for the Underlying Fund during the last one-half
hour preceding the close of the principal trading session on such Relevant
Exchange are materially inaccurate;
(c)
the suspension, absence or material limitation of trading on the primary
market for trading in futures or options contracts related to the
Underlying Fund, if available, during the one-half hour period preceding
the close of the principal trading session in such market,
(d)
the occurrence or existence of a suspension, absence or material
limitation of trading of stocks then constituting 20% or more of the value
of the Target Index on the Relevant Exchange(s) for such securities for
more than two hours of trading during, or during the one-half hour period
preceding the close of, the principal trading session on such Relevant
Exchange(s), in each case as determined by the Calculation Agent in its
sole discretion; or
(e)
the suspension, material limitation or absence of trading on the primary
market for trading in futures or options contracts related to the Target
Index during the one-half hour period preceding the close of the principal
trading session in such 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
applicable 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
the purpose of determining whether a Market Disruption Event exists with
respect to an Underlying Fund at any time, if trading in a security
included in the Target Fund is materially suspended or materially limited
at that time, or there occurs an event that disrupts or impairs the
ability of market participants in general to effect transactions in or
obtain market values for such security, then the relevant percentage
contribution of that security to the level of the Target Fund shall be
based on a comparison of (i) the portion of the level of the Target Fund
attributable to that security relative to (ii) the overall level of the
Target Fund, in each case immediately before the occurrence of that
suspension, limitation or other market disruption, as the case may be.
|
||
|
For
purposes of determining whether a Market Disruption Event with respect to
the Underlying Fund 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
|
PS-25
|
Relevant
Exchange or the primary market for trading in the relevant futures or
options contracts; (2) a decision to permanently discontinue trading in
the relevant futures or options contract will not constitute a Market
Disruption Event; (3) limitations pursuant NYSE Rule 80B (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 the
relevant futures or options contract by the primary market for trading in
such futures or options, if available, by reason of (x) a price change
exceeding limits set by such 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 such futures or options contracts; and (5) a
suspension, absence or material limitation of trading on the primary
market on which the relevant futures or options are traded will not
include any time when such 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
shares of the Underlying. See “Adjustment Events”
below.
|
|
|
Adjustment
Events
|
For
Securities linked to Underlying Shares, the Exchange Factor with respect
to the Underlying Shares or the amounts paid at maturity will be adjusted
as follows:
|
| 1. | If the Underlying Shares are subject to a stock split or reverse stock split, then once such split has become effective, the Exchange Factor will be proportionately adjusted. | |||
| 2. | If the Underlying Shares are subject (i) to a stock dividend (i.e., the issuance of additional Underlying Shares) that is given ratably to all holders of Underlying Shares or (ii) to a distribution of the Underlying Shares as a result of the triggering of any provision of the corporate charter of the Underlying Company, in each case other than a stock split described in paragraph 1, then once the dividend has become effective and the Underlying Shares are trading ex-dividend, the Exchange Factor will be proportionally adjusted. | |||
| 3. | There shall be no adjustments to the Exchange Factor to reflect cash dividends or other distributions paid with respect to the Underlying Shares unless such cash dividends or other distributions constitute Extraordinary Dividends as described below (except that distributions described in paragraph 2 above shall not be subject to this paragraph). A cash dividend or other distribution with respect to the Underlying Shares shall be deemed to be an “Extraordinary Dividend” if such dividend or other distribution exceeds the immediately preceding non-Extraordinary Dividend for the Underlying Shares by an amount equal to at least 10% of the Closing Price of the Underlying Shares (as adjusted for any subsequent corporate event requiring an adjustment hereunder, such as a stock split or reverse stock split) on the Trading | |||
PS-26
| Day preceding the ex-dividend date for the payment of such Extraordinary Dividend (the “ex-dividend date”). If an Extraordinary Dividend occurs with respect to the Underlying Shares, the Exchange Factor with respect to the Underlying Shares will be adjusted on the ex-dividend date with respect to such Extraordinary Dividend so that the new Exchange Factor will equal the product of (i) the then-current Exchange Factor and (ii) a fraction, the numerator of which is the Closing Price on the Trading Day preceding the ex-dividend date, and the denominator of which is the amount by which the Closing Price on the Trading Day preceding the ex-dividend date exceeds the Extraordinary Dividend Amount. The “Extraordinary Dividend Amount” with respect to an Extraordinary Dividend for the Underlying Shares shall equal (i) in the case of cash dividends or other distributions that constitute regular dividends, the amount per share of such Extraordinary Dividend minus the amount per share of the immediately preceding non-Extraordinary Dividend for the Underlying Shares or (ii) in the case of cash dividends or other distributions that do not constitute regular dividends, the amount per share of such Extraordinary Dividend. To the extent an Extraordinary Dividend is not paid in cash, the value of the non-cash component will be determined by the Calculation Agent, whose determination shall be conclusive. A distribution on the Underlying Shares described in clause (A), clause (D) or clause (E) in the definitions of “Reorganization Event” of paragraph 5 below that also constitutes an Extraordinary Dividend shall not cause an adjustment to the Exchange Factor pursuant to this paragraph 3. | ||||
| 4. | If the Underlying Company issues rights or warrants to all holders of the Underlying Shares to subscribe for or purchase Underlying Shares at an exercise price per share less than the Closing Price of the Underlying Shares on both (i) the date the exercise price of such rights or warrants is determined and (ii) the expiration date of such rights or warrants, and if the expiration date of such rights or warrants precedes the maturity of the Securities, then the Exchange Factor shall be adjusted to equal the product of the prior Exchange Factor and a fraction, the numerator of which shall be the number of Underlying Shares outstanding immediately prior to the issuance of such rights or warrants plus the number of additional Underlying Shares offered for subscription or purchase pursuant to such rights or warrants and the denominator of which shall be the number of Underlying Shares outstanding immediately prior to the issuance of such rights or warrants plus the number of additional Underlying Shares which the aggregate offering price of the total number of shares of the Underlying Shares so offered for subscription or purchase pursuant to such rights or warrants would purchase at the Closing Price on the expiration date of such rights or warrants, which shall be determined by multiplying such total number of shares offered by the exercise price of such rights or warrants and dividing the product so obtained by such Closing Price. | |||
| 5. | For Reverse Exchangeable Securities, if a Reorganization Event (as defined below) occurs, the payment at maturity will depend on the kind and amount of Exchange Property (as defined below) received by holders of Underlying Shares in the Reorganization Event. | |||
PS-27
| (i) | If the Exchange Property consists solely of equity securities listed on a securities exchange that, in the opinion of the Calculation Agent, maintains sufficient liquidity for trading in such Exchange Property, then the payment at maturity for each $1,000 face amount of Securities will depend on whether the Closing Price of such Exchange Property on the Determination Date: |
| (a) | If the Closing Price of such Exchange Property has not fallen below the Initial Price on the Determination Date, then each holder of a Security will receive the face amount of $1,000 in cash; or | ||||
| (b) | If the Closing Price of such Exchange Property has fallen below the Initial Price on the Determination Date, we will deliver to you, in exchange for each Security, Exchange Property with a value equal to the product of the Redemption Amount times the Transaction Value and (y) if the Closing Price of such Exchange Property on the Determination Date is at or above the Initial Price, we will pay you $1,000 in cash. | ||||
| The Calculation Agent will adjust the Initial Price to reflect the new securities delivered in such Reorganization Event and the market value and volatility levels of such securities and any Exchange Factor adjustments to the Initial Price as of the effective date of the Reorganization Event. Following any such adjustment, the Initial Price will be such adjusted Initial Price, divided by the Exchange Factor (which shall have been reset to 1.0 immediately following the Reorganization Event). The Bank will provide notice to the Trustee and the Securities Administrator of the adjusted Initial Price as soon as practicable after the date of such Reorganization Event. | ||||
| (ii) | If the Exchange Property consists solely of property other than such listed equity securities, each holder of a Security will receive, on the Maturity Date, in exchange for each $1,000 face amount of Securities, the lesser of: (i) $1,000 in cash or (ii) Exchange Property in an amount with a value equal to the product of the Redemption Amount times the Transaction Value as of the Determination Date. We may, in lieu of delivering such Exchange Property, pay you the cash value of such Exchange Property as of the Determination Date, as determined by the Calculation Agent. We will notify the Trustee and the Securities Administrator of the amount and type of Exchange Property to be delivered or cash to be paid. | |||
| (iii) | If the Exchange Property consists of any combination of such listed equity securities and other property, then we will (a) deliver, on the Maturity Date, the portion of Exchange Property consisting of such other property with a value equal to the product of the Redemption Amount (prior to any adjustment under this clause) times the Transaction Value of such portion of Exchange Property on the Determination Date or, at our election, pay the cash value thereof, as determined by the Calculation Agent, (b) proportionally |
PS-28
| adjust the Redemption Amount to reflect the portion of the Exchange Property constituting such listed equity securities, (c) adjust the Initial Price to reflect such listed equity securities, the market value and volatility levels of such listed equity securities and any Exchange Factor adjustments to the Initial Price as of the effective date of the Reorganization Event and (d) reduce the face amount of each $1,000 of Securities to an amount equal to such adjusted Redemption Amount multiplied by such adjusted Initial Price. Following such adjustments, the amount paid at maturity for each Security will be determined as set forth under clause (i) above, except references to each $1,000 face amount of Security and $1,000 in cash and the reference to $1,000 in the definition of Redemption Amount shall be references to the adjusted face amount of Securities as described in clause (d) of the preceding sentence. In addition, following any such adjustment, the Initial Price will be such adjusted Initial Price, divided by the Exchange Factor (which shall have been reset to 1.0 immediately following the Reorganization Event). The Bank will provide notice to the Trustee and the Securities Administrator of any adjustments to the Securities as a result of this clause (iii) as soon as practicable after the date of such Reorganization Event. | ||||
| 6. | For Knock-in Reverse Exchangeable Securities, if a Reorganization Event (as defined below) occurs, the payment at maturity will depend on (i) whether the Closing Price of the Underlying Shares fell below the Knock-in Level on any Trading Day from but not including the Pricing Date to and including one Trading Day prior to the date of the Reorganization Event (for purposes of this paragraph 5, we refer to such period as the “Relevant Period”), and (ii) the kind and amount of Exchange Property (as defined below) received by holders of Underlying Shares in the Reorganization Event. | |||
| In the case where the Closing Price of the Underlying Shares has fallen below the Knock-in Level on any Trading Day during the Relevant Period, each holder of a Security will receive at maturity, in respect of each $1,000 face amount of each Security, the lesser of: (i) $1,000 in cash or (ii) Exchange Property in an amount with a value equal to the product of the Redemption Amount times the Transaction Value (as defined below). | ||||
| In the case where the Closing Price of the Underlying Shares has not fallen below the Knock-in Level on any Trading Day during the Relevant Period, then the payment at maturity will depend upon the type of Exchange Property received by holders of Underlying Shares in accordance with the following: | ||||
| (i) | If the Exchange Property consists solely of equity securities listed on a securities exchange that, in the opinion of the Calculation Agent, maintains sufficient liquidity for trading in such Exchange Property, then the payment at maturity for each $1,000 face amount of Securities will depend on whether the Closing Price of such Exchange Property has fallen below the Knock-in Level on any Trading Day commencing on the date of such Reorganization Event to and including the Determination Date: | |||
PS-29
| (a) | If the Closing Price of such Exchange Property has not fallen below the Knock-in Level on any Trading Day commencing on the date of such Reorganization Event to and including the Determination Date, then each holder of a Security will receive the face amount of $1,000 in cash; or | ||||
| (b) | If the Closing Price of such Exchange Property has fallen below the Knock-in Level on any Trading Day commencing on the date of such Reorganization Event to and including the Determination Date, then (x) if the Closing Price of such Exchange Property on the Determination Date is below the Initial Price, we will deliver to you, in exchange for each Security, Exchange Property with a value equal to the product of the Redemption Amount times the Transaction Value and (y) if the Closing Price of such Exchange Property on the Determination Date is at or above the Initial Price, we will pay you $1,000 in cash. | ||||
| The Calculation Agent will adjust the Initial Price and consequently the Knock-in Level to reflect the new securities delivered in such Reorganization Event and the market value and volatility levels of such securities and any Exchange Factor adjustments to the Initial Price as of the effective date of the Reorganization Event. Following any such adjustment, the Initial Price will be such adjusted Initial Price, divided by the Exchange Factor (which shall have been reset to 1.0 immediately following the Reorganization Event). The Bank will provide notice to the Trustee and the Securities Administrator of the adjusted Knock-in Level and Initial Price as soon as practicable after the date of such Reorganization Event. | |||||
| (ii) | If the Exchange Property consists solely of property other than such listed equity securities, each holder of a Security will receive, on the Maturity Date, in exchange for each $1,000 face amount of Securities, the lesser of: (i) $1,000 in cash or (ii) Exchange Property in an amount with a value equal to the product of the Redemption Amount times the Transaction Value as of the Determination Date. We may, in lieu of delivering such Exchange Property, pay you the cash value of such Exchange Property as of the Determination Date, as determined by the Calculation Agent. We will notify the Trustee and the Securities Administrator of the amount and type of Exchange Property to be delivered or cash to be paid. | ||||
| (iii) | If the Exchange Property consists of any combination of such listed equity securities and other property, then we will (a) deliver, on the Maturity Date, the portion of Exchange Property consisting of such other property with a value equal to the product of the Redemption Amount (prior to any adjustment under this clause) times the Transaction Value of such portion of Exchange Property on the Determination Date or, at our election, pay the cash value thereof, as determined by the Calculation Agent, (b) proportionally adjust the Redemption Amount to reflect the portion of the | ||||
PS-30
|
Exchange
Property constituting such listed equity securities, (c) adjust the
Initial Price and consequently the Knock-in Level to reflect such listed
equity securities, the market value and volatility levels of such listed
equity securities and any Exchange Factor adjustments to the Initial Price
as of the effective date of the Reorganization Event and (d) reduce the
face amount of each $1,000 of Securities to an amount equal to such
adjusted Redemption Amount multiplied by such adjusted Initial
Price. Following such adjustments, the amount paid at maturity
for each Security will be determined as set forth under clause (i) above,
except references to each $1,000 face amount of Security and $1,000 in
cash and the reference to $1,000 in the definition of Redemption Amount
shall be references to the adjusted face amount of Securities as described
in clause (d) of the preceding sentence. In addition, following
any such adjustment, the Initial Price will be such adjusted Initial
Price, divided by the Exchange Factor (which shall have been reset to 1.0
immediately following the Reorganization Event). The Bank will
provide notice to the Trustee and the Securities Administrator of any
adjustments to the Securities as a result of this clause (iii) as soon as
practicable after the date of such Reorganization
Event.
|
||
|
“Reorganization
Event” means (A) there has occurred any reclassification or change with
respect to the Underlying Shares, including, without limitation, as a
result of the issuance of any tracking stock by the Underlying Company;
(B) the Underlying Company or any surviving entity or subsequent surviving
entity of the Underlying Company (an “Underlying Company Successor”) has
been subject to a merger, combination or rigidation and is not the
surviving entity; (C) any statutory exchange of securities of the
Underlying Company or any Underlying Company Successor with another
corporation occurs (other than pursuant to clause (B) above); (D) the
Underlying Company is liquidated; (E) the Underlying Company issues to all
of its shareholders equity securities of an issuer other than the
Underlying Company (other than in a transaction described in clauses (B),
(C) or (D) above) (a “Spin-off Event”); or (F) a tender or exchange offer
or going-private transaction is consummated for all the outstanding
Underlying Shares.
|
||
|
“Exchange
Property” means securities, cash or any other assets distributed to
holders of the Underlying Shares in any Reorganization Event, including,
(A) in the case of the issuance of tracking stock or in the case of a
Spin-off Event, the Underlying Shares with respect to which the tracking
stock or spun-off security was issued and (B) in the case of any other
Reorganization Event where the Underlying Shares continue to be held by
the holders receiving such distribution, the Underlying
Shares.
|
||
|
“Transaction
Value”, at any date, means (A) for any cash received as Exchange Property
in any such Reorganization Event, the amount of cash received per
Underlying Share; (B) for any property other than cash or securities
received in any such Reorganization Event, the market value, as determined
by the Calculation Agent, as of the date of receipt, of such Exchange
Property received per Underlying Share; and (C) for any security received
in any such Reorganization Event
|
PS-31
|
(including
in the case of the issuance of tracking stock, the reclassified Underlying
Shares and, in the case of a Spin-off Event, the Underlying Shares with
respect to which the spun-off security was issued), an amount equal to the
Closing Price, as of the Determination Date, per share of such security
multiplied by the quantity of such security received for each Underlying
Share.
|
||
|
For
purposes of clause (iii) above, if Exchange Property consists of more than
one type of property that is not listed equity securities described in
clause (iii) above, holders of Securities will receive at maturity a pro
rata share of each such type of Exchange Property in proportion to the
quantity of such Exchange Property received in respect of each Underlying
Share. If Exchange Property includes a cash component, holders will not
receive any coupons accrued on such cash component. In the event Exchange
Property consists of securities, those securities will, in turn, be
subject to the antidilution adjustments set forth in paragraphs 1 through
6.
|
||
|
For
purposes of paragraph 5 and 6:
|
| (i) | in the case of a consummated tender or exchange offer or going-private transaction involving Exchange Property of a particular type, Exchange Property shall be deemed to include the amount of cash or other property paid by the offeror in the tender or exchange offer with respect to such Exchange Property (in an amount determined on the basis of the rate of exchange in such tender or exchange offer or going-private transaction); and | |||
| (ii) | in the event of a tender or exchange offer or a going-private transaction with respect to Exchange Property in which an offeree may elect to receive cash or other property, Exchange Property shall be deemed to include the kind and amount of cash and other property received by offerees who elect to receive cash. | |||
| 7. | If ADSs serving as the Underlying Shares are no longer listed or admitted to trading on a U.S. securities exchange registered under the Exchange Act, or included in the OTC Bulletin Board, or if the ADS facility between the Underlying Company and the ADS depositary is terminated for any reason, then, on and after the date the ADSs are no longer so listed or admitted to trading or the date of such termination, as applicable (the “Change Date”), the ADS Underlying Stock will be deemed to be the Underlying Shares. The Exchange Factor will thereafter equal the last value of the Exchange Factor for the ADSs multiplied by the number of shares of ADS Underlying Stock represented by a single ADS. On and after the Change Date, solely for the purposes of determining whether the Closing Price has declined below the Knock-in Level, the Initial Price shall be converted into the applicable foreign currency using the applicable exchange rate on the Change Date as described below. The Closing Price of the Underlying Shares on the Determination Date shall be expressed in U.S. dollars, converting the closing price of the ADS Underlying Stock on the Determination Date into U.S. dollars using the applicable exchange rate as described below. | |||
PS-32
|
Unless otherwise specified in the relevant Price
Supplement,
in these
circumstances, to the
extent that the Redemption Amount is otherwise due at maturity,
the Bank will pay you the cash value of the
Redemption Amount in U.S. dollars. On any date of
determination, the applicable exchange rate will be the spot rate of the
local currency of the ADS Underlying Stock relative to the
U.S. dollar as reported by Reuters Group PLC (“Reuters”) on the relevant
page for such rate at approximately the closing time of the Relevant
Exchange for the ADS
Underlying Stock on
such day. However, if such rate is not displayed on the
relevant Reuters page on such date of determination, the applicable
exchange rate on such day will equal an average (mean) of the bid
quotations in The City of New York received by the
Calculation Agent at
approximately 11:00 a.m., New York City time, on the business day
immediately following the date of determination, from three recognized
foreign exchange dealers (provided that each such dealer commits to
execute a contract at its applicable bid quotation) or, (2) if the
Calculation Agent is
unable to obtain three such bid quotations, the average of such bid
quotations obtained from two recognized foreign exchange dealers or, (3) if the
Calculation Agent is
able to obtain such bid quotation from only one recognized foreign
exchange dealer, such bid quotation, in each case for the purchase of the
applicable foreign currency for U.S. dollars in the aggregate face amount of the Securities for settlement on the third
business day following the date of
determination. If the Calculation Agent is unable to obtain at
least one such bid
quotation, the Calculation Agent will determine the applicable
exchange rate in its sole discretion.
|
||
|
With
respect to paragraphs 1 to 6 above, if ADSs are serving as the Underlying
Shares, all adjustments to the Exchange Factor for such Underlying Shares
will be made as if the ADS Underlying Stock is serving as the Underlying
Shares. Therefore, for example, if the ADS Underlying Stock are subject to
a two-for-one stock split and assuming the Exchange Factor is equal to
one, the Exchange Factor for the Underlying Shares would be adjusted to
equal to two. If the Securities are linked to ADSs, the term
“dividend” will mean, unless otherwise specified in the relevant Pricing
Supplement, the dividend paid by the issuer of the ADS Underlying Stock,
net of any applicable foreign withholding or similar taxes that would be
due on dividends paid to a U.S. person that claims and is entitled to a
reduction in such taxes under an applicable income tax treaty, if
available.
If
ADSs are serving as the Underlying Shares, no adjustment to the ADS price
or the Exchange Factor, including those described below, will be made if
(1) holders of ADSs are not eligible to participate in any of the
transactions described above or (2) (and to the extent that) the
Calculation Agent determines in its sole discretion that the issuer or the
depositary for the ADSs has adjusted the number of shares of the ADS
Underlying Stock represented by each ADS so that the ADS price would not
be affected by the corporate event in question. However, to the
extent that the number of shares of ADS Underlying Stock represented by
each ADS is changed for any other reason, appropriate adjustments to the
Exchange Factor will be made to reflect such
change.
|
PS-33
|
With
respect to paragraphs 1 to 6 above, no adjustments to the Exchange Factor
shall be required unless such adjustment would require a change of at
least 0.1% in the Exchange Factor then in effect. The Exchange Factor
resulting from any of the adjustments specified above shall be rounded to
the nearest one hundred-thousandth with five one-millionths being rounded
upward.
|
||
|
No
adjustments to the Exchange Factor or method of calculating the Exchange
Factor shall be required other than those specified above. However, the
Bank may, at its sole discretion, cause the Calculation Agent to make
additional changes to the Exchange Factor upon the occurrence of corporate
or other similar events that affect or could potentially affect market
prices of, or shareholders’ rights in, the Underlying Shares (or other
Exchange Property) but only to reflect such changes, and not with the aim
of changing relative investment risk. The adjustments specified above do
not cover all events that could affect the market price or the Closing
Price of the Underlying Shares, including, without limitation, a partial
tender or partial exchange offer for the Underlying Shares.
|
||
|
The
Calculation Agent shall be solely responsible for the determination and
calculation of any adjustments to the Exchange Factor or method of
calculating the Exchange Factor and of any related determinations and
calculations with respect to any distributions of stock, other securities
or other property or assets (including cash) in connection with any
Reorganization Event described in paragraph 5 above, and its
determinations and calculations with respect thereto shall be
conclusive.
|
||
|
The
Calculation Agent will provide information as to any adjustments to the
Exchange Factor or method of calculating the Exchange Factor upon written
request by any holder of the Securities.
|
||
|
For
Securities linked to an Underlying Fund, the Exchange Factor with respect
to the Underlying Fund will be adjusted as follows:
If
the shares of the Underlying Fund 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 share of the underlying Fund.
No
adjustments to the Exchange Factor shall be required unless such
adjustment would require a change of at least 0.1% in the Exchange Factor
then in effect. The Exchange Factor resulting from any of the adjustments
specified above shall be rounded to the nearest one hundred-thousandth
with five one-millionths being rounded upward.
No
adjustments to the Exchange Factor or method of calculating the Exchange
Factor shall be required other than those specified above. However, the
Bank may, at its sole discretion, cause the Calculation Agent to make
additional changes to the Exchange Factor upon the occurrence of other
similar events that affect or could potentially affect market prices of,
or shareholders’ rights in, the Underlying Fund 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 Fund.
|
||
|
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.
|
PS-34
|
Discontinuance
of the Underlying
Fund;
Alteration of Method of Calculation
|
If
the Underlying Fund is liquidated, delisted or otherwise terminated and
the sponsor of the Underlying Fund (a “Fund Sponsor”) or another entity
establishes and maintains a successor or substitute exchange-traded fund
that the Calculation Agent determines, in its sole discretion, to be
comparable to the liquidated, delisted or otherwise terminated Underlying
Fund (such fund being referred to herein as a “Successor Fund”), then the
Closing Price per share of the Underlying Fund on the Determination Date
will be determined by reference to the price per share of such Successor
Fund at the close of trading on the Relevant Exchange or market for such
Successor Fund on the applicable Determination Date.
Upon
any selection by the Calculation Agent of a Successor Fund, the
Calculation Agent will cause written notice thereof to be furnished to us,
the Trustee, the Securities Administrator and the Depository Trust Company
as the holder of the Securities within three Trading Days of such
selection.
If
the Fund Sponsor liquidates, delists or otherwise terminates the
Underlying Fund prior to, and such liquidation, delisting or termination
is continuing on, the Determination Date, and the Calculation Agent
determines that no Successor Fund is available with respect to the
Underlying Fund at such time, then the Calculation Agent will determine
the Closing Price per share of the Underlying Fund. Such
Closing Price will be computed by the Calculation Agent in accordance with
the formula for and method of calculating the Underlying Fund last in
effect prior to such liquidation, delisting or termination, using the
closing price (or, if trading in the relevant securities has been
materially suspended or materially limited, its good faith estimate of the
closing price that would have prevailed but for such suspension or
limitation) on the Determination Date for the Underlying Fund of each
security most recently comprising the Underlying
Fund. Notwithstanding these alternative arrangements,
liquidation, delisting or termination of the Underlying Fund may adversely
affect the value of the Securities.
If
at any time the method of calculating the price of a share of the
Underlying Fund or a Successor Fund is changed in a material respect, or
if the Underlying Fund or a Successor Fund is in any other way modified so
that such fund does not, in the opinion of the Calculation Agent, fairly
represent the price of the Underlying Fund or such Successor Fund had such
changes or modifications not been made, then the Calculation Agent will,
at the close of business in New York City on the Determination Date with
respect to the Underlying Fund make such calculations and adjustments to
the terms of the Securities as, in the good faith judgment of the
Calculation Agent, may be necessary in order to arrive at a price of a
fund comparable to the Underlying Fund or Successor Fund, as the case may
be, as if such changes or modifications had not been made, and on the
applicable Determination Date make each relevant calculation with
reference to the Underlying Fund or Successor Fund, as
adjusted. Accordingly, if the method of calculating the price
of a share of the Underlying Fund or a Successor Fund is modified so that
the price of such fund is a fraction of what it would have been if it had
not been modified.
|
PS-35
|
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 RBSSI, as Calculation
Agent, as though the Closing Price per share of the Underlying as of the
Determination Date were the Closing Price per share of the Underlying on
the date of acceleration, and, for Knock-in Reverse Exchangeable
Securities, the Knock-in Period ends on the date of acceleration,
including any accrued coupons to, but not including, the date of
acceleration.
|
|
|
Calculation
Agent
|
RBSSI,
which is our affiliate. All determinations made by the Calculation Agent
will be at the sole discretion of the Calculation Agent and will, in the
absence of manifest error, be conclusive for all purposes and binding on
you and on us.
|
|
|
Additional
Amounts
|
Subject
to certain exceptions and limitations described in “Description of Debt
Securities — Payment of Additional Amounts” in the accompanying
Prospectus, we will pay such additional amounts to holders of the
Securities as may be necessary in order that the net payment of the
principal of the Securities and any other amounts payable on the
Securities, after withholding for or on account of any present or future
tax, assessment or governmental charge imposed upon or as a result of such
payment by The Netherlands (or any political subdivision or taxing
authority thereof or therein) or the jurisdiction of residence or
incorporation of any successor corporation (other than the United States),
will not be less than the amount provided for in the Securities to be then
due and payable.
|
|
|
Book
Entry
|
The
indenture for the Securities permits us at anytime and in our sole
discretion to decide not to have any of the Securities represented by one
or more registered global securities. DTC has advised us that, under its
current practices, it would notify its participants of our request, but
will only withdraw beneficial interests from the global security at the
request of each DTC participant.
|
|
|
Record
Date
|
The
“record date” for any Coupon Payment Date is the calendar day prior to
that Coupon Payment Date, whether or not that date is a business
day.
|
|
|
Supplemental
Information
|
References
in this product supplement and in the relevant Pricing Supplement to
coupons, coupon payments, coupon rates, coupon payment dates and face
amount are equivalent to references to interest, interest payments,
interest rates, interest payment dates and principal amount, respectively,
in the prospectus and the prospectus
supplement.
|
PS-36
USE
OF PROCEEDS
Unless
otherwise specified in the relevant Pricing Supplement, the net proceeds we
receive from the sale of the Securities will be used for general corporate
purposes and, in part, by us or one or more of our affiliates in connection with
hedging our obligations under the Securities. The issue price of the Securities
includes the selling agents’ commissions (as shown on the cover page of the
relevant Pricing Supplement) paid with respect to the Securities and the cost of
hedging our obligations under the Securities. The cost of hedging includes the
projected profit that our affiliates expect to realize in consideration for
assuming the risks inherent in managing the hedging transactions. Since hedging
our obligations entails risk and may be influenced by market forces beyond our
or our affiliates’ control, such hedging may result in a profit that is more or
less than initially projected, or could result in a loss. See also “Risk Factors
— The Inclusion of Commissions and Cost of Hedging in the Issue Price is Likely
to Adversely Affect Secondary Market Prices” and “Potential Conflicts of
Interest; No Security Interest in the Shares of the Underlying Held by Us” and
“Plan of Distribution (Conflicts of Interest)” in this Product Supplement and
“Use of Proceeds” in the accompanying Prospectus.
PS-37
U.S.
FEDERAL INCOME TAX CONSEQUENCES
The
following is a summary of the material U.S. federal income tax consequences of
ownership and disposition of the Securities. It applies only to an investor who
purchases the Securities at issuance for their issue price and holds the
Securities as capital assets within the meaning of Section 1221 of the Internal
Revenue Code of 1986, as amended to the date hereof (the “Code”). The tax consequences
of ownership and disposition of the Underlying are not addressed. This
discussion 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 Product Supplement may affect the
tax consequences described below, possibly with retroactive effect. It does not
address all aspects of U.S. federal income taxation that may be relevant to an
investor in light of the investor’s particular circumstances or to certain types
of investors subject to special treatment under the U.S. federal income tax
laws, such as certain former citizens or residents of the United States, certain
financial institutions, real estate investment trusts, regulated investment
companies, tax-exempt entities, dealers and certain traders in securities,
partnerships or other entities classified as partnerships for U.S. federal
income tax purposes, persons who hold the Securities as a part of a hedging
transaction, straddle, conversion or integrated transaction, U.S. holders (as
defined below) who have a “functional currency” other than the U.S. dollar, or
individual non-U.S. investors who are present in the United States for 183 days
or more in a taxable year in which their Securities are sold or
retired.
Tax
Treatment of the Securities
Unless
otherwise provided in the applicable Pricing Supplement, we believe that it is
reasonable to treat a Security for U.S. federal income tax purposes as a put
option (the “Put
Option”) written by you to us with respect to the Underlying, secured by
a cash deposit equal to the issue price (the “Deposit”). Under
this treatment, in the case of a Reverse Exchangeable Security, the Put Option
will be deemed to have been exercised by us if the closing price of the
Underlying on the determination date is less than its initial
price. In the case of a Knock-in Reverse Exchangeable Security, the
Put Option will be deemed to have been exercised if (i) the closing price of the
Underlying is less than the knock-in level at any time during the knock-in
period, and (ii) the closing price of the Underlying on the determination date
is less than its initial price. If the Put Option is deemed to have
been exercised by us, the Deposit will be applied automatically in full
satisfaction of your obligation under the Put Option; otherwise, the Put Option
will be deemed to have expired unexercised and the Deposit will be returned to
you. Under this treatment, less than the full amount of each coupon
payment will be attributable to the interest on the Deposit; the excess of each
coupon payment over the portion of the payment attributable to the interest on
the Deposit will represent a portion of the option premium attributable to your
grant of the Put Option (“Put
Premium,” and collectively for all coupon payments received, “Put Premiums”).
Due to
the absence of authorities that directly address instruments that are similar to
the Securities, significant aspects of the U.S. federal income tax consequences
of an investment in the Securities are uncertain. We do not plan to request a
ruling from the IRS, and the IRS or a court might not agree with the treatment
described herein. Accordingly, you should consult your tax adviser regarding the
U.S. federal income tax consequences of an investment in the Securities
(including possible alternative treatments, some of which are discussed below)
and with respect to any tax consequences arising under the laws of any state,
local or non-U.S. taxing jurisdiction.
Unless
otherwise stated, the following discussion assumes that the treatment of the
Securities described above will be respected.
Tax
Consequences to U.S. Holders
You are a
“U.S. holder” if, for U.S. federal income tax purposes, you are a beneficial
owner of a Security who is: (i) a citizen or resident of the United States; (ii)
a corporation created or organized under the laws of the United States or any
political subdivision thereof; or (iii) an estate or trust the income of which
is subject to U.S. federal income taxation regardless of its
source.
Securities
with a Term of One Year or Less
The
following discussion applies to Securities with a term of one year or less (from
but excluding the issue date to and including the last possible date that the
Securities could be outstanding).
PS-38
Coupon Payments. Because the
term of these Securities is one year or less, the Deposit will be treated
as a short-term debt instrument for U.S. federal income tax
purposes. Under the applicable Treasury regulations, the Deposit will
be treated as being issued at a discount equal to the sum of all interest
payments to be made with respect to the Deposit. Accrual-method
holders, and cash-method holders who so elect, should include the discount in
income as it accrues on a straight-line basis, unless they elect to accrue the
discount on a constant-yield method based on daily
compounding. Cash-method holders who do not elect to accrue the
discount in income currently should include interest paid on the Deposit upon
its receipt. Additionally, cash-method holders who do not elect to
accrue the discount in income currently will be required to defer deductions for
any interest paid on indebtedness incurred to purchase or carry the Securities,
in an amount not exceeding the accrued discount that has not been included in
income. The Put Premiums will be taken into account as described
below.
Sale or Exchange of a
Security. Upon sale or exchange of a Security prior to maturity, you will
be required to recognize an amount of short-term capital gain or loss equal to
the difference between (i) the proceeds received minus the amount of accrued but
unpaid discount on the Deposit and (ii) the purchase price you paid for the
Security minus the total Put Premiums you have received from us. This
amount represents the net of the gain or loss attributable to the termination of
the Put Option and the gain or loss attributable to the sale of the
Deposit. You will recognize ordinary income with respect to accrued
discount on the Deposit that you have not previously included in
income. You should consult your tax adviser regarding the separate
determination of gain or loss with respect to the Put Option and the
Deposit.
Tax Treatment at Maturity.
The coupon payment received at maturity will be treated as described above under
“Coupon Payments.” If, in addition to the final coupon payment, you
receive an amount of cash equal to the face amount, the Put Option will be
deemed to have expired unexercised. In that case, you will not recognize gain or
loss upon the return of the Deposit, but you will recognize short-term capital
gain in an amount equal to the sum of all Put Premiums received (including the
final Put Premium).
If you
receive the redemption amount at maturity, you will be deemed to have applied
the Deposit toward the physical settlement of the Put Option. In this
case, you will not recognize gain or loss with respect to the Put Premiums or
the receipt of the Underlying (other than in respect of cash received in lieu of
any fractional share). Instead, you will have an aggregate basis in
the Underlying (including any fractional share) received equal to the amount of
the Deposit less the total Put Premiums received, and that basis will be
allocated proportionately among those shares. Your holding period for
the Underlying will begin on the day after receipt. With respect to
any cash received in lieu of a fractional share, you will recognize gain or loss
in an amount equal to the difference between the amount of the cash received in
respect of the fractional share and the tax basis allocable to the fractional
share.
If,
instead, you receive the cash value of the redemption amount, you will be deemed
to have applied the Deposit toward the cash settlement of the Put
Option. In that case, you will recognize short-term capital gain or
loss in an amount equal to the difference between (i) the cash value plus the
total Put Premiums received and (ii) the amount of the Deposit.
Securities
with a Term of More Than One Year
The
following discussion applies to Securities with a term of more than one
year.
Coupon
Payments. The portion of each coupon payment attributable to
the Deposit will be taxable to you as ordinary income at the time it accrues or
is received in accordance with your method of accounting for U.S. federal income
tax purposes. The Put Premiums will be taken into account as
described below.
Sale or Exchange of the
Securities. Upon a sale or exchange of a Security prior to maturity, you
should apportion the amount realized between the Deposit and the Put Option
based on their respective values on the date of the sale or exchange. You will
recognize gain or loss with respect to the Deposit in an amount equal to the
difference between (i) the amount realized that is apportioned to the Deposit
(excluding any amount attributable to accrued but unpaid interest on the
Deposit, which will be treated as a payment of interest); and (ii) your basis in
the Deposit. Such gain or loss will be capital gain or loss, and will
be long-term capital gain or loss if you have held the Security for more than
one year. Any amount realized that is apportioned to the Put Option (together
with the total Put Premiums previously received) will be treated as short-term
capital gain.
PS-39
If the
value of the Deposit on the date of the sale or exchange exceeds the amount
realized upon the sale or exchange of a Security, you will be treated as having
(i) sold or exchanged the Deposit for an amount equal to its value on that date,
and (ii) made a payment to the purchaser of the Security, equal to the amount of
the excess of the value of the Deposit over the amount received, in exchange for
the purchaser’s assumption of the Put Option. In that case, you will recognize
short-term capital gain or loss in respect of the Put Option in an amount equal
to the difference between the total Put Premiums previously received by you and
the amount deemed to be paid by you in exchange for the purchaser’s assumption
of the Put Option.
Tax Treatment at Maturity.
The coupon payment received at maturity will be treated as described above under
“Coupon Payments.” If, in addition to the final coupon payment, you
receive an amount of cash equal to the face amount, the Put Option will be
deemed to have expired unexercised. In this case, you will not
recognize gain or loss upon the return of the Deposit, but you will recognize
short-term capital gain in an amount equal to the sum of all the Put Premiums
received (including the final Put Premium).
If you
receive the redemption amount at maturity, you will be deemed to have applied
the Deposit toward the physical settlement of the Put Option. In that
case, you will not recognize gain or loss with respect to the Put Premiums or
the receipt of the Underlying (other than in respect of cash received in lieu of
any fractional share). Instead, you will have an aggregate basis in
the Underlying (including any fractional share) received equal to the amount of
the Deposit less the total Put Premiums received, and that basis will be
allocated proportionately among those shares. Your holding period for
the Underlying will begin on the day after receipt. With respect to
any cash received in lieu of a fractional share, you will recognize gain or loss
in an amount equal to the difference between the amount of the cash received in
respect of the fractional share and the basis allocable to the fractional
share.
If,
instead, you receive the cash value of the redemption amount, you will be deemed
to have applied the Deposit toward the cash settlement of the Put
Option. In that case, you will recognize short-term capital gain or
loss in an amount equal to the difference between (i) the cash value plus the
total Put Premiums received with respect to the Put Option and (ii) the amount
of the Deposit.
Possible
Alternative Tax Treatments of an Investment in the Securities.
Due to
the absence of authorities that directly address the proper tax treatment of the
Securities, the IRS or a court might not uphold the tax treatment described
above. If the IRS were successful in asserting an alternative treatment, the tax
consequences of ownership and disposition of the Securities might be affected
materially and adversely from the description above. It is possible,
for example, that the Securities could be treated as debt instruments issued by
us. Under this treatment, Securities having a term exceeding one year from
issuance to maturity (including the last possible date that the Securities could
be outstanding) would be governed by Treasury regulations relating to the
taxation of contingent payment debt instruments. In that event, regardless of
whether you are an accrual-method or cash-method taxpayer, you would be required
to accrue into income “original issue discount” based on our comparable yield
for similar non-contingent debt, determined as of the time of issuance of the
Securities, in each year that you held the Securities. In addition,
delivery of the redemption amount would be a taxable event, and any income
recognized on the sale, exchange or retirement of the Securities would be
treated as ordinary in character. Moreover, if you were to recognize a loss
above certain thresholds, you could be required to file a disclosure statement
with the IRS.
Other
alternative U.S. federal income tax characterizations of the Securities are also
possible. For instance, you could be required to include the full
amount of the coupon payments on the Securities as ordinary income in accordance
with your method of accounting. In addition, in December 2007,
Treasury and the IRS released a notice requesting comments on various issues
regarding the U.S. federal income tax treatment of “prepaid forward contracts”
and similar instruments. While it is not clear whether the Securities would be
viewed as similar to the typical prepaid forward contract described in the
notice, it is possible that any Treasury regulations or other guidance
promulgated after consideration of these issues could materially and adversely
affect the tax consequences of an investment in the Securities, possibly with
retroactive effect.
You
should consult your tax adviser regarding the U.S. federal income tax
consequences of an investment in the Securities, including possible alternative
treatments and the issues presented by this notice, as well as any tax
consequences arising under the laws of any state, local or non-U.S. taxing
jurisdiction.
PS-40
Tax
Consequences to Non-U.S. Holders
You are a
“non-U.S. holder” if, for U.S. federal income tax purposes, you are a beneficial
owner of the Securities who is: (i) a nonresident alien individual; (ii) a
foreign corporation; or (iii) a foreign estate or trust.
Under
current law, any income or gain from a Security should not be subject to U.S.
federal income tax, including withholding tax, provided generally that (i) you
certified on IRS Form W-8BEN, under penalties of perjury, that you are not a
United States person and otherwise satisfied applicable requirements, and (ii)
such income or gain was not effectively connected with your conduct of a
trade or business in the United States.
As
described above under “—Tax Consequences to U.S. Holders—Possible Alternative
Tax Treatments of an Investment in the Securities,” in December 2007, Treasury
and the IRS released a notice requesting comments on various issues regarding
the U.S. federal income tax treatment of “prepaid forward contracts” and similar
instruments. While it is not clear whether the Securities would be
viewed as similar to the typical prepaid forward contract described in the
notice, it is possible that any Treasury regulations or other guidance
promulgated after consideration of these issues might require non-U.S. holders
to accrue income, subject to withholding tax, over the term of the Securities,
possibly on a retroactive basis. You should consult your tax adviser regarding
the U.S. federal income tax consequences of an investment in the Securities,
including possible alternative treatments and the issues presented by this
notice.
If you
are engaged in a trade or business in the United States, and if the income or
gain from the Securities is effectively connected with your conduct of that
trade or business, you generally will be taxed in the same manner as a U.S.
holder. In this case, you will be required to provide a properly executed IRS
Form W-8ECI in order to claim an exemption from withholding. If this paragraph
applies to you, you should consult your tax adviser with respect to other U.S.
tax consequences of ownership and disposition of the Securities, including the
possible imposition of a 30% branch profits tax if you are a
corporation.
Backup
Withholding and Information Reporting
Payments
on the Securities and proceeds received from a sale or exchange of the
Securities (including payment of the cash value of the redemption amount)
generally will be subject to information reporting unless you are an exempt
recipient (such as a domestic corporation) and may also be subject to backup
withholding at the rate specified in the Code if you fail to provide certain
identifying information (such as an accurate taxpayer identification number, if
you are a U.S. holder) or meet certain other conditions. If you are a non-U.S.
holder and you provide a properly executed IRS Form W-8BEN or W-8ECI, as
applicable, you will generally establish an exemption from backup
withholding.
Amounts
withheld under the backup withholding rules are not additional taxes and may be
refunded or credited against your U.S. federal income tax liability, provided
the required information is furnished to the IRS.
PS-41
PLAN
OF DISTRIBUTION (CONFLICTS OF INTEREST)
Unless
otherwise specified in the relevant Pricing Supplement, we have appointed RBS
Securities Inc. (“RBSSI”) as agent for any offering of the
Securities. RBSSI has agreed to use reasonable efforts to solicit
offers to purchase the Securities. We will pay RBSSI, in connection
with sales of the Securities resulting from a solicitation such agent made or an
offer to purchase such agent received, a commission in an amount as specified in
the relevant Pricing Supplement. RBSSI has informed us that, as part of its
distribution of the Securities, it intends to reoffer the Securities to other
dealers who will sell the Securities. Each such dealer engaged by
RBSSI, or further engaged by a dealer to whom RBSSI reoffers the Securities,
will purchase the Securities at an agreed discount to the initial offering price
of the Securities. RBSSI has informed us that such discounts may vary
from dealer to dealer and that not all dealers will purchase or repurchase the
Securities at the same discount. RBSSI has also informed us that it
may pay any dealer additional fees payable upon maturity of the Securities based
on the performance of the Securities sold and/or additional fees payable
annually based on the amount of Securities sold by such dealer in a particular
calendar year; provided
that the aggregate amount of such discounts and additional fees paid to all
dealers for an offering shall not exceed the commission that RBSSI will receive
from us. You can find a general description of the commission rates
payable to the agents under “Plan of Distribution” in the accompanying
Prospectus Supplement.
RBSSI is
an affiliate of ours and Holding. RBSSI will conduct each offering of Securities
in compliance with the requirements of NASD Rule 2720 of the Financial Industry
Regulatory Authority, which is commonly referred to as FINRA, regarding a FINRA
member firm’s distribution of securities of an affiliate. Following the initial
distribution of any of these Securities, RBSSI may offer and sell those
Securities in the course of its business as broker-dealer. RBSSI may
act as principal or agent in these transactions and will make any sales at
varying prices related to prevailing market prices at the time of sale or
otherwise. RBSSI may use this Product Supplement, the relevant Pricing
Supplement and the accompanying Prospectus Supplement and Prospectus in
connection with any of these transactions. RBSSI is not obligated to make a
market in any of these Securities and may discontinue any market-making
activities at any time without notice.
RBSSI or
an affiliate of RBSSI may enter into one or more hedging transactions with us in
connection with this offering of Securities. See “Use of Proceeds”
above.
To the
extent that the total aggregate face amount of the Securities being offered by
the relevant Pricing Supplement is not purchased by investors in that offering,
one or more of our affiliates may agree to purchase a portion of the unsold
Securities, and to hold such Securities for investment purposes. See “Holding of
the Securities by our Affiliates and Future Sales” under the heading “Risk
Factors.”
PS-42
|
You
should rely only on the information contained or incorporated by reference
in this Product Supplement, the relevant Pricing Supplement, any related
Underlying 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 Product Supplement
nor the relevant Pricing Supplement, any related Underlying Supplement,
accompanying Prospectus Supplement or Prospectus, nor any sale made
hereunder and thereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of ABN AMRO Bank
N.V. or ABN AMRO Holding N.V. since the date of the relevant Pricing
Supplement or that the information contained or incorporated by reference
in the accompanying Prospectus is correct as of any time subsequent to the
date of such information.
|
ABN
AMRO BANK N.V.
Senior
Fixed Rate Notes
fully
and unconditionally guaranteed by
ABN
AMRO Holding N.V.
|
||
|
TABLE
OF CONTENTS
|
|||
|
PRODUCT
SUPPLEMENT
|
Page
|
Reverse
ExchangeableSM
Securities and
Knock-in Reverse ExchangeableSM Securities linked to the Common Stock of an
Underlying Company or
an
Exchange-Traded Fund
|
|
|
Summary
|
PS-2
|
||
|
Risk
Factors
|
PS-9
|
||
|
Public
Information Regarding the Underlying
|
PS-20
|
||
|
Description
of Securities
|
PS-21
|
||
|
Use
of Proceeds
|
PS-37
|
||
|
U.S.
Federal Income Tax Consequences
|
PS-38
|
||
|
Plan
of Distribution (Conflicts of Interest)
|
PS-42
|
||
|
PROSPECTUS
SUPPLEMENT
|
Page
|
||
|
About
This Prospectus Supplement
|
S-1
|
||
|
Risk
Factors
|
S-2
|
PRODUCT
SUPPLEMENT
(TO
PROSPECTUS DATED
SEPTEMBER
29, 2009 AND
PROSPECTUS
SUPPLEMENT
DATED
SEPTEMBER 29, 2009)
|
|
|
Description
of Notes
|
S-4
|
||
|
Taxation
in the Netherlands
|
S-24
|
||
|
United
States Federal Income Taxation
|
S-27
|
||
|
Plan
of Distribution (Conflicts of Interest)
|
S-34
|
||
|
Legal
Matters
|
S-36
|
||
|
PROSPECTUS
|
Page
|
||
|
About
This Prospectus
|
1
|
||
|
Where
You Can Find Additional Information
|
2
|
||
|
Cautionary
Statement on Forward-Looking
|
RBS
Securities Inc.
|
||
|
Statements
|
3
|
||
|
Consolidated
Ratios of Earnings to Fixed Charges
|
4
|
||
|
ABN
AMRO Bank N.V. and ABN AMRO
|
|||
|
Holding
N.V.
|
5
|
||
|
Use
of Proceeds
|
5
|
||
|
Description
of Debt Securities
|
6
|
||
|
Forms
of Securities
|
16
|
||
|
The
Depositary
|
17
|
||
|
Plan
of Distribution (Conflicts of Interest)
|
19
|
||
|
Legal
Matters
|
22
|
||
|
Experts
|
23
|
||
|
Benefit
Plan Investor Considerations
|
24
|
||
|
Enforcement
of Civil Liabilities
|
25
|