Filed Pursuant to Rule 424(b)(2)
File Number: 333-30786
Prospectus Supplement
(To Prospectus dated March 17, 2000)
[LOGO OF HEWLETT-PACKARD]
$1,500,000,000
Medium-Term Notes, Series A
Due 9 Months or More from Date of Issue
The following terms may apply to particular notes being offered. The final
terms of each note will be specified in a pricing supplement. For more
information, see "Description of the Notes."
. Mature nine months or more from the date of issue
. May be subject to redemption or repurchase at our option or repurchase at
the option of the holder
. Fixed or floating interest rate. The floating interest rate formula may be
based on:
-- CD Rate
-- Commercial Paper Rate
-- Federal Funds Rate
-- LIBOR
-- Treasury Rate
-- Prime Rate
-- CMT Rate
-- Another rate set forth in a pricing supplement
. Fixed rate notes may bear no interest when issued at a discount from the
principal amount due at maturity
. Certificated or book-entry form
. Interest paid on fixed rate notes and floating rate notes will be paid on
the dates specified in the pricing supplement
. Minimum denominations of $1,000 and integral multiples of $1,000 (or other
specified denominations for foreign or composite currencies)
See "Risk Factors" on page S-4 of this prospectus supplement for a discussion
of certain risks that you should consider in connection with an investment in
the notes.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus supplement, the attached prospectus or
any pricing supplement. Any representation to the contrary is a criminal
offense.
--------------------------------------------------------------------------------
Price to
Public Agents' Discount Proceeds to Us
-------------------------------------------------------------------------------
Per Note 100% .125%--.750% 99.875%--99.250%
-------------------------------------------------------------------------------
Total $1,500,000,000 $1,875,000--$11,250,000 $1,498,125,000--$1,488,750,000
-------------------------------------------------------------------------------
Hewlett-Packard Company is offering the notes on a continuous basis through or
to the agents listed below acting as agent or principal. Each agent has agreed
to use its reasonable efforts to solicit offers to purchase the notes. We may
also sell the notes directly to investors. We may also offer the notes through
or to other agents or dealers acting as agent or principal or in other methods
specified in a pricing supplement.
JPMorgan
ABN AMRO Incorporated
Banc of America Securities LLC
Bear, Stearns & Co. Inc.
Credit Suisse First Boston
Deutsche Banc Alex. Brown
Goldman, Sachs & Co.
HSBC
Merrill Lynch & Co.
Morgan Stanley Dean Witter
Salomon Smith Barney
The Williams Capital
Group, L.P.
May 16, 2001
You should rely only on the information incorporated by reference or contained
in this prospectus supplement, the attached prospectus and the applicable
pricing supplement. We have not authorized anyone to provide you with different
information and if you receive any unauthorized information you should not rely
on it. We are not making an offer of these securities in any place where the
offer is not permitted. You should not assume that the information contained or
incorporated by reference in this prospectus supplement, the attached
prospectus or any pricing supplement is accurate as of any date other than the
date on the front of the applicable document.
TABLE OF CONTENTS
Page
Prospectus Supplement ----
About this Prospectus Supplement; Pricing Supplements................ S-3
Risk Factors......................................................... S-4
Description of the Notes............................................. S-7
Special Provisions Relating to Foreign Currency Notes................ S-25
United States Federal Taxation....................................... S-27
Supplemental Plan of Distribution.................................... S-36
Legal Opinions....................................................... S-37
Experts.............................................................. S-37
Glossary............................................................. S-38
Prospectus Page
----
Summary.............................................................. 1
Where You Can Find More Information.................................. 3
Risk Factors......................................................... 4
Ratio of Earnings to Fixed Charges................................... 4
Use of Proceeds...................................................... 4
Description of the Debt Securities................................... 5
Description of Common Stock.......................................... 15
Description of Preferred Stock....................................... 16
Description of the Depositary Shares................................. 17
Description of the Warrants.......................................... 20
Plan of Distribution................................................. 22
Legal Matters........................................................ 22
Experts.............................................................. 22
S-2
ABOUT THIS PROSPECTUS SUPPLEMENT; PRICING SUPPLEMENTS
We may use this prospectus supplement, together with the attached prospectus
and a pricing supplement, to offer our medium-term notes, referred to as the
"notes," from time to time under our senior indenture. The total initial public
offering price of notes that may be offered by use of this prospectus
supplement is $1,500,000,000 aggregate principal amount or the equivalent in
foreign or composite currencies. That amount will be reduced by the amount of
any securities issued under our shelf registration statement (No. 333-30786),
provided that no such reduction will affect any note already issued or as to
which we have accepted an offer to purchase.
This prospectus supplement sets forth terms of the notes that we may offer. It
supplements the description of the debt securities contained in the attached
prospectus. If information in this prospectus supplement is inconsistent with
the attached prospectus, this prospectus supplement will apply and will
supersede that information in the attached prospectus.
Each time we issue notes, we will attach a pricing supplement to this
prospectus supplement and the attached prospectus. The pricing supplement will
contain the specific description of the notes being offered and the terms of
the offering. The pricing supplement may also add, update or change information
in this prospectus supplement or the attached prospectus. Any information in
the pricing supplement, including any changes in the method of calculating
interest on any note, that is inconsistent with this prospectus supplement or
the attached prospectus will apply and will supersede that information in this
prospectus supplement or the attached prospectus.
It is important for you to read and consider all information contained in this
prospectus supplement and the attached prospectus and pricing supplement in
making your investment decision. You should also read and consider the
information in the documents we have referred you to in "Where You Can Find
More Information" on page 3 of the attached prospectus.
S-3
RISK FACTORS
In consultation with your own financial and legal advisors, you should
carefully consider, among other matters, the following discussion of risks
before deciding whether an investment in the notes is suitable for you. In
addition, you should carefully consider the discussion of those risks set forth
in our most recent annual report on Form 10-K and in any subsequent quarterly
reports on Form 10-Q, each of which is incorporated by reference. The notes are
not an appropriate investment for you if you are unsophisticated with respect
to the significant elements of the notes or financial matters. In particular,
those notes denominated or payable in a foreign currency are not suitable for
you if you are unsophisticated with respect to foreign currency transactions,
and those notes with payments calculated by reference to one or more interest
rates, currencies or other indices or formulas are not suitable for your if you
are unsophisticated with respect to transactions involving the applicable
interest rate index or currency index or other indices or formulas.
Investment in foreign currency notes entails significant risks not associated
with debt securities denominated in U.S. dollars
If you invest in notes that are denominated in a currency other than U.S.
dollars, your investment will be subject to significant risks that are not
associated with a similar investment in notes denominated in U.S. dollars.
These risks include:
. the possibility of significant changes in rates of exchange between U.S.
dollars and the specified currency;
. the possibility of significant changes in rates of exchange between U.S.
dollars and the currency resulting from official redenomination of the
currency; and
. the possibility that the United States or any foreign government will impose
or modify foreign exchange controls.
These risks generally depend on factors over which we have no control, such as
economic and political events, and on the supply and demand for the relevant
currencies. In recent years, rates of exchange between the U.S. dollar and
certain currencies have been highly volatile. This volatility may continue in
the future. Even if fluctuations have occurred in any particular exchange rate
in the past, fluctuations may not occur in the rate during the term of any note
denominated in foreign currency. Depreciation of the currency specified for a
note against the U.S. dollar would result in a decrease in the effective yield
of that note below its coupon rate and could result in a substantial loss to
you on a U.S. dollar basis.
Governments have imposed from time to time, and may in the future impose,
exchange controls that could affect exchange rates as well as the availability
of a foreign currency at the time of payment of amounts due on a note
denominated in that currency. Exchange controls may restrict or prohibit
payments in any designated currency. Even if there are no actual exchange
controls, a currency may not be available to us when payments on the notes are
due because of circumstances beyond our control.
The information set forth in this prospectus supplement is directed to
prospective purchasers of notes who are United States residents. We are not
advising prospective purchasers who are residents of countries other than the
United States about any matters that may affect the purchase or holding of, or
receipt of payments on the notes. These persons should consult their own
advisors about those matters.
If applicable, the pricing supplement will contain a description of any
material exchange controls affecting the currency in which the notes are
denominated, if other than U.S. dollars, and any other required information
concerning such currency.
See also "Special Provisions Relating to Foreign Currency Notes."
S-4
Payment currency may be changed to U.S. dollars if the payment currency is
unavailable
If payment on a note is required to be made in a currency other than U.S.
dollars and that currency is unavailable due to the imposition of exchange
controls or other circumstances beyond our control or is no longer used by the
government of the country issuing that currency or for the settlement of
transactions by public institutions of or within the international banking
community, then all payments on that note will be made in U.S. dollars until
such currency is again available or used. The amounts payable on any date in
such currency will be converted into U.S. dollars on the basis of the most
recently available market exchange rate for such currency or as otherwise
indicated in the pricing supplement. Any payment in respect of the note made
under these circumstances in U.S. dollars will not constitute an event of
default under the senior indenture.
Judgments may not be available in foreign currencies
The laws of the State of New York will govern the notes. Courts in the United
States have not customarily rendered judgments for money damages denominated in
any currency other than the U.S. dollar. The Judiciary Law of the State of New
York provides, for example, that a judgment granted in connection with an
obligation denominated in a currency other than U.S. dollars will be granted in
the foreign currency of the underlying obligation and converted into U.S.
dollars at a rate of exchange on the date of the entry of the judgment.
However, a state court outside the State of New York may not follow the same
rules and procedures on conversions of foreign currency judgments.
Investment in indexed notes entails significant risks
If you invest in notes indexed to one or more interest rates, currencies or
composite currencies, including exchange rates and swap indices between
currencies or composite currencies, commodities, securities or other indices or
formulas, there will be significant risks that are not associated with similar
investments in a conventional fixed rate or floating rate debt security. These
risks include fluctuation of the indices or formulas and the possibility that
you will receive a lower or no amount of principal, premium or interest, and at
different times, than you expected. We have no control over a number of
matters, including economic, financial and political events that are important
in determining the existence, magnitude and longevity of these risks and their
results. In addition, if an index or formula used to determine any amounts
payable in respect of the notes contains a multiplier or leverage factor, the
effect of any change in the index or formula will be magnified. In recent
years, values of certain indices and formulas have been highly volatile, and
volatility in those and other indices and formulas may be expected in the
future. However, past experience is not necessarily indicative of what may
occur in the future.
Our credit ratings may not reflect all risks of an investment in the notes
The credit ratings of our medium-term note program may not reflect the
potential impact of all risks related to structure and other factors relating
to your notes. Actual or anticipated changes or downgrades in our credit
ratings, including any announcement that our ratings are under review for a
possible downgrade, could increase our corporate borrowing costs and affect the
market value of your notes.
There may be an uncertain trading market for your notes, and many factors may
affect the trading value for your notes
We cannot assure you that a trading market for your notes will ever develop or
be maintained. Many factors independent of our creditworthiness affect the
trading market. These factors include:
. complexity and volatility of the index or formula applicable to the notes;
. method of calculating the principal, premium and interest in respect of the
notes;
S-5
. time remaining to the maturity of the notes;
. outstanding amount of the notes;
. redemption of the notes;
. amount of other debt securities linked to the index or formula applicable to
the notes; and
. level, direction and volatility of market interest rates generally.
In addition, certain notes have a more limited trading market and experience
more price volatility because they were designed for specific investment
objectives or strategies. There may be a limited number of buyers when you
decide to sell the notes. This may affect the price you receive for the notes
or your ability to sell the notes at all. You should not purchase notes unless
you understand and know you can bear the foregoing investment risks.
Redemption or repurchase may adversely affect your return on the notes
If your notes are redeemable or subject to repurchase at our option or are
otherwise subject to mandatory redemption, we may, in the case of optional
redemption or repurchase, or must, in the case of mandatory redemption, redeem
or repurchase the notes at times when prevailing interest rates may be
relatively low. Accordingly, you may not be able to reinvest the redemption or
repurchase proceeds in a comparable security at an effective interest rate as
high as that of the notes.
S-6
DESCRIPTION OF THE NOTES
General
The following is a summary of important terms of the notes. The senior
indenture under which we will issue the notes has been filed as an exhibit to
the registration statement. The definitions of capitalized terms used in this
prospectus supplement are provided in the Glossary beginning on page S-38.
The notes will be unsecured "senior debt securities," as described in the
attached prospectus and will constitute one series of senior debt securities
issued under the senior indenture between us, as issuer, and Chase Manhattan
Bank and Trust Company, National Association, as trustee, referred to as the
"trustee." They will have the same rank as all of our other unsecured senior
debt securities. We may offer $1,500,000,000 aggregate principal amount of
notes or the equivalent in foreign currencies or composite currency units with
this prospectus supplement.
The notes are being offered on a continuous basis. Unless redeemed by us or
repurchased at the option of the holder, each note will mature on a business
day nine months or more from its date of issue, specified on its face and in
the applicable pricing supplement. The applicable pricing supplement will
specify whether the notes are subject to redemption or repayment prior to
maturity and whether they will be subject to any sinking fund.
The notes may bear interest at either a fixed or floating rate. Interest on
floating rate notes will be determined, and adjusted periodically, by reference
to an interest rate basis or formula, which may be adjusted by a spread or
spread multiplier. We may issue notes at prices less than their stated
principal amount. Some of these discounted notes will be considered original
issue discount notes. Original issue discount notes may or may not bear
periodic interest. Unless otherwise specified in the pricing supplement, the
amount payable to the holder of an original issue discount note upon an
acceleration of its maturity will equal its adjusted issue price. This amount
will be less than the amount payable at maturity.
If specified in the pricing supplement, the amount of principal or interest on
the notes may be determined by reference to an index.
Each note will be issued in fully registered form without coupons. Each note
will be issued initially either in certificated form or in global form and
deposited with, or on behalf of, The Depository Trust Company, as depositary,
or such other depositary as may be specified in the applicable pricing
supplement. Foreign currency notes may be represented by either global notes or
by certificated notes, as specified in the applicable pricing supplement. Notes
issued in global form will be "book-entry notes." Beneficial interests in a
book-entry note will be shown on, and transfers of those interests will be
effected only through, records maintained by the depositary or its
participants. Except under limited circumstances, book-entry notes will not be
issuable in certificated form. Payments of principal and interest on book-entry
notes will be made to the depositary or its nominee. Payments to beneficial
owners of interests in book-entry notes will be made through the depositary and
its participants. See "Description of the Debt Securities--Global Securities"
in the attached prospectus.
Certificated notes may be presented for registration of transfer or exchange at
the corporate trust office of the security registrar for the senior debt
securities, Chase Manhattan Bank and Trust Company, National Association,
located at 101 California Street, Suite 2725, San Francisco, California 94111.
The transfer or exchange of global notes will be effected as specified in
"Book-Entry Notes" below.
The notes may be denominated in U.S. dollars or in foreign currencies or
composite currency units, which will be described in the pricing supplement.
Such foreign currency or composite currency unit is called the specified
currency. If a specified currency is not described in the pricing supplement,
the notes will be denominated in U.S. dollars and payments of principal,
premium and interest will be made in U.S. dollars in the manner described in
this prospectus supplement. If any of the notes are to be denominated in a
foreign currency, additional information about the terms of these notes and
other matters of interest to the holders of these notes will be described in
the pricing supplement. The authorized denominations of the notes denominated
in U.S. dollars will be U.S. $1,000 and any multiple of U.S. $1,000 unless
otherwise specified in the pricing supplement. The authorized denominations of
notes denominated in a foreign currency will be set forth in the pricing
supplement.
S-7
As used in this prospectus supplement, "business day" means:
. with respect to any note, any day that is not a Saturday or Sunday and that,
in The City of New York, is not a day on which banking institutions
generally are authorized or obligated by law or executive order to close;
. if the note is denominated in a specified currency other than U.S. dollars
or euros, any day that is not a day on which banking institutions are
authorized or required by law to close in the financial center of the
country issuing the specified currency;
. if the note is denominated in euros, any day on which the Trans-European
Automated Real-Time Gross Settlement Express Transfer (TARGET) System is
open; and
. with respect only to LIBOR notes, as described below, a "London business
day."
As used in the preceding definition, financial center means the capital city of
the country issuing the specified currency, except that with respect to the
following currencies the financial center shall be the city or cities listed
next to each currency:
Currency Financial Center
-------- ----------------
U.S. dollars The City of New York
Australian dollars Sydney
Canadian dollars Toronto
South African rand Johannesburg
Swiss Francs Zurich
Unless otherwise specified in the applicable pricing supplement, "London
business day" means:
. if the Index Currency is other than the euro, any day on which dealings in
deposits in the Index Currency are transacted in the London interbank
market; or
. if the Index Currency is the euro, any day on which the Trans-European
Automated Real-Time Gross Settlement Express Transfer (TARGET) System is
open.
The paying agent and exchange rate agent for the notes will initially be Chase
Manhattan Bank and Trust Company, National Association.
Payment of Principal and Interest
Except as described below and under "Special Provisions Relating to Foreign
Currency Notes--Payment Currency," payments of principal of, and premium, if
any, and interest on all notes will be made in the applicable specified
currency.
We will make payments of principal of, and premium and interest, if any, on
notes in book-entry form through the trustee to the depositary or its nominee.
See "--Book-Entry Notes." Unless otherwise specified in the applicable pricing
supplement, a beneficial owner of notes in book-entry form that are denominated
in a specified currency other than United States dollars electing to receive
payments of principal or any premium or interest in that specified currency
must notify the participant of the depositary through which its interest is
held on or before the applicable regular record date, in the case of a payment
of interest, and on or before the sixteenth day, whether or not a business day,
as defined above, before the notes' stated maturity, in the case of principal
or premium, of the beneficial owner's election to receive all or a portion of
any payment in a specified currency. The participant must notify the depositary
of any election on or before the third business day after the regular record
date. The depositary will notify the paying agent of the election on or before
the fifth business day after the regular record date. If complete instructions
are received by the participant and forwarded to the depositary, and forwarded
by the depositary to the paying agent, on or before the relevant dates, the
beneficial owner of the notes in book-entry form will receive payments in the
specified currency. See "Special Provisions Relating to Foreign Currency
Notes--Payment Currency."
S-8
Where payments of principal and premium, if any, and interest (at maturity or
otherwise) for a certificated note are to be made in U.S. dollars, payments
will be made in immediately available funds, provided that the note is
presented to the trustee in time for the trustee to make the payments in such
funds in accordance with its normal procedures. Notwithstanding the foregoing,
where payments of interest and, in the case of amortizing notes, principal and
premium, if any, with respect to any certificated note, other than amounts
payable at maturity, are to be made in U.S. dollars, the payments may, at our
option, be paid by check mailed to the address of the person in whose name a
certificated note is registered at the close of business on the applicable
record date, as such address appears in the security register.
Unless we otherwise indicate in the applicable pricing supplement, payments of
principal and premium, if any, and interest with respect to any certificated
note to be made in a specified currency other than U.S. dollars will be paid in
immediately available funds by wire transfer to such account maintained by the
holder with a bank designated by the holder, on or prior to the regular record
date or at least 15 days prior to maturity, as the case may be, provided that
such bank has the appropriate facilities for such a payment in the specified
currency. However, it is also necessary that with respect to payments of
principal and premium, if any, and interest at maturity the note is presented
to the trustee in time for the trustee to make such payment in accordance with
its normal procedures, which shall require presentation no later than two
business days prior to maturity in order to ensure the availability of
immediately available funds in the specified currency at maturity. A holder
must make such designation by filing the appropriate information with the
trustee and, unless revoked, any such designation made with respect to any note
will remain in effect with respect to any further payments payable to such
holder with respect to such note.
If we so specify in the applicable pricing supplement, payments of principal
and premium, if any, and interest with respect to any foreign currency note
which is a certificated note will be made in U.S. dollars if the holder of such
note elects to receive all such payments in U.S. dollars by delivery of a
written request to the trustee either on or prior to the regular record date
for such certificated note or at least 15 days prior maturity. Such election
may be in writing, mailed or hand delivered, or by cable, telex or other form
of facsimile transmission, to the trustee. A holder of a foreign currency note
which is a certificated note may elect to receive payment in U.S. dollars for
all principal, premium, if any, and interest payments and need not file a
separate election for each payment. Such election will remain in effect until
revoked by written notice to the trustee, but written notice of such revocation
must be received by the trustee either on or prior to the regular record date
or at least 15 days prior to maturity.
Holders of foreign currency notes whose notes are held in the name of a broker
or nominee should contact such broker or nominee to determine whether and how
an election to receive payments in U.S. dollars may be made.
The U.S. dollar amount to be received by a holder of a foreign currency note
will be based upon the exchange rate as determined by the exchange rate agent
based on the most favorable bid quotation of U.S. dollars for us received by
such exchange rate agent at approximately 11:00 a.m., New York City time, on
the second business day preceding the applicable payment date from three
recognized foreign exchange dealers in The City of New York selected by the
exchange rate agent and approved by us, one of which may be the exchange rate
agent, for the purchase by the quoting dealer, for settlement on such payment
date, of the aggregate amount of the specified currency payable on such payment
date in respect of all notes denominated in such specified currency. If three
quoting dealers are not available, then two dealers will be used. If no such
bid quotations are available, payments will be made in the specified currency,
unless such specified currency is unavailable due to the imposition of exchange
controls or other circumstances beyond our control, in which case payment will
be made as described below under "Special Provisions Relating to Foreign
Currency Notes--Payment Currency." All currency exchange costs will be borne by
the holders of such notes by deductions from such payments. Unless we otherwise
specify in the applicable pricing supplement, Chase Manhattan Bank and Trust
Company, National Association, will be the exchange rate agent for the notes.
S-9
In the event of an official redenomination of a specified currency for a note,
our obligations with respect to payments on a note denominated in that currency
will be deemed immediately following such redenomination to provide for payment
of equivalent amounts of redenominated currency. In no event will any
adjustment be made to any amount payable under a note as a result of any change
in the value of a specified currency relative to any other currency due solely
to fluctuations in exchange rates.
Interest and Interest Rates
Unless otherwise specified in the pricing supplement, each note will accrue
interest from and including its date of issue. The pricing supplement will
designate whether a particular note bears interest at a fixed or floating rate.
In the case of a floating rate note, the pricing supplement will also specify
whether the note will bear interest based on the CD Rate, the Commercial Paper
Rate, the Federal Funds Rate, LIBOR, the Treasury Rate, the Prime Rate, the CMT
Rate or on another interest rate or combination of interest rates bases set
forth in the pricing supplement.
The rate of interest on floating rate notes will reset daily, weekly, monthly,
quarterly, semi-annually, annually or otherwise. The reset dates will be
specified in the pricing supplement and on the face of each note. In addition,
the pricing supplement will specify the spread or spread multiplier, if any,
and the maximum interest rate or minimum interest rate, if any, applicable to
each floating rate note.
The interest rate on the notes will in no event be higher than the maximum rate
permitted by applicable law. Under New York law as in effect on the date of
this prospectus supplement, the maximum rate of interest is 25% per annum on a
simple interest basis. This limit does not apply to notes in a principal amount
of $2,500,000 or more.
Interest on a note will be payable on the first interest payment date following
its date of issue. However, if the date of a note's issue is on or after the
record date for that interest payment date, interest will be payable beginning
on the second interest payment date following the note's issue.
If any interest payment date with respect to any floating rate note, other than
an interest payment date that is also the maturity date of that note, falls on
a day that is not a business day, that interest payment date will be postponed
to the next day that is a business day and interest will continue to accrue.
However, in the case of a LIBOR note, if the next business day is in the
following calendar month, the interest payment date will be the preceding
business day. If the maturity date of any floating or fixed rate note or an
interest payment date for any fixed rate note falls on a day that is not a
business day, payment of principal, premium, if any, and interest with respect
to that note will be paid on the next business day. No interest on that payment
will accrue from and after that maturity date or interest payment date.
Interest payable at maturity will be payable to the person to whom principal is
payable.
Interest rates we offer with respect to the notes may differ depending upon,
among other things, the aggregate principal amount of notes purchased in any
single transaction. We may from time to time change interest rates, interest
rate formulas and other variable terms of the notes. No change, however, will
affect any note already issued or as to which an offer to purchase has been
accepted by us.
Fixed Rate Notes
The pricing supplement relating to an offering of fixed rate notes will
designate a fixed rate of interest per year payable on the notes. The rate may
change as described below under "Interest Rate Reset" and "Extension of
Maturity." The rate of interest may be zero. Fixed rate notes may bear one or
more annual rates of interest as specified in the pricing supplement. Interest
on the notes will be payable in arrears on the interest payment dates. Unless
otherwise specified in the pricing supplement:
. the interest payment dates for fixed rate notes will be on the dates
specified in the applicable pricing supplement for the fixed rate notes and
upon maturity;
S-10
. the regular record dates for payment of interest will be the date (whether
or not a business day) that is 15 calendar days (unless otherwise specified
in the pricing supplement) immediately preceding the interest payment dates
specified in the pricing supplement; and
. interest, if any, on fixed rate notes will be computed on the basis of a
360-day year of twelve 30-day months.
Floating Rate Notes
Unless we otherwise specify in the applicable pricing supplement, each floating
rate note will bear interest at a variable rate determined by reference to an
interest rate formula or formulas, which may be adjusted by adding or
subtracting the spread and/or multiplying by the spread multiplier, each as
described below. A floating rate note may also have either or both of the
following:
. a maximum numerical interest rate limitation, or ceiling, on the rate of
interest which may accrue during any interest period; and
. a minimum numerical interest rate limitation, or floor, on the rate of
interest that may accrue during any interest period.
The spread is the number of basis points specified by us in the applicable
pricing supplement as being applicable to the interest rate for such note. The
spread multiplier is the percentage specified by us in the applicable pricing
supplement as being applicable to the interest rate for such note.
The applicable pricing supplement relating to a floating rate note will
designate an interest rate basis or bases for such floating rate note. Such
basis or bases may be:
. the CD Rate, in which case such note will be a CD Rate note;
. the Commercial Paper Rate, in which case such note will be a Commercial
Paper Rate note;
. the Federal Funds Rate, in which case such note will be a Federal Funds Rate
note;
. LIBOR, in which case such note will be a LIBOR note;
. the Treasury Rate, in which case such note will be a Treasury Rate note;
. the Prime Rate, in which case such note will be a Prime Rate note;
. the CMT Rate, in which case such note will be a CMT Rate note; or
. such other interest rate formula or formulas (which may include a
combination of more than one of the interest rate bases described above) as
may be described in the applicable pricing supplement.
We will also specify in the applicable pricing supplement for a floating rate
note the spread and/or spread multiplier, if any, and the maximum or minimum
interest rate limitation, if any, applicable to each note. In addition, in such
pricing supplement we will define or particularize for each note the following
terms, if applicable: initial interest rate, interest payment dates, Index
Maturity, Index Currency, Calculation Date and interest reset date with respect
to such note.
Unless otherwise specified in the pricing supplement, Chase Manhattan Bank and
Trust Company, National Association will be the calculation agent with respect
to the calculation of rates of interest payable on floating rate notes. Upon
the request of a registered holder of a floating rate note, the calculation
agent will provide the interest rate then in effect and, if different, the
interest rate which will become effective as a result of a determination made
on the most recent Interest Determination Date with respect to that floating
rate note.
Unless otherwise specified in the pricing supplement:
. the regular record date for payment of interest will be the fifteenth day
before the day on which interest will be paid, whether or not such day is a
business day; and
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. each interest payment on any floating rate note will include interest
accrued from and including the date of issue or the last date to which
interest has been paid, as the case may be, to, but excluding, the
applicable interest payment date or the date of maturity, as the case may
be.
Accrued interest on a floating rate note will be calculated by multiplying the
principal amount of the note by an accrued interest factor. The accrued
interest factor will be computed by adding the interest factors calculated for
each day in the period for which accrued interest is being calculated. Unless
otherwise specified in the pricing supplement, the interest factor for each day
is computed by dividing the interest rate in effect on that day by:
. the actual number of days in the year, in the case of Treasury Rate notes
and CMT rate notes; or
. 360 days, in the case of all other floating rate notes.
The interest rate on a floating rate note in effect on any day will be:
. if the day is an Interest Reset Date, the interest rate with respect to the
Interest Determination Date relating to that Interest Reset Date; or
. if the day is not an Interest Reset Date, the interest rate with respect to
the Interest Determination Date relating to the preceding Interest Reset
Date.
The interest rate in effect for the period from the date of issue to, but
excluding, the first Interest Reset Date will be the initial interest rate
specified in the pricing supplement.
Except as otherwise specified in the pricing supplement, all percentages and
decimals resulting from any calculation of interest on floating rate notes will
be rounded, if necessary, to the nearest one-hundred thousandth of a percentage
point, with five one-millionths of a percentage point rounded upwards. For
example, 9.876545% (or .09876545) will be rounded to 9.87655% (or .0987655) and
9.876544% (or .09876544) will be rounded to 9.87654% (or .0987654). All dollar
amounts used in or resulting from any such calculation will be rounded to the
nearest cent (with one-half cent being rounded upwards).
CD Rate Notes. A CD Rate note will bear interest at an interest rate calculated
with reference to the CD Rate and the spread or spread multiplier, if any, as
specified in the CD Rate note and the pricing supplement.
Unless otherwise specified in the pricing supplement, the CD Rate for any
Interest Determination Date is the rate on that date for negotiable
certificates of deposit having the Index Maturity specified in the pricing
supplement, as published in H.15(519) prior to 9:00 a.m., New York City time,
on the Calculation Date pertaining to that Interest Determination Date under
the heading "CDs (secondary market)."
The following procedures will be followed if the CD Rate cannot be determined
as described above:
. If the rate is not published in H.15(519) by 9:00 a.m., New York City time,
on the Calculation Date, the CD Rate will be the rate on that Interest
Determination Date for negotiable certificates of deposit having the Index
Maturity designated in the applicable pricing supplement as published in
H.15 Daily Update under the heading "CDs (secondary market)."
. If the rate is not published in either H.15(519) or H.15 Daily Update by
3:00 p.m., New York City time, on the Calculation Date, then the calculation
agent will determine the CD Rate to be the arithmetic mean of the secondary
market offered rates as of 10:00 a.m., New York City time, on that Interest
Determination Date, quoted by three leading non-bank dealers in negotiable
U.S. dollar certificates of deposit in New York City for negotiable
certificates of deposit in a denomination of $5,000,000 of major United
States money-center banks of the highest credit standing with a remaining
maturity closest to the Index Maturity designated in the pricing supplement.
The calculation agent, after consultation with us, will select the three
dealers referred to above.
. If fewer than three dealers are quoting as mentioned above, the CD Rate will
be the CD Rate in effect during the prior interest period.
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Commercial Paper Rate Notes. A Commercial Paper Rate note will bear interest at
an interest rate calculated with reference to the Commercial Paper Rate and the
spread or spread multiplier, if any, as specified in the Commercial Paper Rate
note and the pricing supplement.
Unless otherwise specified in the pricing supplement, the "Commercial Paper
Rate" for any Interest Determination Date is the Money Market Yield of the rate
on that date for commercial paper having the Index Maturity specified in the
pricing supplement, as published in H.15(519) prior to 9:00 a.m., New York City
time, on the Calculation Date pertaining to that Interest Determination Date
under the heading "Commercial paper--Nonfinancial."
The following procedures will be followed if the Commercial Paper Rate cannot
be determined as described above:
. If the rate is not published in H.15(519) by 9:00 a.m., New York City time,
on the Calculation Date, the Commercial Paper Rate will be the Money Market
Yield of the rate on that Interest Determination Date for commercial paper
having the Index Maturity designated in the pricing supplement, as published
in H.15 Daily Update under the heading "Commercial paper--Nonfinancial."
. If the rate is not published in either H.15(519) or H.15 Daily Update by
3:00 p.m., New York City time, on the Calculation Date, then the calculation
agent will determine the Commercial Paper Rate to be the Money Market Yield
of the arithmetic mean of the offered rates of three leading dealers of
commercial paper in New York City as of 11:00 a.m., New York City time, on
that Interest Determination Date for commercial paper having the Index
Maturity specified in the pricing supplement placed for an industrial issuer
whose bond rating is "AA", or the equivalent, from a nationally recognized
rating agency. The calculation agent, after consultation with us, will
select the three dealers referred to above.
. If fewer than three dealers selected by the calculation agent are quoting as
mentioned above, the Commercial Paper Rate will be the Commercial Paper Rate
in effect during the prior interest period.
Federal Funds Rate Notes. Federal Funds Rate notes will bear interest at an
interest rate calculated with reference to the Federal Funds Rate and the
spread or spread multiplier, if any, as specified in the Federal Funds Rate
note and the pricing supplement.
Unless otherwise specified in the pricing supplement, the "Federal Funds Rate"
for any Interest Determination Date is the rate on that date for Federal Funds
as published in H.15(519) under the heading "Federal funds (effective)," as
such rate is displayed on Telerate Page 120, prior to 9:00 a.m., New York City
time, on the Calculation Date pertaining to that Interest Determination Date
under the heading "Federal funds (effective)."
The following procedures will be followed if the Federal Funds Rate cannot be
determined as described above:
. If the rate is not published in H.15(519) by 9:00 a.m., New York City time,
on the Calculation Date, the Federal Funds Rate will be the rate on that
Interest Determination Date, as published in H.15 Daily Update under the
heading "Federal funds (effective)."
. If the rate is not published in either H.15(519) or H.15 Daily Update by
3:00 p.m., New York City time, on the Calculation Date, then the calculation
agent will determine the Federal Funds Rate to be the arithmetic mean of the
rates for the last transaction in overnight Federal funds arranged by each
of three leading brokers of Federal funds transactions in New York City
prior to 9:00 a.m. New York time on such Interest Determination Date. The
calculation agent, after consultation with us, will select the three brokers
referred to above.
. If fewer than three brokers selected by the calculation agent are quoting as
mentioned above, the Federal Funds Rate will be the Federal Funds Rate in
effect during the prior interest period.
LIBOR Notes. A LIBOR note will bear interest at an interest rate, calculated
with reference to LIBOR and the spread or spread multiplier, if any, as
specified in the LIBOR note and the pricing supplement.
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Unless otherwise specified in the pricing supplement, the calculation agent
will determine LIBOR as follows:
With respect to each Interest Determination Date:
. If "LIBOR Telerate" is specified in the pricing supplement, LIBOR will be
the rate for deposits in the Index Currency having the Index Maturity
specified in the pricing supplement, commencing on the second London
business day immediately following such Interest Determination Date, as that
rate appears on the Designated LIBOR Page as of 11:00 a.m., London time, on
that Interest Determination Date.
. If "LIBOR Reuters" is specified in the pricing supplement, LIBOR will be the
arithmetic mean of the offered rates for deposits in the Index Currency
having the Index Maturity specified in the pricing supplement, commencing on
the second London business day immediately following such Interest
Determination Date, as those rates appear on the Designated LIBOR Page as of
11:00 a.m., London time, on that Interest Determination Date, if at least
two such offered rates appear on the Designated LIBOR Page.
. If neither "LIBOR Telerate" nor "LIBOR Reuters" is specified in the
applicable pricing supplement as the method for calculating LIBOR, LIBOR
will be calculated as if "LIBOR Telerate" had been specified.
If the Designated LIBOR Page by its terms provides only for a single rate, that
single rate will be used regardless of the foregoing provisions requiring more
than one rate.
With respect to any Interest Determination Date on which fewer than the
required number of applicable rates appear or no rate appears on the applicable
Designated LIBOR Page, the calculation agent will determine LIBOR as follows:
. If LIBOR will be determined on the basis of the offered rates at which
deposits in the Index Currency having the Index Maturity designated in the
pricing supplement, commencing on the second London business day immediately
following such Interest Determination Date, and in a principal amount equal
to an amount not less than U.S. $1 million that is representative of a
single transaction in that market at that time are offered by four major
banks in the London interbank market at approximately 11:00 a.m., London
time, on the Interest Determination Date to prime banks in the London
interbank market. The calculation agent will select the four banks after
consultation with us and request the principal London office of each of
those banks to provide a quotation of its rate. If at least two quotations
are provided, LIBOR for that Interest Determination Date will be the
arithmetic mean of those quotations.
. If fewer than two quotations are provided as mentioned above, LIBOR will be
the arithmetic mean of the rates quoted by three major banks in the
applicable financial center, on the Interest Determination Date for loans to
leading European banks in the Index Currency having the Index Maturity
designated in the pricing supplement, commencing on the second London
business day immediately following such Interest Determination Date, and in
a principal amount equal to an amount not less than U.S. $1 million that is
representative for a single transaction in that market at that time. The
calculation agent, after consultation with us, will select the three banks
referred to above.
. If fewer than three banks selected by the calculation agent are quoting as
mentioned above, LIBOR will be LIBOR in effect during the prior interest
period.
Treasury Rate Notes. A Treasury Rate note will bear interest at an interest
rate calculated with reference to the Treasury Rate and the spread or spread
multiplier, if any, as specified in the Treasury Rate note and the pricing
supplement.
Unless otherwise specified in the pricing supplement, the "Treasury Rate" for
any Interest Determination Date is the rate set at the most recent auction of
direct obligations of the United States ("Treasury bills") having the Index
Maturity designated in the pricing supplement, as that rate appears on either
Telerate Page 56 or Telerate Page 57 (or any pages that may replace such pages)
under the heading "INVESTMENT RATE."
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The following procedures will be followed if the Treasury Rate cannot be
determined as described above:
. If the above rate is not published on Telerate Page 56 or Telerate Page 57
by 9:00 a.m., New York City time, on the Calculation Date, the Treasury Rate
will be the auction average rate, expressed as a Bond Equivalent Yield, as
otherwise announced by the United States Department of the Treasury, for the
Interest Determination Date.
. If the results of the most recent auction of Treasury bills having the Index
Maturity designated in the pricing supplement are not published or announced
as described above by 3:00 p.m., New York City time, on the Calculation
Date, or if no auction is held in a particular week, the Treasury Rate will
be the Bond Equivalent Yield of the rate set forth in H.15(519) for the
Interest Determination Date opposite the Index Maturity under the heading
"U.S. government securities/Treasury bills/Secondary market."
. If the above rate is not published in H.15(519) by 3:00 p.m., New York City
time, on the Calculation Date, the Treasury Rate will be the rate set forth
in H.15 Daily Update, or another recognized electronic source used for the
purpose of displaying that rate, for the Interest Determination Date in
respect of the Index Maturity under the heading "U.S. government
securities/Treasury bills/Secondary market."
. If the above rate is not published in H.15(519), H.15 Daily Update or
another recognized source by 3:00 p.m., New York City time, on the
Calculation Date, then the calculation agent will determine the Treasury
Rate to be a yield to maturity, expressed as a Bond Equivalent Yield, of the
arithmetic mean of the secondary market bid rates, as of approximately 3:30
p.m., New York City time, on the Interest Determination Date of three
leading primary United States government securities dealers selected by the
calculation agent after consultation with us for the issue of Treasury bills
with a remaining maturity closest to the Index Maturity specified in the
pricing supplement.
. If fewer than three dealers selected by the calculation agent are quoting as
mentioned above, the Treasury Rate will be the Treasury Rate in effect
during the prior interest period.
Prime Rate Notes. A Prime Rate note will bear interest at an interest rate
calculated with reference to the Prime Rate and the spread or spread
multiplier, if any, as specified in the Prime Rate note and the pricing
supplement.
Unless otherwise specified in the note and the pricing supplement, the "Prime
Rate" for any Interest Determination Date is the prime rate or base lending
rate on that date, as published in H.15(519) by 9:00 a.m., New York City time,
on the Calculation Date pertaining to the Interest Determination Date under the
heading "Bank prime loan."
The following procedures will be followed if the Prime Rate cannot be
determined as described above:
. If the rate is not published in H.15(519) prior to 9:00 a.m., New York City
time, on the Calculation Date, then the Prime Rate will be the rate on the
Interest Determination Date as published in H.15 Daily Update opposite the
heading "Bank prime loan."
. If the above rate is not published in either H.15(519) or H.15 Daily Update
by 3:00 p.m., New York City time, on the Calculation Date, then the
calculation agent will determine the Prime Rate to be the arithmetic mean of
the rates of interest publicly announced by each bank that appears on the
Reuters Screen USPRIME1 as that bank's prime rate or base lending rate as in
effect for that Interest Determination Date.
. If fewer than four rates appear on the Reuters Screen USPRIME1 on the
Interest Determination Date, then the Prime Rate will be the average of the
prime rates or base lending rates quoted, on the basis of the actual number
of days in the year divided by a 360-day year, as of the close of business
on the Interest Determination Date by four major banks in The City of New
York selected by the calculation agent from a list approved by us.
. If fewer than two rates appear on the Reuters Screen USPRIME1 on the
Interest Determination Date, then the Prime Rate will be the arithmetic mean
of the prime rates or base lending rates furnished by the appropriate number
of substitute U.S. banks or trust companies in The City of New York that
have a total
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equity capital of U.S. $500,000,000 or more and are subject to supervision
or examination by federal or state authority. The calculation agent will
select the banks or trust companies referred to above from a list approved
by us.
. If the banks selected by the calculation agent are not quoting as mentioned
above, the Prime Rate will be the Prime Rate in effect during the prior
interest period.
CMT Rate Notes. A CMT Rate note will bear interest at an interest rate
calculated with reference to the CMT Rate and the spread or spread multiplier,
if any, as specified in the CMT Rate notes and the pricing supplement.
Unless otherwise specified in the pricing supplement, the "CMT Rate" for any
Interest Determination Date is the rate displayed on the Designated CMT
Telerate Page by 3:00 p.m., New York City time, on the Calculation Date
pertaining to the Interest Determination Date under the heading (or any
successor heading) "Treasury Constant Maturities--Federal Reserve Board
Release H.15--Mondays Approximately 3:45 p.m.," under the column for the Index
Maturity specified in the pricing supplement for:
. if the Designated CMT Telerate Page is 7051, such Interest Determination
Date; or
. if the Designated CMT Telerate Page is 7052, the week, or the month, as
applicable, ended immediately preceding the week in which the related
Interest Determination Date occurs.
The following procedures will be used if the CMT Rate cannot be determined as
described above:
. If the above rate is no longer displayed on the relevant page, or if not
displayed by 3:00 p.m., New York City time, on the Calculation Date, then
the CMT Rate will be the Treasury constant maturity rate for the Index
Maturity for the Interest Determination Date, as published in H.15(519).
. If that rate is no longer published in H.15(519), or if not displayed by
3:00 p.m., New York City time, on the Calculation Date, then the CMT Rate
will be the Treasury constant maturity rate, or other United States
Treasury rate, for the Index Maturity for the Interest Determination Date
as may then be published by either the Board of Governors of the Federal
Reserve System or the United States Department of the Treasury that the
calculation agent determines to be comparable to the rate formerly
displayed on the Designated CMT Telerate Page and published in H.15(519).
. If that information is no longer provided by 3:00 p.m., New York City time,
on the Calculation Date, then the calculation agent will determine the CMT
Rate to be a yield to maturity based on the arithmetic mean of the
secondary market offered rates as of approximately 3:30 p.m., New York City
time, on the Interest Determination Date reported, according to their
written records, by three leading primary United States government
securities dealers in The City of New York selected by the calculation
agent after consultation with us. The calculation agent will select five
leading primary United States government securities dealers and will
eliminate the highest and lowest quotations or, in the event of equality,
one of the highest and lowest quotations, for the most recently issued
direct noncallable fixed rate obligations of the United States ("Treasury
Notes") with an original maturity of approximately the Index Maturity and a
remaining term to maturity of not less than the Index Maturity minus one
year.
. If the calculation agent cannot obtain three Treasury Note quotations, the
calculation agent will determine the CMT Rate to be a yield to maturity
based on the arithmetic mean of the secondary market offered rates as of
approximately 3:30 p.m., New York City time, on the Interest Determination
Date of three leading primary United States government securities dealers
in New York City, selected using the same method described above, for the
most recently issued direct noncallable fixed rate obligations of the
United States with an original maturity of the number of years that is the
next highest to the Index Maturity and a remaining term to maturity closest
to the Index Maturity and in an amount of at least U.S. $100 million.
. If three or four (but not five) reference dealers are quoting as described
above, then the CMT Rate will be based on the arithmetic mean of the
offered rates obtained and neither the highest nor the lowest of those
quotations will be eliminated.
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. If fewer than three leading primary United States government securities
dealers selected by the calculation agent are quoting as described above,
the CMT Rate will be the CMT Rate in effect during the prior interest
period.
Amortizing Notes
We may from time to time offer fixed rate notes on which all or a portion of
the principal amount is payable before the stated maturity in accordance with a
schedule, by application of a formula or by reference to an index. These notes
are referred to as "amortizing notes." Unless otherwise specified in the
pricing supplement, interest on each amortizing note will be computed on the
basis of a 360-day year of twelve 30-day months. Payments with respect to
amortizing notes will be applied first to interest and then to principal.
Further information concerning additional terms and provisions of amortizing
notes, including repayment information, will be specified in the pricing
supplement.
Indexed Notes
The notes may be issued from time to time as notes of which the principal,
premium and/or interest will be determined with reference to specified
currencies, currency units, commodities, stock, other securities, interest or
other notes, financial or non-financial indices or other factors, in each case
as set forth in the pricing supplement. These notes are referred to as "indexed
notes." Holders of indexed notes may receive a principal amount on maturity
that is greater than or less than the face amount of the notes depending upon
the relative value of the specified index. Information as to the method for
determining the amount of principal, premium and/or interest payable in respect
of indexed notes, the time and manner of such payments, certain historical
information with respect to the specified index, material tax considerations
and other information will be set forth in the pricing supplement.
For the purpose of determining whether holders of the requisite principal
amount of securities outstanding under the senior indenture have made a demand
or given a notice or waiver or taken any other action, the outstanding
principal amount of indexed notes will be deemed to be the face amount of the
indexed notes. In the event of an acceleration of the maturity of an indexed
note, the principal amount payable to the holder of that note upon acceleration
will be the principal amount determined by reference to the formula by which
the principal amount of the note would be determined on the maturity date, as
if the date of acceleration were the maturity date.
Floating Rate/Fixed Rate Notes
A note may be a floating rate note for a portion of its term and a fixed rate
note for a portion of its term. In this event, the interest rate on the note
will be determined as if it were a floating rate note and a fixed rate note for
each specified period, as shall be set out in the pricing supplement.
Original Issue Discount Notes
We may from time to time offer original issue discount notes. The pricing
supplement for the original issue discount notes may provide that the holders
will not receive periodic interest payments. Any additional provisions relating
to the original issue discount notes may be described in the pricing
supplement. For the purpose of determining whether holders of the requisite
principal amount of notes outstanding under the senior indenture have made a
demand or given a notice or waiver or taken any other action, the outstanding
principal amount of original issue discount notes shall be deemed to be the
amount of the principal that would be due and payable upon acceleration of the
stated maturity as of the date of such determination.
By an original issue discount note, we mean either:
. a note, including any zero coupon note, that has a stated redemption price
at stated maturity that exceeds its issue price by at least 0.25% of its
stated redemption price at maturity multiplied by the number of full years
from the original issue date to stated maturity; or
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. any other note we designate as issued with original issue discount for
United States federal income tax purposes.
Dual Currency Notes
We may from time to time offer notes in which we have a one-time option to pay
the principal, premium, if any, and interest, if any, on the notes in an
optional currency specified in the pricing supplement that is a different
currency from the currency specified in the note. These notes are called
referred to as "dual currency notes." We shall specify in the pricing
supplement for the dual currency note:
. the specified currency;
. the optional payment currency;
. the designated exchange rate;
. the option election dates; and
. the interest payment dates for dual currency notes.
The amounts payable and the method for calculating these amounts with
respect to dual currency notes and any additional terms and conditions of any
issue of dual currency notes will be specified in the pricing supplement.
Interest Rate Reset
If we have the option under any note to reset the interest rate, in the case of
a fixed rate note, or to reset the spread and/or spread multiplier, in the case
of a floating rate note, we will indicate such option in the pricing supplement
relating to such note, and, if so:
. the date or dates on which such interest rate or such spread and/or spread
multiplier, as the case may be, may be reset, each an optional reset date;
and
. the basis or formula, if any, for such resetting.
We may exercise such option with respect to a note by notifying the trustee of
such exercise at least 45 but not more than 60 days prior to an optional reset
date for such note, unless otherwise specified in the pricing supplement. Not
later than 40 days (unless otherwise specified in the pricing supplement) prior
to such optional reset date, the trustee will mail to the holder of such note a
notice, called the reset notice, first class, postage prepaid, setting forth:
. our election to reset the interest rate, in the case of a fixed rate note,
or the spread and/or spread multiplier, in the case of a floating rate note;
. such new interest rate or such new spread and/or spread multiplier; and
. the provisions, if any, for redemption during the period from such optional
reset date to the next optional reset date or, if there is no such next
optional reset date, to the stated maturity of such note (each such period
is called a subsequent interest period) including the date or dates on which
or the period or periods during which and the price or prices at which such
redemption may occur during such subsequent interest period.
Notwithstanding the above, not later than 20 days (unless otherwise specified
in the pricing supplement) prior to an optional reset date for a note, we may,
at our option, revoke the interest rate, in the case of a fixed rate note, or
the spread and/or spread multiplier, in the case of a floating rate note, in
either case provided for in the reset notice and establish a higher interest
rate, in the case of a fixed rate note, or a higher spread and/or spread
multiplier, in the case of a floating rate note, for the subsequent interest
period commencing on such optional reset date by mailing or causing the trustee
to mail notice of such higher interest rate or higher spread and/or spread
multiplier, as the case may be, first class, postage prepaid, to the direct
holder of such note. Such notice
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shall be irrevocable. All notes with respect to which the interest rate or
spread and/or spread multiplier is reset on an optional reset date will bear
such higher interest rate, in the case of a fixed rate note, or higher spread
and/or spread multiplier, in the case of a floating rate note.
If we elect to reset the interest rate or the spread and/or spread multiplier
of a note, the holder of such note will have the option to elect repayment of
such note by us on any optional reset date at a price equal to the principal
amount of such note plus any accrued interest to such optional reset date. In
order for a note to be so repaid on an optional reset date, the holder must
follow the procedures described below under "Repurchase at Option of the
Holder" for optional repayment, except that the period for delivery of such
note or notification to the trustee shall be at least 25 but not more than 35
days (unless otherwise specified in the pricing supplement) prior to such
optional reset date and except that a holder who has tendered a note for
repayment pursuant to a reset notice may, by written notice to the trustee,
revoke any such tender for repayment until the close of business on the tenth
day prior to such optional reset date.
Extension of Maturity
If we have provided in any note the option for us to extend the stated maturity
for one or more periods, each an extension period, up to but not beyond the
final maturity date described in the pricing supplement relating to such note,
such pricing supplement will indicate such option and the basis or formula, if
any, for setting the interest rate, in the case of a fixed rate note, or the
spread and/or spread multiplier, in the case of a floating rate note,
applicable to any such extension period, and such pricing supplement will
describe any special tax consequences to holders of such notes.
We may exercise such option with respect to a note by notifying the trustee of
such exercise at least 45 but not more than 60 days (unless otherwise specified
in the pricing supplement) prior to the original stated maturity of such note
in effect prior to the exercise of such option. No later than 40 days (unless
otherwise specified in the pricing supplement) prior to the original stated
maturity, the trustee will mail to the holder of such note an extension notice
relating to such extension period, first class, postage prepaid, setting forth:
. our election to extend the stated maturity of such note;
. the new stated maturity;
. in the case of a fixed rate note, the interest rate applicable to the
extension period or, in the case of a floating rate note, the spread and/or
spread multiplier applicable to the extension period; and
. the provisions, if any, for redemption during the extension period,
including the date or dates on which or the period or periods during which
and the price or prices at which such redemption may occur during the
extension period.
When the trustee has mailed an extension notice to the holder of a note, the
stated maturity of such note shall be extended automatically as described in
the extension notice, and, except as modified by the extension notice and as
described in the next paragraph, such note will have the same terms as prior to
the mailing of such extension notice.
Notwithstanding the above, not later than 20 days (unless otherwise specified
in the pricing supplement) prior to the original stated maturity for a note, we
may, at our option, revoke the interest rate, in the case of a fixed rate note,
or the spread and/or spread multiplier, in the case of a floating rate note,
provided for in the extension notice and establish a higher interest rate, in
the case of a fixed rate note, or a higher spread and/or spread multiplier, in
the case of a floating rate note, for the extension period by mailing or
causing the trustee to mail notice of such higher interest rate or higher
spread and/or spread multiplier, as the case may be, first class, postage
prepaid, to the holder of such note. Such notice shall be irrevocable. All
notes with respect to which the stated maturity is extended will bear such
higher interest rate, in the case of a fixed rate note, or higher spread and/or
spread multiplier, in the case of a floating rate note, for the extension
period.
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If we elect to extend the stated maturity of a note, the direct holder of such
note will have the option to elect repayment of such note by us at the original
stated maturity at a price equal to the principal amount of such note plus any
accrued interest to such date. In order for a note to be so repaid on the
original stated maturity, the direct holder must follow the procedures
described below under "Repurchase at Option of the Holder" for optional
repayment, except that the period for delivery of such note or notification to
the trustee shall be at least 25 but not more than 35 days (unless otherwise
specified in the pricing supplement) prior to the original stated maturity and
except that a direct holder who has tendered a note for repayment pursuant to
an extension notice may, by written notice to the trustee, revoke any such
tender for repayment until the close of business on the tenth day prior to the
original stated maturity.
Other Provisions
Any provisions with respect to a note, including the specification and
determination of one or more interest rate bases, the calculation of the
interest and/or principal payable on the note, any redemption, extension or
repayment provisions, or any other provisions relating to a note, may be
modified or supplemented to the extent not inconsistent with the terms of the
senior indenture, so long as the provisions are specified in the note and in
the pricing supplement.
Book-Entry Notes
Book-entry notes of any series will be issued in the form of one or more
registered global notes that will be deposited with, or on behalf of, The
Depository Trust Company, as depositary (or such other depositary as may be
specified in the pricing supplement), and registered in the name of the
depositary's nominee. The global note may not be transferred except as a whole
to another nominee of the depositary or to a successor depositary or its
nominee.
Upon the issuance of the global note, the depositary will credit, on its book-
entry registration and transfer system, the principal amount of the notes
represented by the global note to accounts of institutions that have accounts
with the depositary. Institutions that have accounts with the depositary are
referred to as "participants." The accounts to be credited will be designated
by the agents, or by us if we sell the notes directly. Owners of beneficial
interests in the global note that are not participants or persons that may hold
through participants but desire to purchase, sell or otherwise transfer
ownership of the notes by book-entry on the records of the depositary may do so
only through participants and persons that may hold through participants.
Because the depositary can only act on behalf of participants and persons that
may hold through participants, the ability of an owner of a beneficial interest
in the global note to pledge notes to persons or entities that do not
participate in the book-entry and transfer system of the depositary, or
otherwise take actions in respect of the notes, may be limited. In addition,
the laws of some states require that certain purchasers of securities take
physical delivery of such securities in definitive form. These limits and laws
may impair a purchaser's ability to transfer beneficial interests in the global
note.
So long as the depositary, or its nominee, is the registered owner of the
global note, the depositary or its nominee will be considered the sole owner or
holder of the notes represented by the global note for all purposes under the
senior indenture. Generally, owners of beneficial interests in the global note
will not be entitled to have notes represented by the global note registered in
their names, will not receive or be entitled to receive physical delivery of
notes in definitive form and will not be considered the owners or holders of
the notes under the senior indenture.
Principal and interest payments on notes registered in the name of the
depositary or its nominee will be made to the depositary or its nominee as the
registered owner of the global note. Neither we, the trustee, any paying agent
or the note registrar will have any responsibility or liability for any aspect
of the records relating to, or payments made on account of, beneficial
ownership interests in the global note or for maintaining, supervising or
reviewing any records relating to the beneficial ownership interests.
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We expect that the depositary, upon receipt of any payment of principal or
interest, will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of the global note as shown on the records of the depositary. We also
expect that payments by participants to owners of beneficial interests in the
global note held through the participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers and registered in "street name," and will be the
responsibility of such participants. Owners of beneficial interests in the
global note that hold through the depositary under a book-entry format (as
opposed to holding certificates directly) may experience some delay in the
receipt of interest payments because the depositary will forward payments to
its participants, which in turn will forward them to persons that hold through
participants.
If the depositary is at any time unwilling or unable to continue as depositary
and a successor depositary is not appointed by us or the depositary within
ninety days, we will issue notes in definitive registered form in exchange for
the global note. In addition, either the depositary or we may at any time, in
our sole discretion, determine not to have the notes represented by a global
note and, in such event, we will issue notes in definitive registered form in
exchange for the global note. In either instance, an owner of a beneficial
interest in the global note will be entitled to have notes equal in principal
amount to the beneficial interest registered in its name and will be entitled
to physical delivery of the notes in definitive form.
DTC has advised us as follows: DTC is a limited-purpose trust company organized
under the laws of the State of New York, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code and a "clearing agency" registered pursuant to the provisions
of Section 17A of the Securities Exchange Act of 1934. DTC was created to hold
securities of its participants and to facilitate the clearance and settlement
of securities transactions among its participants in those securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. DTC's
participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations, some of which own DTC.
Access to DTC's book-entry system is also available to others, including banks,
brokers, dealers and trust companies, that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
All payments of principal, premium, if any, and any interest on foreign
currency notes which are global notes will be made in U.S. dollars unless the
depositary has received notice in accordance with its procedures from any
participants of their election to receive all or a specified portion of such
payments in the specified currency, in which case payments in the specified
currency will be made directly to such participants.
Redemption and Repurchase
If applicable, the pricing supplement will indicate the terms on which the
notes will be redeemable or subject to repurchase at our option. Unless
otherwise specified in the pricing supplement, notice of redemption or
repurchase will be provided by mailing a notice of redemption or repurchase to
each holder at least 30 days and not more than 60 days (unless otherwise
specified in the pricing supplement) before the date fixed for redemption or
repurchase. If not all the notes having the same terms are to be redeemed or
repurchased, as the case may be, the notes to be redeemed or repurchased shall
be selected by the trustee by a method as the trustee deems fair and
appropriate. Unless otherwise specified in the pricing supplement, the notes
will not be subject to any sinking fund.
We may at any time purchase notes at any price in the open market or otherwise.
Notes purchased by us may, at our discretion, be held or resold or surrendered
to the trustee for cancellation.
Repurchase at the Option of the Holder
If applicable, the pricing supplement will indicate that the note will be
subject to repurchase at the holder's option on a date or dates prior to
maturity, and at a price or prices, set forth in the pricing supplement,
together with accrued interest to the date of repurchase.
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In order for a note to be repurchased, the trustee must receive at least 30
days but not more than 45 days (unless otherwise specified in the pricing
supplement) prior to the repurchase date:
. appropriate wire instructions; and
. either (a) the note with the form entitled "Option to Elect Repurchase" on
the reverse of the note duly completed, or (b) a telegram, telex, facsimile
transmission or letter from a member of a national securities exchange or
the National Association of Securities Dealers, Inc., or a commercial bank
or trust company in the United States setting forth:
(i) the name of the holder of the note;
(ii) the principal amount of the note;
(iii) the portion of the principal amount of the note to be repurchased;
(iv) the certificate number or a description of the tenor and terms of the
note;
(v) a statement that the option to elect repurchase is being exercised;
and
(vi) a guarantee that the note to be repaid with the form entitled "Option
to Elect Repurchase" on the reverse of the note duly completed will
be received by the trustee within five business days. The trustee
must actually receive the note and form duly completed by the fifth
business day.
Exercise of the repurchase option by the holder of a note shall be irrevocable.
The holder of a note may exercise the repurchase option for less than the
entire principal amount of the note provided that the principal amount of the
note remaining outstanding after repurchase is an authorized denomination. No
transfer or exchange of any note will be permitted after exercise of a
repurchase option. If a note is to be repurchased in part, no transfer or
exchange of the portion of the note to be repurchased will be permitted after
exercise of a repurchase option. All questions as to the validity, eligibility,
including time of receipt, and acceptance of any note for repurchase will be
determined by us and our determination will be final, binding and non-
appealable.
If a note is represented by a global note, the depositary or its nominee will
be the holder of the note and therefore will be the only entity that can
exercise a right to repurchase. In order to ensure that the depositary or its
nominee will timely exercise a right to repurchase with respect to a particular
note, the beneficial owner of such note must instruct the broker or other
direct or indirect participant through which it holds an interest in such note
to notify the depositary of its desire to exercise a right to repurchase.
Different firms have different cutoff times for accepting instructions from
their customers. As a result, each beneficial owner should consult the broker
or other direct or indirect participant through which it holds an interest in a
note in order to ascertain the cutoff time by which an instruction must be
given in order for timely notice to be delivered to the depositary.
Tax Redemption
If specified in the applicable pricing supplement for the notes, we may redeem
the notes, subject to any other terms specified in the note and the pricing
supplement, as a whole but not in part, at our option, upon not more than 60
days, nor less than 30 days (unless otherwise specified in the pricing
supplement), prior notice to the holders of the notes, at a redemption price
equal to 100% of the principal amount of the notes, or, if applicable, a lesser
amount in the case of original issue discount notes, and premium, if any,
together with accrued interest, if any, to date fixed for redemption, if on the
next succeeding interest payment date, we will be obligated to:
. pay any additional amounts as specified in the pricing supplement; or
. account to any federal or state taxing authority for any amount, other than
any tax withheld or deducted from interest payable on a particular series of
notes, regarding any payment made or to be made on any note.
If specified in the applicable pricing supplement for the particular issuance
of the notes, we will, subject to certain exceptions and limitations set forth
below, pay to the holder of such note who is a United States Alien (as
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defined below), as additional interest, such additional amounts as may be
necessary in order that every net payment on such note (including payment of
the principal of and interest on such note) by us or our specified paying
agent, after deduction or withholding for or on account of any present or
future tax, assessment or other governmental charge imposed upon or as a result
of such payment by the United States (or any political subdivision or taxing
authority thereof or therein), will not be less than the amount provided in
such note to be then due and payable.
However, our obligation to pay additional amounts with respect to that
particular issuance of notes will not apply to:
(1) any tax, assessment or other governmental charge that would not have been
so imposed but for:
. the existence of any present or former connection between such holder or
beneficial owner of such note (or between a fiduciary, settlor or
beneficiary of, or a person holding a power over, such holder, if such
holder is an estate or a trust, or a member or shareholder of such
holder, if such holder is a partnership or corporation) and the United
States or any political subdivision or taxing authority thereof or
therein, including, without limitation, such holder (or such fiduciary,
settlor, beneficiary, person holding a power, member or shareholder)
being or having been a citizen or resident of the United States or
treated as a resident thereof or being or having been engaged in a trade
or business or present therein or having or having had a permanent
establishment therein; or
. such holder's or beneficial owner's past or present status as a personal
holding company, foreign personal holding company, foreign private
foundation or other foreign tax-exempt organization with respect to the
United States, controlled foreign corporation for United States tax
purposes or corporation that accumulates earnings to avoid United States
federal income tax;
(2) any estate, inheritance, gift, excise, sales, transfer, wealth or personal
holding company, foreign personal holding company, foreign private
foundation or other foreign tax-exempt organization with respect to the
United States, controlled foreign corporation for United States tax
purposes or corporation that accumulates earnings to avoid United States
federal income tax;
(3) any tax, assessment or other governmental charge that would not have been
imposed but for the presentation by the holder of such note for payment
more than 30 days after the date on which such payment became due and
payable or the date on which payment thereof was duly provided for,
whichever occurred later;
(4) any tax, assessment or other governmental charge that is payable otherwise
than by withholding from a payment on such note;
(5) any tax, assessment or other governmental charge required to be withheld
by any paying agent from a payment on such note, if such payment can be
made without such withholding by any other paying agent;
(6) any tax, assessment or other governmental charge that would not have been
imposed but for a failure to comply with applicable certification,
information, documentation, identification or other reporting requirements
concerning the nationality, residence, identity or connection with the
United States of the holder or beneficial owner of such note if such
compliance is required by statute or regulation of the United States or by
any applicable tax treaty to which the United States is a party as a
precondition to relief or exemption from such tax, assessment or other
governmental charge;
(7) any tax, assessment or other governmental charge imposed on a holder that
actually or constructively owns 10% or more or the combined voting power
or all classes of our stock;
(8) any tax, assessment or other governmental charge that would not have been
imposed or withheld but for the treatment of the interest by us as
contingent interest described in Section 871(h)(4) of the Internal Revenue
Code of 1986, as amended;
(9) any tax, assessment or other governmental charge that would not have been
imposed or withheld but for an election by the holder the effect of which
is to make the payment of the principal of, or interest (other any other
amount) on, such note by us or a paying agent subject to United States
federal income tax; or
(10) any combination of items (1), (2), (3), (4), (5), (6), (7), (8) and (9).
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In addition, we shall not be required to pay additional amounts on such note to
a holder that is a fiduciary or partnership or other than the sole beneficial
owner of such payment to the extent a beneficiary or settlor with respect to
such fiduciary or a member of such partnership or a beneficial owner would not
have been entitled to additional amounts (or payment of additional amounts
would not have been necessary) had such beneficiary, settlor, member or
beneficial owner been the holder of such note.
For the purposes above, a "United States Alien" means any person who, for
United States federal income tax purposes, is a foreign corporation, a non-
resident alien individual, a non-resident alien fiduciary of a foreign estate
or trust, or a foreign partnership one or more of the members of which is, for
United States federal income tax purposes, a foreign corporation, a non-
resident alien individual or a non-resident alien fiduciary, of a foreign
estate or trust. "United States" means the United States of America (including
the States and the District of Columbia) and its territories, its possessions
and other areas subject to its jurisdiction.
Covenants
The covenants contained in the indenture described under the caption
"Description of Debt Securities--Covenants in the Senior Indenture" in the
attached prospectus will apply to the notes.
Defeasance
The provisions of the indenture relating to defeasance and covenant defeasance
described under the caption "Description of Debt Securities--Satisfaction &
Discharge; Defeasance" in the attached prospectus will apply to the notes.
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SPECIAL PROVISIONS RELATING TO FOREIGN CURRENCY NOTES
Foreign currency notes will not be sold in, or to residents of, the country
issuing the specified currency in which particular notes are denominated. The
information described in this prospectus supplement is directed to prospective
purchasers who are United States residents, and we disclaim any responsibility
to advise prospective purchasers who are residents of countries other than the
United States with respect to any matters that may affect the purchase, holding
or receipt of payments of principal of and interest on the notes. Such persons
should consult their own counsel with regard to such matters. See "Risk
Factors--Investment in foreign currency notes entails significant risks not
associated with debt securities denominated in U.S. dollars."
The pricing supplement relating to notes that are denominated in, or the
payment of which is determined with reference to, a specified currency other
than U.S. dollars or relating to currency indexed notes will contain
information concerning historical exchange rates for such specified currency
against the U.S. dollar or other relevant currency, a description of such
currency or currencies and any exchange controls affecting such currency or
currencies. Information concerning exchange rates is furnished as a matter of
information only and should not be regarded as indicative of the range of or
trend in fluctuations in currency exchange rates that may occur in the future.
Payment Currency
Unless we otherwise specify in the applicable pricing supplement, purchasers of
the notes are required to pay for foreign currency notes in U.S. dollars, a
foreign currency or such other composite currency unit specified in the
applicable pricing supplement. At the present time there are limited facilities
in the United States for the conversion of U.S. dollars into foreign currencies
and vice versa, and banks generally do not offer non-U.S. dollar checking and
savings account facilities in the United States. If a prospective purchaser of
the notes does not have the specified currency to purchase the notes from us,
the prospective purchaser may request that the agent involved in the initial
placement of the notes convert such purchaser's U.S. dollars into the specified
currency if notice is given by such purchaser to the agent on or prior to the
fifth day preceding the delivery of the notes. Each such conversion in
connection with the initial purchase of the notes from us will be made by the
agent for the initial placement of the notes on terms and subject to
conditions, limitations and charges as this agent may from time to time
establish in accordance with its regular foreign exchange practices. All costs
of exchange will be borne by the purchasers of the notes. Special tax
considerations apply to foreign currency notes and are described below under
"United States Federal Taxation--U.S. Holders--Nonfunctional Currency Notes."
Except as described in the applicable pricing supplement, if payment on a note
is required to be made in a specified currency other than U.S. dollars and such
currency is unavailable in our good faith judgment due to the imposition of
exchange controls or other circumstances beyond our control, or is no longer
used by the government of the country issuing such currency or for the
settlement of transactions by public institutions of or within the
international banking community, then all payments with respect to such note
shall be made in U.S. dollars until such currency is again available or so
used. The amount so payable on any date in such foreign currency shall be
converted into U.S. dollars at a rate determined by the exchange rate agent on
the basis of the market exchange rate on the second business day prior to such
payment, or, if the market exchange rate is not then available, the most
recently available market exchange rate or as otherwise determined by us in
good faith if the foregoing is impracticable. Any payment in respect of such
note made under such circumstances in U.S. dollars will not constitute an event
of default under the senior indenture.
The notes that are denominated in, or the payment of which is determined by
reference to, a specified currency other than U.S. dollars, will provide that,
in the event of an official redenomination of a foreign currency,
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including, without limitation, an official redenomination of a foreign currency
that is a composite currency, our obligations with respect to payments on notes
denominated in such currency shall, in all cases, be regarded immediately
following such redenomination as providing for the payment of that amount of
redenominated currency representing the amount of such obligations immediately
before such redenomination. Such notes will not provide for any adjustment to
any amount payable under the notes as a result of:
. change in the value of a foreign currency due solely to fluctuations in
exchange rates; or
. any redenomination of any component currency of any composite currency,
unless such composite currency is itself redenominated.
If the official unit of any component currency is altered by way of combination
or subdivision, the number of units of that currency as a component shall be
divided or multiplied in the same proportion. If two or more component
currencies are consolidated into a single currency, the amounts of those
currencies as components shall be replaced by an amount in such single
currency. If any component currency is divided into two or more currencies, the
amount of that original component currency as a component shall be replaced by
the amounts of such two or more currencies having an aggregate value on the
date of division equal to the amount of the former component currency
immediately before such division.
All determinations referred to above made by the exchange rate agent shall be
at its sole discretion, except to the extent expressly provided herein that any
determination is subject to our approval. In the absence of manifest error,
such determinations shall be conclusive for all purposes and binding on holders
of the notes and the exchange rate agent shall have no liability therefor.
Governing Law and Judgments
The notes will be governed by and construed in accordance with the laws of the
State of New York. Courts in the United States have not customarily rendered
judgments for money damages denominated in any currency other than the U.S.
dollar. New York statutory law provides, however, that a court shall render a
judgment or decree in the foreign currency of the underlying obligation and
that the judgment or decree shall be converted into U.S. dollars at the rate of
exchange prevailing on the date of the entry of the judgment or decree.
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UNITED STATES FEDERAL TAXATION
The following summary describes certain United States federal income tax
consequences of the ownership of notes as of the date of this prospectus
supplement. Generally, this summary deals only with notes held as capital
assets and does not deal with special situations, such as those of dealers in
securities or currencies, financial institutions, tax-exempt entities, life
insurance companies, persons holding notes as part of a hedging, constructive
sale or conversion transaction or a straddle or to holders of notes whose
"functional currency" is not the U.S. dollar. This discussion only covers you
if you buy your notes in the initial offering of a particular issuance of
notes. Furthermore, the discussion below is based upon the provisions of the
Internal Revenue Code and regulations, rulings and judicial decisions as of the
date of this prospectus supplement. Those authorities may be repealed, revoked
or modified so as to result in United States federal income tax consequences
different from those discussed below. This discussion does not cover state,
local or foreign law. Any special United States federal tax considerations
relevant to a particular issue of the notes will be provided in the pricing
supplement. We have not requested a ruling from the IRS on the tax consequences
of the notes. As a result, the IRS could disagree with portions of this
discussion. Persons considering the purchase, ownership or disposition of notes
should consult their own tax advisors concerning the United States federal
income tax consequences to them in light of their particular situations as well
as any consequences arising under the laws of any other taxing jurisdiction.
U.S. Holders
Payments of Interest
Except as set forth below, interest on a note will generally be taxable to a
U.S. holder as ordinary income from domestic sources at the time it is paid or
accrued in accordance with the U.S. holder's method of accounting for tax
purposes. As used in this prospectus supplement, a "U.S. holder" means a
beneficial owner of a note that is:
. an individual citizen or resident of the United States;
. a corporation or partnership or entity taxable as a corporation or
partnership created or organized in or under the laws of the United States
or any political subdivision of the United States;
. an estate the income of which is subject to United States federal income
taxation regardless of its source; or
. a trust that is subject to the supervision of a court within the United
States and the control of one or more United States persons as described in
section 7701(a)(30) of the Internal Revenue Code.
If a partnership holds notes, the tax treatment of a partner will generally
depend upon the status of the partner and upon the activities of the
partnership. If you are a partner of a partnership holding notes, we suggest
that you consult your tax advisor.
A "non-U.S. holder" is a holder that is not a U.S. holder.
Original Issue Discount
U.S. holders of notes issued with original issue discount will be subject to
special tax accounting rules, as described in greater detail below. Original
issue discount is referred to as "OID." U.S. holders of those notes generally
must include OID in gross income in advance of the receipt of cash attributable
to that income. However, U.S. holders of those notes generally will not be
required to include separately in income cash payments received on the notes,
even if denominated as interest, to the extent those payments do not constitute
"qualified stated interest." Notes issued with OID will be referred to as
"original issue discount notes." Notice will be given in the pricing supplement
when we determine that a particular note will be an original issue discount
note.
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This summary is based upon final Treasury regulations addressing debt
instruments with OID. A note with an "issue price" that is less than its stated
redemption price at maturity generally will be issued with original issue
discount if that difference is at least 0.25% of the stated redemption price at
maturity multiplied by the number of complete years to maturity. The stated
redemption price at maturity is equal to the sum of all payments to be made on
the note other than "qualified stated interest." The "issue price" of each note
in a particular offering will be the first price at which a substantial amount
of that particular offering is sold to the public. This calculation will not
include any sales to an underwriter, placement agent or wholesaler. The term
"qualified stated interest" means stated interest that is unconditionally
payable in cash or in property, other than debt instruments of the issuer, at
least annually during the entire term of the note at a single fixed rate or,
subject to certain conditions, based on one or more interest indices. Interest
is payable at a single fixed rate only if the rate appropriately takes into
account the length of the interval between payments. Notice will be given in
the pricing supplement when we determine that a particular note will bear
interest that is not "qualified stated interest."
In the case of a note issued with de minimis OID, the U.S. holder generally
must include the de minimis OID in income at the time payments other than
qualified stated interest on the notes are made in proportion to the amount
paid. A note will have de minimis OID if it is issued with a discount that is
not OID because it is less than 0.25% of the stated redemption price at
maturity multiplied by the number of complete years to maturity. Any amount of
de minimis OID that has been included in income generally will be treated as
capital gain.
Certain notes may contain provisions permitting them to be redeemed prior to
their stated maturity at our option and/or at the holder's option. Original
issue discount notes containing those features may be subject to rules that
differ from the general rules discussed in this prospectus supplement. Persons
considering the purchase of original issue discount notes with those features
should carefully examine the pricing supplement and should consult their own
tax advisors with respect to those features since the tax consequences with
respect to OID will depend, in part, on the particular terms and features of
the notes.
U.S. holders of original issue discount notes with a maturity upon issuance of
more than one year must, in general, regardless of their usual method of
accounting, include OID in income in advance of the receipt of some or all of
the related cash payments using the "constant yield method" described in this
paragraph. The amount of OID includable in income by the initial U.S. holder of
an original issue discount note is the sum of the "daily portions" of OID with
respect to the note for each day during the taxable year or portion of the
taxable year in which that U.S. holder held such note. This amount is referred
to as "accrued OID." The daily portion is determined by allocating to each day
in any "accrual period" a pro rata portion of the OID allocable to that accrual
period. The "accrual period" for an original issue discount note may be of any
length and may vary in length over the term of the note, provided that each
accrual period is no longer than one year and each scheduled payment of
principal or interest occurs on the first day or the final day of an accrual
period. The amount of OID allocable to any accrual period is an amount equal to
the excess, if any, of:
. the product of the note's adjusted issue price at the beginning of the
accrual period and its yield to maturity. determined on the basis of
compounding at the close of each accrual period and properly adjusting for
the length of the accrual period
over
. the aggregate of all "qualified stated interest" allocable to the accrual
period.
OID allocable to a final accrual period is the difference between the amount
payable at maturity and the adjusted issue price at the beginning of the final
accrual period. For purposes of this calculation, the amount payable at
maturity will not include payments of "qualified stated interest." Special
rules apply for calculating OID for an initial short accrual period. The
"adjusted issue price" of a note at the beginning of any accrual period
generally is equal to its issue price:
. increased by the accrued OID for each prior accrual period, determined
without regard to the amortization of any acquisition or bond premium, as
described below; and
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. reduced by any payments made on the note, other than "qualified stated
interest," on or before the first day of the accrual period.
Under these rules, a U.S. holder will have to include in income increasingly
greater amounts of OID in successive accrual periods. We are required to
provide information returns stating the amount of OID accrued on notes held of
record by persons other than corporations and other exempt holders.
In the case of an original issue discount note that is a floating rate note,
both the "yield to maturity" and "qualified stated interest" will be determined
solely for purposes of calculating the accrual of OID as though the note will
bear interest in all periods at a fixed rate generally equal to:
. the rate that would be applicable to interest payments on the note on its
date of issue; or
. the rate that reflects the yield to maturity that is reasonably expected for
the note.
Additional rules may apply if interest on a floating rate note is based on more
than one interest index. Persons considering the purchase of floating rate
notes should carefully examine the pricing supplement and should consult their
own tax advisors regarding the United States federal income tax consequences of
the holding and disposition of those notes.
U.S. holders may elect to treat all interest on any note as OID and calculate
the amount includable in gross income under the constant yield method described
above. For the purposes of this election, interest includes each of the
following, as adjusted by any amortizable bond premium or acquisition premium:
. stated interest;
. acquisition discount;
. OID;
. de minimis OID;
. market discount;
. de minimis market discount; and
. unstated interest.
The election is to be made for the taxable year in which the U.S. holder
acquired the note, and may not be revoked without the consent of the IRS. U.S.
holders should consult with their own tax advisors about this election.
Optional Redemption
If we have an option to redeem a note, or the holder has an option to cause a
note to be repurchased, before the note's stated maturity, the option will be
presumed to be exercised if the yield on the note would be:
. in the case of a redemption at our option, lower than its yield to stated
maturity; or
. in the case of an option of the holder, higher than its yield to stated
maturity.
For purposes of this calculation, any date on which the note may be redeemed or
repurchased would be used as the maturity date and the amount payable on that
date in accordance with the terms of that note would be used as the stated
redemption price at maturity. If such option is not in fact exercised when
presumed to be exercised, the note would be treated solely for OID purposes as
if it were redeemed or repurchased, and a new note were issued, on the presumed
exercise date for an amount equal to the note's adjusted issue price on that
date.
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Short-Term Notes
Notes having a term of one year or less are referred to as "short-term notes."
In the case of short-term notes, all payments, including all stated interest
will be included in the stated redemption price at maturity and will not be
"qualified stated interest." Thus, U.S. holders will generally be taxed on the
discount in lieu of stated interest. The discount will be equal to the excess
of the stated redemption price at maturity over the issue price of a short-term
note, unless the U.S. holder elects to compute this discount using tax basis
instead of issue price. In general, individuals and certain other cash method
U.S. holders of short-term notes are not required to include accrued discount
in their income currently unless they elect to do so. They may, however, be
required to include stated interest in income as the income is received. U.S.
holders that report income for U.S. federal income tax purposes on the accrual
method and certain other U.S. holders are required to accrue discount on these
short-term notes as ordinary income on a straight-line basis, unless an
election is made to accrue the discount according to a constant yield method
based on daily compounding. In the case of a U.S. holder that is not required,
and does not elect, to include discount in income currently, any gain realized
on the sale, exchange or retirement of the short-term note will generally be
ordinary income to the extent of the discount accrued through the date of sale,
exchange or retirement. In addition, a U.S. holder that does not elect to
currently include accrued discount in income may be required to defer
deductions for a portion of the U.S. holder's interest expense with respect to
any indebtedness attributable to the notes.
Acquisition Premium; Amortizable Premium
A U.S. holder that purchases an original issue discount note for an amount that
is greater than its adjusted issue price but equal to or less than the sum of
all amounts payable on the note after the purchase date other than payments of
qualified stated interest will be considered to have purchased that note at an
"acquisition premium." Under the acquisition premium rules, the amount of OID
which the U.S. holder must include in its gross income with respect to the note
for any taxable year will be reduced by the portion of the acquisition premium
properly allocable to that year.
A U.S. holder that purchases a note for an amount in excess of the sum of all
amounts payable on the note after the purchase date other than qualified stated
interest will be considered to have purchased the note at a "premium." If the
note purchased is an original issue discount note, that U.S. holder will not be
required to include any OID in income. A U.S. holder generally may elect to
amortize the premium over the remaining term of the note on a constant yield
method as an offset to interest when includable in income under the U.S.
holder's regular accounting method. In the case of instruments that provide for
alternative payment schedules, bond premium is calculated by assuming that:
. the holder will exercise or not exercise options in a manner that maximizes
the holder's yield;
. the issuer will exercise or not exercise options, other than call options,
in a manner that minimizes the holder's yield; and
. the issuer will exercise call options in a manner that maximizes the
holder's yield.
Bond premium on a note held by a U.S. holder that does not make an election to
amortize the premium will decrease the gain or increase the loss otherwise
recognized on disposition of the note. The election to amortize premium on a
constant yield method once made applies to all debt obligations held or
subsequently acquired by the electing U.S. holder on or after the first day of
the first taxable year to which the election applies and may not be revoked
without the consent of the IRS.
Sale, Exchange and Retirement of Notes
A U.S. holder's tax basis in a note will, in general, be the U.S. holder's cost
for that note, increased by OID, market discount or any discount with respect
to a short-term note previously included in income by the U.S. holder and
reduced by any amortized premium and any cash payments on the note other than
"qualified stated
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interest." Upon the sale, exchange, retirement or other disposition of a note,
a U.S. holder will recognize gain or loss equal to the difference between the
amount realized upon the sale, exchange, retirement or other disposition and
the adjusted tax basis of the note. For purposes of this calculation, the
amount realized upon the disposition will be reduced by any accrued "qualified
stated interest," which will be taxable as such. Except as described above with
respect to certain short-term notes or with respect to market discounts, that
gain or loss will be capital gain or loss. Capital gains of individuals derived
in respect of capital assets held for more than one year are eligible for
reduced rates of taxation. The deductibility of capital losses is subject to
limitations.
Nonfunctional Currency Notes
The following is a summary of the principal United States federal income tax
consequences to a United States holder of the ownership of a foreign currency
note or a note determined by reference to a specified currency other than the
U.S. dollar, which are collectively referred to as nonfunctional currency
notes. Persons considering the purchase of nonfunctional currency notes should
consult their own tax advisors with regard to the application of the United
States federal income tax laws to their particular situations, as well as any
consequences arising under the laws of any other taxing jurisdiction.
In general, if a payment of interest with respect to a note is made in (or
determined by reference to the value of) nonfunctional currency, the amount
includable in the income of the U.S. holder will be, in the case of a cash
basis U.S. holder, the U.S. dollar value of the nonfunctional currency payment
based on the exchange rate in effect on the date of receipt or, in the case of
an accrual basis U.S. holder, based on the average exchange rate in effect
during the interest accrual period (or, with respect to an accrual period that
spans two taxable years, the partial period within the taxable year), in either
case regardless of whether the payment is in fact converted into U.S. dollars.
Upon receipt of an interest payment (including a payment attributable to
accrued but unpaid interest upon the sale or retirement of the nonfunctional
currency note) in (or determined by reference to the value of) nonfunctional
currency, an accrual basis U.S. holder will recognize ordinary income or loss
measured by the difference between such average exchange rate and the exchange
rate in effect on the date of receipt. Accrual basis U.S. holders may determine
the U.S. dollar value of any interest income accrued in a nonfunctional
currency under an alternative method, described below as the spot accrual
convention.
A U.S. holder will have a tax basis in any nonfunctional currency received as
payment of interest on, or on the sale, exchange or retirement of, the
nonfunctional currency note equal to the U.S. dollar value of such
nonfunctional currency, determined at the time of payment, or the disposition
of the nonfunctional currency note. Any gain or loss realized by a U.S. holder
on a sale or other disposition of nonfunctional currency (including its
exchange for U.S. dollars or its use to purchase nonfunctional currency notes)
will be ordinary income or loss.
A U.S. holder's tax basis in a nonfunctional currency note, and the amount of
any subsequent adjustments to such holder's tax basis, will be the U.S. dollar
value of the nonfunctional currency amount paid for such nonfunctional currency
note, or the nonfunctional currency amount of the adjustment, determined using
the spot rate on the date of such purchase or adjustment and increased by the
amount of any original issue discount included in the U.S. holder's income (and
accrued market discount, in the case of a United States holder who has elected
to currently include market discount, as described above) with respect to the
nonfunctional currency note and reduced by the amount of any payments on the
nonfunctional currency note that are not "qualified stated interest" payments
and by the amount of any amortizable bond premium nonfunctional currency note.
A U.S. holder who converts U.S. dollars to a nonfunctional currency and
immediately uses that currency to purchase a nonfunctional currency note
denominated in the same currency normally will not recognize gain or loss in
connection with such conversion and purchase. However, a U.S. holder who
purchases a nonfunctional currency note with previously owned nonfunctional
currency will recognize gain or loss in an amount equal to the difference, if
any, between such holder's tax basis in the nonfunctional currency and the U.S.
dollar value of the nonfunctional currency on the date of purchase.
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For purposes of determining the amount of any gain or loss recognized by a U.S.
holder on the sale, exchange or retirement of a nonfunctional currency note,
the amount realized upon such sale, exchange or retirement will be the U.S.
dollar value of the nonfunctional currency received (or that was payable, in
the case the payment was made in U.S. dollars), determined using the spot rate
on the date of the sale, exchange or retirement.
Gain or loss realized upon the sale, exchange or retirement of a nonfunctional
currency note that is attributable to fluctuations in currency exchange rates
will be treated as ordinary income or loss. Gain or loss attributable to
fluctuations in exchange rates will be calculated by multiplying the original
purchase price paid by the U.S. holder (expressed in the relevant nonfunctional
currency) by the change in the relevant exchange rate (expressed in dollars per
unit of relevant nonfunctional currency) between the date on which the U.S.
holder acquired the nonfunctional currency note and the date on which the U.S.
holder received payment in respect of the sale, exchange or retirement of the
nonfunctional currency note. Such nonfunctional currency gain or loss will be
recognized only to the extent of the total gain or loss realized by a U.S.
holder on the sale, exchange or retirement of the nonfunctional currency note.
Original issue discount on a note which is also a nonfunctional currency note
is to be determined for any accrual period in the relevant nonfunctional
currency and then translated into the U.S. holder's functional currency on the
basis of the average exchange rate in effect during such accrual period. If the
interest accrual period spans two taxable years, the original issue discount
accruing within each year's portion of the accrual period is to be translated
into U.S. dollars on the basis of the average exchange rate for the partial
period within the taxable year.
A U.S. holder may elect to translate original issue discount (and, in the case
of an accrual basis United States holder, accrued interest) into U.S. dollars
at the exchange rate in effect on the last day of an accrual period for the
original issue discount or interest, or in the case of an accrual period that
spans two taxable years, at the exchange rate in effect on the last day of the
partial period with the taxable year (the spot accrual convention).
Additionally, if a payment of original issue discount or interest is actually
received within five business days of the last day of the accrual period or
taxable year, an electing U.S. holder may instead translate such original issue
discount or accrued interest into U.S. dollars at the exchange rate in effect
on the day of actual receipt. Any such election will apply to all debt
instruments held by the U.S. holder at the beginning of the first taxable year
to which the election applies or thereafter acquired by the U.S. holder, and
will be irrevocable without the consent of the IRS.
Because exchange rates may fluctuate, a U.S. holder of a note with original
issue discount denominated in a nonfunctional currency may recognize a
different amount of original issue discount income in each accrual period that
would the U.S. holder of a similar note with original issue discount
denominated in U.S. dollars. Also, as described above, exchange gain or loss
will be recognized when the original issue discount is paid or the U.S. holder
disposes of the note.
If the U.S. holder of a nonfunctional currency note has not elected to include
market discount in income currently as it accrues, the amount of accrued market
discount must be determined in the nonfunctional currency and translated into
U.S. dollars using the spot exchange rate in effect on the date principal is
paid or the nonfunctional currency note is sold, exchanged, retired or
otherwise disposed of. No part of such accrued market discount is treated as
exchange gain or loss. If the U.S. holder has elected to include market
discount in income currently as it accrues, the amount of market discount which
accrues during any accrual period will be required to be determined in units of
nonfunctional currency and translated into U.S. dollars on the basis of the
average exchange rate in effect during such accrual period. Such an electing
U.S. holder will recognize exchange gain or loss with respect to accrued market
discount under the same rules that apply to the accrual of interest payments on
a nonfunctional currency note by a U.S. holder on the accrual basis.
Indexed Notes
If applicable, the pricing supplement will contain a discussion of any special
United States federal income tax rules with respect to currency indexed notes
or other indexed notes.
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Backup Withholding and Information Reporting
Under the tax rules concerning information reporting to the IRS assuming you
hold your notes through a broker or other intermediary, the intermediary must
provide information to the IRS concerning interest, OID and retirement proceeds
on your notes, unless an exemption applies. Similarly, unless an exemption
applies, you must provide the intermediary with your Taxpayer Identification
Number for its use in reporting information to the IRS. If you are an
individual, this is your social security number. You are also required to
comply with other IRS requirements concerning information reporting.
If you are subject to these requirements but do not comply, the intermediary
must withhold 31% of all payments to you on the notes (including principal
payments). If the intermediary withholds payments, you may use the withheld
amount as a credit against your federal income tax liability. All individuals
are subject to these requirements. Some holders, including all corporations,
tax-exempt organizations and individual retirement accounts, are exempt from
these requirements.
Non-U.S. Holders
Withholding Taxes
Generally, payments of principal and interest on the notes will not be subject
to U.S. withholding taxes. However, for the exemption from withholding taxes to
apply to you, you must meet one of the following four requirements:
1. You provide a completed Form W-8BEN (or substitute form) to the bank, broker
or other intermediary through which you hold your notes. The Form W-8BEN
contains your name, address and a statement that you are the beneficial
owner of the notes and that you are not a U.S. holder.
2. You hold your notes directly through a "qualified intermediary", and the
qualified intermediary has sufficient information in its files indicating
that you are not a U.S. holder. A qualified intermediary is a bank, broker
or other intermediary that (1) is either a U.S. or non-U.S. entity, (2) is
acting out of a non-U.S. branch or office and (3) has signed an agreement
with the IRS providing that it will administer all or part of the U.S. tax
withholding rules under specified procedures.
3. You are entitled to an exemption from withholding tax on interest under a
tax treaty between the U.S. and your country of residence. To claim this
exemption, you must generally complete Form W-8BEN and claim this exemption
on the form. In some cases, you may instead be permitted to provide
documentary evidence of your claim to the intermediary, or a qualified
intermediary may already have some or all of the necessary evidence in its
files, or
4. The interest income on the notes is effectively connected with the conduct
of your trade or business in the U.S., and is not exempt from U.S. tax under
a tax treaty. To claim this exemption, you must complete Form W-8ECI.
Even if you meet one of the above requirements, interest paid to you will be
subject to withholding tax under any of the following circumstances:
. The withholding agent or an intermediary knows or has reason to know that
you are not entitled to an exemption from withholding tax. Specific rules
apply for this test.
. The IRS notifies the withholding agent that information that you or an
intermediary provided concerning your status is false.
. An intermediary through which you hold the notes fails to comply with the
procedures necessary to avoid withholding taxes on the notes. In particular,
an intermediary is generally required to forward a copy of your Form W-8BEN
(or other documentary information concerning your status) to the withholding
agent for the notes. However, if you hold your notes through a qualified
intermediary--or if there is a qualified
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intermediary in the chain of title between yourself and the withholding
agent for the notes--the qualified intermediary will not generally forward
this information to the withholding agent.
. You own 10% or more of the voting stock of the Company, are a "controlled
foreign corporation" with respect to the Company, or are a bank making a
loan in the ordinary course of its business. In these cases, you will be
exempt from withholding taxes only if you are eligible for a treaty
exemption or if the interest income is effectively connected with your
conduct of a trade or business in the U.S., as discussed above.
Interest payments made to you will generally be reported to the IRS and to you
on Form 1042-S. However, this reporting does not apply to you if you either:
hold your notes directly through a qualified intermediary and the applicable
procedures are complied with, the notes have an original maturity of 183 days
or less from their issue date, or you file Form W-8ECI.
The rules regarding withholding are complex and vary depending on your
individual situation. They are also subject to change. In addition, special
rules apply to certain types of non-U.S. holders of notes, including
partnerships, trusts, and other entities treated as pass-through entities for
U.S. federal income tax purposes. We suggest that you consult with your tax
advisor regarding the specific methods for satisfying these requirements.
Sale or Retirement of Notes
If you sell a note or it is redeemed, you will not be subject to federal
income tax on any gain unless one of the following applies:
. The gain is connected with a trade or business that you conduct in the U.S.
or
. You are an individual, you are present in the U.S. for at least 183 days
during the year in which you dispose of the note, and certain other
conditions are satisfied,
the gain represents accrued interest or OID and the rules for interest would
apply.
U.S. Trade or Business
If you hold your note in connection with a trade or business that you are
conducting in the U.S.:
. Any interest on the note, and any gain from disposing of the note,
generally will be subject to income tax as if you were a U.S. holder.
. If you are a corporation, you may be subject to the "branch profits tax" on
your earnings that are connected with your U.S. trade or business,
including earnings from the note. This tax is 30%, but may be reduced or
eliminated by an applicable income tax treaty.
Estate Taxes
If you are an individual, your notes will not be subject to U.S. estate tax
when you die. However, this rule may not apply if, at your death, payments on
the notes were connected to a trade or business that you were conducting in
the U.S.
Backup Withholding and Information Reporting
U.S. rules concerning information reporting and backup withholding are
described above. These rules apply to non-U.S. holders as follows: (1)
Principal and interest payments you receive will be automatically exempt from
the usual rules if you are a non-U.S. holder exempt from withholding tax on
interest, as described above. The exemption does not apply if the withholding
agent or an intermediary knows or has reason to know that you should be
subject to the usual information reporting or backup withholding rules. In
addition, as described above, interest payments made to you may be reported to
the IRS on Form 1042-S; and (2) Sale proceeds you receive on a sale of your
notes through a broker may be subject to information reporting and/or backup
withholding if you are not
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eligible for an exemption. In particular, information reporting and backup
withholding may apply if you use the U.S. office of a broker, and information
reporting (but not backup withholding) may apply if you use the foreign office
of a broker that has certain connections to the U.S. We suggest that you
consult your tax advisor concerning information reporting and backup
withholding on a sale.
Non-Dollar Denominated Notes
A discussion of the United States federal income tax consequences with respect
to notes denominated in other than U.S. dollars will be contained in the
pricing supplement.
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SUPPLEMENTAL PLAN OF DISTRIBUTION
Under the terms of the Agency Agreement, dated May 16, 2001, we are offering
the notes on a continuous basis through or to J.P. Morgan Securities Inc., ABN
AMRO Incorporated, Banc of America Securities LLC, Bear, Stearns & Co. Inc.,
Credit Suisse First Boston Corporation, Deutsche Banc Alex. Brown Inc.,
Goldman, Sachs & Co., HSBC Securities (USA) Inc., Merrill Lynch, Pierce, Fenner
& Smith Incorporated, Morgan Stanley & Co. Incorporated, Salomon Smith Barney
Inc., The Williams Capital Group, L.P., and other agents we may specify in a
pricing supplement. The agents have agreed to use their reasonable efforts to
solicit orders. We will pay the relevant agent a commission ranging from .125%
to .750% of the principal amount of each note, depending upon its maturity,
sold through such agent. The exact commission paid will be determined by the
stated maturity of the notes sold.
We may sell notes directly to investors (other than broker-dealers) in those
jurisdictions in which we are permitted to do so. If we sell notes directly to
investors, no commission or discount will be paid. We may also sell notes
through or to other agents or dealers as may be named in the applicable pricing
supplement. We may also sell notes to an agent as principal for the agent's
account at a price agreed upon at the time of sale. Such notes may be resold by
such agent to investors at a fixed public offering price or at prevailing
market prices, or at a related price, as determined by such agent. Unless
otherwise specified in the applicable pricing supplement, any note sold to an
agent as principal will be purchased at a price equal to 100% of the principal
amount minus a discount equal to the commission that would be paid on an agency
sale of a note of identical maturity.
An agent may sell notes purchased from us as principal to other dealers for
resale to investors and other purchasers and may provide any portion of the
discount received in connection with their purchase from us to such dealers.
After the initial public offering of the notes, the public offering price and
other selling terms may be changed.
The notes will not have an established trading market when issued. Also, the
notes will not be listed on any securities exchange. An agent may make a market
in the notes, as permitted by applicable laws and regulations, but is not
obligated to do so and may discontinue any market-making at any time without
notice. There can be no assurance of a secondary market for any notes, or that
any purchaser of notes will be able to sell notes in the future.
Each purchaser of a note will arrange for payment as instructed by the relevant
agent. The agents are required to deliver the proceeds of the notes to us in
immediately available funds, to a bank designated by us in accordance with the
terms of the Agency Agreement, on the date of settlement.
Each agent may be deemed to be an "underwriter" within the meaning of the
Securities Act of 1933, as amended. We have agreed to indemnify the agents
against certain liabilities, including liabilities under the Securities Act, or
to contribute to payments that they may be required to make in connection with
such indemnification. We have agreed to reimburse the agents for certain
expenses, including the reasonable specified fees and disbursements of counsel
for the agents.
We reserve the right to withdraw, cancel or modify the offer made hereby
without notice. We will have the sole right to accept offers to purchase notes
and may reject any proposed purchase of notes as a whole or in part. The agents
will have the right, in their discretion reasonably exercised, to reject any
offer to purchase notes, as a whole or in part.
In connection with the purchase of notes by an agent, as principal, for resale
at a fixed price, such agent may engage in transactions that stabilize,
maintain or otherwise affect the price of the notes. Such transactions may
consist of bids or purchases of notes for the purpose of pegging, fixing or
maintaining the price of the notes. Specifically, the agent may overallot in
connection with such offering, creating a syndicate short position. In
addition, the agent may bid for and purchase the notes in the open market to
cover syndicate short positions or to stabilize, maintain or otherwise affect
the price of the notes. Finally, the agent or its syndicate may reclaim selling
concessions allowed for distributing of notes in the offering, if the agent
repurchases previously distributed notes
S-36
in the market to cover overallotments or to stabilize the price of the notes.
Any of these activities may stabilize or maintain the market price of the notes
above independent market level. The agents are not required to engage in any of
these activities, and may end any of them at any time.
Concurrently with the offering of the notes through the agents, we may issue
other securities as contemplated by the attached prospectus.
In the ordinary course of their respective businesses, the agents or their
affiliates have engaged and may in the future engage in investment banking
and/or commercial banking transactions with us and our affiliates. Chase
Manhattan Bank and Trust Company, National Association, the trustee, is an
affiliate of J.P. Morgan Securities Inc., one of the agents.
LEGAL OPINIONS
Opinions regarding the validity of the notes being offered will be issued for
us by Wilson Sonsini Goodrich & Rosati, Professional Corporation, 650 Page Mill
Road, Palo Alto, California 94304, and, unless otherwise specified in the
pricing supplement, for the agents by Cravath, Swaine & Moore, Worldwide Plaza,
825 Eighth Avenue, New York, New York 10019.
In the opinions described above, assumptions will be made regarding future
action required to be taken by us and the appropriate trustee in connection
with the issuance and sale of any particular notes, the specific terms of those
notes and other matters which may affect the validity of those notes but which
cannot be ascertained on the date of the relevant opinion.
EXPERTS
The consolidated financial statements of Hewlett-Packard Company at October 31,
2000, and for the year then ended, incorporated by reference in this prospectus
and prospectus supplement have been audited by Ernst & Young LLP, independent
auditors, and at October 31, 1999, and for each of the two years in the period
ended October 31, 1999, by PriceWaterhouseCoopers LLP, independent auditors, as
set forth in their respective reports thereon included in the Annual Report on
Form 10-K for the year ended October 31, 2000 and incorporated by reference
herein, and are included in reliance upon such reports given on the authority
of such firms as experts in accounting and auditing.
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GLOSSARY
Set forth below are definitions of some of the terms used in this prospectus
supplement and not defined in the attached prospectus.
"Bond Equivalent Yield" means a yield calculated in accordance with the
following formula and expressed as a percentage:
D x N
Bond Equivalent Yield = _____________ x 100
360 - (D x M)
where "D" refers to the applicable annual rate for Treasury bills, quoted on a
bank discount basis, "N" refers to 365 or 366, as the case may be, and "M"
refers to the actual number of days in the interest period for which interest
is being calculated.
"Calculation Date" means, with respect to any Interest Determination Date, the
date on or before which the calculation agent is to calculate an interest rate
for a floating rate note. Unless otherwise specified in the note and the
pricing supplement, the Calculation Date pertaining to an Interest
Determination Date for a floating rate note will be the first to occur of:
. the tenth calendar day after that Interest Determination Date or, if that
day is not a business day, the next succeeding business day; or
. the business day preceding the applicable interest payment date or date of
maturity, redemption or repayment, of that note, as the case may be.
"Designated CMT Telerate Page" means the display on the Bridge Telerate, Inc.,
or any successor service, on the page specified in the pricing supplement, or
any other page that replaces that page on that service for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519). If no page is
specified, page 7052 for the most recent week.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is designated in the
pricing supplement, the display on the Reuters Monitor Money Rates Service, or
a successor nominated as the information vendor, for the purpose of displaying
the London interbank rates of major banks for the applicable Index Currency, or
(b) if "LIBOR Telerate" is designated in the pricing supplement, the display on
the Bridge Telerate, Inc., or a successor nominated as the information vendor,
for the purpose of displaying the London interbank rates of major banks for the
applicable Index Currency.
"H.15(519)" means the publication entitled "Statistical Release H.15(519),
Selected Interest Rates", or any successor publication, published by the Board
of Governors of the Federal Reserve System and available through the World Wide
Web site of the Board of Governors of the Federal Reserve System at
http://www.federalreserve.gov/releases/h15/current, or any successor site or
publication.
"H.15 Daily Update" means the daily update of H.15 (519), available through the
World Wide Web site of the Board of Governors of the Federal Reserve System at
http://www.federalreserve.gov/releases/h15/update, or any successor site or
publication.
"Index Currency" means the currency, including composite currencies, specified
in the pricing supplement as the currency for which LIBOR shall be calculated.
If no currency is specified, the Index Currency will be U.S. dollars.
"Index Maturity" means the period of time designated as the representative
maturity of the certificates of deposit, the commercial paper, the Index
Currency, the Treasury bills or other instrument or obligation,
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respectively, by reference to transactions in which the CD Rate, the Commercial
Paper Rate, LIBOR, the Treasury Rate and the CMT Rate, respectively, are to be
calculated, as set forth in the pricing supplement.
"Interest Determination Date" means the date as of which the interest rate for
a floating rate note is to be calculated, to be effective as of the following
Interest Reset Date and calculated on the related Calculation Date. Unless
otherwise specified in the pricing supplement:
. the Interest Determination Date pertaining to an Interest Reset Date for a
CD Rate note, Commercial Paper Rate note, Federal Funds Rate note, Prime
Rate note or CMT Rate note will be the second business day preceding that
Interest Reset Date;
. the Interest Determination Date pertaining to an Interest Reset Date for a
LIBOR note will be the second London business day preceding that Interest
Reset Date; and
. the Interest Determination Date pertaining to an Interest Reset Date for a
Treasury Rate note will be the day of the week during which that Interest
Reset Date falls on which Treasury bills of the Index Maturity designated in
the pricing supplement are auctioned. Treasury bills are usually sold at
auction on Monday of each week, unless that day is a legal holiday, in which
case the auction is usually held on the following Tuesday or may be held on
the preceding Friday. If, as the result of a legal holiday, an auction is
held on the preceding Friday, that Friday will be the Interest Determination
Date pertaining to the Interest Reset Date occurring in the following week.
"Interest Reset Date" means the date on which a floating rate note will begin
to bear interest at the interest rate determined as of the related Interest
Determination Date. Unless otherwise specified in the applicable note and
pricing supplement, the Interest Reset Dates will be:
. in the case of floating rate notes that reset daily, each business day;
. in the case of floating rate notes, other than Treasury Rate notes, that
reset weekly, Wednesday of each week;
. in the case of Treasury Rate notes that reset weekly, Tuesday of each week;
. in the case of floating rate notes that reset monthly, the third Wednesday
of each month;
. in the case of floating rate notes that reset quarterly, as specified in the
pricing supplement;
. in the case of floating rates notes that reset semi-annually, the third
Wednesday of each of two months of each year specified in the pricing
supplement; and
. in the case of floating rate notes that reset annually, the third Wednesday
of one month of each year specified in the pricing supplement.
If an Interest Reset Date for any floating rate note would otherwise be a day
that is not a business day, that Interest Reset Date will be postponed to the
next business day. However, in the case of a LIBOR note, if that business day
is in the following calendar month, that Interest Reset Date will be the
preceding business day. If a Treasury bill auction, as described in the
definition of "Interest Determination Date," will be held on any day that would
otherwise be an Interest Reset Date for a Treasury Rate note, then that
Interest Reset Date will instead be the business day immediately following that
auction date.
"Money Market Yield" means a yield calculated in accordance with the following
formula:
D x 360
Money Market Yield = _____________ x 100
360 - (D x M)
where "D" refers to the annual rate for commercial paper, quoted on a bank
discount basis and expressed as a decimal and "M" refers to the actual number
of days in the interest period for which interest is being calculated.
S-39
"Reuters Screen USPRIME1 Page" means the display on the Reuters Monitor Money
Rates Service on the page designated as "USPRIME1," or any other page that
replaces that page on that service for the purpose of displaying prime rates or
base lending rates of major United States banks.
"Telerate Page 56," "Telerate Page 57" and "Telerate Page 120" mean the
displays designated on Bridge Telerate, Inc. as Page 56, Page 57 or Page 120,
or any page that replaces either Page 56, Page 57 or Page 120 on that service,
or another service that is nominated as the information vendor, for the purpose
of displaying Treasury bill or federal funds auction rates.
S-40
PROSPECTUS
$3,000,000,000
HEWLETT-PACKARD COMPANY
By this prospectus, we may offer --
Debt Securities
Common Stock
Preferred Stock
Depositary Shares
Warrants
See "Risk Factors" on page 4 for information you should consider before buying
the securities.
Our common stock is listed on the New York Stock Exchange under the symbol
"HWP." On March 15, 2000, the reported last sale price of our common stock on
the New York Stock Exchange was $132.00 per share.
----------------
We will provide specific terms of these securities in supplements to this
prospectus. You should read this prospectus and any supplement carefully before
you invest.
----------------
This prospectus may not be used to offer and sell securities unless accompanied
by a prospectus supplement.
----------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
This prospectus is dated March 17, 2000
SUMMARY
This prospectus is part of a Registration Statement on Form S-3 that we
filed with the Securities and Exchange Commission utilizing a "shelf"
registration process. Under this shelf process, we may sell any combination of
securities described in this prospectus in one or more offerings, up to a total
dollar amount of $3,000,000,000. This prospectus provides you with a general
description of the securities we may offer. Each time we sell securities, we
will provide a prospectus supplement that will contain specific information
about the terms of that offering. The prospectus supplement may also add,
update or change information contained in this prospectus. You should read both
this prospectus and any prospectus supplement together with additional
information described below under the heading "Where You Can Find More
Information."
Hewlett-Packard Company
We were originally incorporated in California in 1947. In 1998, we were
reincorporated in Delaware. Our principal executive offices are located at 3000
Hanover Street, Palo Alto, California 94304. Our telephone number is (650) 857-
1501.
The Securities We May Offer
We may offer up to $3,000,000,000 of debt securities, common stock,
preferred stock, depositary shares and warrants. The prospectus supplement will
describe the specific amounts, prices and terms of these securities.
We may sell the securities to or through underwriters, dealers or agents or
directly to purchasers. Our agents and we reserve the sole right to accept and
to reject in whole or in part any proposed purchase of securities. The
prospectus supplement, which we will provide to you each time we offer
securities, will set forth the names of any underwriters, dealers or agents
involved in the sale of the securities and any applicable fee, commission or
discount arrangements with them.
Debt Securities
We may offer unsecured general obligations in the form of either senior or
subordinated debt. The senior debt securities and the subordinated debt
securities are together referred to in this prospectus as the "debt
securities." The senior debt securities will have the same rank as all of our
other unsecured, unsubordinated debt. The subordinated debt securities will be
entitled to payment only after payment on our senior debt. Senior debt
generally includes all indebtedness for money borrowed by us, except
indebtedness that is stated to be not senior to, or to have the same rank as,
or is expressly junior to the subordinated debt securities.
The senior and subordinated debt will be issued under separate indentures
between Hewlett-Packard and Chase Manhattan Bank and Trust Company, National
Association, as trustee. We have summarized the general features of the debt
from the indentures. We encourage you to read the indentures that are exhibits
to our Registration Statement No. (333-30786) and to read our recent annual
report and quarterly report. Instructions on how you can get copies of these
documents are provided below under the heading "Where You Can Find More
Information."
General Indenture Provisions that Apply to Senior and Subordinated Debt
. Neither indenture limits the amount of debt that we may issue or provides
holders any protection should there be a highly leveraged transaction
involving our company.
. The indentures allow us to merge or to consolidate with another U.S.
entity or convey, transfer or lease our properties and assets
substantially as an entirety to another U.S. entity, as long as certain
conditions are
1
met. If these events occur, the other company will be required to assume
our responsibilities on the debt, and we will be released from all
liabilities and obligations (except in the case of a lease).
. The indentures provide that holders of a majority of the total principal
amount of the debt outstanding in any series may request in writing that
we enter into a supplemental indenture with the trustee to change certain
of our obligations or your rights concerning the debt; but to change the
payment of principal, interest or to adversely effect the right to
convert or certain other matters, every holder in that series must
consent.
. We may discharge the indentures and defease restrictive covenants by
depositing sufficient funds with the trustee to pay the obligations when
due, as long as certain conditions are met. The trustee would pay all
amounts due to you on the debt from the deposited funds.
Events of Default
Each of the following is an event of default under the indentures:
. Principal not paid when due,
. Failure to make sinking fund payment for 30 days,
. Failure to pay interest for 30 days,
. Covenants not performed for 90 days after notice,
. Bankruptcy, insolvency or reorganization, and
. Any other event of default in the indenture.
Remedy
Upon an event of default, other than a bankruptcy, insolvency or
reorganization, the trustee or holders of 25% of the principal amount
outstanding in a series may declare the outstanding principal immediately
payable. Under certain circumstances, however, the holders of a majority in
principal amount may rescind this action.
General Indenture Provisions that Apply Only to Senior Debt Securities
The indenture relating to the senior debt securities contains covenants
restricting our ability to incur liens and enter into sale and lease-back
transactions.
General Indenture Provisions that Apply Only to Subordinated Debt Securities
The subordinated debt securities will be subordinated to all senior debt.
Common Stock
We may issue our common stock, par value $0.01 per share. Holders of common
stock are entitled to receive dividends declared by our board of directors or
an authorized committee of our board of directors. Currently, we pay a dividend
of $0.16 per share per quarter. Each holder of common stock is entitled to one
vote per share. The holders of common stock have no preemptive rights. Holders
of common stock have cumulative voting rights for the election of our directors
in accordance with our bylaws and Delaware law.
Preferred Stock and Depositary Shares
We may issue our preferred stock, par value $0.01 per share, in one or more
series. Our board of directors, or an authorized committee of our board of
directors, will determine the dividend, voting, conversion and other
2
rights of the series being offered and the terms and conditions relating to its
offering and sale at the time of the offer and sale. We may also issue
fractional shares of preferred stock that will be represented by depositary
shares and depositary receipts.
Warrants
We may issue warrants for the purchase of debt securities, preferred stock
or common stock. We may issue warrants independently or together with other
securities.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the Securities
and Exchange Commission, in accordance with the Securities Exchange Act of
1934, as amended. You may read and copy our reports, proxy statements and other
information filed by us at the public reference facilities of the Securities
and Exchange Commission at the Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C., 20549. Please call the Commission at 1-800-SEC-0330 for
further information about the public reference rooms. Our reports, proxy
statements and other information filed with the Commission are available to the
public over the Internet at the Commission's World Wide Web site at
http://www.sec.gov. These materials also may be inspected and copied at the
offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005 and the Pacific Exchange, Inc., 301 Pine Street, San Francisco,
California 94104 and 233 South Beaudry Avenue, Los Angeles, California 90012.
The Commission allows us to "incorporate by reference" the information we
filed with it, which means that we can disclose important information by
referring you to our filings with the Commission. The information incorporated
by reference is considered to be a part of this prospectus, and information
that we file later with the Commission will automatically update and supersede
this information. We incorporate by reference the documents listed below and
any future filings made by us with the Commission under Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act until our offering is complete.
. Annual Report on Form 10-K for the fiscal year ended October 31, 1999.
. Quarterly Report on Form 10-Q for the fiscal quarter ended January 31,
2000.
. The description of our common stock contained in our registration
statement on Form 8-A filed with the Securities and Exchange Commission
on or about November 6, 1957, and any amendment or report filed for the
purpose of updating this description.
We will provide to each person who so requests, including any beneficial
owner to whom a prospectus is delivered, a copy of these filings. You may
request a copy of these filings, at no cost, by writing or telephoning us at
the following address:
Investor Relations Department
Hewlett-Packard Company
3000 Hanover Street
Palo Alto, California 94304
(650) 857-1501
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not
authorized anyone else to provide you with different information. We are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume the information in this prospectus or any
prospectus supplement is accurate as of any date other than the date on the
front of those documents.
3
RISK FACTORS
Before participating in this offering you should carefully consider the
risks discussed in the section of our Form 10-Q for the fiscal quarter ended
January 31, 2000, entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Factors That Could Affect Future Results,"
which is incorporated in this document by reference.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for each of the periods indicated is
as follows:
----------------------------------------------------------------
Three Months Ended
January
31, Fiscal Year Ended October 31,
------------------- ---------------------------------
2000 1999 1999 1998 1997 1996 1995
--------- --------- ------ ------ ------ ----- ------
Ratio of earnings to
fixed charges........... 12.8x 15.4x 13.7x 11.4x 12.1x 7.8x 11.0x
These computations include our consolidated subsidiaries included in
continuing operations and us. For these ratios, "earnings" represents earnings
from continuing operations before taxes, adjusted for minority interest in
income of subsidiaries with fixed charges and undistributed earnings or loss of
equity investees, plus fixed charges from continuing operations. Fixed charges
consist of:
. interest expense on all indebtedness,
. amortization of debt discounts or premiums, and
. a reasonable approximation of the interest factor deemed to be included
in rental expense.
USE OF PROCEEDS
Unless otherwise indicated in the prospectus supplement, the net proceeds
from the sale of securities offered by this prospectus will be used for general
corporate purposes, which may include repayment of existing indebtedness,
acquisitions of products, technology and businesses, capital expenditures and
to meet working capital needs. Pending such uses, we will invest the net
proceeds in interest-bearing securities.
4
DESCRIPTION OF THE DEBT SECURITIES
The debt securities will either be our senior debt securities or our
subordinated debt securities. The debt securities will be issued under one or
more separate indentures between us and Chase Manhattan Bank and Trust Company,
National Association, as trustee. Senior debt securities will be issued under a
senior indenture and subordinated debt securities will be issued under a
subordinated indenture. Together, the senior indenture and subordinated
indenture are called indentures. The prospectus, together with its prospectus
supplement, will describe all the material terms of a particular series of debt
securities.
The following is a summary of the most important provisions and definitions
of the indentures. For additional information, you should look at the
applicable indenture that is filed as an exhibit to the registration statement,
which includes the prospectus. In this description of the debt securities, the
words "Hewlett-Packard," "we," "us" or "our" refer only to Hewlett-Packard
Company and not to any of our subsidiaries.
General
Debt securities may be issued in separate series without limitation as to
aggregate principal amount. We may specify a maximum aggregate principal amount
for the debt securities of any series. We are not limited as to the amount of
debt securities we may issue under the indentures. Unless otherwise provided in
a prospectus supplement, a series of debt securities may be reopened for
issuance of additional debt securities of such series.
The prospectus supplement will set forth:
. whether the debt securities are senior or subordinated,
. the offering price,
. the title,
. any limit on the aggregate principal amount,
. the person who shall be entitled to receive interest, if other than the
record holder on the record date,
. the date the principal will be payable,
. the interest rate, if any, the date interest will accrue, the interest
payment dates and the regular record dates,
. the interest rate, if any, payable on overdue installments of principal,
premium or interest,
. the place where payments shall be made,
. any mandatory or optional redemption provisions,
. if applicable, the method for determining how principal, premium, if any,
or interest will be calculated by reference to an index or formula,
. if other than U.S. currency, the currency or currency units in which
principal, premium, if any, or interest will be payable and whether we or
the holder may elect payment to be made in a different currency,
. the portion of the principal amount that will be payable upon
acceleration of stated maturity, if other than the entire principal
amount,
. if the principal amount payable at stated maturity will not be
determinable as of any date prior to stated maturity, the amount which
will be deemed to be the principal amount,
. any defeasance provisions if different from those described below under
"Satisfaction and Discharge--Defeasance,"
5
. any conversion or exchange provisions,
. whether the debt securities will be issuable in the form of a global
security,
. any subordination provisions if different from those described below
under "Subordinated Debt Securities,"
. any paying agents, authenticating agents or security registrars,
. any guarantees on the debt securities,
. any security for any of the debt securities,
. any deletions of, or changes or additions to, the events of default or
covenants, and
. any other specific terms of such debt securities.
Unless otherwise specified in the prospectus supplement:
. the debt securities will be registered debt securities, and
. registered debt securities denominated in U.S. dollars will be issued in
denominations of $1,000 or multiples of $1,000.
Debt securities may be sold at a substantial discount below their stated
principal amount, bearing no interest or interest at a rate which at time of
issuance is below market rates.
Exchange and Transfer
Debt securities may be transferred or exchanged at the office of the
security registrar or at the office of any transfer agent designated by us. We
will not impose a service charge for any transfer or exchange, but we may
require holders to pay any tax or other governmental charges associated with
any transfer or exchange.
In the event of any potential redemption of debt securities of any series,
we will not be required to:
. issue, register the transfer of, or exchange any debt security of that
series during a period beginning at the opening of business 15 days
before the day of mailing of a notice of redemption and ending at the
close of business on the day of the mailing, or
. register the transfer of or exchange any debt security of that series
selected for redemption, in whole or in part, except the unredeemed
portion being redeemed in part.
We have initially appointed the trustee as the security registrar. Any
transfer agent, in addition to the security registrar, initially designated by
us will be named in the prospectus supplement. We may designate additional
transfer agents, change transfer agents or change the office of the transfer
agent, change any security registrar or act as security registrar. However, we
will be required to maintain a transfer agent in each place of payment for the
debt securities of each series.
Global Securities
The debt securities of any series may be represented, in whole or in part,
by one or more global securities. Each global security will:
. be registered in the name of a depositary that we will identify in a
prospectus supplement,
. be deposited with the depositary or nominee or custodian, and
. bear any required legends.
6
No global security may be exchanged in whole or in part for debt securities
registered in the name of any person other than the depositary or any nominee
unless:
. the depositary has notified us that it is unwilling or unable to continue
as depositary or has ceased to be qualified to act as depositary,
. an event of default is continuing, or
. any other circumstances described in a prospectus supplement.
As long as the depositary, or its nominee, is the registered owner of a
global security, the depositary or nominee will be considered the sole owner
and holder of the debt securities represented by the global security for all
purposes under the indenture. Except in the above limited circumstances, owners
of beneficial interests in a global security will not be:
. entitled to have the debt securities registered in their names,
. entitled to physical delivery of certificated debt securities, and
. considered to be holders of those debt securities under the indenture.
Payments on a global security will be made to the depositary or its nominee
as the holder of the global security. Some jurisdictions have laws that require
that certain purchasers of securities take physical delivery of such securities
in definitive form. These laws may impair the ability to transfer beneficial
interests in a global security.
Institutions that have accounts with the depositary or its nominee are
referred to as "participants." Ownership of beneficial interests in a global
security will be limited to participants and to persons that may hold
beneficial interests through participants. The depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts
of debt securities represented by the global security to the accounts of its
participants.
Ownership of beneficial interests in a global security will be shown on and
effected through records maintained by the depositary, with respect to
participants' interests, or any participant, with respect to interests of
persons held by participants on their behalf.
Payments, transfers and exchanges relating to beneficial interests in a
global security will be subject to policies and procedures of the depositary.
The depositary policies and procedures may change from time to time. Neither
the trustee nor we will have any responsibility or liability for the
depositary's or any participant's records with respect to beneficial interests
in a global security.
Payment and Paying Agents
The provisions of this paragraph will apply to the debt securities unless
otherwise indicated in the prospectus supplement. Payment of interest on a debt
security on any interest payment date will be made to the person in whose name
the debt security is registered at the close of business on the regular record
date. Payment on debt securities of a particular series will be payable at the
office of a paying agent or paying agents designated by us. However, at our
option, we may pay interest by mailing a check to the record holder. The
corporate trust office will be designated as our sole paying agent.
We may also name any other paying agents in the prospectus supplement. We
may designate additional paying agents, change paying agents or change the
office of any paying agent. However, we will be required to maintain a paying
agent in each place of payment for the debt securities of a particular series.
7
All moneys paid by us to a paying agent for payment on any debt security
which remain unclaimed for a period ending the earlier of:
. 10 business days prior to the date the money would be turned over to the
state, or
. at the end of two years after the payment was due will be repaid to us.
Thereafter, the holder may look only to us for such payment.
Consolidation, Merger and Sale of Assets
We may not consolidate with or merge into any other person, in a transaction
in which we are not the surviving corporation, or convey, transfer or lease its
properties and assets substantially as an entirety to, any person, unless:
. the successor, if any, is a U.S. corporation, limited liability company,
partnership, trust or other entity,
. the successor assumes our obligations on the debt securities and under
the indentures,
. immediately after giving effect to the transaction, no default or event
of default shall have occurred and be continuing, and
. certain other conditions are met.
Events of Default
Each indenture defines an event of default with respect to any series of
debt securities as one or more of the following events:
(1) failure to pay principal of or any premium on any debt security of
that series when due,
(2) failure to pay any interest on any debt security of that series for 30
days when due,
(3) failure to make any sinking fund payment for 30 days when due,
(4) failure to perform any other covenant in the indenture that continues
for 90 days after we are given the notice required in the indenture,
(5) our bankruptcy, insolvency or reorganization, and
(6) any other event of default specified in the prospectus supplement.
An event of default of one series of debt securities is not necessarily an
event of default for any other series of debt securities.
If an event of default, other than an event of default described in clause
(5) above, shall occur and be continuing, either the trustee or the holders of
at least 25% in aggregate principal amount of the outstanding securities of
that series may declare the principal amount of the debt securities of that the
outstanding securities of that series may declare the principal amount of the
debt securities of that series to be due and payable immediately. If an event
of default described in clause (5) above shall occur, the principal amount of
all the debt securities of that series will automatically become immediately
due and payable. Any payment by us on the subordinated debt securities
following any acceleration will be subject to the subordination provisions
described below under "Subordinated Debt Securities."
After acceleration the holders of a majority in aggregate principal amount
of the outstanding securities of that series, under certain circumstances, may
rescind and annul such acceleration if all events of default, other than the
non-payment of accelerated principal, or other specified amount, have been
cured or waived.
Other than the duty to act with the required care during an event of
default, the trustee will not be obligated to exercise any of its rights or
powers at the request of the holders unless the holders shall have offered to
the
8
trustee reasonable indemnity. Generally, the holders of a majority in aggregate
principal amount of the outstanding debt securities of any series will have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the trustee or exercising any trust or power conferred on
the trustee.
A holder will not have any right to institute any proceeding under the
indentures, or for the appointment of a receiver or a trustee, or for any other
remedy under the indentures, unless:
(1) the holder has previously given to the trustee written notice of a
continuing event of default with respect to the debt securities of
that series,
(2) the holders of at least 25% in aggregate principal amount of the
outstanding debt securities of that series have made a written request
and have offered reasonable indemnity to the trustee to institute the
proceeding, and
(3) the trustee has failed to institute the proceeding and has not
received direction inconsistent with the original request from the
holders of a majority in aggregate principal amount of the outstanding
debt securities of that series within 60 days after the original
request.
Holders may, however, sue to enforce the payment of principal, premium or
interest on or after the due date without following the procedures listed in
(1) through (3) above.
We will furnish the trustee an annual statement by our officers as to
whether or not we are in default in the performance of the indenture and, if
so, specifying all known defaults.
Modification and Waiver
The trustee and we may make modifications and amendments to the indentures
with the consent of the holders of a majority in aggregate principal amount of
the outstanding securities of each series affected by the modification or
amendment. We may also make modifications and amendments to the indentures for
the benefit of the holders, without their consent, for certain purposes
including, but not limited to:
. providing for a successor of our company to assume the covenants under
the indenture,
. adding covenants or events of default,
. making certain changes to facilitate the issuance of the securities,
. securing the securities,
. providing for a successor trustee,
. curing any ambiguities or inconsistencies,
. permitting or facilitating the defeasance and discharge of the
securities, and
. other changes specified in the indenture.
However, neither we nor the trustee may make any modification or amendment
without the consent of the holder of each outstanding security of that series
affected by the modification or amendment if such modification or amendment
would:
. change the stated maturity of any debt security,
. reduce the principal, premium, if any, or interest on any debt security,
. reduce the principal of an original issue discount security or any other
debt security payable on acceleration of maturity,
. change the place of payment or the currency in which any debt security is
payable,
. impair the right to sue for any payment after the stated maturity or
redemption date,
9
. if subordinated debt securities, modify the subordination provisions in a
materially adverse manner to the holders of subordinated debt securities,
. adversely affect the right to convert any debt security, or
. change the provisions in the indenture that relate to modifying or
amending the indenture.
Satisfaction and Discharge; Defeasance
We may be discharged from our obligations on the debt securities of any
series if we deposit enough money with the trustee to pay all the principal,
interest and any premium due to the stated maturity date or redemption date of
the debt securities.
Each indenture contains a provision that permits us to elect either or both
of the following:
. to be discharged from all of our obligations, subject to limited
exceptions, with respect to any series of debt securities then
outstanding; and
. to be released from our obligations under the following covenants and
from the consequences of an event of default resulting from a breach of
these and a number of other covenants:
(1) the limitations on sale and lease-back transactions under the senior
indenture,
(2) the limitations on secured debt under the senior indenture,
(3) covenants as to payment of taxes and maintenance of properties, and
(4) the subordination provisions under the subordinated indenture.
To make either of the above elections, we must deposit in trust with the
trustee enough money to pay in full the principal, interest and premium on the
debt securities. This amount may be made in cash and/or U.S. government
obligations. As a condition to either of the above elections, we must deliver
to the trustee an opinion of counsel that the holders of the debt securities
will not recognize income, gain or loss for Federal income tax purposes as a
result of the action.
If any of the above events occur, the holders of the debt securities of the
series will not be entitled to the benefits of the indenture, except for
registration of transfer and exchange of debt securities, replacement of lost,
stolen or mutilated debt securities and, if applicable, conversion and exchange
of debt securities.
Notices
Notices to holders will be given by mail to the addresses of the holders in
the security register.
Governing Law
The indentures and the debt securities will be governed by, and construed
under, the law of the State of New York, without regard to conflicts of laws
principles.
Regarding the Trustee
The indentures limit the right of the trustee, if it becomes our creditor,
to obtain payment of claims or secure its claims.
The trustee is permitted to engage in certain other transactions. If the
trustee acquires any conflicting interest, however, and there is a default
under the debt securities of any series for which they are trustee, the trustee
must eliminate the conflict or resign.
10
Senior Debt Securities
The senior debt securities will be unsecured, unless we elect otherwise, and
will rank equally with all of our other unsecured and non-subordinated senior
debt.
Covenants in the Senior Indenture
Limitations on Liens. Neither we nor any restricted subsidiary will issue,
incur, create, assume or guarantee any secured debt without securing the senior
debt securities equally and ratably with or prior to that secured debt unless
the total amount of all secured debt with which the senior debt securities are
not secured equally and ratably would not exceed the greater of $500 million or
10% of our consolidated net tangible assets.
Limitations on Sale and Lease-back Transactions. Subject to the last
paragraph of this Section, neither we nor any restricted subsidiary will enter
into any lease longer than three years covering any of our principal property
or any restricted subsidiary that is sold to any other person in connection
with that lease unless either:
(1) we or any restricted subsidiary would be entitled to incur
indebtedness secured by a mortgage on the principal property involved
in such transaction at least equal in amount to the attributable debt
with respect to the lease, without equally and ratably securing the
senior debt securities, pursuant to "Limitation on Liens" described
above, or
(2) an amount equal to the greater of the following amounts is applied
within 180 days to the retirement of our or any restricted
subsidiary's long-term debt or the purchase or development of
comparable property:
. the net proceeds from the sale,
. the attributable debt with respect to the sale and lease-back
transaction.
However, either we or our restricted subsidiaries would be able to enter
into a sale and lease-back transaction without being required to apply to net
proceeds from this sale and lease-back transaction as required by (2) above if
the sum of the following amounts would not exceed the greater of $500 million
or 10% of our consolidated net tangible assets:
. the total amount of the sale and lease-back transactions, and
. the total amount of secured debt.
Definitions Relating to the Senior Debt Securities
"attributable debt" with regard to a sale and lease-back transaction means
the lesser of:
(1) the fair market value of such property as determined in good faith by
our board of directors, or
(2) discounted present value of all net rentals under the lease.
"consolidated net tangible assets" means total assets, less reserves, after
deducting:
(1) total current liabilities, excluding:
. notes and loans payable,
. current maturities of long-term debt,
. current maturities of capital leases, and
(2) certain intangible assets, to the extent included in total assets.
"mortgage" means a mortgage, security interest, pledge, lien, charge or
other encumbrance.
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"nonrecourse obligation" means indebtedness substantially related to:
. the acquisition of assets not previously owned by us or any restricted
subsidiary, or
. the financing of any project involving the development of our or any of
our restricted subsidiary's property in which the only recourse is to the
assets acquired with the proceeds of the transaction or the project
financed with the proceeds of the transaction.
"principal property" means the land, improvements, buildings and fixtures
owned by us or a restricted subsidiary located in the United States that
constitutes our principal corporate office, any manufacturing plant or any
manufacturing facility and has a book value in excess of .75% of our
consolidated net tangible assets as of the determination date. Principal
property does not include any property that our board of directors has
determined not to be of material importance to the business conducted by our
subsidiaries and us, taken as a whole.
"restricted subsidiary" means any subsidiary that owns any principal
property, but does not include:
. any subsidiary primarily engaged in financing receivables or in the
finance business, or
. any of our less than 80%-owned subsidiaries if the common stock of the
subsidiary is traded on any national securities exchange or quoted on the
Nasdaq National Market or in the over-the-counter markets.
"secured debt" means any of our debt or any debt of a restricted subsidiary
for borrowed money secured by a mortgage on any principal property or any stock
or indebtedness of a restricted subsidiary. Secured debt does not include:
. mortgages on property existing at the time of acquisition of the property
by us or any subsidiary, whether or not assumed,
. mortgages on property, shares of stock or indebtedness or other assets of
a corporation existing at the time it becomes a restricted subsidiary,
. mortgages on property, shares of stock or indebtedness or other assets
existing at the time of acquisition by us or a restricted subsidiary of
ours (including leases), or mortgages to secure payment of all or any
part of the purchase price, or to secure any debt within 12 months after
the acquisition thereof, or in the case of property, the completion of
construction, improvement or commencement of substantial commercial
operation of the property,
. mortgages to secure indebtedness owing to us or to a restricted
subsidiary,
. mortgages existing at the date of the senior indenture,
. mortgages on property existing at the time the person is merged or
consolidated with us or a restricted subsidiary,
. mortgages on property at the time of a sale or lease of the properties of
a person as an entirety or substantially as an entirety to us or a
restricted subsidiary,
. mortgages incurred to finance the acquisition or construction of property
secured by mortgages in favor of the United States or a political
subdivision of the Unites States,
. mortgages for taxes, assessments or other governmental charges not yet
due or payable without penalty that are being contested by us or a
restricted subsidiary, and for which we have adequately reserved,
. mortgages incurred in connection with an asset acquisition or a project
financed with a non-recourse obligation, or
. mortgages for materialmen's, mechanics', workmen's, repairmen's,
landlord's mortgages for rent or other similar mortgages arising in the
ordinary course of business in respect of obligations which are not
overdue or which are being contested by us or any restricted subsidiary
in good faith and by appropriate proceedings,
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. mortgages consisting of zoning restrictions, licenses, easements and
restrictions on the use of real property and minor irregularities that do
not materially impair the use of the real property,
. mortgages constituting any extension, renewal or replacement of any
mortgage listed above to the extent the mortgage is not increased.
Subordinated Debt Securities
The subordinated debt securities are subordinated in right of payment to the
prior payment in full of all senior debt, including any senior debt securities.
In the event of any dissolution, winding up, liquidation or reorganization of
us, the holders of senior debt shall be entitled to receive payment in full
before holders of subordinated debt securities shall be entitled to receive any
payment or distribution on any subordinated debt securities.
In the event of insolvency, upon any distribution of our assets:
. holders of subordinated debt securities are required to pay over their
share of such distribution to the trustee in bankruptcy, receiver or
other person distributing the assets of the Company to pay all senior
debt remaining to the extent necessary to pay all holders of senior debt
in full, and
. our unsecured creditors who are not holders of subordinated debt
securities or holders of senior debt may recover less, ratably, than
holders of senior debt and may recover more, ratably, than the holders of
subordinated debt securities.
Definitions Relating to Subordinated Debt Securities
"senior debt" means the principal, premium, if any, and unpaid interest on:
. our indebtedness for borrowed money,
. our obligations evidenced by bonds, debentures, notes or similar
instruments,
. our obligations under any interest rate swaps, caps, collars, options,
and similar arrangements,
. our obligations under any foreign exchange contract, currency swap
contract, futures contract, currency option contract, or other foreign
currency hedge arrangements,
. our obligations under any credit swaps, caps, floors, collars and similar
arrangements,
. indebtedness incurred, assumed or guaranteed by us in connection with the
acquisition by us or any of our subsidiaries of any business, properties
or assets, except purchase-money indebtedness classified as accounts
payable under generally accepted accounting principles,
. our obligations as lessee under leases required to be capitalized on the
balance sheet in conformity with generally accepted accounting
principles,
. all obligations under any lease or related document, including a purchase
agreement, in connection with the lease of real property which provides
that we are contractually obligated to purchase or cause a third party to
purchase the leased property and thereby guarantee a minimum residual
value of the leased property to the lessor and our obligations under such
lease or related document to purchase or to cause a third party to
purchase such leased property,
. our reimbursement obligations in respect of letters of credit relating to
indebtedness or our other obligations that qualify as indebtedness or
obligations of the kind referred to above, and
. our obligations under direct or indirect guaranties in respect of, and
obligations to purchase or otherwise acquire, or otherwise to assure a
creditor against loss in respect of, indebtedness or obligations of
others of the kinds referred to above.
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However, senior debt shall not include any indebtedness or obligation that
provides that such indebtedness or obligation is not superior in right of
payment to the subordinated debt securities or provides that such indebtedness
is subordinate to our other indebtedness and obligations.
The subordinated debt securities are effectively subordinated to all
existing and future liabilities of our subsidiaries. Any right we have to
participate in any distribution of the assets of any of our subsidiaries upon
their liquidation, reorganization or insolvency, and the consequent right of
holders of senior debt securities to participate in those assets, will be
subject to the claims of the creditors of such subsidiary. In addition, any
claim we may have as a creditor would still be subordinate to any security
interest in the assets of such subsidiary and any indebtedness of such
subsidiary senior to that held by us.
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DESCRIPTION OF COMMON STOCK
Our certificate of incorporation authorizes us to issue up to 4,800,000,000
shares of common stock. As of January 31, 2000 there were approximately
1,000,112,000 shares of common stock outstanding.
The holders of common stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. The holders of common stock have
cumulative voting rights for the election of our directors in accordance with
our bylaws and Delaware law. Subject to preferences applicable to any
outstanding preferred stock, the holders of common stock are entitled to
receive ratably such dividends as may be declared from time to time by the
board of directors out of funds legally available for distribution, and, in the
event of our liquidation, dissolution or winding up, the holders of common
stock are entitled to share in all assets remaining after payment of
liabilities. The common stock has no preemptive or conversion rights and is not
subject to further calls or assessments by us. There are no redemption or
sinking fund provisions available to the common stock. The common stock
currently outstanding is validly issued, fully paid and nonassessable.
The transfer agent and registrar for the common stock is Harris Trust and
Savings Bank.
Anti-Takeover Effects of Delaware Law
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law, which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in any business combination with any interested
stockholder for a period of three years following the time that such
stockholder became an interested stockholder, unless:
(1) prior to such time, the board of directors of the corporation approved
either the business combination or the transaction that resulted in
the stockholder's becoming an interested stockholder,
(2) upon consummation of the transaction that resulted in the
stockholder's becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for
purposes of determining the number of shares outstanding those shares
owned:
. by persons who are directors and also officers, and
. by employee stock plans in which employee participants do not have
the right to determine confidentially whether shares held subject to
the plan will be tendered in a tender or exchange offer, or
(3) at or subsequent to such time, the business combination is approved by
the board of directors and authorized at an annual or special meeting
of the stockholders, and not by written consent, by the affirmative
vote of at least 66 2/3% of the outstanding voting stock that is not
owned by the interested stockholder.
Section 203 defines "business combination" to include:
(1) any merger or consolidation involving the corporation and the
interested stockholder,
(2) any sale, transfer, pledge or other disposition of 10% or more of the
assets of the corporation involving the interested stockholder,
(3) subject to certain exceptions, any transaction that results in the
issuance or transfer by the corporation of any stock of the
corporation to the interested stockholder,
(4) any transaction involving the corporation that has the effect of
increasing the proportionate share of the stock of any class or series
of the corporation beneficially owned by the interested stockholder,
or
(5) the receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided by
or through the corporation.
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In general, Section 203 defines an "interested stockholder" as any entity or
person who or which beneficially owns (or within three years did own) 15% or
more of the outstanding voting stock of the corporation and any entity or
person affiliated with or controlling or controlled by such entity or person.
The existence of this provision would be expected to have an anti-takeover
effect with respect to transactions not approved in advance by our board of
directors, including discouraging attempts that might result in a premium over
the market price for the shares of common stock held by stockholders.
DESCRIPTION OF PREFERRED STOCK
Our certificate of incorporation authorizes us to issue up to 300,000,000
shares of preferred stock in one or more series. As of January 31, 2000, we did
not have any outstanding shares of preferred stock or options to purchase
preferred stock. Our board of directors, however, has the authority without
shareholder consent, subject to certain limitations imposed by law or our
bylaws, to issue one or more series of preferred stock at any time. The rights,
preferences and restrictions of the preferred stock of each series will be
fixed by the certificate of designation relating to each series. A prospectus
supplement relating to each such series will specify the terms of the preferred
stock as determined by our board of directors, including the following:
. the number of shares in any series,
. the designation for any series by number, letter or title that shall
distinguish the series from any other series of preferred stock,
. the dividend rate and whether dividends on that series of preferred stock
will be cumulative, noncumulative or partially cumulative,
. the voting rights of that series of preferred stock, if any,
. any conversion provisions applicable to that series of preferred stock,
. any redemption or sinking fund provisions applicable to that series of
preferred stock,
. the liquidation preference per share of that series of preferred stock,
if any, and
. the terms of any other preferences or rights, if any, applicable to that
series of preferred stock.
We will describe the specific terms of a particular series of preferred
stock in the prospectus supplement relating to that series. The description of
preferred stock above and the description of the terms of a particular series
of preferred stock in the related prospectus supplement will not be complete.
You should refer to the certificate of designation for complete information.
The prospectus supplement will also contain a description of certain U.S.
federal income tax consequences relating to the preferred stock.
Although it has no present intention to do so, our board of directors,
without stockholder approval, may issue preferred stock with voting and
conversion rights which could adversely affect the voting power of the holders
of common stock. If we issue preferred stock, it may have the effect of
delaying, deferring or preventing a change of control.
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DESCRIPTION OF THE DEPOSITARY SHARES
At our option, we may elect to offer fractional shares of preferred stock,
rather than full shares of preferred stock. If we do, we will issue to the
public receipts for depositary shares and each of these depositary shares will
represent a fraction (to be set forth in the prospectus supplement) of a share
of a particular series of preferred stock. Each owner of a depositary share
will be entitled, in proportion to the applicable fractional interest in shares
of preferred stock underlying that depositary share, to all rights and
preferences of the preferred stock underlying that depositary share. Those
rights include dividend, voting, redemption and liquidation rights.
The shares of preferred stock underlying the depositary shares will be
deposited with a bank or trust company selected by us to act as depositary,
under a deposit agreement between us, the depositary and the holders of the
depositary receipts. The depositary will be the transfer agent, registrar and
dividend disbursing agent for the depositary shares.
The depositary shares will be evidenced by depositary receipts issued
pursuant to the depositary agreement. Holders of depositary receipts agree to
be bound by the deposit agreement, which requires holders to take certain
actions such as filing proof of residence and paying certain charges.
The summary of terms of the depositary shares contained in this prospectus
is not complete. You should refer to the forms of the deposit agreement, our
certificate of incorporation and the certificate of amendment for the
applicable series of preferred stock that are, or will be, filed with the
Securities and Exchange Commission.
Dividends
The depositary will distribute all cash dividends or other cash
distributions received in respect of the series of preferred stock underlying
the depositary shares to the record holders of depositary receipts in
proportion to the number of depositary shares owned by those holders on the
relevant record date, which will be the same date as the record date for the
preferred stock.
In the event of a distribution other than in cash, the depositary will
distribute property received by it to the record holders of depositary receipts
that are entitled to receive the distribution, unless the depositary determines
that it is not feasible to make the distribution. If this occurs, the
depositary, with our approval, may adopt another method for the distribution,
including selling the property and distributing the net proceeds to the
holders.
Liquidation Preference
In the event of our voluntary or involuntary liquidation, dissolution or
winding up, the holders of each depositary share will be entitled to receive
the fraction of the liquidation preference accorded each share of the
applicable series of preferred stock, as set forth in the applicable prospectus
supplement.
Redemption
If a series of preferred stock underlying the depositary shares is subject
to redemption, the depositary shares will be redeemed from the proceeds
received by the depositary resulting from the redemption, in whole or in part,
of preferred stock held by the depositary. Whenever we redeem any preferred
stock held by the depositary, the depositary will redeem, as of the same
redemption date, the number of depositary shares representing the preferred
stock so redeemed. The depositary will mail the notice of redemption to the
record holders of the depositary receipts promptly upon receiving the notice
from us and fewer than 35 or more than 60 days, unless otherwise provided in
the applicable prospectus supplement, prior to the date fixed for redemption of
the preferred stock and the depositary shares.
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Voting
Upon receipt of notice of any meeting at which the holders of preferred
stock are entitled to vote, the depositary will mail the information contained
in the notice of meeting to the record holders of the depositary receipts
underlying the preferred stock. Each record holder of those depositary receipts
on the record date will be entitled to instruct the depositary as to the
exercise of the voting rights pertaining to the amount of preferred stock
underlying that holder's depositary shares. The record date for the depositary
will be the same date as the record date for the preferred stock. The
depositary will try, as far as practicable, to vote the preferred stock
underlying the depositary shares in accordance with such instructions, and we
will agree to take all action which may be deemed necessary by the depositary
in order to enable the depositary to do so. The depositary will not vote the
preferred stock to the extent that it does not receive specific instructions
from the holders of depositary receipts.
Withdrawal of Preferred Stock
Owners of depositary shares are entitled, upon surrender of depositary
receipts at the principal office of the depositary and payment of any unpaid
amount due to the depositary, to receive the number of whole shares of
preferred stock underlying the depositary shares. Partial shares of preferred
stock will not be issued. Holders of preferred stock will not be entitled to
deposit the shares under the deposit agreement or to receive depositary
receipts evidencing depositary shares for the preferred stock.
Amendment and Termination of Deposit Agreement
The form of depositary receipt evidencing the depositary shares and any
provision of the deposit agreement may be amended at any time and from time to
time by agreement between us and the depositary. However, any amendment which
materially and adversely alters the rights of the holders of depositary shares,
other than fee changes, will not be effective unless the amendment has been
approved by at least a majority of the depositary shares then outstanding. The
deposit agreement may be terminated by the depositary or us only if:
. all outstanding depositary shares have been redeemed, or
. there has been a final distribution in respect of the preferred stock in
connection with our dissolution and such distribution has been made to
all the holders of depositary shares.
Charges of Depositary
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. We will also pay
charges of the depositary in connection with the initial deposit of the
preferred stock and the initial issuance of the depositary shares, any
redemption of the preferred stock and all withdrawals of preferred stock by
owners of depositary shares. Holders of depositary receipts will pay transfer,
income and other taxes and governmental charges and other specified charges as
provided in the deposit agreement to be for their accounts. The depositary may
refuse to transfer depositary shares, withhold dividends and distributions and
sell the depositary shares evidenced by the depositary receipt if the charges
are not paid.
Miscellaneous
The depositary will forward to the holders of depositary receipts all
reports and communications we deliver to the depositary that we are required to
furnish to the holders of the preferred stock. In addition, the depositary will
make available for inspection by holders of depositary receipts at the
principal office of the depositary, and at such other places as it may from
time to time deem advisable, any reports and communications we deliver to the
depositary as the holder of preferred stock.
Neither the depositary nor we will be liable if either of us is prevented or
delayed by law or any circumstance beyond our control in performing our
respective obligations under the deposit agreement. Our obligations and those
of the depositary will be limited to performance in good faith of our
respective duties under
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the deposit agreement. Neither the depositary nor we will be obligated to
prosecute or defend any legal proceeding in respect of any depositary shares or
preferred stock unless satisfactory indemnity is furnished. We and the
depositary may rely on written advice of counsel or accountants, on information
provided by holders of depositary receipts or other persons believed in good
faith to be competent to give such information and on documents believed to be
genuine and to have been signed or presented by the proper party or parties.
Resignation and Removal of Depositary
The depositary may resign at any time by delivering a notice to us of its
election to do so. We may remove the depositary at any time. Any such
resignation or removal will take effect upon the appointment of a successor
depositary and its acceptance of such appointment. The successor depositary
must be appointed within 60 days after delivery of the notice for resignation
or removal and must be a bank or trust company having its principal office in
the United States of America and having a combined capital and surplus of at
least $150,000,000.
Federal Income Tax Consequences
Owners of the depositary shares will be treated for Federal income tax
purposes as if they were owners of the preferred stock underlying the
depositary shares. As a result, owners will be entitled to take into account
for Federal income tax purposes income and deductions to which they would be
entitled if they were holders of such preferred stock. No gain or loss will be
recognized for Federal income tax purposes upon the withdrawal of preferred
stock in exchange for depositary shares. The tax basis of each share of
preferred stock to an exchanging owner of depositary shares will be, upon such
exchange, the same as the aggregate tax basis of the depositary shares
exchanged. The holding period for preferred stock in the hands of an exchanging
owner of depositary shares will include the period during which such person
owned such depositary shares.
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DESCRIPTION OF THE WARRANTS
General
We may issue warrants for the purchase of debt securities, preferred stock
or common stock. Warrants may be issued independently or together with debt
securities, preferred stock or common stock and may be attached to or separate
from any offered securities. Each series of warrants will be issued under a
separate warrant agreement to be entered into between us and a bank or trust
company, as warrant agent. The warrant agent will act solely as our agent in
connection with the warrants and will not have any obligation or relationship
of agency or trust for or with any holders or beneficial owners of warrants.
This summary of certain provisions of the warrants is not complete. For the
complete terms of the warrant agreement, you should refer to the provisions of
the warrant agreement that will be filed with the Securities and Exchange
Commission in connection with the offering of warrants.
Debt Warrants
The prospectus supplement relating to a particular issue of warrants to
issue debt securities will describe the terms of the debt warrants, including
the following:
. the title of the debt warrants,
. the offering price for the debt warrants, if any,
. the aggregate number of the debt warrants,
. the designation and terms of the debt securities purchasable upon
exercise of the debt warrants,
. if applicable, the designation and terms of the debt securities that the
debt warrants are issued with and the number of debt warrants issued with
each debt security,
. if applicable, the date from and after which the debt warrants and any
debt securities issued with them will be separately transferable,
. the principal amount of debt securities that may be purchased upon
exercise of a debt warrant and the price at which the debt securities may
be purchased upon exercise, which may be payable in cash, securities or
other property,
. the dates on which the right to exercise the debt warrants will commence
and expire,
. if applicable, the minimum or maximum amount of the debt warrants that
may be exercised at any one time,
. whether the debt warrants represented by the debt warrant certificates or
debt securities that may be issued upon exercise of the debt warrants
will be issued in registered or bearer form,
. information with respect to book-entry procedures, if any,
. the currency or currency units in which the offering price, if any, and
the exercise price are payable,
. if applicable, a discussion of material united states federal income tax
considerations,
. the antidilution provisions of the debt warrants, if any,
. the redemption or call provisions, if any, applicable to the debt
warrants, and
. any additional terms of the debt warrants, including terms, procedures,
and limitations relating to the exchange and exercise of the debt
warrants.
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Stock Warrants
The prospectus supplement relating to a particular issue of warrants to
issue our common stock or preferred stock will describe the terms of the
warrants, including the following:
. the title of the warrants,
. the offering price for the warrants, if any,
. the aggregate number of the warrants,
. the designation and terms of the common stock or preferred stock that may
be purchased upon exercise of the warrants,
. if applicable, the designation and terms of the securities with which the
warrants are issued and the number of warrants issued with each security,
. if applicable, the date from and after which the warrants and any
securities issued with the warrants will be separately transferable,
. the number of shares of common stock or preferred stock that may be
purchased upon exercise of a warrant and the price at which such shares
may be purchased upon exercise,
. the dates on which the right to exercise the warrants shall commence and
expire,
. if applicable, the minimum or maximum amount of the warrants that may be
exercised at any one time,
. the currency or currency units in which the offering price, if any, and
the exercise price are payable,
. if applicable, a discussion of material United States Federal income tax
considerations,
. the antidilution provisions of the warrants, if any,
. the redemption or call provisions, if any, applicable to the warrants,
and
. any additional terms of the warrants, including terms, procedures, and
limitations relating to the exchange and exercise of the warrants.
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PLAN OF DISTRIBUTION
We may sell the securities separately or together:
. through one or more underwriters or dealers in a public offering and sale
by them,
. directly to investors, or
. through agents.
We may describe the securities from time to time in one or more transactions
at a fixed price or prices, which may be changed from time to time:
. at market prices prevailing at the times of sale,
. at prices related to such prevailing market prices, or
. at negotiated prices.
We will describe the method of distribution of the securities in the
prospectus supplement.
Underwriters, dealers or agents may receive compensation in the form of
discounts, concessions or commissions from us or our purchasers, as their
agents in connection with the sale of securities. These underwriters, dealers
or agents may be considered to be underwriters under the Securities Act of
1933, as amended. As a result, discounts, commissions, or profits on resale
received by the underwriters, dealers or agents may be treated as underwriting
discounts and commissions. The prospectus supplement will identify any such
underwriter, dealer or agent and describe any compensation received by them
from us. Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.
Underwriters, dealers and agents may be entitled to indemnification by us
against certain civil liabilities, including liabilities under the Securities
Act, or to contribution with respect to payments made by the underwriters,
dealers or agents, under agreements between us and the underwriters, dealers
and agents.
We may grant underwriters who participate in the distribution of securities
an option to purchase additional securities to cover over-allotments, if any,
in connection with the distribution.
All debt securities will be new issues of securities with no established
trading market. Underwriters involved in the public offering and sale of debt
securities may make a market in the debt securities. However, they are not
obligated to make a market and may discontinue market-making activity at any
time. No assurance can be given as to the liquidity of the trading market for
any debt securities.
Underwriters or agents and their associates may be customers of, engage in
transactions with or perform services for us in the ordinary course of
business.
LEGAL MATTERS
Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto,
California, will pass upon the validity of the issuance of the securities
offered by this prospectus for us.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K for the year ended October 31, 1999
have been so incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
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