File Pursuant to 424(b)(2)
File No. 333-72912
PROSPECTUS SUPPLEMENT
TO PROSPECTUS DATED NOVEMBER 21, 2001
[FLEETBOSTON FINANCIAL LOGO]
U.S. $4,000,000,000
FLEETBOSTON FINANCIAL CORPORATION
SENIOR MEDIUM-TERM NOTES, SERIES T
SUBORDINATED MEDIUM-TERM NOTES, SERIES U
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
THE NOTES:
- We will offer notes from time to time and specify the terms and conditions of
each issue of notes in a pricing supplement.
- The notes will be senior or subordinated unsecured debt securities of
FleetBoston.
- The notes will have stated maturities of nine months or more from the date
they are originally issued.
- We will pay amounts due on the notes in U.S. dollars or any other
consideration described in the applicable pricing supplement.
- We will specify whether the notes can be redeemed or repaid before their
maturity and whether they are subject to mandatory redemption, redemption at
the option of FleetBoston or repayment at the option of the holder of the
notes.
- The notes may bear interest at fixed or floating rates or may not bear any
interest. If the notes bear interest at a floating rate, the floating rate may
be based on one or more indices or formulas plus or minus a fixed amount or
multiplied by a specified percentage.
- The subordinated notes are subordinate to FleetBoston's senior indebtedness
and other financial obligations, as described in the accompanying prospectus
under "Description of Debt Securities -- Subordinated Debt Securities."
Payment of principal of the subordinated notes may be accelerated only if
there is a bankruptcy or reorganization of FleetBoston, and not if FleetBoston
defaults in payment on the subordinated notes or in the performance of any
other covenant of FleetBoston.
- The notes will be issued in denominations of $1,000 and integral multiples of
$1,000 unless otherwise specified in the applicable pricing supplement.
INVESTING IN THE NOTES INVOLVES CERTAIN RISKS. SEE "RISK FACTORS" ON PAGE S-3.
THE NOTES ARE NOT DEPOSITS AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED
OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS SUPPLEMENT, THE
ACCOMPANYING PROSPECTUS OR ANY PRICING SUPPLEMENT IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AGENTS' DISCOUNTS PROCEEDS, BEFORE
PUBLIC OFFERING PRICE AND COMMISSIONS EXPENSES, TO FLEETBOSTON
--------------------- ------------------------ -----------------------------
Per note............. 100% .125% - .75% 99.875% - 99.250%
Total(1)............. $4,000,000,000 $5,000,000 - $30,000,000 $3,995,000,000 - $3,970,000,000
------------------------
(1) Or the equivalent in one or more foreign or composite currencies.
We may sell notes to the agents referred to below as principal for resale at
varying or fixed offering prices or through any agent as agent using its
reasonable efforts to sell notes on our behalf. We may also sell notes without
the assistance of an agent.
If we sell other securities referred to in the accompanying prospectus, the
amount of notes that we may offer and sell under this prospectus supplement will
be reduced.
References in this prospectus supplement to "FleetBoston," "we," "us" and "our"
are to FleetBoston Financial Corporation.
BEAR, STEARNS & CO. INC.
FLEET SECURITIES, INC.
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
MORGAN STANLEY
ROBERTSON STEPHENS
SALOMON SMITH BARNEY
The date of this prospectus supplement is November 27, 2001.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
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Risk Factors........................... S-3
Description of the Notes............... S-5
Certain United States Federal Income
Tax Considerations................... S-24
Plan of Distribution................... S-30
PROSPECTUS
PAGE
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About This Prospectus................. 2
Where You Can Find More Information... 2
Forward-looking Statements............ 4
FleetBoston Financial Corporation..... 5
Consolidated Ratios of Earnings to
Fixed Charges....................... 5
Use of Proceeds....................... 6
Regulation and Supervision............ 6
The GLB Act......................... 7
Future Legislation.................. 7
Description of Debt Securities........ 7
General............................. 8
Registration and Transfer........... 9
Payment and Place of Payment........ 10
Global Securities................... 10
Events of Default................... 10
Modification and Waiver............. 12
Consolidation, Merger and Sale of
Assets........................... 13
PAGE
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Regarding the Trustee............... 13
International Offering.............. 13
Senior Debt Securities................ 14
Restrictive Covenants............... 14
Defeasance.......................... 15
Subordinated Debt Securities.......... 15
Subordination....................... 15
Restrictive Covenants............... 17
Description of Warrants............... 17
Offered Warrants.................... 17
Further Information in Prospectus
Supplement....................... 18
Significant Provisions of the
Warrant Agreements............... 19
Plan of Distribution.................. 20
Experts............................... 21
Legal Opinions........................ 21
S-2
RISK FACTORS
Your investment in the notes involves certain risks. In consultation with
your own financial and legal advisers, you should carefully consider, among
other matters, the following discussion of risks before deciding whether an
investment in the notes is suitable for you. The notes are not an appropriate
investment for you if you are unsophisticated with respect to the significant
features of the notes or the relationship between these features.
NOTES INDEXED TO INTEREST RATE, CURRENCY OR OTHER INDICES OR FORMULAS ARE MORE
VOLATILE THAN CONVENTIONAL DEBT SECURITIES
If you invest in notes indexed to one or more interest rates, currency or
other indices or formulas, you could be subject to significant risks not
associated with 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. You
may receive payments 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 that index or formula will be
magnified. In recent years, values of certain indices and formulas have been
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.
NOTES DENOMINATED IN FOREIGN CURRENCIES ARE SUBJECT TO SIGNIFICANT RISKS
ASSOCIATED WITH EXCHANGE RATE FLUCTUATION, FOREIGN EXCHANGE CONTROLS AND OTHER
FACTORS OVER WHICH WE HAVE NO CONTROL
Judgments. If an action based on your notes denominated in a specified
currency other than U.S. dollars were commenced in a court of the United States,
it is unlikely that the court would grant judgment in any currency other than
U.S. dollars. The Judiciary Law of the State of New York provides, however, that
a judgment or decree in an action based upon an obligation denominated in a
currency other than U.S. dollars will be rendered in the foreign currency of the
underlying obligation and converted into U.S. dollars at the rate of exchange
prevailing on the date of the entry of the judgment or decree. You would bear
the risk of exchange rate fluctuations between the time the amount of the
judgment is calculated and the time the judgment is converted to U.S. dollars
and paid to you.
Exchange Rates and Exchange Controls. If you invest in notes that are
denominated in a foreign currency or currency units, there will be significant
risks which 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 the U.S. dollar and the foreign currency and the
possibility of the imposition or modification of foreign exchange controls by
either the U.S. or foreign governments. These risks depend on economic and
political events and on the supply of and demand for the relevant currencies,
factors over which we have no control. Moreover, if payments on your foreign
currency notes are determined by reference to a formula containing a multiplier
or leverage factor, the effect of any change in the exchange rates between the
applicable currencies will be magnified. In recent years, rates of exchange
between the U.S. dollar and certain foreign currencies have been highly volatile
and you should expect such volatility in the future. Fluctuations in any
particular exchange rate that have occurred in the past do not mean that
fluctuations in that exchange rate may occur during the term of any note. If the
currency specified in a note depreciates in value against the U.S. dollar, the
effective yield of your note would decrease below its coupon rate, and could
result in a loss to you on a U.S. dollar basis. Governmental exchange controls
could affect exchange rates and the availability of the payment currency for
your foreign currency notes on a required payment date. Even if there are no
exchange controls, it is possible that your payment currency will not be
available on a required payment date for circumstances beyond our control. In
these cases, we will be allowed to satisfy our obligations in respect of your
foreign currency notes in U.S. dollars.
THIS PROSPECTUS SUPPLEMENT, THE APPLICABLE PRICING SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS DO NOT DESCRIBE ALL THE RISKS OF AN INVESTMENT IN NOTES
DENOMINATED IN CURRENCIES OTHER THAN U.S. DOLLARS. WE
S-3
BELIEVE THAT THESE RISKS ARE POTENTIALLY TOO VARIABLE TO ASCERTAIN AND DESCRIBE
WITH ANY REASONABLE DEGREE OF CERTAINTY AND THAT PREPARATION OF A LIST OF EVERY
POTENTIAL MATERIAL RISK INCORPORATING EVERY ECONOMIC, FINANCIAL, POLITICAL AND
MILITARY CIRCUMSTANCE, AMONG OTHER THINGS, WOULD BE IMPRACTICAL. YOU SHOULD
CONSULT YOUR OWN FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED BY AN
INVESTMENT IN NOTES DENOMINATED IN CURRENCIES OTHER THAN U.S. DOLLARS. THESE
NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE UNSOPHISTICATED
WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS.
Unless otherwise specified in the applicable pricing supplement, notes
denominated in foreign currencies will not be sold in, or to residents of, the
country of the specified currency in which particular notes are denominated.
The information set forth 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, or interest on, the
notes. If you are not a resident of the United States, you should consult your
own counsel with regard to such matters.
Governments have imposed, and may in the future impose, exchange controls
which could affect exchange rates as well as the availability of a specified
currency other than U.S. dollars at a note's interest payment date or maturity
or upon earlier redemption or repayment. We cannot assure you that exchange
controls will not restrict or prohibit payment of principal or interest in any
foreign currency or currency unit. Even if there are no actual exchange
controls, it is possible that at a payment date of any particular note, the
specified currency for such note would not be available to us due to
circumstances beyond our control. In that event, we will make required payments
in U.S. dollars on the basis of the market exchange rate. See "Description of
the Notes."
The applicable pricing supplement will contain information concerning
exchange rates for the specified currency, if other than U.S. dollars, in which
principal of, or interest on, the notes is payable, as against the U.S. dollar
at selected times during the last five years, as well as current foreign
exchange controls affecting that specified currency.
REDEMPTION MAY ADVERSELY AFFECT YOUR RETURN ON THE NOTES
If your notes are redeemable at our option or are subject to mandatory
redemption, we may choose to, in the case of optional redemption, or must, in
the case of mandatory redemption, redeem your notes at times when prevailing
interest rates may be relatively low. Accordingly, you may not be able to
reinvest the redemption proceeds in a comparable security at an effective
interest rate as high as that of the notes.
THERE MAY BE AN UNCERTAIN TRADING MARKET FOR YOUR NOTES; MANY FACTORS AFFECT THE
TRADING VALUE OF YOUR NOTES
We cannot assure you a trading market for your notes will ever develop or
be maintained. Many factors independent of our creditworthiness may affect the
trading market of your notes. These factors include:
- the complexity and volatility of the index or formula applicable to the
notes;
- the method of calculating the principal, premium and interest in respect
of the notes;
- the time remaining to the maturity of the notes;
- the outstanding amount of the notes;
- the redemption features of the notes;
- the amount of other securities linked to the index or formula applicable
to the notes; and
- the level, direction and volatility of market interest rates generally.
In addition, because some notes were designed for specific investment
objectives or strategies, these notes will have a more limited trading market,
and will experience more price volatility, than notes designed for broader
investment objectives or strategies. There may be a limited number of buyers for
these notes. This may affect the price you receive for these notes or your
ability to sell these notes at all. You should not purchase notes unless you
understand and know you can bear the related investment risks.
S-4
OUR CREDIT RATINGS MAY NOT REFLECT ALL RISKS OF AN INVESTMENT IN THE NOTES
Our credit ratings are an assessment of our ability to pay our obligations.
Consequently, real or anticipated changes in our credit ratings will generally
affect the market value of your notes. Our credit ratings, however, may not
reflect the potential impact of risks related to structure, market or other
factors discussed above on the value of your notes.
DESCRIPTION OF THE NOTES
The senior notes will be issued as a series of debt securities under a
senior indenture, dated as of December 6, 1999, the "SENIOR INDENTURE," between
us and The Bank of New York, as trustee. The subordinated notes will be issued
as a series of debt securities under a subordinated indenture, dated as of
December 6, 1999, the "SUBORDINATED INDENTURE," between us and The Bank of New
York, as trustee.
The term "SENIOR DEBT SECURITIES," as used in this prospectus supplement,
refers to all securities issued and issuable from time to time under our senior
indentures and includes the senior notes. The term "SUBORDINATED DEBT
SECURITIES," as used in this prospectus supplement, refers to all securities
issued and issuable from time to time under our subordinated indentures and
includes the subordinated notes. The debt securities and the senior and
subordinated indentures are more fully described in the accompanying prospectus.
The following summary of the material provisions of the notes and of the
indentures is not complete and is qualified in its entirety by reference to the
indentures, copies of which have been filed as exhibits to the registration
statement of which the accompanying prospectus is a part.
You should rely only on the information contained or incorporated by
reference in this prospectus supplement, the accompanying prospectus and any
pricing supplement. We have not authorized any other person to provide you with
different or additional information. If anyone provides you with different or
additional information, you should not rely on it. We are not making an offer to
sell these securities in any jurisdiction where the offer or sale is not
permitted. You should assume that the information contained or incorporated by
reference in this prospectus supplement, the accompanying prospectus and any
pricing supplement is accurate only as of the date on the front cover of that
document.
The following description of notes will apply unless otherwise specified in
an applicable pricing supplement.
TERMS OF THE NOTES
All senior debt securities, including the senior notes, will be our
unsecured general obligations and will rank equally with all of our other
unsecured and unsubordinated indebtedness from time to time outstanding. All
subordinated debt securities, including the subordinated notes, will be our
unsecured general obligations and will be subordinate and junior in the right of
payment, to the extent and in the manner set forth in the accompanying
prospectus, to all of our senior indebtedness and other financial obligations
(each as defined in the accompanying prospectus). As of September 30, 2001, our
senior indebtedness and other financial obligations aggregated approximately
$5.8 billion (holding company only). In addition, we issued $1.0 billion of
senior notes on November 19, 2001. There is no limitation on our ability to
issue additional senior indebtedness or other financial obligations.
Because we are a holding company, our right and the rights of our
creditors, including the holders of the notes, to participate in any
distribution of the assets of any subsidiary upon its liquidation or
reorganization or otherwise is necessarily subject to the prior claims of
creditors of that subsidiary, except to the extent that a bankruptcy court may
recognize our claims as a creditor of that subsidiary. In addition, dividends,
loans and advances to us from our banking subsidiaries are restricted by state
and federal banking regulators.
Our senior and subordinated indentures do not limit the aggregate principal
amount of debt securities which we may issue. We may issue our debt securities
from time to time as a single series or in two or more separate series up to the
aggregate principal amount from time to time authorized by us for each series.
We may, from time to time, without the consent of the holders of the notes,
provide for the issuance of notes or
S-5
other debt securities under our indentures in addition to the $4.0 billion
aggregate principal amount of notes offered by this prospectus supplement. As of
September 30, 2001, we had $4.5 billion aggregate principal amount of senior
notes issued and outstanding and $4.0 billion of subordinated notes issued and
outstanding (holding company only). The aggregate principal amount of notes
which may be offered and sold by this prospectus supplement may be reduced by
our sale of other securities under the registration statement of which the
accompanying prospectus is a part.
The notes will be offered on a continuing basis and will mature on a day
nine months or more from their date of issue, as specified in the applicable
pricing supplement. Interest-bearing notes will bear interest at either fixed or
floating rates as specified in the applicable pricing supplement. Notes may be
issued at significant discounts from their principal amount payable at stated
maturity, or on any date before the stated maturity date on which the principal
or an installment of principal of a note becomes due and payable, whether by the
declaration of acceleration, call for redemption at our option, repayment at the
option of the holder or otherwise. The stated maturity date or such prior date,
as the case may be, is referred to as a "MATURITY." Some notes may not bear
interest.
Unless otherwise indicated in a note and in the applicable pricing
supplement, the notes will be denominated in United States dollars and we will
make payments of principal of, and premium, if any, and interest on, the notes
in United States dollars.
We may change interest rates, interest rate formulae and other variable
terms of the notes from time to time, but no change will affect any note already
issued or as to which we have accepted an offer to purchase.
Each note will be issued in fully registered book-entry form or
certificated form, in denominations of $1,000 and integral multiples of $1,000,
unless otherwise specified in the applicable pricing supplement. Notes in
book-entry form may be transferred or exchanged only through a participating
member of The Depository Trust Company, referred to as "DTC," or any other
depository as is identified in an applicable pricing supplement. See
"-- Book-Entry Notes." Registration of transfer of notes in certificated form
will be made at the corporate trust office of the trustee. There will be no
service charge for any registration of transfer or exchange of notes, but we may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection with any transfer or exchange.
We will make payments of principal of, and premium and interest, if any, on
notes in book-entry form through the trustee to DTC 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 currency other than United States dollars, a "SPECIFIED CURRENCY," electing
to receive payments of principal or any premium or interest in that specified
currency must notify the participant of DTC 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 below, 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 depository of
any election on or before the third business day after the regular record date.
The depository 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 depository, and forwarded by
the depository 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.
In the case of notes in certificated form, we will make payment of
principal or premium, if any, at the maturity of each note in immediately
available funds upon presentation of the note and, in the case of any repayment
on an optional repayment date, upon submission of a duly completed election
form, at the corporate trust office of the trustee in the Borough of Manhattan,
The City of New York, or at any other place as we may designate. We will pay
interest due at maturity to the person to whom we pay principal of a note in
certificated form. Payment of interest due on notes in certificated form other
than at maturity will be made at the corporate trust office of the trustee or,
at our option, may be made by check mailed to the address of the person entitled
to receive payment as the address appears in the security register.
Notwithstanding the immediately preceding sentence, a holder of $1,000,000 or
more in aggregate principal amount of notes in certificated form, whether having
identical or different terms and provisions, having the same interest payment
S-6
dates will, at our option, be entitled to receive interest payments, other than
at maturity, by wire transfer of immediately available funds if the trustee has
received appropriate wire transfer instructions in writing not less than 15 days
prior to the applicable interest payment date. Any wire instructions received by
the trustee shall remain in effect until revoked by the holder.
"BUSINESS DAY" means any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which commercial banks are authorized or
required by law, regulation or executive order to close in The City of New York;
provided, however, that, with respect to non-United States dollar-denominated
notes, the day is also not a day on which commercial banks are authorized or
required by law, regulation or executive order to close in the principal
financial center, as defined below, of the country issuing the specified
currency or, if the specified currency is the Euro, the day is also a day on
which the Trans-European Automated Real-time Gross Settlement Express Transfer
(TARGET) System is open; provided, further, that, with respect to notes as to
which LIBOR is an applicable Interest Rate Basis, the day is also a London
business day. "LONDON BUSINESS DAY" means a day on which commercial banks are
open for business, including dealings in the LIBOR Currency, as defined below,
in London.
"PRINCIPAL FINANCIAL CENTER" means, unless otherwise specified in the
applicable pricing supplement,
(1) the capital city of the country issuing the specified currency; or
(2) the capital city of the country to which the LIBOR currency
relates;
except that with respect to United States dollars, Australian dollars, Canadian
dollars, Deutsche marks, Dutch guilders, Italian lire, Portuguese escudos, South
African rand and Swiss francs, the "principal financial center" will be The City
of New York, Sydney and (solely in the case of the specified currency)
Melbourne, Toronto, Frankfurt, Amsterdam, Milan, London (solely in the case of
the LIBOR Currency), Johannesburg and Zurich, respectively.
TRANSACTION AMOUNT
We may offer interest rates that may differ with respect to the notes
depending upon, among other things, the aggregate principal amount of notes
purchased in any transaction. We may offer notes with similar variable terms but
different interest rates concurrently at any time. We may also concurrently
offer notes having different variable terms to different investors.
REDEMPTION AT OUR OPTION
The notes will not be subject to any sinking fund. We may redeem the notes
at our option prior to their stated maturity only if an initial redemption date
is specified in the applicable notes and in the applicable pricing supplement.
If so indicated in the applicable pricing supplement, we may redeem the notes at
our option on any date on and after the applicable initial redemption date
specified in the applicable pricing supplement. On and after the initial
redemption date, if any, we may redeem the related note at any time in whole or
from time to time in part at our option at the applicable redemption price
referred to below together with interest on the principal of the applicable note
payable to the redemption date. Unless otherwise specified in the applicable
pricing supplement, we must give notice of redemption not more than 60 nor less
than 30 days before the redemption date. We will redeem the notes in increments
of $1,000, provided that any remaining principal amount will be an authorized
denomination of the applicable note. Unless otherwise specified in the
applicable pricing supplement, the redemption price with respect to a note will
initially mean the initial redemption percentage of the principal amount of the
note to be redeemed specified in the applicable pricing supplement. The
redemption price shall decline at each anniversary of the initial redemption
date by a percentage of the principal amount to be redeemed specified in the
applicable pricing supplement until the redemption price is 100% of the
principal amount.
REPAYMENT AT THE HOLDER'S OPTION
If so indicated in an applicable pricing supplement, we will repay the
notes in whole or in part at the option of the holders of the notes on any
optional repayment date specified in the applicable pricing
S-7
supplement. If no optional repayment date is indicated with respect to a note,
it will not be repayable at the option of the holder before its stated maturity.
Any repayment in part will be in an amount equal to $1,000 or integral multiples
of $1,000, provided that any remaining principal amount will be an authorized
denomination of the applicable note. The repurchase price for any note so
repurchased will be 100% of the principal amount to be repaid, together with
interest on the principal of the applicable note payable to the date of
repayment. For any note to be repaid, the trustee must receive, at its office
maintained for that purpose in the Borough of Manhattan, The City of New York,
currently the corporate trust office of the trustee, not more than 45 nor less
than 30 days before the optional repayment date:
- in the case of a note in certificated form, the note and the form
entitled "Option to Elect Repayment" duly completed; or
- in the case of a note in book-entry form, instructions to that effect
from the applicable beneficial owner of the notes to the depository and
forwarded by the depository to the trustee.
The trustee must receive notices of elections from a holder to exercise the
repayment option by 5:00 p.m., New York City time, on the last day for giving
that notice. Exercise of the repayment option by the holder of a note will be
irrevocable.
Only the depository may exercise the repayment option in respect of global
securities representing notes in book-entry form. Accordingly, beneficial owners
of global securities that desire to have all or any portion of the notes in
book-entry form represented by global securities repaid must instruct the
participant through which they own their interest to direct the depository to
exercise the repayment option on their behalf by forwarding the repayment
instructions to the trustee as discussed above. In order to ensure that the
trustee receives instructions on a particular day, the applicable beneficial
owner must so instruct the participant through which it owns its interest before
that participant's deadline for accepting instructions for that day. Different
firms may have different deadlines for accepting instructions from their
customers. Accordingly, beneficial owners of notes in book-entry form should
consult the participants through which they own their interest for the
respective deadlines. All instructions given to participants from beneficial
owners of notes in book-entry form relating to the option to elect repayment
will be irrevocable. In addition, at the time instructions are given, each
beneficial owner will cause the participant through which it owns its interest
to transfer its interest in the global security or securities representing the
related notes in book-entry form, on the depository's records, to the trustee.
See "-- Book-Entry Notes."
If applicable, we will comply with the requirements of Section 14(e) of the
Exchange Act and the rules promulgated under that section and any other
securities laws or regulations in connection with any repayment at the option of
the holder.
We may at any time purchase notes at any price or prices in the open market
or otherwise. Notes so purchased by us may, at our discretion, be held, resold
or surrendered to the trustee for cancellation.
INTEREST
Each note will bear interest from the date of issue at the rate per annum
or, in the case of a floating rate note, pursuant to the interest rate formula
stated in the applicable note and in the applicable pricing supplement until the
principal of the note is paid or made available for payment. Interest will be
payable in arrears on each interest payment date specified in the applicable
pricing supplement on which an installment of interest is due and payable and at
maturity. The first payment of interest on any note originally issued between a
regular record date and the related interest payment date will be made on the
interest payment date immediately following the next succeeding regular record
date to the registered holder on the next succeeding regular record date. The
regular record date will be the fifteenth calendar day, whether or not a
business day, immediately preceding the related interest payment date.
FIXED RATE NOTES
Unless otherwise specified in an applicable pricing supplement, each fixed
rate note will bear interest from, and including, the date of issue, at the rate
per annum stated on the face of the note until the principal
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amount of the note is paid or made available for payment. Interest payments on
fixed rate notes will equal the amount of interest accrued from and including
the immediately preceding interest payment date in respect of which interest has
been paid or from and including the date of issue, if no interest has been paid
with respect to the applicable fixed rate notes, to, but excluding, the related
interest payment date or maturity, as the case may be. Unless otherwise
specified in the applicable pricing supplement, interest on fixed rate notes
will be computed on the basis of a 360-day year of twelve 30-day months.
Unless otherwise specified in the applicable pricing supplement, interest
on fixed rate notes will be payable semiannually on May 15 and November 15 of
each year and at maturity. If any interest payment date or the maturity of a
fixed rate note falls on a day that is not a business day, the related payment
of principal, premium, if any, or interest will be made on the next succeeding
business day as if made on the date the applicable payment was due, and no
interest will accrue on the amount payable for the period from and after the
interest payment date or maturity, as the case may be.
FLOATING RATE NOTES
Interest on floating rate notes will be determined by reference to the
applicable Interest Rate Basis or Interest Rate Bases, which may be one or more
of:
- the CMT Rate;
- the Commercial Paper Rate;
- the Federal Funds Rate;
- LIBOR;
- the Prime Rate;
- the Treasury Rate; or
- any other Interest Rate Basis or interest rate formula that is specified
in the applicable pricing supplement.
A floating rate note may bear interest with respect to two or more Interest
Rate Bases.
TERMS. Each applicable pricing supplement will specify the terms of the
floating rate note being delivered, including:
- whether the floating rate note is a "Regular Floating Rate Note," an
"Inverse Floating Rate Note" or a "Floating Rate/Fixed Rate Note;"
- the Interest Rate Basis or Bases;
- the Initial Interest Rate;
- the Interest Reset Dates;
- the interest payment dates;
- the period to maturity of the instrument or obligation with respect to
which the Interest Rate Basis or Bases will be calculated, the "INDEX
MATURITY;"
- the Maximum Interest Rate and Minimum Interest Rate, if any;
- the number of basis points to be added to or subtracted from the related
Interest Rate Basis or Bases, the "SPREAD;"
- the percentage of the related Interest Rate Basis or Bases by which the
Interest Rate Basis or Bases will be multiplied to determine the
applicable interest rate, the "SPREAD MULTIPLIER;"
- if one or more of the specified Interest Rate Bases is LIBOR, the LIBOR
Currency, the Index Maturity and the Designated LIBOR Page; and
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- if one or more of the specified Interest Rate Bases is the CMT Rate, the
Designated CMT Telerate Page and Designated CMT Maturity Index.
The rate derived from the applicable Interest Rate Basis will be determined
in accordance with the related provisions below. The interest rate in effect on
each day will be based on:
- if that day is an Interest Reset Date, the rate determined as of the
Interest Determination Date (as defined below) immediately preceding that
Interest Reset Date, or
- if that day is not an Interest Reset Date, the rate determined as of the
Interest Determination Date immediately preceding the most recent
Interest Reset Date, except that the interest rate in effect for the
period, if any, from the date of issue to the first Interest Reset Date
will be the Initial Interest Reset Date.
The interest rate borne by the floating rate notes will be determined as
follows:
REGULAR FLOATING RATE NOTES. Unless a floating rate note is designated as
a Floating Rate/Fixed Rate Note, an Inverse Floating Rate Note or as having an
Addendum attached or as having "Other Provisions" apply relating to a different
interest rate formula, it will be a "REGULAR FLOATING RATE NOTE" and, except as
described below or in an applicable pricing supplement, will bear interest at
the rate determined by reference to the applicable Interest Rate Basis or Bases:
- plus or minus the applicable Spread, if any, and/or
- multiplied by the applicable Spread Multiplier, if any.
The rate at which interest on the Regular Floating Rate Note will be
payable will be reset on each Interest Reset Date; provided, however, that the
interest rate in effect for the period from the date of issue to the first
Interest Reset Date will be the Initial Interest Rate.
FLOATING RATE/FIXED RATE NOTES. If a floating rate note is designated as a
"FLOATING RATE/FIXED RATE NOTE," it will bear interest at the rate determined by
reference to the applicable Interest Rate Basis or Bases:
- plus or minus the applicable Spread, if any, and/or
- multiplied by the applicable Spread Multiplier, if any.
The rate at which interest on the applicable Floating Rate/Fixed Rate Note
will be payable will be reset on each Interest Reset Date; provided, however,
that:
- the interest rate in effect for the period from the date of issue to the
first Interest Reset Date will be the Initial Interest Rate; and
- the interest rate in effect commencing on, and including, the date on
which interest begins to accrue on a fixed rate basis to maturity will be
the Fixed Interest Rate; if no Fixed Interest Rate is specified, the
interest rate in effect commencing on, and including, the date on which
interest begins to accrue on a fixed rate basis to maturity will be the
interest rate in effect on the Floating Rate/Fixed Rate Note on the day
immediately preceding the date on which interest begins to accrue on a
fixed rate basis.
INVERSE FLOATING RATE NOTES. If a floating rate note is designated as an
"INVERSE FLOATING RATE NOTE," except as described below, it will bear interest
equal to:
- the Fixed Interest Rate specified in the related pricing supplement,
minus
- the rate determined by reference to the applicable Interest Rate Basis or
Bases plus or minus the applicable Spread, if any; and/or multiplied by
the applicable Spread Multiplier, if any;
provided, however, that unless otherwise specified in the applicable pricing
supplement, the interest rate on the applicable Inverse Floating Rate Note will
not be less than zero percent. Commencing on the first Interest Reset Date, the
rate at which interest on the applicable Inverse Floating Rate Note is payable
will be reset on each Interest Reset Date; provided, however, that the interest
rate in effect for the period from the date of issue to the first Interest Reset
Date will be the Initial Interest Rate.
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Each Interest Rate Basis shall be the rate determined in accordance with
the applicable provisions below. Except as set forth above, the interest rate in
effect on each day will be the interest rate determined as of the Interest
Determination Date (as defined below) immediately preceding the most recent
Interest Reset Date.
INTEREST RESET DATES. The applicable pricing supplement will specify the
dates on which the interest rate on the related floating rate note will be
reset, each, an "INTEREST RESET DATE." Unless otherwise specified in the
applicable pricing supplement, the Interest Reset Dates will be, in the case of
floating rate notes which reset:
- daily -- each business day;
- weekly -- the Wednesday of each week, with the exception of weekly reset
floating rate notes as to which the Treasury Rate is an applicable
Interest Rate Basis, which will reset the Tuesday of each week;
- monthly -- the third Wednesday of each month;
- quarterly -- the third Wednesday of March, June, September and December
of each year;
- semiannually -- the third Wednesday of the two months specified in the
applicable pricing supplement; and
- annually -- the third Wednesday of the month specified in the applicable
pricing supplement;
provided, however, that with respect to Floating Rate/Fixed Rate Notes, the rate
of interest will not reset after the applicable date on which interest begins to
accrue at a fixed rate.
If any Interest Reset Date for any floating rate note would otherwise be a
day that is not a business day, the applicable Interest Reset Date will be
postponed to the next succeeding day that is a business day, except that in the
case of a floating rate note as to which LIBOR is an applicable Interest Rate
Basis, if the business day falls in the next succeeding calendar month, then the
Interest Reset Date will be the immediately preceding business day.
MAXIMUM AND MINIMUM INTEREST RATES. A floating rate note may also have
either or both of the following:
- a maximum numerical limitation, or ceiling, on the rate at which interest
may accrue during any interest period, a "MAXIMUM INTEREST RATE;" and
- a minimum numerical limitation, or floor, on the rate at which interest
may accrue during any interest period, a "MINIMUM INTEREST RATE."
The senior and subordinated indentures are, and any notes issued under the
indentures will be, governed by and construed in accordance with the laws of the
State of New York. Under present New York law, the maximum rate of interest is
25% per annum on a simple interest basis. This limit may not apply to securities
in which $2,500,000 or more has been invested. While we believe that New York
law would be given effect by a state or federal court sitting outside of New
York, state laws frequently regulate the amount of interest that may be charged
to and paid by a borrower, including, in some cases, corporate borrowers.
Prospective investors should consult their personal advisors with respect to the
applicability of these laws.
INTEREST PAYMENTS. Each applicable pricing supplement will specify the
dates on which interest will be payable. Each floating rate note will bear
interest from the date of issue at the rates specified in the applicable
floating rate note until the principal of the applicable note is paid or
otherwise made available for payment. Except as provided below or in the
applicable pricing supplement, the interest payment dates with respect to
floating rate notes will be, in the case of floating rate notes which reset:
- daily, weekly or monthly -- the third Wednesday of each month or on the
third Wednesday of March, June, September and December of each year, as
specified in the applicable pricing supplement;
- quarterly -- the third Wednesday of March, June, September and December
of each year;
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- semiannually -- the third Wednesday of the two months of each year
specified in the applicable pricing supplement;
- annually -- the third Wednesday of the month of each year specified in
the applicable pricing supplement; and
- at maturity.
If any interest payment date for any floating rate note, other than an
interest payment date at maturity, would otherwise be a day that is not a
business day, the interest payment date will be postponed to the next succeeding
day that is a business day, except that in the case of a floating rate note as
to which LIBOR is an applicable Interest Rate Basis, if the business day falls
in the next succeeding calendar month, the applicable interest payment date will
be the immediately preceding business day. If the maturity of a floating rate
note falls on a day that is not a business day, the payment of principal,
premium, if any, and interest will be made on the next succeeding business day,
and no interest on that payment will accrue for the period from and after the
maturity.
All percentages resulting from any calculation on floating rate notes will
be rounded 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, would be rounded to 9.87655%, or .0987655. All dollar
amounts used in or resulting from any calculation on floating rate notes will be
rounded to the nearest cent with one-half cent being rounded upward.
Interest payments on floating rate notes will equal the amount of interest
accrued from and including the immediately preceding interest payment date in
respect of which interest has been paid or from and including the date of issue,
if no interest has been paid, to but excluding the related interest payment date
or maturity.
With respect to each floating rate note, accrued interest is calculated by
multiplying its face amount by an accrued interest factor. The accrued interest
factor is computed by adding the interest factor calculated for each day in the
period for which accrued interest is being calculated.
- In the case of notes for which the Interest Rate Basis is the Commercial
Paper Rate, the Federal Funds Rate, LIBOR or the Prime Rate, the interest
factor for each day will be computed by dividing the interest rate
applicable to each day by 360.
- In the case of notes for which the Interest Rate Basis is the CMT Rate or
the Treasury Rate, the interest factor for each day will be computed by
dividing the interest rate applicable to each day by the actual number of
days in the year.
- The interest factor for notes for which the interest rate is calculated
with reference to two or more Interest Rate Bases will be calculated in
each period in the same manner as if only one of the applicable Interest
Rate Bases applied.
INTEREST DETERMINATION DATES. The interest rate applicable to each
interest reset period commencing on the Interest Reset Date with respect to that
interest reset period will be the rate determined as of the applicable "INTEREST
DETERMINATION DATE."
- The Interest Determination Dates with respect to the CMT Rate and the
Commercial Paper Rate will be the second business day preceding each
Interest Reset Date for the related note.
- The Interest Determination Dates with respect to the Federal Funds Rate
and the Prime Rate, will be the business day immediately preceding each
Interest Reset Date.
- The Interest Determination Dates with respect to LIBOR will be the second
London business day preceding each Interest Reset Date.
- The Interest Determination Date with respect to the Treasury Rate will be
the day in the week in which the related Interest Reset Date falls on
which Treasury Bills, as defined below, are normally auctioned. Treasury
Bills are normally sold at auction on Monday of each week, unless that
day is a legal holiday, in which case the auction is normally held on the
following Tuesday, except that the
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auction may be held on the preceding Friday. If an auction is held on the
Friday of the week preceding the related Interest Reset Date, the related
Interest Determination Date will be the preceding Friday. If an auction
falls on any Interest Reset Date, then the related Interest Reset Date
will instead be the first business day following the auction.
- The Interest Determination Date pertaining to a floating rate note the
interest rate of which is determined with reference to two or more
Interest Rate Bases will be the latest business day which is at least two
business days before the applicable Interest Reset Date for the
applicable floating rate note on which each Interest Reset Basis is
determinable.
- Each Interest Rate Basis will be determined on the Interest Determination
Date, and the applicable interest rate will take effect on the related
Interest Reset Date.
CALCULATION DATE. Unless otherwise provided in the applicable pricing
supplement, The Bank of New York will be the calculation agent, the "CALCULATION
AGENT." The interest rate applicable to each interest period will be determined
by the calculation agent on or prior to the calculation date, except with
respect to LIBOR, which will be determined on the particular Interest
Determination Date. Upon the request of the holder of any floating rate note,
the calculation agent will provide the interest rate then in effect and, if
determined, the interest rate that will become effective as a result of a
determination made for the next Interest Reset Date with respect to that
floating rate note. Unless otherwise specified in the applicable pricing
supplement, the calculation date, if applicable, pertaining to any Interest
Determination Date will be the earlier of:
- the tenth calendar day after the applicable Interest Determination Date,
or, if the tenth calendar day is not a business day, the next succeeding
business day; or
- the business day preceding the applicable Interest Payment Date or
maturity, as the case may be.
INITIAL INTEREST RATE. The interest rate in effect with respect to a
floating rate note from the Issue Date to the first Interest Reset Date, the
"INITIAL INTEREST RATE" will be specified in the applicable Pricing Supplement.
CMT RATE. CMT Rate Notes will bear interest at the rates, calculated with
reference to the CMT Rate and the Spread and/or Spread Multiplier, if any,
specified in the applicable CMT Rate Notes and in any applicable pricing
supplement.
"CMT RATE" means:
(1) if CMT Telerate Page 7051 is specified in the applicable pricing
supplement:
(a) the percentage equal to the yield for United States Treasury
securities at "constant maturity" having the Index Maturity specified in
the applicable pricing supplement as published in H.15 (519) under the
caption "Treasury Constant Maturities," as the yield is displayed on Bridge
Telerate, Inc. (or any successor service), on page 7051 (or any other page
as may replace page 7051 on that service) ("Telerate Page 7051"), for the
applicable Interest Determination Date, or
(b) if the rate referred to in clause (a) does not appear on Telerate
Page 7051, the percentage equal to the yield for United States Treasury
securities at "constant maturity" having the Index Maturity specified in
the applicable pricing supplement and for the applicable Interest
Determination Date as published in H.15(519) under the caption "Treasury
Constant Maturities," or
(c) if the rate referred to in clause (b) does not appear in
H.15(519), the rate on the applicable Interest Determination Date for the
period of the Index Maturity specified in the applicable pricing supplement
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 which would
otherwise have been published in H.15(519), or
(d) if the rate referred to in clause (c) is not published, the rate
on the applicable Interest Determination Date calculated by the calculation
agent as a yield to maturity based on the arithmetic mean of the secondary
market bid prices at approximately 3:30 P.M., New York City time, on the
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applicable Interest Determination Date of three leading primary United
States government securities dealers in The City of New York, which may
include an agent or its affiliates, each a "REFERENCE DEALER," selected by
the calculation agent from five Reference Dealers selected by the
calculation agent and eliminating the highest quotation, or, in the event
of equality, one of the highest, and the lowest quotation, or, in the event
of equality, one of the lowest, for United States Treasury securities with
an original maturity equal to the Index Maturity specified in the
applicable pricing supplement, a remaining term to maturity no more than 1
year shorter than the Index Maturity specified in the applicable pricing
supplement and in a principal amount that is representative for a single
transaction in the securities in the market at that time, or
(e) if fewer than five but more than two of the prices referred to in
clause (d) are provided as requested, the rate on the applicable Interest
Determination Date calculated by the calculation agent based on the
arithmetic mean of the bid prices obtained, and neither the highest nor the
lowest of the quotations shall be eliminated, or
(f) if fewer than three prices referred to in clause (e) are provided
as requested, the rate on the applicable Interest Determination Date
calculated by the calculation agent as a yield to maturity based on the
arithmetic mean of the secondary market bid prices as of approximately 3:30
P.M., New York City time, on the applicable Interest Determination Date of
three Reference Dealers selected by the calculation agent from five
Reference Dealers selected by the calculation agent and eliminating the
highest quotation or, in the event of equality, one of the highest and the
lowest quotation or, in the event of equality, one of the lowest, for
United States Treasury securities with an original maturity greater than
the Index Maturity specified in the applicable pricing supplement, a
remaining term to maturity closest to the Index Maturity specified in the
applicable pricing supplement and in a principal amount that is
representative for a single transaction in the securities in the market at
that time, or
(g) if fewer than five but more than two prices referred to in clause
(f) are provided as requested, the rate on the applicable Interest
Determination Date calculated by the calculation agent based on the
arithmetic mean of the bid prices obtained, and neither the highest nor the
lowest of the quotations will be eliminated, or
(h) if fewer than three prices referred to in clause (g) are provided
as requested, the CMT Rate in effect on the applicable Interest
Determination Date; or
(2) if CMT Telerate Page 7052 is specified in the applicable pricing
supplement:
(a) the percentage equal to the one-week or one-month, as specified in
the applicable pricing supplement, average yield for United States Treasury
securities at "constant maturity" having the Index Maturity specified in
the applicable pricing supplement as published in H.15(519) opposite the
caption "Treasury Constant Maturities," as the yield is displayed on Bridge
Telerate, Inc. (or any successor service) on page 7052 (or any other page
as may replace page 7052 on that service) ("Telerate Page 7052"), for the
week or month, as applicable, ended immediately preceding the week or
month, as applicable, in which the related Interest Determination Date
falls, or
(b) if the rate referred to in clause (a) does not appear on Telerate
Page 7052, the percentage equal to the one-week or one-month, as specified
in the applicable pricing supplement, average yield for United States
Treasury securities at "constant maturity" having the Index Maturity
specified in the applicable pricing supplement and for the week or month,
as applicable, preceding the applicable Interest Determination Date as
published in H.15(519) opposite the caption "Treasury Constant Maturities,"
or
(c) if the rate referred to in clause (b) does not appear in
H.15(519), the one-week or one-month, as specified in the applicable
pricing supplement, average yield for United States Treasury securities at
"constant maturity" having the Index Maturity specified in the applicable
pricing supplement as otherwise announced by the Federal Reserve Bank of
New York for the week or month, as applicable, ended immediately preceding
the week or month, as applicable, in which the related Interest
Determination Date falls, or
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(d) if the Federal Reserve Bank of New York does not publish the rate
referred to in clause (c), the rate on the applicable Interest
Determination Date calculated by the calculation agent as a yield to
maturity based on the arithmetic mean of the secondary market bid prices at
approximately 3:30 P.M., New York City time, on the applicable Interest
Determination Date of three Reference Dealers selected by the calculation
agent from five Reference Dealers selected by the calculation agent and
eliminating the highest quotation, or, in the event of equality, one of the
highest, and the lowest quotation, or, in the event of equality, one of the
lowest, for United States Treasury securities with an original maturity
equal to the Index Maturity specified in the applicable pricing supplement,
a remaining term to maturity no more than 1 year shorter than the Index
Maturity specified in the applicable pricing supplement and in a principal
amount that is representative for a single transaction in the securities in
the market at that time, or
(e) if fewer than five but more than two of the prices referred to in
clause (d) are provided as requested, the rate on the applicable Interest
Determination Date calculated by the calculation agent based on the
arithmetic mean of the bid prices obtained, and neither the highest nor the
lowest of the quotations shall be eliminated, or
(f) if fewer than three prices referred to in clause (e) are provided
as requested, the rate on the applicable Interest Determination Date
calculated by the calculation agent as a yield to maturity based on the
arithmetic mean of the secondary market bid prices as of approximately 3:30
P.M., New York City time, on the applicable Interest Determination Date of
three Reference Dealers selected by the calculation agent from five
Reference Dealers selected by the calculation agent and eliminating the
highest quotation or, in the event of equality, one of the highest and the
lowest quotation or, in the event of equality, one of the lowest, for
United States Treasury securities with an original maturity greater than
the Index Maturity specified in the applicable pricing supplement, a
remaining term to maturity closest to the Index Maturity specified in the
applicable pricing supplement and in a principal amount that is
representative for a single transaction in the securities in the market at
that time, or
(g) if fewer than five but more than two prices referred to in clause
(f) are provided as requested, the rate will be calculated by the
calculation agent based on the arithmetic mean of the bid prices obtained,
and neither the highest nor the lowest of the quotations will be
eliminated, or
(h) if fewer than three prices referred to in clause (g) are provided
as requested, the CMT Rate in effect on the applicable Interest
Determination Date.
If two United States Treasury securities with an original maturity greater
than the Index Maturity specified in the applicable pricing supplement have
remaining terms to maturity equally close to the Index Maturity specified in the
applicable pricing supplement, the quotes for the United States Treasury
security with the shorter original remaining term to maturity will be used.
"H.15(519)" means the weekly statistical release designated as H.15(519),
or any successor publication, published by the Board of Governors of the Federal
Reserve System.
"DESIGNATED CMT TELERATE PAGE" means the display on Bridge Telerate, Inc.
or any successor service on the page specified in the applicable pricing
supplement or any other page as may replace the specified page on that service
for the purpose of displaying Treasury Constant Maturities as reported in
H.15(519), or, if no page is specified in the applicable pricing supplement,
page 7052.
"DESIGNATED CMT MATURITY INDEX" means the original period to maturity of
the United States Treasury securities, either 1, 2, 3, 5, 7, 10, 20 or 30 years,
specified in the applicable pricing supplement with respect to which the CMT
Rate will be calculated or, if no maturity is specified in the applicable
pricing supplement, 2 years.
COMMERCIAL PAPER RATE. Commercial Paper Rate Notes will bear interest at
the rates, calculated with reference to the Commercial Paper Rate and the Spread
and/or Spread Multiplier, if any, specified in the applicable Commercial Paper
Rate Notes and in any applicable pricing supplement.
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"COMMERCIAL PAPER RATE" means:
(1) the Money Market Yield on the applicable Interest Determination
Date of the rate for commercial paper having the Index Maturity specified
in the applicable pricing supplement published in H.15(519) under the
caption "Commercial Paper -- Nonfinancial," or
(2) if the rate described in clause (1) is not so published by 3:00
P.M., New York City time, on the related calculation date, the Money Market
Yield of the rate on the applicable Interest Determination Date for
commercial paper having the Index Maturity specified in the applicable
pricing supplement published in H.15 Daily Update, or other recognized
electronic source used for the purpose of displaying the applicable rate,
under the caption "Commercial Paper -- Nonfinancial," or
(3) if the rate is referred to in clause (2) is not so published by
3:00 P.M., New York City time, on the related calculation date, the rate on
the applicable Interest Determination Date calculated by the calculation
agent as the Money Market Yield of the arithmetic mean of the offered rates
at approximately 11:00 A.M., New York City time, on the applicable Interest
Determination Date of three leading dealers of United States dollar
commercial paper in The City of New York, which may include the agent and
its affiliates, selected by the calculation agent for commercial paper
having the Index Maturity specified in the applicable pricing supplement
placed for industrial issuers whose bond rating is "Aa," or the equivalent,
from a nationally recognized statistical rating organization, or
(4) if the dealers selected by the calculation agent are not quoting
as mentioned in clause (3), the rate in effect on the applicable Interest
Determination Date.
"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.
"MONEY MARKET YIELD" means a yield calculated in accordance with the
following formula and expressed as a percentage:
D X 360
Money Market Yield = ------------- X 100
360 - (D X M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the interest period for which interest is being calculated.
FEDERAL FUNDS RATE. Federal Funds Rate Notes will bear interest at the
rates, calculated with reference to the Federal Funds Rate and the Spread and/or
Spread Multiplier, if any, specified in the applicable Federal Funds Rate Notes
and in any applicable pricing supplement.
"FEDERAL FUNDS RATE" means:
(1) the rate on the applicable Interest Determination Date for United
States dollar federal funds as published in H.15(519) under the heading
"Federal Funds (effective)," as displayed on Bridge Telerate, Inc. or any
successor service on page 120 or any other page as may replace the
applicable page on that service, "TELERATE PAGE 120," or
(2) if the rate referred to in clause (1) does not appear on Telerate
Page 120 or is not so published by 3:00 P.M., New York City time, on the
related calculation date, the rate on the applicable Interest Determination
Date for United States dollar federal funds published in H.15 Daily Update,
or other recognized electronic source used for the purpose of displaying
the applicable rate, under the caption "Federal Funds (effective)," or
(3) if the rate referred to in clause (2) is not so published by 3:00
P.M., New York City time, on the related calculation date, the rate on the
applicable Interest Determination Date calculated by the calculation agent
as the arithmetic mean of the rates for the last transaction in overnight
United States dollar federal funds arranged by three leading brokers of
United States dollar federal funds transactions in
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The City of New York, which may include the agent or its affiliates,
selected by the calculation agent before 9:00 A.M., New York City time, on
the applicable Interest Determination Date, or
(4) if the brokers selected by the calculation agent are not quoting
as mentioned in clause (3), the rate in effect on the applicable Interest
Determination Date.
LIBOR. LIBOR Notes will bear interest at the rates, calculated with
reference to LIBOR and the Spread and/or Spread Multiplier, if any, specified in
the applicable LIBOR Notes and in any applicable pricing supplement.
"LIBOR" means:
(1) if "LIBOR Telerate" is specified in the applicable pricing
supplement or if neither "LIBOR Reuters" nor "LIBOR Telerate" is specified
in the applicable pricing supplement as the method for calculating LIBOR,
LIBOR will be the rate for deposits in the LIBOR Currency, as defined
below, having the Index Maturity specified in the applicable pricing
supplement, commencing on the second London business day immediately
following that Interest Determination Date that appears on the Designated
LIBOR Page as of 11:00 A.M., London time, on the applicable Interest
Determination Date, or
(2) if "LIBOR Reuters" is specified in the applicable pricing
supplement, LIBOR will be the arithmetic mean of the offered rates for
deposits in the LIBOR Currency having the Index Maturity specified in the
applicable pricing supplement, commencing on the second London business day
immediately following that Interest Determination Date, that appear, on the
Designated LIBOR Page specified in the applicable pricing supplement as of
11:00 A.M., London time, on the applicable Interest Determination Date. If
the Designated LIBOR Page by its terms provides only for a single rate,
then the single rate will be used, or
(3) with respect to a LIBOR Interest Determination Date on which fewer
than two offered rates appear, or no rate appears, as the case may be, on
the designated LIBOR Page as specified in clauses (1) and (2),
respectively, the rate calculated by the calculation agent as the
arithmetic mean of at least two quotations obtained by the calculation
agent after requesting the principal London offices of each of four major
reference banks, which may include affiliates of the agent, in the London
interbank market to provide the calculation agent with its offered
quotation for deposits in the LIBOR Currency for the period of the Index
Maturity specified in the applicable pricing supplement, commencing on the
second London business day immediately following the applicable Interest
Determination Date, to prime banks in the London interbank market at
approximately 11:00 A.M., London time, on the applicable Interest
Determination Date and in a principal amount that is representative for a
single transaction in the applicable LIBOR Currency in that market at that
time, or
(4) if fewer than two quotations referred to in clause (3) are so
provided, the rate on the applicable Interest Determination Date calculated
by the calculation agent as the arithmetic mean of the rates quoted at
approximately 11:00 A.M., in the applicable principal financial center(s),
on the applicable Interest Determination Date by three major banks, which
may include affiliates of the agent, in the applicable Principal Financial
Center selected by the calculation agent for loans in the LIBOR Currency to
leading European banks, having the Index Maturity specified in the
applicable pricing supplement and in a principal amount that is
representative for a single transaction in the applicable LIBOR Currency in
that market at that time, or
(5) if the banks so selected by the calculation agent are not quoting
as mentioned in clause (4), the rate in effect on the applicable Interest
Determination Date.
"LIBOR CURRENCY" means the currency specified in the applicable pricing
supplement as to which LIBOR will be calculated or, if no currency is specified
in the applicable pricing supplement, United States dollars.
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"DESIGNATED LIBOR PAGE" means either:
- if "LIBOR Telerate" is designated in the applicable pricing supplement or
neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the
applicable pricing supplement as the method for calculating LIBOR, the
display on Bridge Telerate, Inc. or any successor service on the page
specified in such pricing supplement or any page as may replace the
specified page on that service for the purpose of displaying the London
interbank rates of major banks for the applicable LIBOR Currency, or
- if "LIBOR Reuters" is specified in the applicable pricing supplement, the
display on the Reuter Monitor Money Rates Service or any successor
service on the page specified in the applicable pricing supplement or any
other page as may replace the specified page on that service for the
purpose of displaying the London interbank rates of major banks for the
applicable LIBOR Currency.
PRIME RATE. Prime Rate Notes will bear interest at the rates, calculated
with reference to the Prime Rate and the Spread and/or Spread Multiplier, if
any, specified in the applicable Prime Rate Notes and any applicable pricing
supplement.
"PRIME RATE" means:
(1) the rate on the applicable Interest Determination Date as
published in H.15(519) under the caption "Bank Prime Loan," or
(2) if the rate referred to in clause (1) is not so published by 3:00
P.M., New York City time, on the related calculation date, the rate on the
applicable Interest Determination Date published in H.15 Daily Update, or
such other recognized electronic source used for the purpose of displaying
the applicable rate under the caption "Bank Prime Loan," or
(3) if the rate referred to in clause (2) is not so published by 3:00
P.M., New York City time, on the related calculation date, the rate
calculated by the calculation agent as the arithmetic mean of the rates of
interest publicly announced by each bank that appears on the Reuters Screen
US PRIME 1 Page as the particular bank's prime rate or base lending rate as
of 11:00 A.M., New York City time, on the applicable Interest Determination
Date, or
(4) if fewer than four rates described in clause (3) are so published
by 3:00 P.M., New York City time, on the related calculation date as shown
on the Reuters Screen US PRIME 1 Page, the rate on the applicable Interest
Determination Date calculated by the calculation agent as the arithmetic
mean 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 applicable Interest Determination Date by three major
banks, which may include affiliates of the agent, in The City of New York
selected by the calculation agent, or
(5) if the banks selected by the calculation agent are not quoting as
mentioned in clause (4), the rate in effect on the applicable Interest
Determination Date.
"REUTERS SCREEN US PRIME 1 PAGE" means the display on the Reuters Monitor
Money Rates Service or any successor service on the "US PRIME 1 Page" or other
page as may replace the US PRIME 1 Page on that service for the purpose of
displaying prime rates or base lending rates of major United States banks.
TREASURY RATE. Treasury Rate Notes will bear interest at the rates,
calculated with reference to the Treasury Rate and the Spread and/or Spread
Multiplier, if any, specified in the applicable Treasury Rate Notes and in any
applicable pricing supplement.
"TREASURY RATE" means:
(1) the rate from the auction held on the applicable Interest
Determination Date, the "AUCTION," of direct obligations of the United
States, "TREASURY BILLS," having the Index Maturity specified in the
applicable pricing supplement under the caption "INVESTMENT RATE" on the
display on Bridge Telerate, Inc. or any successor service on page 56 or any
other page as may replace page 56 on that
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service, "TELERATE PAGE 56," or page 57 or any other page as may replace
page 57 on that service, "TELERATE PAGE 57," or
(2) if the rate described in clause (1) is not so published by 3:00
P.M., New York City time, on the related calculation date, the Bond
Equivalent Yield of the rate for the applicable Treasury Bills as published
in H.15 Daily Update, or other recognized electronic source used for the
purpose of displaying the applicable rate, under the caption "U.S.
Government Securities/Treasury Bills/Auction High," or
(3) if the rate described in clause (2) is not so published by 3:00
P.M., New York City time, on the related calculation date, the Bond
Equivalent Yield of the auction rate of the applicable Treasury Bills
announced by the United States Department of the Treasury, or
(4) if the rate referred to in clause (3) is not announced by the
United States Department of the Treasury, or if the Auction is not held,
the Bond Equivalent Yield of the rate on the applicable Interest
Determination Date of Treasury Bills having the Index Maturity specified in
the applicable Pricing Supplement published in H.15(519) under the caption
"U.S. Government Securities/Treasury Bills/ Secondary Market," or
(5) if the rate referred to in clause (4) is not so published by 3:00
P.M., New York City time, on the related calculation date, the rate on the
applicable Interest Determination Date of the applicable Treasury Bills as
published in H.15 Daily Update, or other recognized electronic source used
for the purpose of displaying the applicable rate, under the caption "U.S.
Government Securities/Treasury Bills/ Secondary Market," or
(6) if the rate referred to in clause (5) is not so published by 3:00
P.M., New York City time, on the related Calculation Date, the rate on the
applicable Interest Determination Date calculated by the calculation agent
as the 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
applicable Interest Determination Date, of three primary United States
government securities dealers, which may include the agent or its
affiliates, selected by the calculation agent, for the issue of Treasury
Bills with a remaining maturity closest to the Index Maturity specified in
the applicable pricing supplement, or
(7) if the dealers selected by the calculation agent are not quoting
as mentioned in clause (6), the rate in effect on the applicable Interest
Determination Date.
"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 per annum 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.
OTHER PROVISIONS; ADDENDA
Any provisions with respect to an issue of notes, including the
determination of one or more Interest Rate Bases, the specification of one or
more Interest Rate Bases, the calculation of the interest rate applicable to a
floating rate note, the applicable interest payment dates, the stated maturity
date, any redemption or repayment provisions or any other matter relating to the
applicable notes may be modified by the terms as specified under "Other
Provisions" on the face of the applicable notes or in an Addendum relating to
the applicable notes, if so specified on the face of the applicable notes and in
the applicable pricing supplement.
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RENEWABLE NOTES
We may issue renewable notes, "RENEWABLE NOTES," which are notes which will
automatically renew at their maturity date unless the holder of the renewable
note elects to terminate the automatic extension feature by giving notice in the
manner described in the related pricing supplement.
The holder of the renewable note must give notice of termination at least
15 but not more than 30 days prior to the renewal date. The holder of a
renewable note may terminate the automatic extension for less than all of the
holder's renewable notes only if the terms of the note as described in the
related pricing supplement specifically permit partial termination. An election
to terminate the automatic extension of any portion of the renewable note is not
revocable and will be binding on the holder of the note. If the holder elects to
terminate the automatic extension of the maturity of the note, the holder will
become entitled to the principal and interest accrued up to the renewal date.
The related pricing supplement will identify a final maturity date beyond which
the maturity date cannot be renewed.
If a note is represented by a global note, a "GLOBAL NOTE," the depository
or its nominee will be the holder of the note and therefore will be the only
entity that can exercise a right to terminate the automatic extension of a note.
In order to ensure that the depository or its nominee will timely exercise a
right to terminate the automatic extension provisions of a particular note, the
beneficial owner of the note must instruct the broker or other participant
through which it holds an interest in the note to notify the depository of its
desire to terminate the automatic extension of the note. Different firms have
different cut-off times for accepting instructions from their customers and,
accordingly, each beneficial owner should consult the broker or other
participant through which it holds an interest in a note to ascertain the
cut-off time by which an instruction must be given for delivery of timely notice
to the depository or its nominee.
EXTENDIBLE NOTES
We may issue notes whose stated maturity date may be extended at our
option, an "EXTENDIBLE NOTE," for one or more whole year periods, each an
"EXTENSION PERIOD," up to but not beyond a final maturity date described in the
related pricing supplement.
We may exercise our option to extend the extendible note by notifying the
applicable trustee (or any duly appointed paying agent) at least 45 but not more
than 60 days prior to the then effective maturity date. If we elect to extend
the extendible note, the trustee (or paying agent) will mail (at least 40 days
prior to the maturity date) to the registered holder of the extendible note a
notice, "EXTENSION NOTICE," informing the holder of our election, the new
maturity date and any updated terms. Upon the mailing of the extension notice,
the maturity of such note will be extended automatically as set forth in the
extension notice.
In connection with the extension of an extendible note, we may, not later
than 20 calendar days prior to the maturity date of an extendible note (or, if
such date is not a business day, on the immediately succeeding business day), at
our option, 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 applicable trustee (or
paying agent) to mail notice of that higher interest rate or higher spread
and/or spread multiplier to the holder of the note. The notice will be
irrevocable.
If we elect to extend the maturity of an extendible note, the holder of the
note will have the option to instead elect repayment of the note by us on the
then effective maturity date. In order for an extendible note to be so repaid on
the maturity date, we must receive, at least 25 days but not more than 35 days
prior to the maturity date.
(1) the note with the form "Option to Elect Repayment" on the reverse of
the note duly completed; or
(2) a telegram, telex, facsimile transmission or a letter from a member of
a national securities exchange or the National Association of Securities
Dealers, Inc., the "NASD," or a commercial bank or trust company in the United
States setting forth the name of the holder of the note, the principal amount of
the note, the principal amount of the note to be repaid, the certificate number
or a description of the tenor and terms of the note, a statement that the option
to elect repayment is being exercised and a guarantee that the note to be
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repaid, together with the duly completed form entitled "Option to Elect
Repayment" on the reverse of the note, will be received by the applicable
trustee (or paying agent) not later than the fifth business day after the date
of the telegram, telex, facsimile transmission or letter; provided, however,
that the telegram, telex, facsimile transmission or letter will only be
effective if the applicable trustee (or paying agent) receives the note and form
duly completed by that fifth business day. The option may be exercised by the
holder of an extendible note for less than the aggregate principal amount of the
note then outstanding if the principal amount of the note remaining outstanding
after repayment is an authorized denomination.
A holder who has tendered an extendible note for repayment may, by written
notice to us, revoke the tender until 3:00 pm New York City time on the 15th
calendar day preceding the then effective maturity date.
If a note is represented by a global note, the depository or its nominee
will be the holder of that note and therefore will be the only entity that can
exercise a right to repayment. To ensure that the depository or its nominee
timely exercises a right to repayment with respect to a particular note, the
beneficial owner of that note must instruct the broker or other participant
through which it holds an interest in the note to notify the depository of its
desire to exercise a right to repayment. Different firms have different cut-off
times for accepting instructions from their customers and, accordingly, each
beneficial owner should consult the broker or other participant through which it
holds an interest in a note to determine the cut-off time by which an
instruction must be given for timely notice to be delivered to the depository or
its nominee.
FUNGIBLE NOTES
We also have the ability under the senior and subordinated indentures to
"reopen" a previously issued tranche of notes and issue additional notes of such
tranche or establish additional terms of such tranche to the extent permitted
under the senior or subordinated indenture, as applicable. We may also issue
notes with the same terms as previously issued notes.
DISCOUNT NOTES
We may from time to time offer notes at a price less than their redemption
price at maturity, resulting in the applicable notes being treated as if they
were issued with original issue discount for federal income tax purposes,
"DISCOUNT NOTES." Discount Notes may currently pay no interest or interest at a
rate which at the time of issuance is below market rates. Additional
considerations relating to any Discount Notes are described in "United States
Federal Income Taxation."
INDEXED NOTES
We may from time to time offer notes, "INDEXED NOTES," the principal value
of which at maturity will be determined by reference to:
(a) one or more equity or debt securities, including, but not limited
to, the price or yield of those securities;
(b) any statistical measure of economic or financial performance,
including, but not limited to, any currency, consumer price or mortgage
index; or
(c) the price or value of any commodity or any other item or index or
any combination,
collectively, the "INDEXED SECURITIES." The payment or delivery of any
consideration on any Indexed Note at maturity will be determined by the decrease
or increase, as applicable, in the price or value of the applicable Indexed
Securities. The terms of and any additional considerations, including any
material tax consequences, relating to any Indexed Notes will be described in
the applicable pricing supplement.
In addition, we may from time to time offer notes under which we may
satisfy all or part of our obligations with regard to payment upon maturity, or
any redemption or required repurchase or in connection with any exchange
provisions, or any interest payment, by delivering to the holders of the notes,
other securities, which may or may not be issued by us, or a combination of
cash, securities and/or property. The
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terms of any such notes and any additional considerations, including any
material tax consequences will be described in the applicable pricing
supplement.
BOOK-ENTRY NOTES
DESCRIPTION OF THE GLOBAL SECURITIES
Upon issuance, all notes in book-entry form having the same date of issue,
maturity and otherwise having identical terms and provisions will be represented
by one or more fully registered global notes. Each global note will be deposited
with, or on behalf of, DTC, as depository, registered in the name of DTC or a
nominee of DTC. Unless and until it is exchanged in whole or in part for notes
in certificated form, no global note may be transferred except as a whole by DTC
to a nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC or
by DTC or any such nominee to a successor of DTC or a nominee of the successor.
DTC PROCEDURES
The following is based on information furnished by DTC:
DTC will act as securities depository for the notes in book-entry form. The
notes in book-entry form will be issued as fully registered securities
registered in the name of Cede & Co., DTC's partnership nominee. One or more
fully registered global notes will be issued for each issue of notes in
book-entry form.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants deposit with DTC. DTC also facilitates
the settlement among participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized book-entry
changes in participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct participants of DTC include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. DTC is owned by a number of its direct
participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc., and the NASD. Access to DTC's system is also available to others
such as securities brokers and dealers, banks and trust companies that clear
through or maintain a custodial relationship with a direct participant, either
directly or indirectly. The rules applicable to DTC and its participants are on
file with the SEC.
Purchases of notes in book-entry form under DTC's system must be made by or
through direct participants, which will receive a credit for those notes in
book-entry form on DTC's records. The ownership interest of each actual
purchaser of each note in book-entry form represented by a global note is, in
turn, to be recorded on the records of direct participants and indirect
participants. Beneficial owners in book-entry form will not receive written
confirmation from DTC of their purchase, but beneficial owners are expected to
receive written confirmations providing details of the transaction, as well as
periodic statements of their holdings, from the direct participants or indirect
participants through which the beneficial owner entered into the transaction.
Transfers of ownership interests in a global note representing notes in
book-entry form are to be accomplished by entries made on the books of
participants acting on behalf of beneficial owners. Beneficial owners of a
global note representing notes in book-entry form will not receive notes in
certificated form representing their ownership interests in those notes, except
if use of the book-entry system for those notes in book-entry form is
discontinued.
To facilitate subsequent transfers, all global notes representing notes in
book-entry form which are deposited with, or on behalf of, DTC are registered in
the name of DTC's nominee, Cede & Co. The deposit of global notes with, or on
behalf of, DTC and their registration in the name of Cede & Co. effect no change
in beneficial ownership. DTC has no knowledge of the actual beneficial owners of
the global notes representing the notes in book-entry form; DTC's records
reflect only the identity of the direct participants to whose accounts such
notes in book-entry form are credited, which may or may not be the beneficial
owners. The participants will remain responsible for keeping account of their
holdings on behalf of their customers.
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Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants, and by direct
participants and indirect participants to beneficial owners, will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to the global
notes representing the notes in book-entry form. Under its usual procedures, DTC
mails an omnibus proxy to us as soon as possible after the applicable record
date. The omnibus proxy assigns Cede & Co.'s consenting or voting rights to
those direct participants, identified in a listing attached to the omnibus
proxy, to whose accounts the notes in book-entry form are credited on the
applicable record date.
We will make principal, premium, if any, and/or interest, if any, payments
on the global notes representing the notes in book-entry form in immediately
available funds to DTC. DTC's practice is to credit direct participants'
accounts on the applicable payment date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe that it will
not receive payment on the applicable payment date. Payments by participants to
beneficial owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of customers in
bearer form or registered in "street name," and will be the responsibility of
the applicable participant and not of DTC, the trustee or us, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment of principal, premium, if any, and/or interest, if any, to DTC is the
responsibility of us and the trustee, disbursement of payments to direct
participants will be the responsibility of DTC, and disbursement of payments to
the beneficial owners will be the responsibility of direct participants and
indirect participants.
If applicable, we will send redemption notices to Cede & Co. If we are
redeeming less than all of the notes in book-entry form of like tenor and terms,
DTC's practice is to determine by lot the amount of the interest of each direct
participant in the issue to be redeemed.
A beneficial owner will give notice of any option to elect to have its
notes in book-entry form repaid by us, through its participant, to the trustee,
and will effect delivery of the applicable notes in book-entry form by causing
the direct participant to transfer the participant's interest in the global note
notes in book-entry form, on DTC's records, to the trustee.
DTC may discontinue providing its services as securities depository with
respect to the notes in book-entry form at any time by giving reasonable notice
to us or the trustee. If we do not appoint a successor securities depository, we
are required to print and deliver notes in certificated form.
We may decide to discontinue use of the system of book-entry transfers
through DTC or a successor securities depository. In that event, we will print
and deliver notes in certificated form.
The laws of some states may require that certain purchasers of securities
take physical delivery of securities in definitive form. Those laws may impair
the ability to own, transfer or pledge beneficial interests in global notes.
So long as DTC, or its nominee, is the registered owner of a global note,
DTC or its nominee, as the case may be, will be considered the sole owner or
holder of the notes represented by the global note for all purposes under the
senior or subordinated indenture, as applicable. Except as provided below,
beneficial owners of a global note will not be entitled to have the notes
represented by a global note registered in their names, will not receive or be
entitled to receive physical delivery of the notes in definitive form and will
not be considered the owners or holders of those notes under the senior or
subordinated indenture, as applicable. Accordingly, each person owning a
beneficial interest in a global note must rely on the procedures of DTC and, if
that person is not a participant, on the procedures of the participant through
which that person owns its interest, to exercise any rights of a holder under
the senior or subordinated indenture, as applicable. We understand that under
existing industry practices, if we request any action of holders or if an owner
of a beneficial interest in a global note desires to give or take any action
which a holder is entitled to give or take under the senior or subordinated
indenture, as applicable, DTC would authorize the participants holding the
relevant beneficial interests to give or take the desired action, and the
participants would authorize beneficial owners owning
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through the participants to give or take the desired action or would otherwise
act upon the instructions of beneficial owners.
EXCHANGE FOR NOTES IN CERTIFICATED FORM
If:
(a) DTC is at any time unwilling or unable to continue as depository
and we do not appoint a successor depository within 60 days,
(b) we execute and deliver to the trustee a company order to the
effect that the global notes shall be exchangeable, or
(c) an Event of Default has occurred and is continuing with respect to
the notes,
the global note or global notes will be exchangeable for notes in certificated
form of like tenor and of an equal aggregate principal amount, in denominations
of $1,000 and integral multiples of $1,000. The certificated notes will be
registered in the name or names as DTC instructs the trustee. We expect that
instructions will be based upon directions received by DTC from participants
with respect to ownership of beneficial interests in global notes.
The information in this section concerning DTC and DTC's system has been
obtained from sources that we believe to be reliable, but we take no
responsibility for the accuracy of the information.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain United States federal income tax
consequences of the purchase, ownership and disposition of the notes is based
upon laws, regulations, rulings and decisions now in effect, all of which are
subject to change (including changes in effective dates) or possible differing
interpretations. It deals only with notes held as capital assets and does not
purport to deal with persons in special tax situations, such as financial
institutions, insurance companies, regulated investment companies, dealers in
securities or currencies, persons holding notes as a hedge against currency
risks or as a position in a "straddle" for tax purposes, or persons whose
functional currency is not the U.S. dollar. It also does not deal with holders
other than original purchasers (except where otherwise specifically noted).
Persons considering the purchase of the notes should consult their tax advisors
concerning the application of United States federal income tax laws to their
particular situations as well as any consequences of the purchase, ownership and
disposition of the notes arising under the laws of any other taxing
jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner of a note
that is for United States federal income tax purposes:
- a citizen or resident of the United States,
- a corporation or partnership (including an entity treated as a
corporation or partnership for United States federal income tax purposes)
created or organized in or under the laws of the United States, any state
thereof or the District of Columbia (unless, in the case of a
partnership, Treasury regulations are adopted that provide otherwise),
- an estate the income of which is subject to U.S. federal income taxation
regardless of its source,
- a trust but only if (A) a court within the United States is able to
exercise primary supervision over the trust and (B) one or more United
States persons have the authority to control all substantial decisions of
the trust, and
- any other person whose income or gain in respect of a note is effectively
connected with the conduct of a United States trade or business.
As used herein, the term "non-U.S. Holder" means a beneficial owner of a
note that is not a U.S. Holder.
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U.S. HOLDERS
PAYMENTS OF INTEREST. Payments of interest on a note generally will be
taxable to a U.S. Holder as ordinary interest income at the time such payments
are accrued or are received in accordance with the U.S. Holder's regular method
of tax accounting.
ORIGINAL ISSUE DISCOUNT. The following summary is a general discussion of
the United States federal income tax consequences to U.S. Holders of the
purchase, ownership and disposition of notes issued with original issue discount
("Discount Notes"). The following summary is based upon final Treasury
regulations (the "OID Regulations") released by the Internal Revenue Service
("IRS") under the original issue discount provisions of the Code.
For United States federal income tax purposes, original issue discount is
the excess of the "stated redemption price at maturity" of a note over its issue
price, if such excess equals or exceeds a de minimis amount (generally 1/4 of 1%
of the note's stated redemption price at maturity multiplied by the number of
complete years to its maturity from its issue date). The "issue price" of each
note in an issue of notes equals the first price at which a substantial amount
of such notes has been sold (ignoring sales to bond houses, brokers or similar
persons or organizations acting in the capacity of underwriters, placement
agents or wholesalers). The "stated redemption price at maturity" of a note is
the sum of all payments provided by the note other than "qualified stated
interest" payments. The term "qualified stated interest" generally means stated
interest that is unconditionally payable in cash or property (other than debt
instruments of the issuer) at least annually at a single fixed rate. In
addition, under the OID Regulations, if a note bears interest for one or more
accrual periods at a rate below the rate applicable for the remaining term of
such note (e.g., notes with teaser rates or interest holidays), and if the
greater of either the resulting foregone interest on such note or any "true"
discount on such note (i.e., the excess of the note's stated principal amount
over its issue price) equals or exceeds a specified de minimis amount, then the
stated interest on the note would be treated as original issue discount rather
than qualified stated interest.
Payments of qualified stated interest on a note are taxable to a U.S.
Holder as ordinary interest income at the time such payments are accrued or are
received in accordance with the U.S. Holder's regular method of tax accounting.
A U.S. Holder of a Discount Note must include original issue discount in income
as ordinary interest for United States federal income tax purposes as it accrues
under a constant yield method in advance of receipt of the cash payments
attributable to such income, regardless of such U.S. Holder's regular method of
tax accounting. In general, the amount of original issue discount included in
income by the initial U.S. Holder of a Discount Note is the sum of the daily
portions of original issue discount with respect to such Discount Note for each
day during the taxable year (or portion of the taxable year) on which such U.S.
Holder held such Discount Note. The "daily portion" of original issue discount
on any Discount Note is determined by allocating to each day in any accrual
period a ratable portion of the original issue discount allocable to that
accrual period. An "accrual period" may be of any length and the accrual periods
may vary in length over the term of the Discount Note, provided that each
accrual period is no longer than one year and each scheduled payment of
principal or interest occurs either on the final day of an accrual period or on
the first day of an accrual period. The amount of original issue discount
allocable to each accrual period is generally equal to the difference between
(i) the product of the Discount Note's adjusted issue price at the beginning of
such accrual period and its yield to maturity (determined on the basis of
compounding at the close of each accrual period and appropriately adjusted to
take into account the length of the particular accrual period) and (ii) the
amount of any qualified stated interest payments allocable to such accrual
period. The "adjusted issue price" of a Discount Note at the beginning of any
accrual period is the sum of the issue price of the Discount Note plus the
amount of original issue discount allocable to all prior accrual periods minus
the amount of any prior payments on the Discount Note that were not qualified
stated interest payments. Under these rules, U.S. Holders generally will have to
include in income increasingly greater amounts of original issue discount in
successive accrual periods.
A U.S. Holder who purchases a Discount Note for an amount that is greater
than its adjusted issue price as of the purchase date and less than or equal to
the sum of all amounts payable on the Discount Note after the purchase date,
other than payments of qualified stated interest, will be considered to have
purchased the
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Discount Note at an "acquisition premium." Under the acquisition premium rules,
the amount of original issue discount which such U.S. Holder must include in its
gross income with respect to such Discount Note for any taxable year (or portion
thereof in which the U.S. Holder holds the Discount Note) will be reduced (but
not below zero) by the portion of the acquisition premium properly allocable to
the period.
Under the OID Regulations, floating rate notes are subject to special rules
whereby a floating rate note will qualify as a "variable rate debt instrument"
if (a) its issue price does not exceed the total noncontingent principal
payments due under the floating rate note by more than a specified de minimis
amount and (b) it provides for stated interest, paid or compounded at least
annually, at current values of:
- one or more qualified floating rates,
- a single fixed rate and one or more qualified floating rates,
- a single objective rate, or
- a single fixed rate and a single objective rate that is a qualified
inverse floating rate.
A "qualified floating rate" is any variable rate where variations in the
value of such rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
floating rate note is denominated. Although a multiple of a qualified floating
rate will generally not itself constitute a qualified floating rate, a variable
rate equal to the product of a qualified floating rate and a fixed multiple that
is greater than zero but not more than 1.35 will constitute a qualified floating
rate. A variable rate equal to the product of a qualified floating rate and a
fixed multiple that is greater than zero but not more than 1.35, increased or
decreased by a fixed rate, will also constitute a qualified floating rate. In
addition, under the OID Regulations, two or more qualified floating rates that
can reasonably be expected to have approximately the same values throughout the
term of the floating rate note (e.g., two or more qualified floating rates with
values within 25 basis points of each other as determined on the Floating Rate
Note's issue date) will be treated as a single qualified floating rate.
Notwithstanding the foregoing, a variable rate that would otherwise constitute a
qualified floating rate but which is subject to one or more restrictions such as
a maximum numerical limitation (i.e., a cap) or a minimum numerical limitation
(i.e., a floor) may, under certain circumstances, fail to be treated as a
qualified floating rate under the OID Regulations unless such cap or floor is
fixed throughout the term of the note.
An "objective rate" is a rate that is not itself a qualified floating rate
but which is determined using a single fixed formula and that is based on
objective financial or economic information. A rate will not qualify as an
objective rate if it is based on information that is within the control of the
issuer (or a related party) or that is unique to the circumstances of the issuer
(or a related party) such as dividends, profits, or the value of the issuer's
stock (although a rate does not fail to qualify as an objective rate merely
because it is based on the credit quality of the issuer). A "qualified inverse
floating rate" is any objective rate which is equal to a fixed rate minus a
qualified floating rate, as long as variations in the rate can reasonably be
expected to inversely reflect contemporaneous variations in the cost of newly
borrowed funds. The OID Regulations also provide that if a floating rate note
provides for stated interest at a fixed rate for an initial period of less than
one year followed by a variable rate that is either a qualified floating rate or
an objective rate and if the variable rate on the floating rate note's issue
date is intended to approximate the fixed rate (e.g., the value of the variable
rate on the issue date does not differ from the value of the fixed rate by more
than 25 basis points), then the fixed rate and the variable rate together will
constitute either a single qualified floating rate or objective rate, as the
case may be.
If a floating rate note that provides for stated interest at either a
single qualified floating rate or a single objective rate throughout the term
thereof qualifies as a "variable rate debt instrument" under the OID
Regulations, then any stated interest on such note which is unconditionally
payable in cash or property (other than debt instruments of the issuer) at least
annually will constitute qualified stated interest and will be taxed
accordingly. Thus, a floating rate note that provides for stated interest at
either a single qualified floating rate or a single objective rate throughout
the term thereof and that qualifies as a "variable rate debt instrument" under
the OID Regulations will generally not be treated as having been issued with
original issue discount unless the floating rate note is issued at a "true"
discount (i.e., at a price below the note's stated principal
S-26
amount) in excess of a specified de minimis amount. Original issue discount on
such a floating rate note arising from "true" discount is allocated to an
accrual period using the constant yield method described above by assuming that
the variable rate is a fixed rate equal to:
- in the case of a qualified floating rate or qualified inverse floating
rate, the value as of the issue date, of the qualified floating rate or
qualified inverse floating rate, or
- in the case of an objective rate (other than a qualified inverse floating
rate), a fixed rate that reflects the yield that is reasonably expected
for the Floating Rate Note.
The qualified stated interest allocable to an accrual period is increased
(or decreased) if the interest actually paid during the accrual period exceeds
(or is less than) the interest assumed to be paid during the accrual period
pursuant to the foregoing rules.
In general, any other variable note that qualifies as a "variable rate debt
instrument" will be converted into an "equivalent" fixed rate debt instrument
for purposes of determining the amount and accrual of original issue discount
and qualified stated interest on the floating rate note. The OID Regulations
generally require that such a floating rate note be converted into an
"equivalent" fixed rate debt instrument by substituting any qualified floating
rate or qualified inverse floating rate provided for under the terms of the
floating rate note with a fixed rate equal to the value of the qualified
floating rate or qualified inverse floating rate, as the case may be, as of the
floating rate note's issue date. Any objective rate (other than a qualified
inverse floating rate) provided for under the terms of the floating rate note is
converted into a fixed rate that reflects the yield that is reasonably expected
for the floating rate note. In the case of a floating rate note that qualifies
as a "variable rate debt instrument" and provides for stated interest at a fixed
rate in addition to either one or more qualified floating rates or a qualified
inverse floating rate, the fixed rate is initially converted into a qualified
floating rate (or a qualified inverse floating rate, if the floating rate note
provides for a qualified inverse floating rate). Under such circumstances, the
qualified floating rate or qualified inverse floating rate that replaces the
fixed rate must be such that the fair market value of the floating rate note as
of the floating rate note's issue date is approximately the same as the fair
market value of an otherwise identical debt instrument that provides for either
the qualified floating rate or qualified inverse floating rate rather than the
fixed rate. Subsequent to converting the fixed rate into either a qualified
floating rate or a qualified inverse floating rate, the floating rate note is
then converted into an "equivalent" fixed rate debt instrument in the manner
described above.
Once the floating rate note is converted into an "equivalent" fixed rate
debt instrument pursuant to the foregoing rules, the amount of original issue
discount and qualified stated interest, if any, are determined for the
"equivalent" fixed rate debt instrument by applying the general original issue
discount rules to the "equivalent" fixed rate debt instrument and a U.S. Holder
of the floating rate note will account for such original issue discount and
qualified stated interest as if the U.S. Holder held the "equivalent" fixed rate
debt instrument. In each accrual period appropriate adjustments will be made to
the amount of qualified stated interest or original issue discount assumed to
have been accrued or paid with respect to the "equivalent" fixed rate debt
instrument in the event that such amounts differ from the actual amount of
interest accrued or paid on the floating rate note during the accrual period.
Certain of the notes may be redeemable at our option prior to their stated
maturity (a "call option") and/or may be repayable at the option of the holder
prior to their stated maturity (a "put option"). Notes containing such features
may be subject to rules that differ from the general rules discussed above.
Investors intending to purchase notes with such features should consult their
own tax advisors, since the original issue discount consequences will depend, in
part, on the particular terms and features of the purchased notes.
U.S. Holders may generally, upon election, include in income all interest
(including stated interest, acquisition discount, original issue discount, de
minimis original issue discount, market discount, de minimis market discount,
and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium) that accrues on a debt instrument by using the constant
yield method applicable to original issue discount, subject to certain
limitations and exceptions.
SHORT-TERM NOTES. Notes that have a fixed maturity of one year or less
("Short-Term Notes") will be treated as having been issued with original issue
discount. In general, an individual or other cash method U.S.
S-27
Holder is not required to accrue such original issue discount unless the U.S.
Holder elects to do so. If such an election is not made, any gain recognized by
the U.S. Holder on the sale, exchange or maturity of the Short-Term Note will be
ordinary income to the extent of the original issue discount accrued on a
straight-line basis, or upon election under the constant yield method (based on
daily compounding), through the date of sale or maturity, and a portion of the
deductions otherwise allowable to the U.S. Holder for interest on borrowings
allocable to the Short-Term Note will be deferred until a corresponding amount
of income is realized. U.S. Holders who report income for United States federal
income tax purposes under the accrual method, and certain other holders
including banks and dealers in securities, are required to accrue original issue
discount on a Short-Term Note on a straight-line basis unless an election is
made to accrue the original issue discount under a constant yield method (based
on daily compounding).
MARKET DISCOUNT. A U.S. Holder who purchases a note, other than a Discount
Note, for an amount that is less than its issue price (or, in the case of a
subsequent purchaser, its stated redemption price at maturity) will be treated
as having purchased such note at a "market discount," unless the amount of such
market discount is less than a specified de minimis amount.
Under the market discount rules, a U.S. Holder will be required to treat
any partial principal payment (or, in the case of a Discount Note, any payment
that does not constitute qualified stated interest) on, or any gain realized on
the sale, exchange, retirement or other disposition of, a note as ordinary
income to the extent of the lesser of:
- the amount of such payment or realized gain or
- the market discount which has not previously been included in income and
is treated as having accrued on such note at the time of such payment or
disposition.
Market discount will be considered to accrue ratably during the period from
the date of acquisition to the maturity date of the note, unless the U.S. Holder
elects to accrue market discount on the basis of semiannual compounding.
A U.S. Holder may be required to defer the deduction of all or a portion of
the interest paid or accrued on any indebtedness incurred or maintained to
purchase or carry a note with market discount until the maturity of the note or
certain earlier dispositions, because a current deduction is only allowed to the
extent the interest expense exceeds an allocable portion of market discount. A
U.S. Holder may elect to include market discount in income currently as it
accrues (on either a ratable or semiannual compounding basis), in which case the
rules described above regarding the treatment as ordinary income of gain upon
the disposition of the note and upon the receipt of certain cash payments and
regarding the deferral of interest deductions will not apply. Generally, such
currently included market discount is treated as ordinary interest for United
States federal income tax purposes. Such an election will apply to all debt
instruments acquired by the U.S. Holder on or after the first day of the first
taxable year to which such election applies and may be revoked only with the
consent of the IRS.
PREMIUM. If a U.S. Holder purchases a note for an amount that is greater
than the sum of all amounts payable on the notes after the purchase date other
than payments of qualified stated interest, such U.S. Holder will be considered
to have purchased the note with "amortizable bond premium" equal in amount to
such excess. A U.S. Holder may elect to amortize such premium using a constant
yield method over the remaining term of the note and may offset interest
otherwise required to be included in respect of the note during any taxable year
by the amortized amount of such excess for the taxable year. However, if the
note may be optionally redeemed after the U.S. Holder acquires it at a price in
excess of its stated redemption price at maturity, special rules would apply
which could result in a deferral of the amortization of some bond premium until
later in the term of the note. Any election to amortize bond premium applies to
all taxable debt instruments acquired by the U.S. Holder on or after the first
day of the first taxable year to which such election applies and may be revoked
only with the consent of the IRS.
DISPOSITION OF A NOTE. Except as discussed above, upon the sale, exchange
or retirement of a note, a U.S. Holder generally will recognize taxable gain or
loss equal to the difference between the amount realized on the sale, exchange
or retirement (other than amounts representing accrued and unpaid interest) and
such
S-28
U.S. Holder's adjusted tax basis in the note. A U.S. Holder's adjusted tax basis
in a note generally will equal such U.S. Holder's initial investment in the note
increased by any original issue discount included in income (and any accrued
market discount previously included in income) and decreased by the amount of
any payments received (other than qualified stated interest) and amortizable
bond premium taken with respect to such note. Such gain or loss generally will
be long-term capital gain or loss if the note had been held at the time of
disposition for more than one year.
FOREIGN CURRENCY NOTES
Special tax provisions relating to notes denominated in a foreign currency
will be set forth in the applicable note and the applicable pricing supplement
relating thereto.
NON-U.S. HOLDERS
A non-U.S. Holder who is an individual or corporation (or an entity treated
as a corporation for federal income tax purposes) holding the notes on its own
behalf will not be subject to United States federal income taxes on payments of
principal, premium, interest or original issue discount on a note, unless such
non-U.S. Holder is a direct or indirect 10% or greater shareholder of ours, a
controlled foreign corporation related to us or a bank receiving interest
described in section 881(c)(3)(A) of the Code.
To qualify for the exemption from taxation, a "Withholding Agent" must have
received a statement from the individual or corporation that:
- is signed under penalties of perjury by the beneficial owner of the note,
- certifies that such owner is not a U.S. Holder, and
- provides the beneficial owner's name and address.
A "Withholding Agent" is the last United States payor (or a non-U.S. payor who
is a qualified intermediary, U.S. branch of a foreign person, or withholding
foreign partnership) in the chain of payment prior to payment to a non-U.S.
Holder (which itself is not a Withholding Agent). Generally, this statement is
made on Form W-8BEN, which is effective for the remainder of the year of
signature plus three full calendar years unless a change in circumstances makes
any information on the form incorrect. Notwithstanding the preceding sentence, a
Form W-8BEN with a U.S. taxpayer identification number will remain effective
until a change in circumstances makes any information on the form incorrect,
provided that the Withholding Agent reports at least annually to the beneficial
owner on IRS Form 1042-S. The beneficial owner must inform the Withholding Agent
within 30 days of such change and furnish a new Form W-8BEN. A non-U.S. Holder
who is not an individual or corporation (or an entity treated as a corporation
for federal income tax purposes) holding the notes on its own behalf may have
substantially increased reporting requirements. In particular, in the case of
notes held by a foreign partnership (or foreign trust), the partners (or
beneficiaries) rather than the partnership (or trust) will be required to
provide the certification discussed above, and the partnership (or trust) will
be required to provide certain additional information.
A non-U.S. Holder whose income with respect to its investment in a note is
effectively connected with the conduct of a U.S. trade or business would
generally be taxed as if such non-U.S. Holder was a U.S. person provided the
holder provides to the Witholding Agent an IRS Form W-8ECI.
Certain securities clearing organizations, and other entities who are not
beneficial owners, may be able to provide a signed statement to the Withholding
Agent. However, in such case, the signed statement may require a copy of the
beneficial owner's Form W-8BEN (or the substitute form).
Generally, a non-U.S. Holder will not be subject to federal income taxes on
any amount which constitutes capital gain upon retirement or disposition of a
note, unless such non-U.S. Holder is an individual who is present in the United
States for 183 days or more in the taxable year of the disposition and such gain
is derived from sources within the United States. Certain other exceptions may
be applicable, and a non-U.S. Holder should consult its tax advisor in this
regard.
S-29
The notes will not be includible in the estate of a non-U.S. Holder unless
the individual is a direct or indirect 10% or greater shareholder of us or, at
the time of such individual's death, payments in respect of the notes would have
been effectively connected with the conduct by such individual of a trade or
business in the United States.
BACKUP WITHHOLDING. Backup withholding of United States federal income tax
may apply to payments made in respect of the notes to registered owners who are
not "exempt recipients" and who fail to provide certain identifying information
(such as the registered owner's taxpayer identification number) in the required
manner. Generally, individuals are not exempt recipients, whereas corporations
and certain other entities generally are exempt recipients. Payments made in
respect of the notes to a U.S. Holder must be reported to the IRS, unless the
U.S. Holder is an exempt recipient or establishes an exemption. Compliance with
the identification procedures described in the preceding section would establish
an exemption from backup withholding for those non-U.S. Holders who are not
exempt recipients.
In addition, upon the sale of a note to (or through) a broker, the broker
must report the sale and withhold on the entire purchase price, unless either:
- the broker determines that the seller is a corporation or other exempt
recipient, or
- the seller certifies (generally on a Form W-8BEN) that such seller is a
non-U.S. Holder (and certain other conditions are met).
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules from a payment to a beneficial owner would be allowed
as a refund or a credit against such beneficial owner's United States federal
income tax provided the required information is furnished to the IRS.
Prospective investors are strongly urged to consult their own tax advisors
with respect to the Withholding Regulations.
PLAN OF DISTRIBUTION
We are offering the notes for sale on a continuing basis through the agents
Bear, Stearns & Co. Inc., Fleet Securities, Inc., Goldman, Sachs & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated,
Robertson Stephens, Inc. and Salomon Smith Barney Inc. who will purchase the
notes, as agent or principal, from us, for resale to investors and other
purchasers at varying prices relating to prevailing market prices at the time of
resale as determined by the agents, or, if so specified in an applicable pricing
supplement, for resale at a fixed public offering price. Unless otherwise
specified in an applicable pricing supplement, any note sold to an agent as
principal will be purchased by that agent at a price equal to 100% of the
principal amount of the note less a percentage of the principal amount equal to
the commission applicable to an agency sale, as described below, of a note of
identical maturity. Each agent has agreed to utilize its reasonable efforts on
an agency basis to solicit offers to purchase the notes at 100% of the principal
amount of the notes, unless otherwise specified in an applicable pricing
supplement. If notes are sold on an agency basis, we will pay a commission to
the agent, ranging from .125% to .75% of the principal amount of a note,
depending upon its stated maturity or, with respect to a note for which the
stated maturity is in excess of 30 years, a commission as agreed upon by us and
an agent at the time of sale.
An agent may sell notes it has purchased from us as principal to other
dealers for resale to investors, and may allow any portion of the discount
received in connection with those purchases from us to those dealers. After the
initial public offering of notes, the agent may change the public offering price
or, in the case of notes to be resold at a fixed public offering price, the
concession and the discount allowed to dealers.
We reserve the right to withdraw, cancel or modify the offer made by this
prospectus supplement without notice and may reject orders, in whole or in part,
whether placed directly with us or through any agent. An agent will have the
right, in its discretion reasonably exercised, to reject in whole or in part any
offer to purchase notes received by that agent.
S-30
Unless otherwise specified in an applicable pricing supplement, the agent
will be required to pay the purchase price of the notes in immediately available
funds in U.S. dollars or the specified currency, as the case may be, in New York
City on the date of settlement.
No note will have an established trading market when issued. Unless
specified in the applicable pricing supplement, we will not list the notes on
any securities exchange. Any agent may from time to time purchase and sell notes
in the secondary market, but the agents are not obligated to do so, and there
can be no assurance that there will be a secondary market for the notes or
liquidity in the secondary market if one develops. From time to time, the agents
may make a market in the notes.
The agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended. We have agreed to indemnify the agents
against or to make contributions relating to certain civil liabilities,
including liabilities under the Securities Act, or to contribute to payments the
agents may be required to make in respect of those liabilities. We have agreed
to reimburse the agents for certain expenses.
From time to time, we may issue and sell other securities described in the
accompanying prospectus, and the amount of notes that we may offer and sell
under this prospectus supplement may be reduced as a result of those sales.
In connection with the offering of notes purchased by an agent as principal
on a fixed price basis, the agent is permitted to engage in certain transactions
that stabilize the price of the notes. These transactions may consist of bids or
purchases for the purpose of pegging, fixing or maintaining the price of the
notes. If an agent creates a short position in the notes in connection with the
offering, i.e., if it sells notes in an aggregate principal amount exceeding
that set forth in the applicable pricing supplement, then the agent may reduce
that short position by purchasing notes in the open market. In general,
purchases of notes for the purpose of stabilization or to reduce a short
position could cause the price of the notes to be higher than in the absence of
these purchases.
Neither we nor any agent makes any representation or prediction as to the
direction or magnitude of any effect that the transactions described above may
have on the price of the notes. In addition, neither we nor any agent makes any
representation that an agent will engage in any of those transactions or that
those transactions, once commenced, will not be discontinued without notice.
Robertson Stephens, Inc. and Fleet Securities, Inc. are our wholly-owned
subsidiaries. The underwriting arrangements for this offering comply with the
requirements of Rule 2720 of the Conduct Rules of the NASD regarding a NASD
member firm's underwriting securities of an affiliate. In accordance with Rule
2720, no NASD member may make sales in this offering to any discretionary
account without the prior specific written approval of the customer. This
prospectus supplement and the accompanying prospectus may be used by Robertson
Stephens and Fleet Securities in connection with offers and sales related to
secondary market transactions in the notes. Robertson Stephens and Fleet
Securities may act as principal or agent in these transactions. Those sales will
be made at prices related to prevailing market prices at the time of sale.
In the ordinary course of their business, certain of the agents and their
affiliates have engaged, and may in the future engage, in investment banking,
commercial banking and financial advisory transactions with us and our
affiliates, for which they receive customary fees and expenses.
S-31
PROSPECTUS
[FLEETBOSTON FINANCIAL LOGO]
FLEETBOSTON FINANCIAL CORPORATION
FleetBoston Financial Corporation may offer and sell --
-- Debt Securities
-- Warrants
We will provide specific terms of these securities in supplements to this
prospectus. You should read this prospectus and any supplements carefully before
you invest.
A security is not a deposit and the securities are not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other governmental agency.
This prospectus may be used to offer and sell securities only if accompanied by
the prospectus supplement for those securities.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED
OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS OR THE ACCOMPANYING
PROSPECTUS SUPPLEMENT IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is November 21, 2001.
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
We may provide information to you about the securities we are offering in
three separate documents that progressively provide more detail:
- this prospectus, which provides general information, some of which may
not apply to your securities;
- the accompanying prospectus supplement, which describes the terms of the
securities, some of which may not apply to your securities; and
- if necessary, a pricing supplement, which describes the specific terms of
your securities.
IF THE TERMS OF YOUR SECURITIES VARY BETWEEN THE PRICING SUPPLEMENT, THE
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS, YOU SHOULD RELY ON THE
INFORMATION IN THE FOLLOWING ORDER OF PRIORITY:
- THE PRICING SUPPLEMENT, IF ANY;
- THE PROSPECTUS SUPPLEMENT; AND
- THE PROSPECTUS.
We include cross-references in this prospectus and the accompanying
prospectus supplement to captions in these materials where you can find further
related discussions. The following Table of Contents and the Table of Contents
included in the accompanying prospectus supplement provide the pages on which
these captions are located.
------------------------
Unless indicated in the applicable prospectus supplement, neither we nor
the underwriters have taken any action that would permit us to publicly sell
these securities in any jurisdiction outside the United States. If you are an
investor outside the United States, you should inform yourself about and comply
with any restrictions as to the offering of the securities and the distribution
of this prospectus.
i
TABLE OF CONTENTS
PAGE
----
About This Prospectus............... 2
Where You Can Find More
Information....................... 2
Forward-looking Statements.......... 4
FleetBoston Financial Corporation... 5
Consolidated Ratios of Earnings to
Fixed Charges..................... 5
Use of Proceeds..................... 6
Regulation and Supervision.......... 6
The GLB Act....................... 7
Future Legislation................ 7
Description of Debt Securities...... 7
General........................... 8
Registration and Transfer......... 9
Payment and Place of Payment...... 10
Global Securities................. 10
Events of Default................. 10
Modification and Waiver........... 12
Consolidation, Merger and Sale of
Assets......................... 13
PAGE
----
Regarding the Trustee............. 13
International Offering............ 13
Senior Debt Securities.............. 14
Restrictive Covenants............. 14
Defeasance........................ 15
Subordinated Debt Securities........ 15
Subordination..................... 15
Restrictive Covenants............. 17
Description of Warrants............. 17
Offered Warrants.................. 17
Further Information in Prospectus
Supplement..................... 18
Significant Provisions of the
Warrant Agreements............. 19
Plan of Distribution................ 20
Experts............................. 21
Legal Opinions...................... 21
ii
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission, the "SEC," utilizing a "shelf" registration
process. Under this shelf process, we may from time to time sell any combination
of the debt securities or warrants described in this prospectus in one or more
offerings up to a total dollar amount of $4,131,868,750. We may also sell other
securities under the registration statement that will reduce the total dollar
amount of securities that we may sell under this prospectus. This prospectus
provides you with a general description of the debt securities or warrants we
may offer. Each time we sell debt securities or warrants, 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 the additional information described
under the heading "Where You Can Find More Information."
Unless otherwise indicated or unless the context requires otherwise, all
references in this prospectus to "FLEETBOSTON," "WE," "US," "OUR" or similar
references mean FleetBoston Financial Corporation.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement under the Securities
Act of 1933 that registers, among other securities, the offer and sale of the
securities offered by this prospectus. The registration statement, including the
attached exhibits and schedules, contains additional relevant information about
us. The rules and regulations of the SEC allow us to omit certain information
included in the registration statement from this prospectus.
In addition, we file reports, proxy statements and other information with
the SEC under the Securities Exchange Act of 1934. You may read and copy this
information at the following locations of the SEC:
Public Reference Room
450 Fifth Street, N.W.
Room 1024
Washington, D.C. 20549
Northeast Regional Office
233 Broadway
New York, New York 10007
Midwest Regional Office
500 West Madison Street
Suite 1400
Chicago, Illinois 60661-2511
You may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330.
The SEC also maintains an internet world wide web site that contains
reports, proxy statements and other information about issuers, like us, who file
electronically with the SEC. The address of that site is:
http://www.sec.gov.
You can also inspect reports, proxy statements and other information about
us at the offices of the New York Stock Exchange, 20 Broad Street, New York, New
York 10005 and the Boston Stock Exchange, 100 Franklin Street, Boston,
Massachusetts 02110.
The SEC allows us to "INCORPORATE BY REFERENCE" information into this
prospectus. This means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is considered to be a part of this prospectus, except
for any information that is superseded by information that is included directly
in this document or in a more recent incorporated document.
2
This prospectus incorporates by reference the documents listed below that
we have previously filed with the SEC. They contain important information about
us and our financial condition.
SEC FILINGS PERIOD
----------- ------
Annual Report on Form 10-K.......................... Year ended December 31, 2000, as filed on
February 28, 2001
Quarterly Reports on Form 10-Q...................... Quarter ended March 31, 2001, as filed on May
15, 2001
Quarter ended June 30, 2001, as filed on
August 14, 2001
Quarter ended September 30, 2001, as filed on
November 14, 2001
The description of FleetBoston common stock set
forth in the FleetBoston registration statement
filed by Industrial National Corporation
(predecessor to FleetBoston) on Form 8-B dated May
29, 1970, and any amendment or report filed for
the purpose of updating that description; and
Current Reports on Form 8-K......................... Filed:
-January 17, 2001
-March 1, 2001
-March 14, 2001
-April 17, 2001
-May 4, 2001
-July 18, 2001
-September 17, 2001
-September 26, 2001
-October 17, 2001
-October 19, 2001, as amended by a
Form 8-K/A filed October 23, 2001
-November 19, 2001
We incorporate by reference additional documents that we may file with the
SEC between the date of this prospectus and the date we sell all of the debt
securities. These documents include periodic reports, such as Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as
well as proxy statements.
You can obtain any of the documents incorporated by reference in this
document through us, or from the SEC through the SEC's Internet world wide web
site at the address described above. Documents incorporated by reference are
available from us without charge, excluding any exhibits to those documents,
unless the exhibit is specifically incorporated by reference as an exhibit in
this prospectus. You can obtain documents incorporated by reference in this
prospectus by requesting them in writing or by telephone from us at the
following address:
Investor Relations Department
FleetBoston Financial Corporation
P.O. Box 2016, MA DE 10034F
Boston, Massachusetts 02106-2106
(617) 434-7858
We have not authorized anyone to give any information or make any
representation about us that is different from, or in addition to, those
contained in this prospectus or in any of the materials that we have
incorporated into this prospectus. If anyone does give you information of this
sort, you should not rely on it. If you are in a jurisdiction where offers to
sell, or solicitations of offers to purchase, the securities offered by this
document are unlawful, or if you are a person to whom it is unlawful to direct
these types of activities, then the offer presented in this document does not
extend to you. The information contained in this document speaks only as of the
date of this document unless the information specifically indicates that another
date applies.
3
FORWARD-LOOKING STATEMENTS
This prospectus, including information included or incorporated by
reference, contains certain forward-looking statements with respect to our
financial condition, results of operations, plans, objectives, future
performance and business, including, without limitation, statements preceded by,
followed by or that include the words "believes," "expects," "anticipates,"
"estimates" or similar expressions.
These forward-looking statements involve risks and uncertainties. Actual
results may differ materially from those contemplated by the forward-looking
statements due to many factors, including:
- general political and economic conditions, either domestically or
internationally or in the states in which we are doing business, may be
less favorable than expected;
- the adverse economic effects of the recent terrorist attacks against the
United States and the response of the United States to those attacks may
be greater than expected;
- Latin American economies, particularly the economy of Argentina, may
continue to exhibit weakness and may also adversely impact the economies
of other countries;
- credit quality may continue to deteriorate, resulting in an increase in
the level of our nonperforming assets and chargeoffs;
- interest rate and currency fluctuations, equity and bond market
fluctuations and perceptions, and inflation may be greater than expected;
- global capital markets in general, and the technology and
telecommunication industries in particular, may continue to exhibit
weakness, adversely affecting our principal investing and other capital
markets businesses;
- competitive product and pricing pressures among financial institutions
within our markets may increase significantly;
- legislative or regulatory developments, including regulations adopted
under the Gramm-Leach-Bliley Act and other changes in laws concerning
taxes, banking, securities, insurance and other aspects of the financial
services industry, may adversely affect our business;
- technological changes, including the impact of the Internet on our
business, may be more difficult or expensive than anticipated;
- expected cost savings from mergers, acquisitions and integrations of
acquired businesses and cost saving initiatives may not be fully realized
or may not be realized within the expected time frames; and
- the level of costs or difficulties related to the integration of acquired
businesses may be greater than expected.
4
FLEETBOSTON FINANCIAL CORPORATION
We are a diversified financial services company offering a comprehensive
array of financial solutions to approximately 20 million customers in more than
20 countries. Among our key lines of business are:
- Consumer and Investment Services -- includes domestic retail banking to
consumer and small business customers, community banking, student loan
processing, credit card services, and investment management and retail
brokerage services, including mutual funds and investments, retirement
planning, large institutional asset management and not-for-profit
investment services;
- Wholesale and Global Banking -- includes commercial finance, including
asset-based lending and leasing; international banking in key Latin
American markets; corporate banking, including specialized industry and
institutional lending; and middle market lending, including commercial
lending, government banking services, trade services and cash management;
and
- Capital Markets -- includes investment banking services, brokerage
market-making and principal investing.
On March 1, 2001, we completed our acquisition of Summit Bancorp, which was
accounted for as a pooling of interests. All financial information set forth or
incorporated by reference in this prospectus and the accompanying prospectus
supplement has been restated for all periods to give effect to the Summit
acquisition.
At September 30, 2001, our total assets on a consolidated basis were $201.9
billion, our consolidated total deposits were $126.4 billion and our
consolidated total stockholders' equity was $19.8 billion. Based on total
assets, we are the seventh largest financial holding company in the United
States.
Our principal office is located at 100 Federal Street, Boston,
Massachusetts 02110, telephone number (617) 434-2200.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
Our consolidated ratios of earnings to fixed charges were as follows for
the five most recent fiscal years and the nine months ended September 30, 2001:
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
----------------- ------------------------------------
2001 2000 1999 1998 1997 1996
----------------- ---- ---- ---- ---- ----
Ratio of Earnings to Fixed
Charges:
Excluding Interest on
Deposits.................... 2.00x 2.58x 2.23x 2.65x 3.01x 2.81x
Including Interest on
Deposits.................... 1.45 1.75 1.54 1.63 1.70 1.59
-------------------------
For the purpose of computing the ratio of earnings to fixed charges,
"EARNINGS" consist of income before income taxes plus fixed charges, excluding
capitalized interest. "FIXED CHARGES" consist of interest on short-term debt and
long-term debt, including interest related to capitalized leases and capitalized
interest, and one-third of rent expense, which approximates the interest
component of that expense. In addition, where indicated, fixed charges include
interest on deposits.
5
USE OF PROCEEDS
We intend to use the net proceeds from the sale of the securities for
general corporate purposes unless otherwise indicated in the prospectus
supplement, pricing supplement or term sheet relating to a specific issue of
securities. Our general corporate purposes may include extending credit to, or
funding investments in, our subsidiaries. The precise amounts and the timing of
our use of the net proceeds will depend upon our subsidiaries' funding
requirements and the availability of other funds. Until we use the net proceeds
from the sale of any of our securities for general corporate purposes, we will
use the net proceeds to reduce our short-term indebtedness or for temporary
investments. We expect that we will, on a recurrent basis, engage in additional
financings as the need arises to finance our growth, through acquisitions or
otherwise, or to fund our subsidiaries.
REGULATION AND SUPERVISION
As a financial holding company, we are subject to inspection, examination
and supervision by the Federal Reserve Board under the Bank Holding Company Act
of 1956, as amended by the Gramm-Leach-Bliley Act (the "GLB Act"), which is
discussed below under "-- The GLB Act." Our banking subsidiaries are subject to
extensive supervision, examination and regulation by various bank regulatory
authorities and other governmental agencies in the states and countries where we
and our subsidiaries operate. Because we are a holding company, our rights and
the rights of our creditors, including the holders of the debt securities we are
offering under this prospectus, to participate in the assets of any of our
subsidiaries upon the subsidiary's liquidation or reorganization will be subject
to the prior claims of the subsidiary's creditors except to the extent that we
may ourselves be a creditor with recognized claims against the subsidiary. In
addition, there are various statutory and regulatory limitations on the extent
to which our banking subsidiaries can finance or otherwise transfer funds to us
or to our nonbanking subsidiaries, whether in the form of loans, extensions of
credit, investments or asset purchases. Those transfers by any subsidiary bank
to us or a nonbanking subsidiary are limited in amount to 10% of the bank's
capital and surplus and, with respect to us and all such nonbanking
subsidiaries, to an aggregate of 20% of each such bank's capital and surplus.
Furthermore, loans and extensions of credit are required to be secured in
specified amounts and are required to be on terms and conditions consistent with
safe and sound banking practices.
In addition, there are regulatory limitations on the payment of dividends
directly or indirectly to us from our banking subsidiaries. Under applicable
banking statutes, at September 30, 2001, our banking subsidiaries could have
declared additional dividends of approximately $786 million without prior
regulatory approval. Federal and state regulatory agencies also have the
authority to limit further our banking subsidiaries' payment of dividends based
on other factors, such as the maintenance of adequate capital for such
subsidiary bank.
Under the policy of the Federal Reserve Board, we are expected to act as a
source of financial strength to each subsidiary bank and to commit resources to
support such subsidiary bank in circumstances where we might not do so absent
such policy. In addition, any subordinated loans by us to any of our subsidiary
banks would also be subordinate in right of payment to depositors and
obligations to other creditors of such subsidiary bank. Further, the Crime
Control Act of 1990 amended the federal bankruptcy laws to provide that, in the
event of our bankruptcy, any commitment by us to our regulators to maintain the
capital of a banking subsidiary will be assumed by the bankruptcy trustee and
entitled to a priority of payment.
For a discussion of the material elements of the regulatory framework
applicable to financial holding companies, bank holding companies and their
subsidiaries, and specific information
6
relevant to us, refer to our Annual Report on Form 10-K for the year ended
December 31, 2000 and any other subsequent reports filed by us with the SEC,
which are incorporated by reference in this prospectus. This regulatory
framework is intended primarily for the protection of depositors and the deposit
insurance funds that insure deposits of banks, rather than for the protection of
security holders. A change in the statutes, regulations or regulatory policies
applicable to us or our subsidiaries may have a material effect on our business.
THE GLB ACT
The GLB Act, enacted in 1999, eliminates many of the restrictions placed on
the activities of certain qualified bank holding companies. A bank holding
company that qualifies as a "financial holding company" can expand into a wide
variety of financial services, including securities activities, insurance, and
merchant banking without the prior approval of the Federal Reserve Board. Our
election to become a "financial holding company," which we filed with the
Federal Reserve Board, became effective on March 13, 2000.
Banks are also authorized by the GLB Act to engage, through "financial
subsidiaries," in certain activities that are permissible for a financial
holding company and other activities that its applicable regulators deem to be
financial in nature or incidental to any such financial activity. The authority
of a bank to invest in a financial subsidiary is subject to a number of
conditions.
The GLB Act also contains a number of other provisions that will affect our
operations and the operations of all financial institutions. At this time, we do
not believe that the GLB Act will have a material adverse impact upon our or our
subsidiaries' financial condition or results of operations.
FUTURE LEGISLATION
Changes to the laws and regulations in the states and countries where we
and our subsidiaries do business can affect the operating environment of
financial holding companies and their subsidiaries in substantial and
unpredictable ways. We cannot accurately predict whether those changes in laws
and regulations will occur, and, if those changes occur, the ultimate effect
they would have upon our or our subsidiaries' financial condition or results of
operations.
DESCRIPTION OF DEBT SECURITIES
We will issue the senior debt securities under an indenture dated as of
December 6, 1999, the "SENIOR INDENTURE," between us and The Bank of New York as
senior trustee. We will issue the subordinated debt securities under an
indenture dated as of December 6, 1999, the "SUBORDINATED INDENTURE," between us
and The Bank of New York as subordinated trustee. A copy of each of the
indentures are exhibits to the registration statement which contains this
prospectus.
In the following summaries, we describe the general terms and provisions of
the debt securities to be offered by any prospectus supplement. The particular
terms of the debt securities offered by any prospectus supplement and the
extent, if any, to which these general provisions may apply to the debt
securities so offered, will be described in the prospectus supplement relating
to those offered securities. The following summaries of all material terms of
the indentures are not complete and are subject to, and are qualified in their
entirety by reference to, all the provisions of the respective indentures,
including the definitions of terms.
The senior debt securities will be unsecured and will rank equally with all
of our other unsecured and unsubordinated indebtedness. The subordinated debt
securities will be unsecured and will be subordinated to all of our existing and
future senior indebtedness and other financial obligations, as described under
"Subordinated Debt Securities -- Subordination" beginning on page 15.
7
GENERAL
We may issue the debt securities from time to time, without limitation as
to aggregate principal amount and in one or more series. We expect from time to
time to incur additional indebtedness which may be senior to the debt
securities. Neither the indentures nor the debt securities will limit or
otherwise restrict the amount of other indebtedness which we may incur or other
securities which we or our subsidiaries may issue, including indebtedness which
may rank senior to the debt securities. The debt securities will not be secured.
We may issue debt securities upon the satisfaction of conditions contained
in the indentures, including the delivery to the applicable trustee of a
resolution of our board of directors and a certificate of an authorized officer
that fixes or establishes the terms of the debt securities being issued. Any
resolution or officer's certificate approving the issuance of any issue of debt
securities will include the terms of that issue of debt securities, including:
- the title and series designation;
- the aggregate principal amount and the limit, if any, on the aggregate
principal amount or initial public offering price of the debt securities
which may be issued under the applicable indenture;
- the principal amount payable, whether at maturity or upon earlier
acceleration, whether the principal amount will be determined with
reference to an index, formula or other method which may be calculated,
without limitation, with reference to the value of currencies, securities
or baskets of securities, commodities, indices or other measurements to
which any such amount payable is linked, and whether the debt securities
will be issued as original issue discount securities (as defined below);
- the date or dates on which the principal of the debt securities is
payable;
- any fixed or variable interest rate or rates per annum or the method or
formula for determining an interest rate;
- the date from which any interest will accrue;
- any interest payment dates;
- whether the debt securities are senior or subordinated, and if
subordinated, the terms of the subordination if different from that
summarized in this prospectus;
- the price or prices at which the debt securities will be issued, which
may be expressed as a percentage of the aggregate principal amount of
those debt securities;
- the stated maturity date;
- whether the debt securities are to be issued in global form;
- any sinking fund requirements;
- any provisions for redemption, the redemption price and any remarketing
arrangements;
- the minimum denominations;
- whether the debt securities are denominated or payable in United States
dollars or a foreign currency or units of two or more foreign currencies;
- the form in which we will issue the debt securities, whether registered,
bearer or both, and any restrictions applicable to the exchange of one
form for another and to the offer, sale and delivery of the debt
securities in either form;
- information with respect to book-entry procedures;
- the place or places where payments or deliveries on the debt securities
will be made and the debt securities may be presented for registration of
transfer or exchange;
- whether any of the debt securities will be subject to defeasance in
advance of the date for redemption or the stated maturity date;
- whether, and the terms and conditions relating to when, we may satisfy
all or part of our obligations with regard to
8
payment upon maturity, or any redemption or required repurchase or in
connection with any exchange provisions, or any interest payment, by
delivering to the holders of the debt securities, other securities, which
may or may not be issued by us, or a combination of cash, securities
and/or property, "MATURITY CONSIDERATION";
- the terms, if any, upon which the debt securities are convertible into
other securities of ours or another issuer and the terms and conditions
upon which any conversion will be effected, including the initial
conversion price or rate, the conversion period and any other provisions
in addition to or instead of those described in this prospectus; and
- any other terms of the debt securities which are not inconsistent with
the provisions of the applicable indenture.
Please see the accompanying prospectus supplement, pricing supplement or
the terms sheet you have received or will receive for the terms of the specific
debt securities we are offering. We may deliver this prospectus before or
concurrently with the delivery of a terms sheet. We may issue debt securities
under the indentures upon the exercise of warrants to purchase debt securities.
See "Description of Warrants." Nothing in the indentures or in the terms of the
debt securities will prohibit the issuance of securities representing
subordinated indebtedness that is senior or junior to the subordinated debt
securities.
Prospective purchasers of debt securities should be aware that special U.S.
Federal income tax, accounting and other considerations may be applicable to
instruments such as the debt securities. The prospectus supplement relating to
an issue of debt securities will describe these considerations, if they apply.
Debt securities may be issued as "ORIGINAL ISSUE DISCOUNT SECURITIES" which
bear no interest or interest at a rate which at the time of issuance is below
market rates and which will be sold at a substantial discount below their
principal amount. In the event that the maturity of any original issue discount
security is accelerated, the amount payable to the holder of the original issue
discount security upon acceleration will be determined in accordance with the
applicable prospectus supplement, the terms of the security and the relevant
indenture, but will be an amount less than the amount payable at the maturity of
the principal of that original issue discount security. Special federal income
tax and other considerations relating to original issue discount securities will
be described in the applicable prospectus supplement.
REGISTRATION AND TRANSFER
Unless otherwise indicated in the applicable prospectus supplement, we will
issue each series of debt securities in registered form only, without coupons.
The indentures, however, provide that we may also issue debt securities in
bearer form only, or in both registered and bearer form. If debt securities are
issued in bearer form, the prospectus supplement will contain additional
provisions that apply to those debt securities.
Holders may present debt securities in registered form for transfer or
exchange for other debt securities of the same series at the offices of the
trustee according to the terms of the applicable indenture. In no event,
however, will debt securities in registered form be exchangeable for debt
securities in bearer form.
Unless otherwise indicated in the applicable prospectus supplement, the
debt securities issued in fully registered form will be issued without coupons
and in denominations of (1) $1,000 or integral multiples of $1,000 for any
senior debt security and (2) $100,000 or any integral multiple of $1,000 in
excess of $100,000 for any subordinated debt security.
We will not impose a service charge for any transfer or exchange of the
debt securities but may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection with any transfer or exchange.
9
PAYMENT AND PLACE OF PAYMENT
We will pay or deliver principal, maturity consideration and any premium
and interest in the manner, at the places and subject to the restrictions set
forth in the applicable indenture, the debt securities and the applicable
prospectus supplement. However, at our option, we may pay any interest by check
mailed to the holders of registered debt securities at their registered
addresses.
GLOBAL SECURITIES
Each indenture provides that we may issue debt securities in global form.
If any series of debt securities is issued in global form, the prospectus
supplement will describe any circumstances under which beneficial owners of
interests in any of those global debt securities may exchange their interests
for debt securities of that series and of like tenor and principal amount in any
authorized form and denomination.
EVENTS OF DEFAULT
The following are events of default under the senior indenture with respect
to senior debt securities of any series:
- default in the payment of any principal or premium on senior debt
securities of that series when due;
- default in the payment of any interest on senior debt securities of that
series when due, which continues for 30 days;
- default in the delivery or payment of the maturity consideration on
senior debt securities of that series when due;
- default in the deposit of any sinking fund payment on senior debt
securities of that series when due;
- default in the performance of any other obligation contained in the
applicable indenture for the benefit of that series or in the senior debt
securities of that series, which continues for 60 days after written
notice;
- specified events in bankruptcy, insolvency or reorganization; and
- any other event of default provided with respect to senior debt
securities of that series.
The following are the only events of default under the subordinated
indenture with respect to subordinated debt securities of any series:
- specified events in bankruptcy, insolvency or reorganization; and
- any other event of default provided with respect to subordinated debt
securities of that series.
If an event of default occurs and is continuing for any series of debt
securities, the trustee or the holders of at least 25% in aggregate principal
amount or issue price of the outstanding securities of that series may declare
all amounts, or any lesser amount provided for in the debt securities of that
series, to be due and payable or deliverable immediately.
The subordinated trustee and the holders of subordinated debt securities
will not be entitled to accelerate the maturity of the subordinated debt
securities in the case of a default in the performance of any covenant with
respect to the subordinated debt securities, including the payment of interest
and principal or the delivery of the maturity consideration. However, if a
default occurs and is continuing under the subordinated indenture, the
subordinated trustee may, in its discretion and subject to certain conditions,
seek to enforce its rights and the rights of the holders of the subordinated
debt securities by appropriate judicial proceedings.
The following are defaults under the subordinated indenture with respect to
subordinated debt securities of any series:
- any event of default with respect to subordinated debt securities of that
series;
- default in the payment of any principal or premium on subordinated debt
securities of that series when due;
10
- default in the payment of any interest on subordinated debt securities of
that series when due, which continues for 30 days;
- default in the delivery or payment of the maturity consideration on
subordinated debt securities of that series when due;
- default in the performance of any other obligation contained in the
applicable indenture for the benefit of that series or in the
subordinated debt securities of that series, which continues for 60 days
after written notice; and
- any other default provided with respect to subordinated debt securities
of that series.
At any time after the trustee or the holders have accelerated a series of
debt securities, but before the trustee has obtained a judgment or decree for
payment of money due or delivery of the maturity consideration, the holders of a
majority in aggregate principal amount or issue price of outstanding debt
securities of that series may rescind and annul that acceleration and its
consequences, provided that all payments and/or deliveries due, other than those
due as a result of acceleration, have been made and all events of default have
been remedied or waived.
The holders of a majority in principal amount or aggregate issue price of
the outstanding debt securities of any series may waive any default with respect
to that series, except a default:
- in the payment of any amounts due and payable or deliverable under the
debt securities of that series; or
- in an obligation contained in, or a provision of, an indenture which
cannot be modified under the terms of that indenture without the consent
of each holder of each series of debt securities affected.
The holders of a majority in principal amount or issue price of the
outstanding debt securities of a series may direct the time, method and place of
conducting any proceeding for any remedy available to the applicable trustee or
exercising any trust or power conferred on the trustee with respect to debt
securities of that series, provided that any direction is not in conflict with
any rule of law or the indenture. Subject to the provisions of the indenture
relating to the duties of the trustee, before proceeding to exercise any right
or power under the indenture at the direction of the holders, the trustee is
entitled to receive from those holders reasonable security or indemnity against
the costs, expenses and liabilities which it might incur in complying with any
direction.
Unless otherwise stated in the applicable prospectus supplement, any series
of debt securities issued under any indenture will not have the benefit of any
cross-default provisions with any of our other indebtedness.
A holder of any debt security of any series will have the right to
institute a proceeding with respect to the indenture or for any remedy under the
indenture, if:
- that holder previously gives to the trustee written notice of a
continuing event of default with respect to debt securities of that
series;
- the holders of not less than 25% for any senior debt security, or a
majority for any subordinated debt security, in aggregate principal
amount or issue price of the outstanding debt securities of that series
also will have made written request and offered the trustee indemnity
satisfactory to the trustee to institute that proceeding as trustee;
- the trustee will not have received from the holders of a majority in
principal amount or issue price of the outstanding debt securities of
that series a direction inconsistent with the request; and
- the trustee will have failed to institute the proceeding within 60 days.
However, any holder of a debt security has the absolute right to institute
suit for any defaulted payment after the due dates for payment under that debt
security.
11
We are required to furnish to the trustees annually a statement as to the
performance of our obligations under the indentures and as to any default in
that performance.
MODIFICATION AND WAIVER
We and the applicable trustee may amend and modify each indenture with the
consent of holders of at least 66 2/3% in principal amount or issue price of
each series of debt securities issued under that indenture affected. However,
without the consent of each holder of any debt security issued under the
applicable indenture, we may not amend or modify that indenture to:
- change the stated maturity date of the principal or maturity
consideration of, or any installment of principal or interest on, any
debt security issued under that indenture;
- reduce the principal amount or maturity consideration of, the rate of
interest on, or any premium payable upon the redemption of any debt
security issued under that indenture;
- reduce the amount of principal or maturity consideration of an original
issue discount security issued under that indenture payable upon
acceleration of its maturity;
- change the place or currency of payment of principal or maturity
consideration of, or any premium or interest on, any debt security issued
under that indenture;
- impair the right to institute suit for the enforcement of any payment or
delivery on or with respect to any debt security issued under that
indenture;
- reduce the percentage in principal amount or issue price of debt
securities of any series issued under that indenture, the consent of
whose holders is required to modify or amend the indenture or to waive
compliance with certain provisions of the indenture; or
- reduce the percentage in principal amount or issue price of debt
securities of any series issued under that indenture, the consent of
whose holders is required to waive any past default.
The holders of at least a majority in principal amount or issue price of
the outstanding debt securities of any series issued under that indenture may,
with respect to that series, waive past defaults under the indenture, except as
described under "-- Events of Default" beginning on page 10.
We and the trustee may also amend and modify each indenture without the
consent of any holder for any of the following purposes:
- to evidence the succession of another person to us;
- to add to our covenants for the benefit of the holders of all or any
series of securities;
- to add events of default;
- to add or change any provisions of the indentures to facilitate the
issuance of bearer securities;
- to change or eliminate any of the provisions of the applicable indenture,
so long as any such change or elimination will become effective only when
there is no outstanding security of any series which is entitled to the
benefit of that provision;
- to establish the form or terms of debt securities of any series;
- to evidence and provide for the acceptance of appointment by a successor
trustee;
- to cure any ambiguity, to correct or supplement any provision in the
applicable indenture, or to make any other provisions with respect to
matters or questions arising under that indenture, so long as the
interests of holders of debt securities of any series are not adversely
affected in any material respect under that indenture;
- to convey, transfer, assign, mortgage or pledge any property to or with
the trustee; or
12
- to provide for conversion rights of the holders of the debt securities of
any series to enable those holders to convert those securities into other
securities.
CONSOLIDATION, MERGER AND SALE OF ASSETS
Unless otherwise indicated in the applicable prospectus supplement, we may
consolidate or merge with or into any other corporation, and we may sell, lease
or convey all or substantially all of our assets to any corporation, provided
that:
- the resulting corporation, if other than us, is a corporation organized
and existing under the laws of the United States of America or any U.S.
state and assumes all of our obligations to:
- pay or deliver the principal or maturity consideration of, and any
premium, or interest on, the debt securities; and
- perform and observe all of our other obligations under the
indentures, and
- we are not, or any successor corporation, as the case may be, is not,
immediately after any consolidation or merger, in default under the
indentures.
Neither of the indentures provides for any right of acceleration in the
event of a consolidation, merger, sale of all or substantially all of the
assets, recapitalization or change in our stock ownership. In addition, the
indentures do not contain any provision which would protect the holders of debt
securities against a sudden and dramatic decline in credit quality resulting
from takeovers, recapitalizations or similar restructurings.
REGARDING THE TRUSTEE
We maintain banking relations with the trustee. In addition, our banking
subsidiaries maintain deposit accounts and correspondent banking relations with
the trustee.
The occurrence of any default under either the senior indenture, the
subordinated indenture or the indenture between us and the trustee relating to
our junior subordinated debentures, which may also be issued under the
registration statement, could create a conflicting interest for the trustee
under the Trust Indenture Act. If that default has not been cured or waived
within 90 days after the trustee has or acquired a conflicting interest, the
trustee would generally be required by the Trust Indenture Act to eliminate that
conflicting interest or resign as trustee with respect to the debt securities
issued under the senior indenture or the subordinated indenture, or with respect
to the junior subordinated debentures issued to certain Delaware statutory
business trusts of ours under a separate indenture. If the trustee resigns, we
are required to promptly appoint a successor trustee with respect to the
affected securities.
The Trust Indenture Act also imposes certain limitations on the right of
the trustee, as a creditor of us, to obtain payment of claims in certain cases,
or to realize on certain property received in respect to any cash claim or
otherwise. The trustee will be permitted to engage in other transactions with
us, provided that, if it acquires a conflicting interest within the meaning of
Section 310 of the Trust Indenture Act, it must generally either eliminate that
conflict or resign.
INTERNATIONAL OFFERING
If specified in the applicable prospectus supplement, we may issue debt
securities outside the United States. Those debt securities may be issued in
bearer form and will be described in the applicable prospectus supplement. In
connection with any offering outside the United States, we will designate paying
agents, registrars or other agents with respect to the debt securities, as
specified in the applicable prospectus supplement.
We will describe in the applicable prospectus supplement whether our debt
securities issued outside the United States (1) may be subject to certain
selling restrictions, (2) may be listed on one or more foreign stock exchanges
and (3) may have special United States tax and other considerations applicable
to an offering outside the United States.
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SENIOR DEBT SECURITIES
The senior debt securities will be our direct, unsecured obligations and
will rank pari passu with all of our other outstanding senior indebtedness.
RESTRICTIVE COVENANTS
DISPOSITION OF VOTING STOCK OF CERTAIN SUBSIDIARIES. We may not sell or
otherwise dispose of, or permit the issuance of, any voting stock or any
security convertible or exercisable into voting stock of a "principal
constituent bank" of ours or any subsidiary of ours which owns a controlling
interest in a principal constituent bank. A "PRINCIPAL CONSTITUENT BANK" is
defined in the senior indenture as Fleet National Bank and any other of our
majority-owned banking subsidiaries designated as a principal constituent bank.
Any designation of a banking subsidiary as a principal constituent bank with
respect to senior debt securities of any series will remain effective until the
senior debt securities of that series have been repaid. As of the date of this
prospectus, no banking subsidiaries other than Fleet National Bank have been
designated as principal constituent banks with respect to any series of debt
securities.
This restriction does not apply to dispositions made by us or any
subsidiary:
- acting in a fiduciary capacity for any person other than us or any
subsidiary;
- to us or any of our wholly-owned subsidiaries;
- if required by law for the qualification of directors;
- to comply with an order of a court or regulatory authority;
- in connection with a merger of, or consolidation of, a principal
constituent bank with or into a wholly-owned subsidiary or a
majority-owned banking subsidiary, as long as we hold, directly or
indirectly, in the entity surviving that merger or consolidation, not
less than the percentage of voting stock we held in the principal
constituent bank prior to that action;
- if that disposition or issuance is for fair market value as determined by
our board of directors, and, if after giving effect to that disposition
or issuance and any potential dilution, we and our wholly-owned
subsidiaries will own directly not less than 80% of the voting stock of
that principal constituent bank or any subsidiary which owns a principal
constituent bank;
- if a principal constituent bank sells additional shares of voting stock
to its stockholders at any price, if, after that sale, we hold directly
or indirectly not less than the percentage of voting stock of that
principal constituent bank we owned prior to that sale; or
- if we or a subsidiary pledges or creates a lien on the voting stock of a
principal constituent bank to secure a loan or other extension of credit
by a majority-owned banking subsidiary subject to Section 23A of the
Federal Reserve Act.
LIMITATION UPON LIENS ON CERTAIN CAPITAL STOCK. We may not at any time,
directly or indirectly, create, assume, incur or permit to exist any mortgage,
pledge, encumbrance or lien or charge of any kind upon:
- any shares of capital stock of any principal constituent bank, other than
directors' qualifying shares; or
- any shares of capital stock of a subsidiary which owns capital stock of
any principal constituent bank.
This restriction does not apply to:
- liens for taxes, assessments or other governmental charges or levies
which are not yet due or are payable without penalty or which we are
contesting in good faith by appropriate proceedings so long as we have
set aside on our books adequate reserves to cover the contested amount;
or
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- the lien of any judgment, if that judgment is discharged, or stayed on
appeal or otherwise, within 60 days.
DEFEASANCE
We may terminate or "defease" our obligations under the senior indenture
with respect to the senior debt securities of any series by taking the following
steps:
- depositing irrevocably with the senior trustee an amount which through
the payment of interest, principal or premium, if any, will provide an
amount sufficient to pay the entire amount of the senior debt securities:
- in the case of senior debt securities denominated in U.S.
dollars, U.S. dollars or U.S. government obligations;
- in the case of senior debt securities denominated in a foreign
currency, money in that foreign currency or foreign government
obligations of the foreign government or governments issuing
that foreign currency; or
- a combination of money and U.S. government obligations or
foreign government obligations;
- delivering:
- an opinion of independent counsel that the holders of the
senior debt securities of that series will have no federal
income tax consequences as a result of that deposit and
termination;
- if the senior debt securities of that series are then listed on
the New York Stock Exchange, an opinion of counsel that those
senior debt securities will not be delisted as a result of the
exercise of this defeasance option;
- an opinion of counsel as to certain other matters; and
- officers' certificates certifying as to compliance with the
senior indenture and other matters;
- no event of default under the senior indenture may exist or be caused by
the defeasance;
- the defeasance will not cause an event of default under any of our other
agreements or instruments; and
- we will have paid all other amounts due and owing under the senior
indenture.
SUBORDINATED DEBT SECURITIES
The subordinated debt securities will be our direct, unsecured obligations.
Unless otherwise specified in the applicable prospectus supplement, the
subordinated debt securities will rank equal with all of our outstanding
subordinated indebtedness that is not specifically stated to be junior to the
subordinated debt securities.
SUBORDINATION
The subordinated debt securities will be subordinated in right of payment
to all "senior indebtedness," as defined below. In certain events of insolvency,
payments on the subordinated debt securities will also be effectively
subordinated in right of payment to all "other financial obligations," as
defined below. In certain circumstances relating to our liquidation,
dissolution, winding up, reorganization, insolvency or similar proceedings, the
holders of all senior indebtedness will first be entitled to receive payment in
full before the holders of the subordinated debt securities will be entitled to
receive any payment on the subordinated debt securities. If, after all payments
have been made to the holders of senior indebtedness, (A) there are amounts
available for payment on the subordinated debt securities and (B) any
15
person entitled to payment according to the terms of our other financial
obligations, as defined on page 16, has not received full payment, then amounts
available for payments on the subordinated debt securities will first be used to
pay in full those other financial obligations before we may make any payment on
the subordinated debt securities. This obligation to pay over these excess
amounts does not exist for any of our "EXISTING SUBORDINATED INDEBTEDNESS"
issued prior to November 30, 1992.
If the maturity of any debt securities is accelerated, we will have to
repay all senior indebtedness and other financial obligations before we can make
any payment on the subordinated debt securities.
In addition, we may make no payment on the subordinated debt securities in
the event:
- there is a default in any payment or delivery with respect to any senior
indebtedness; or
- there is an event of default with respect to any senior indebtedness
which permits the holders of that senior indebtedness to accelerate the
maturity of the senior indebtedness.
By reason of this subordination in favor of the holders of senior
indebtedness, in the event of an insolvency, our creditors who are not holders
of senior indebtedness or the subordinated debt securities may recover less,
proportionately, than holders of senior indebtedness and may recover more,
proportionately, than holders of the subordinated debt securities. By reason of
the obligation of the holders of subordinated debt securities to pay over any
amount remaining after payment of senior indebtedness to persons in respect of
our other financial obligations, in the event of insolvency, holders of our
existing subordinated indebtedness may recover more, ratably, than the holders
of subordinated debt securities.
Unless otherwise specified in the prospectus supplement relating to the
particular series of subordinated debt securities, "SENIOR INDEBTEDNESS" is
defined in the subordinated indenture as:
- the principal of, premium, if any, and interest on all of our
"indebtedness for money borrowed," as defined below, except (A) existing
subordinated indebtedness and other subordinated debt securities issued
under the subordinated indenture, (B) any indebtedness which is expressly
stated to be junior in right of payment to the subordinated debt
securities and (C) indebtedness which is expressly stated to rank equal
with the subordinated debt securities; and
- any deferrals, renewals or extensions of any senior indebtedness.
The term "INDEBTEDNESS FOR MONEY BORROWED" means:
- any of our obligations or any obligation we have guaranteed for the
repayment of borrowed money, whether or not evidenced by bonds,
debentures, notes or other written instruments; and
- any of our deferred payment obligations or any such obligation we have
guaranteed for the payment of the purchase price of property or assets
evidenced by a note or similar instrument.
Unless otherwise specified in the prospectus supplement relating to the
particular series of subordinated debt securities offered by that prospectus
supplement, "OTHER FINANCIAL OBLIGATIONS" means all of our obligations to make
payment pursuant to the terms of financial instruments, such as:
- securities contracts and foreign currency exchange contracts;
- derivative instruments, such as swap agreements, including interest rate
and foreign exchange rate swap agreements, cap agreements, floor
agreements, collar agreements, interest rate agreements, foreign exchange
rate agreements, options, commodity futures contracts, commodity option
contracts; and
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- similar financial instruments, other than obligations on account of
senior indebtedness and obligations on account of indebtedness for money
borrowed ranking equal with or subordinate to the subordinated debt
securities.
As of September 30, 2001, we had an aggregate of approximately $4 billion
in subordinated debt outstanding at the parent company level (excluding junior
subordinated debentures issued to and held by certain of our statutory business
trusts), of which $.5 billion is subordinated to our senior indebtedness and
$3.5 billion is subordinated to our senior indebtedness and other financial
obligations.
The subordinated indenture does not limit or prohibit the incurrence of
additional senior indebtedness or other financial obligations, which may include
indebtedness that is senior to the subordinated debt securities, but subordinate
to our other obligations. Any prospectus supplement relating to a particular
series of subordinated debt securities will set forth the aggregate amount of
our indebtedness senior to the subordinated debt securities as of a recent
practicable date.
The subordinated debt securities will rank equal in right of payment with
each other and with the existing subordinated indebtedness, subject to the
obligations of the holders of subordinated debt securities to pay over amounts
remaining after payment of senior indebtedness to persons in respect of other
financial obligations.
The prospectus supplement may further describe the provisions, if any,
which may apply to the subordination of the subordinated debt securities of a
particular series.
RESTRICTIVE COVENANTS
The subordinated indenture does not contain any significant restrictive
covenants. The prospectus supplement relating to a series of subordinated debt
securities may describe certain restrictive covenants, if any, to which we may
be bound under the subordinated indenture.
DESCRIPTION OF WARRANTS
OFFERED WARRANTS
We may issue warrants that are debt warrants or universal warrants. We may
offer warrants separately or together with one or more additional warrants or
debt securities or any combination of those securities in the form of units, as
described in the applicable prospectus supplement. If we issue warrants as part
of a unit, the accompanying prospectus supplement will specify whether those
warrants may be separated from the other securities in the unit prior to the
warrants' expiration date. Universal warrants issued in the United States may
not be so separated prior to the 91st day after the issuance of the unit, unless
otherwise specified in the applicable prospectus supplement.
Debt Warrants. We may issue, together with debt securities or separately,
warrants for the purchase of debt securities on terms to be determined at the
time of sale. We refer to this type of warrant as a "DEBT WARRANT."
Universal Warrants. We may also issue warrants to purchase or sell, on
terms to be determined at the time of sale:
- securities of an entity not affiliated with us, a basket of those
securities, an index or indices of those securities or any combination of
the above;
- currencies; or
- commodities.
We refer to the property in the above clauses as "WARRANT PROPERTY." We
refer to this type of warrant as a "UNIVERSAL WARRANT." We may satisfy our
obligations, if any, with respect to any universal warrants by delivering the
warrant property or, in the case of warrants to purchase or sell securities or
commodities, the
17
cash value of the securities or commodities, as described in the applicable
prospectus supplement.
FURTHER INFORMATION IN PROSPECTUS SUPPLEMENT
General Terms of Warrants. The applicable prospectus supplement will
contain, where applicable, the following terms of and other information relating
to the warrants:
- the specific designation and aggregate number of, and the price at which
we will issue, the warrants;
- the currency with which the warrants may be purchased;
- the date on which the right to exercise the warrants will begin and the
date on which that right will expire or, if you may not continuously
exercise the warrants throughout that period, the specific date or dates
on which you may exercise the warrants;
- whether the warrants will be issued in fully registered form or bearer
form, in definitive or global form or in any combination of these forms,
although, in any case, the form of a warrant included in a unit will
correspond to the form of the unit and of any debt security included in
that unit;
- any applicable material United States federal income tax consequences;
- the identity of the warrant agent for the warrants and of any other
depositaries, execution or paying agents, transfer agents, registrars,
determination, or other agents;
- the proposed listing, if any, of the warrants or any securities
purchasable upon exercise of the warrants on any securities exchange;
- if applicable, the minimum or maximum amount of the warrants that may be
exercised at any one time;
- information with respect to book-entry procedures, if any;
- the antidilution provisions of the warrants, if any;
- any redemption or call provisions;
- whether the warrants are to be sold separately or with other securities
as part of units; and
- any other terms of the warrants.
Additional Terms of Debt Warrants. The prospectus supplement will contain,
where applicable, the following terms of and other information relating to any
debt warrants:
- the designation, aggregate principal amount, currency and terms of the
debt securities that may be purchased upon exercise of the debt warrants;
- if applicable, the designation and terms of the debt securities with
which the debt warrants are issued and the number of the debt warrants
issued with each of the debt securities;
- if applicable, the date on and after which the debt warrants and the
related debt securities will be separately transferable; and
- the principal amount of debt securities purchasable upon exercise of each
debt warrant, the price at which and the currency in which the debt
securities may be purchased and the method of exercise.
Additional Terms of Universal Warrants. The applicable prospectus
supplement will contain, where applicable, the following terms of and other
information relating to any universal warrants:
- whether the universal warrants are put warrants or call warrants and
whether you or we will be entitled to exercise the warrants;
- the specific warrant property, and the amount or the method for
determining the amount of the warrant property, purchasable or saleable
upon exercise of each universal warrant;
18
- the price at which and the currency with which the underlying securities,
currencies or commodities may be purchased or sold upon the exercise of
each universal warrant, or the method of determining that price;
- whether the exercise price may be paid in cash, by the exchange of any
other security offered with the universal warrants or both and the method
of exercising the universal warrants; and
- whether the exercise of the universal warrants is to be settled in cash
or by delivery of the underlying securities, commodities, or both.
SIGNIFICANT PROVISIONS OF THE WARRANT AGREEMENTS
We will issue the warrants under one or more warrant agreements to be
entered into between us and a bank or trust company, as warrant agent, in one or
more series, which will be described in the prospectus supplement for the
warrants. The forms of warrant agreements are filed as exhibits to the
registration statement. The following summaries of significant provisions of the
warrant agreements and the warrants are not intended to be comprehensive and
holders of warrants should review the detailed provisions of the relevant
warrant agreement for a full description and for other information regarding the
warrants.
Modifications without Consent of Warrantholders. We and the warrant agent
may amend the terms of the warrants and the warrant certificates without the
consent of the holders to:
- cure any ambiguity;
- cure, correct or supplement any defective or inconsistent provision; or
- amend the terms in any other manner which we may deem necessary or
desirable and which will not adversely affect the interests of the
affected holders in any material respect.
Enforceability of Rights of Warrantholders. The warrant agents will act
solely as our agents in connection with the warrant certificates and will not
assume any obligation or relationship of agency or trust for or with any holders
of warrant certificates or beneficial owners of warrants. Any holder of warrant
certificates and any beneficial owner of warrants may, without the consent of
any other person, enforce by appropriate legal action, on its own behalf, its
right to exercise the warrants evidenced by the warrant certificates in the
manner provided for in that series of warrants or pursuant to the applicable
warrant agreement. No holder of any warrant certificate or beneficial owner of
any warrants will be entitled to any of the rights of a holder of the debt
securities or any other warrant property, if any, purchasable upon exercise of
the warrants, including, without limitation, the right to receive the payments
on those debt securities or other warrant property or to enforce any of the
covenants or rights in the relevant indenture or any other similar agreement.
Registration and Transfer of Warrants. Subject to the terms of the
applicable warrant agreement, warrants in registered, definitive form may be
presented for exchange and for registration of transfer at the corporate trust
office of the warrant agent for that series of warrants, or at any other office
indicated in the prospectus supplement relating to that series of warrants,
without service charge. However, the holder will be required to pay any taxes
and other governmental charges as described in the warrant agreement. The
transfer or exchange will be effected only if the warrant agent for the series
of warrants is satisfied with the documents of title and identity of the person
making the request.
New York Law to Govern. The warrants and each warrant agreement will be
governed by, and construed in accordance with, the laws of the State of New
York.
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PLAN OF DISTRIBUTION
We may sell securities:
- to the public through a group of underwriters managed or co-managed by
one or more underwriters, which may include Robertson Stephens, Inc.,
Fleet Securities, Inc., or other affiliates;
- through one or more agents, which may include Robertson Stephens, Fleet
Securities or other affiliates; or
- directly to purchasers.
The distribution of the securities may be effected 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 time of sale;
- at prices related to those prevailing market prices; or
- at negotiated prices.
Each prospectus supplement will describe the method of distribution of the
securities and any applicable restrictions.
The prospectus supplement with respect to the securities of a particular
series will describe the terms of the offering of the securities, including the
following:
- the name of the agent or the name or names of any underwriters;
- the public offering or purchase price;
- any discounts and commissions to be allowed or paid to the agent or
underwriters;
- all other items constituting underwriting compensation;
- any discounts and commissions to be allowed or paid to dealers; and
- any exchanges on which the securities will be listed.
We may agree to enter into an agreement to indemnify the agents and the
several underwriters against certain civil liabilities, including liabilities
under the Securities Act or to contribute to payments the agents or the
underwriters may be required to make.
If so indicated in the applicable prospectus supplement, we will authorize
underwriters or other persons acting as our agents to solicit offers by certain
institutions to purchase debt securities or warrants from us pursuant to delayed
delivery contracts providing for payment and delivery on the date stated in the
prospectus supplement. Each contract will be for an amount not less than, and
the aggregate amount of securities sold pursuant to those contracts will be
equal to, the respective amounts stated in the prospectus supplement.
Institutions with whom the contracts, when authorized, may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions and other institutions, but
will in all cases be subject to our approval. Delayed delivery contracts will
not be subject to any conditions except that:
- the purchase by an institution of the debt securities or warrants covered
under that contract will not at the time of delivery be prohibited under
the laws of the jurisdiction to which that institution is subject; and
- if the debt securities or warrants are also being sold to underwriters
acting as principals for their own account, the underwriters will have
purchased those debt securities or warrants not sold for delayed
delivery. The underwriters and other persons acting as our agents will
not have any responsibility in respect of the validity or performance of
delayed delivery contracts.
Certain of the underwriters and their associates and affiliates may be
customers of, have borrowing relationships with, engage in other transactions
with, and/or perform services, including investment banking services, for, us or
one or more of our affiliates in the ordinary course of business.
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Robertson Stephens and Fleet Securities are our wholly-owned subsidiaries.
Accordingly, the distribution of securities by Robertson Stephens and/or Fleet
Securities will conform to the requirements set forth in Rule 2720 of the
Conduct Rules of the National Association of Securities Dealers, Inc. In
accordance with Rule 2720, no member of the NASD participating in an
underwriting will be permitted to confirm sales to accounts over which it
exercises discretionary authority without prior specific written approval of the
customer.
Certain of the underwriters may use this prospectus and the accompanying
prospectus supplement for offers and sales related to market-making transactions
in the securities. These underwriters may act as principal or agent in these
transactions, and the sales will be made at prices related to prevailing market
prices at the time of sale.
EXPERTS
Our consolidated financial statements incorporated in this prospectus by
reference to our Current Report on Form 8-K dated May 4, 2001, have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
LEGAL OPINIONS
The validity of the securities offered hereby will be passed upon for us by
Edwards & Angell, LLP, 101 Federal Street, Boston, Massachusetts 02110-1800.
Unless otherwise specified in the applicable prospectus supplement, Sidley
Austin Brown & Wood LLP, 875 Third Avenue, New York, New York 10022, will pass
upon certain matters for the underwriters.
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[FLEETBOSTON FINANCIAL LOGO]
FLEETBOSTON FINANCIAL CORPORATION
SENIOR MEDIUM-TERM NOTES, SERIES T
SUBORDINATED MEDIUM-TERM NOTES, SERIES U
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
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PROSPECTUS SUPPLEMENT
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BEAR, STEARNS & CO. INC.
FLEET SECURITIES, INC.
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
MORGAN STANLEY
ROBERTSON STEPHENS
SALOMON SMITH BARNEY
NOVEMBER 27, 2001
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