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Filed pursuant to Rule 424(b)(3)
Registration No. 333-79981
PROSPECTUS SUPPLEMENT
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(TO PROSPECTUS DATED JUNE 23, 1999)
$600,000,000
[FIRSTAR LOGO]
FIRSTAR CORPORATION
MEDIUM-TERM NOTES, SERIES A
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
We plan to offer and sell Medium-Term Notes, Series A with various terms,
including the following:
- - Stated maturities of 9 months or more from date of issue
- - Redemption and/or repayment provisions, if applicable, whether mandatory or at
the option of us or the holders of notes
- - Payments in U.S. dollars or one or more foreign currencies
- - Minimum denominations of $1,000 or other specified denominations for foreign
currencies
- - Book-entry or certificated form
- - Interest at fixed or floating rates, or no interest at all. The floating
interest rate may be based on one or more of the following indices plus or
minus a spread and/or multiplied by a spread multiplier:
- CD rate
- commercial paper rate
- federal funds rate
- LIBOR
- treasury rate
- prime rate
- CMT rate
- eleventh district cost of funds rate
- such other base rate as is set forth in the applicable pricing supplement
We will specify the financial terms for each note, which may be different
from the terms described in this prospectus supplement, in the applicable
pricing supplement. The notes will constitute a series of senior securities (as
that term is used in the accompanying prospectus) and will rank on an equal
basis with our other unsecured unsubordinated indebtedness.
INVESTING IN NOTES INVOLVES INDEX AND CURRENCY RISKS. SEE "RISK FACTORS"
ON PAGE S-3.
<TABLE>
<CAPTION>
PRICE TO AGENTS' PROCEEDS
PUBLIC(1) COMMISSION(1)(2) TO FIRSTAR(1)
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<S> <C> <C> <C>
Per note.............................................. 100% .125% - .750% 99.250% - 99.875%
Total(1).............................................. $600,000,000 $750,000 - $4,500,000 $595,500,000 - $599,250,000
</TABLE>
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(1) Or the equivalent thereof in one or more foreign or composite currencies.
(2) Commissions for the sale of notes with a maturity of greater than 30 years
will be agreed to by us and the applicable Agent at the time of sale.
We may sell notes to the Agents referred to below as principal for resale at
varying or fixed offering prices or through the agents using their reasonable
efforts on our behalf. If we sell other securities referred to in the
accompanying prospectus, the aggregate initial offering price of the notes that
we may offer and sell under this prospectus supplement is subject to reduction.
MERRILL LYNCH & CO.
BANC OF AMERICA SECURITIES LLC
BEAR, STEARNS & CO. INC.
DONALDSON, LUFKIN & JENRETTE
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MORGAN STANLEY DEAN WITTER
SALOMON SMITH BARNEY
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS JULY 19, 1999.
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TABLE OF CONTENTS
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PAGE
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PROSPECTUS SUPPLEMENT
Disclosure Regarding Forward-Looking Statements............. S-3
About This Prospectus Supplement; Pricing Supplements....... S-3
Risk Factors................................................ S-3
Description of Notes........................................ S-6
Certain United States Federal Income Tax Consequences....... S-25
Plan of Distribution........................................ S-33
Legal Matters............................................... S-34
PROSPECTUS
Firstar..................................................... 2
Where You Can Find More Information......................... 2
Use of Proceeds............................................. 4
Ratios of Earnings to Fixed Charges and to Combined Fixed
Charges and Preferred Stock Dividends..................... 4
Certain Regulatory Matters.................................. 5
Description of Debt Securities.............................. 10
Description of Preferred Shares............................. 22
Description of Depositary Shares............................ 27
Description of Common Stock................................. 30
Description of Securities Warrants.......................... 31
European Monetary Union..................................... 35
Plan of Distribution........................................ 36
Validity of Securities...................................... 36
Experts..................................................... 36
Forward-Looking Statements.................................. 37
</TABLE>
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT, THE PROSPECTUS AND THE APPLICABLE
PRICING SUPPLEMENT. NO ONE IS AUTHORIZED TO GIVE INFORMATION OTHER THAN THAT
CONTAINED IN THIS PROSPECTUS SUPPLEMENT, THE PROSPECTUS AND THE PRICING
SUPPLEMENT AND IN THE DOCUMENTS REFERRED TO IN THIS PROSPECTUS SUPPLEMENT, THE
PROSPECTUS AND THE PRICING SUPPLEMENT. WE HAVE NOT, AND THE AGENTS HAVE NOT,
AUTHORIZED ANY OTHER PERSON TO PROVIDE YOU WITH DIFFERENT INFORMATION. IF ANYONE
PROVIDES YOU WITH DIFFERENT OR INCONSISTENT INFORMATION, YOU SHOULD NOT RELY ON
IT.
WE ARE NOT, AND THE AGENTS 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 APPEARING IN THIS PROSPECTUS SUPPLEMENT, THE
PROSPECTUS AND THE PRICING SUPPLEMENT, AS WELL AS INFORMATION WE PREVIOUSLY
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND INCORPORATED BY REFERENCE,
IS ACCURATE AS OF THE DATE ON THE FRONT COVER OF EACH SUCH DOCUMENT ONLY. OUR
BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS AND PROSPECTS MAY HAVE
CHANGED SINCE THAT DATE.
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References in this prospectus supplement, the accompanying prospectus and
the pricing supplement to "we," "us," "our" and "Firstar" are to Firstar
Corporation.
In this prospectus supplement, the accompanying prospectus and the pricing
supplement, unless otherwise specified or the context otherwise requires,
references to "dollars," "$" and "U.S.$" are to United States dollars.
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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus supplement, the accompanying prospectus and the applicable
pricing supplement contain or incorporate statements that constitute
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. These statements are subject to the safe harbor created by such
sections and appear in a number of places in this prospectus supplement, in the
accompanying prospectus, in the applicable pricing supplement and in the
documents incorporated herein and therein by reference. These statements may
include, among other matters, the intent, belief or current expectations of
Firstar or its officers and information concerning possible or assumed future
results of operations of Firstar. Prospectus investors are cautioned that any
such forward-looking statements are not guarantees of future performance, and
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements to differ materially from the
future results, performance or achievements expressed or implied in such
forward-looking statements. Important factors that could cause future results to
differ include the effects of competition, legislative and regulatory changes,
changes in the economy, the factors discussed below under "Risk Factors", and
other factors discussed in this and other filings by Firstar with the Securities
and Exchange Commission. When used in Firstar's documents or oral presentations,
the words "anticipate," "estimate," "expect," "objective," "projection,"
"forecast," "goal" or similar words are intended to identify forward-looking
statements.
ABOUT THIS PROSPECTUS SUPPLEMENT; PRICING SUPPLEMENTS
We may use this prospectus supplement, together with the attached
prospectus and an attached pricing supplement, to offer our medium-term-notes,
Series A (the "NOTES") from time to time.
This prospectus supplement sets forth certain terms of the notes that we
may offer. It supplements the description of the debt securities contained in
the attached prospectus. If information in this prospectus supplement is
inconsistent with the prospectus, this prospectus supplement will apply and will
supersede that information in the prospectus.
Each time we issue notes, we will attach a pricing supplement to this
prospectus supplement. The pricing supplement will contain the specific
description of the notes we are offering and the terms of the offering. The
pricing supplement may also add, update or change information in this prospectus
supplement or the attached prospectus. Any information in the pricing
supplement, including any changes in the method of calculating interest on any
note, that is inconsistent with this prospectus supplement will apply and will
supersede that information in this prospectus supplement.
It is important for you to read and consider all information contained in
this prospectus supplement and the attached prospectus and pricing supplement in
making your investment decision. You should also read and consider the
information in the documents we have referred you to in "Where You Can Find More
Information" on page 2 of the attached prospectus.
RISK FACTORS
An investment in the notes involves certain risks. Before you decide to
purchase any of the notes, you should carefully consider the following risk
factors, in addition to the other information included in this prospectus
supplement and the attached prospectus. In particular, risks involving notes
denominated in currencies other than U.S. dollars generally depend on factors
over which we have no control and which cannot be readily foreseen, such as
economic and political events and the supply of and demand for the relevant
currencies.
FLUCTUATIONS IN EXCHANGE RATES COULD DECREASE THE VALUE OF NOTES DENOMINATED IN
CURRENCIES OTHER THAN U.S. DOLLARS.
Your investment in a note having a specified currency other than U.S.
dollars entails significant risks that are not associated with a similar
investment in a security denominated in U.S. dollars. Those risks include the
possibility of significant changes in rates of exchange between the U.S. dollar
and that
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specified currency. In recent years, rates of exchange between the U.S. dollar
and certain currencies have been highly volatile, and that volatility may be
expected in the future. Fluctuations in any particular exchange rate that have
occurred in the past are not necessarily indicative, however, of fluctuations in
the rate that may occur during the term of any note. Depreciation of the
specified currency for a note against the U.S. dollar would result in a decrease
in the effective yield of that note below its coupon rate and, in certain
circumstances, could result in a substantial loss to the investor on a U.S.
dollar basis.
GOVERNMENTS COULD IMPOSE EXCHANGE CONTROLS DECREASING EXCHANGE RATES AND OUR
ABILITY TO MAKE PAYMENTS IN SPECIFIED CURRENCIES OTHER THAN U.S. DOLLARS.
Governments have in the past imposed, and may in the future impose,
exchange controls that could affect exchange rates as well as the availability
of a specified currency for making payments in respect of notes denominated in
that currency. At present, we have identified the following currencies in which
payments of principal, premium and interest on notes may be made: Australian
dollars, Canadian dollars, Danish kroner, English pounds sterling, French
francs, German deutsche marks, Italian lire, Japanese yen, New Zealand dollars,
U.S. dollars and Euros. However, we may determine at any time to issue notes
with specified currencies other than those listed. Exchange controls will not
restrict or prohibit payments of principal, premium or interest in any specified
currency. Even if there are no actual exchange controls, it is possible that, on
a payment date, the currency in which amounts then due would not be available to
us. In that event, we will make such payments in the manner set forth under
"Description of Notes -- Payment of Principal and Interest" above.
This prospectus supplement and the accompanying prospectus do not describe
all the risks of an investment in notes denominated in a currency other than
U.S. dollars, and we disclaim any responsibility to advise prospective
purchasers of those risks as they exist at the date of this prospectus
supplement or as such risks may change from time to time. You should consult
your own financial and legal advisors as to the risks entailed by an investment
in notes denominated in a currency other than U.S. dollars. Such notes are not
an appropriate investment for persons who are unsophisticated with respect to
foreign currency transactions.
The information set forth in this prospectus supplement is directed to
prospective purchasers of notes who are U.S. residents, and we disclaim any
responsibility to advise prospective purchasers who are residents of countries
other than the U.S. with respect to any matters that may affect the purchase or
holding of, or receipt of payments of principal, premium or interest in respect
of, notes. Those persons should consult their own advisors with regard to such
matters.
Any pricing supplement relating to notes having a specified currency other
than U.S. dollars will contain a description of any material exchange controls
affecting such currency and any other required information concerning such
currency.
WE MAY MAKE PAYMENTS REQUIRED TO BE MADE IN SPECIFIED CURRENCIES OTHER THAN U.S.
DOLLARS IN U.S. DOLLARS IF THOSE SPECIFIED CURRENCIES ARE UNAVAILABLE, POSSIBLY
SUBJECTING HOLDERS OF NOTES TO UNFAVORABLE EXCHANGE RATES.
Except as set forth below, if payment in respect of a note is required to
be made in a specified currency other than U.S. dollars and that currency is
unavailable due to the imposition of exchange controls or other circumstances
beyond our control or is no longer used by the government of the country issuing
that currency or for the settlement of transactions by public institutions of or
within the international banking community, then all payments in respect of that
note shall be made in U.S. dollars until that currency is again available or so
used. The amounts so payable on any date in that currency shall be converted
into U.S. dollars on the basis of the most recently available market exchange
rate for that currency or as otherwise indicated in the applicable pricing
supplement. Any payment in respect of that note made under such circumstances in
U.S. dollars will not constitute an Event of Default (as defined in the
Indenture) under the Indenture under which such note shall have been issued.
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All determinations referred to above made by the Trustee or the exchange
rate agent, as the case may be, will be at its sole discretion and will, in the
absence of manifest error, be conclusive for all purposes and binding on holders
of notes.
COURT AWARDS FOR NOTES DENOMINATED IN CURRENCIES OTHER THAN U.S. DOLLARS WILL BE
MADE IN THOSE CURRENCIES AND CONVERTED TO U.S. DOLLARS AT EXCHANGE RATES THAT
MAY BE UNFAVORABLE.
The notes will be governed by and construed in accordance with the laws of
the State of New York. Courts in the United States customarily have not rendered
judgments for money damages denominated in any currency other than the U.S.
dollar. A 1987 amendment to the Judiciary Law of the State of New York provides,
however, that 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. This rate of exchange may be
unfavorable.
THE VALUE OF INDEXED NOTES MAY BE DECREASED SUBSTANTIALLY AS A RESULT OF
SIGNIFICANT CHANGE IN THE PRICES OF THE ITEMS THAT MAKE UP THE INDEX.
An investment in indexed notes may entail significant risks that are not
associated with a similar investment in a debt instrument that has a fixed
principal amount, is denominated in U.S. dollars and bears interest at either a
fixed rate or a floating rate determined by reference to nationally published
interest rate references. The risks of a particular indexed note will depend on
its terms, but may include, among other risks, the possibility of significant
changes in the prices of securities, currencies, intangibles, goods, articles or
commodities or of other objective price, economic or other measures making up
the relevant index. Those risks generally depend on factors over which we have
no control and which cannot readily be foreseen, such as economic and political
events and the supply of and demand on which indices are based. In recent years,
currency exchange rates and prices for various assets on which indices are based
have been highly volatile, and such volatility may be expected in the future.
Fluctuations in any such rates or prices that have occurred in the past are not
necessarily indicative, however, of fluctuations that may occur during the term
of any indexed note.
In considering whether to purchase indexed notes, you should be aware that
the calculation of amounts payable in respect of indexed notes may involve
reference to an index determined by an affiliate of ours or to prices which are
published solely by third parties or entities which are not subject to
regulation under the laws of the United States. The risk of loss as a result of
the linkage of principal or interest payments on indexed notes to an index and
to the assets on which indices are based can be substantial. Prospective
purchasers should consult their own financial and legal advisors as to the risks
entailed by an investment in indexed notes.
IT MAY BE VERY DIFFICULT FOR HOLDERS TO SELL THEIR NOTES TO THIRD PARTIES.
We cannot assure you a trading market for your notes will ever develop or
be maintained. Many factors independent of our creditworthiness affect the
trading market. These factors include:
- the complexity and volatility of the index or formula applicable to
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 debt securities linked to the index or formula
applicable to the notes, and
- the level, direction and volatility of market interest rates generally.
In addition, certain notes have a more limited trading market and
experience more price volatility because they were designed for specific
investment objectives or strategies. There may be a limited number
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of buyers when you decide to sell such notes. This may affect the price you
receive for such notes or your ability to sell such notes at all. You should not
purchase notes unless you understand and know you can bear these investment
risks.
DESCRIPTION OF NOTES
We have summarized certain terms of the notes, below. The summary below
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the debt securities described in the
prospectus that we refer to in this document.
GENERAL
We will issue the notes under a senior debt indenture dated June 22, 1999
(the "INDENTURE"), with Citibank, N.A., as Trustee. At the date of this
prospectus supplement, the notes to be offered pursuant to this prospectus
supplement are limited to an aggregate initial public offering price or purchase
price of up to $600,000,000 or the equivalent of that amount in one or more
foreign or composite currencies, which amount is subject to reduction as a
result of the sale of other securities under the registration statement of which
this prospectus supplement and the accompanying prospectus form a part. We may
increase the aggregate amount of notes in the future. The U.S. dollar equivalent
of the public offering price or purchase price of a note denominated in one or
more foreign currencies or currency units (each a "SPECIFIED CURRENCY") will be
determined on the basis of the noon buying rate in New York City for cable
transfers in foreign currencies as certified for customs purposes by the Federal
Reserve Bank of New York (the "MARKET EXCHANGE RATE") for that specified
currency on the applicable issue date. That determination will be made by us or
a third party, which may be Firstar Bank, N.A. or another affiliate of ours, as
exchange rate agent (the "EXCHANGE RATE AGENT"). The notes will be unsecured,
will constitute a series of senior securities (as that term is used in the
accompanying prospectus), and will rank on an equal basis with all our other
unsecured unsubordinated indebtedness.
The notes will be offered on a continuous basis. Each note will be issued
initially as either a book-entry note (a "BOOK-ENTRY NOTE") or, if specified in
the applicable pricing supplement, a certificated note. Except as described in
the prospectus under "Description of Debt Securities -- Temporary Global
Securities," book-entry notes will not be issuable as certificated notes. See
"Book-Entry System" below.
Unless otherwise specified in the applicable pricing supplement, the
authorized denominations of notes denominated in U.S. dollars will be $1,000 and
any larger amount that is an integral multiple of $1,000, and the authorized
denominations of notes having a specified currency other than U.S. dollars will
be the approximate equivalents of the U.S. dollar amounts in the specified
currency.
Unless otherwise specified in the applicable pricing supplement, each note
will mature on a Business Day nine months or more from its date of issue, as
selected by the purchaser of the note and agreed to by us. We may, at our
option, extend the maturity date of the notes. Each note may also be subject to
redemption at our option, or repayment at the option of the holder, prior to the
stated maturity date of the note. Each floating rate note will mature on an
interest payment date for that note.
The pricing supplement relating to a note will describe the following
terms:
- the specified currency for that note;
- whether that note bears interest at a fixed rate or a floating rate or is
an amortizing note and/or an indexed note;
- the price (expressed as a percentage of the aggregate principal amount or
face amount of the note) at which that note will be issued;
- the date on which that note will be issued (the "ORIGINAL ISSUE DATE");
- the date of stated maturity of the note;
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- if that note bears interest at a fixed rate, the rate per annum at which
that note will bear interest, if any, and whether and the manner in which
that rate may be changed prior to its date of stated maturity;
- if that note bears interest at a floating rate, the base rate, the
initial interest rate, the interest reset period or the interest reset
dates, the interest payment dates, and, if applicable, the index
maturity, the maximum interest rate, the minimum interest rate, the
spread or spread multiplier, and any other terms relating to the
particular method of calculating the interest rate for that note and
whether and the manner in which the spread or spread multiplier may be
changed prior to its date of stated maturity;
- whether that note is an original issue discount note;
- if that note is an amortizing note, the terms for repayment prior to its
stated maturity date;
- if that note is an indexed interest rate note, the manner in which the
amount of any interest payment will be determined;
- if that note is an indexed principal note, its face amount and the manner
in which the principal amount payable at the stated maturity date of the
note will be determined;
- whether that note may be redeemed at our option, or repaid at the option
of the holder, prior to the stated maturity date as described under
"-- Optional Redemption, Repayment and Repurchase" below and, if so, the
provisions relating to that redemption or repayment, including, in the
case of an original issue discount note or indexed note, the information
necessary to determine the amount due upon redemption or repayment;
- whether that note is subject to an optional extension beyond its stated
maturity date as described under "-- Extension of Maturity" below; and
- any other terms of that note not inconsistent with the provisions of the
indenture under which that note will be issued.
We may use the term "BUSINESS DAY" to mean 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 foreign currency
notes, a "Business Day" does not include a day on which commercial banks are
authorized or required by law, regulation or executive order to close in the
principal financial center of the country issuing the specified currency (or, if
the specified currency is Euro, that 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, that 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 Designated LIBOR Currency) in London.
We may use the term "PRINCIPAL FINANCIAL CENTER" to mean (a) the capital
city of the country issuing the specified currency, or (b) the capital city of
the country to which the Designated LIBOR Currency relates, as applicable,
except, in the case of (a) or (b) above, that with respect to U.S. dollars,
Australian dollars, Canadian dollars, Deutsche marks, Dutch guilders, Portuguese
escudos, South African rand and Swiss francs, the "principal financial center"
shall be the City of New York, Sydney and (solely in the case of the specified
currency) Melbourne, Toronto, Frankfurt, Amsterdam, London (solely in the case
of the Designated LIBOR Currency), Johannesburg and Zurich, respectively.
A "basis point" or "bp" equals one one-hundredth of a percentage point.
PAYMENT OF PRINCIPAL AND INTEREST
The principal of and any premium and interest on each note are payable by
us in the specified currency for that note. If the specified currency for a note
is other than U.S. dollars, we will (unless otherwise specified in the
applicable pricing supplement) arrange to convert all payments in respect of
that
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note into U.S. dollars in the manner described in the following paragraph. The
holder of a note having a specified currency other than U.S. dollars may (if the
applicable pricing supplement and that note so indicate) elect to receive all
payments in respect of that note in the specified currency by delivery of a
written notice to the Trustee or a paying agent for that note not later than
fifteen calendar days prior to the applicable payment date, except under the
circumstances described under "Risk Factors -- Currency Risks -- Payment
Currency" below. That election will remain in effect until revoked by written
notice to such Trustee or paying agent received not later than fifteen calendar
days prior to the applicable payment date.
In the case of a note having a specified currency other than U.S. dollars,
the amount of any U.S. dollar payment in respect of that note will be determined
by the exchange rate agent based on the highest firm bid quotation expressed in
U.S. dollars received by the exchange rate agent at approximately 11:00 a.m.,
New York City time, on the second Business Day preceding the applicable payment
date (or, if no such rate is quoted on that date, the last date on which such
rate was quoted), from three (or, if three are not available, then two)
recognized foreign exchange dealers in The City of New York (one of which may be
one of our Agents (as defined herein) and another of which may be the exchange
rate agent) selected by the exchange rate agent, for the purchase by the quoting
dealer, for settlement on that payment date, of the aggregate amount of that
specified currency payable on that payment date in respect of all notes
denominated in that specified currency. All currency exchange costs will be
borne by the holders of those notes by deductions from those payments. If no
such bid quotations are available, those payments will be made in that specified
currency, unless that specified currency is unavailable due to the imposition of
exchange controls or to other circumstances beyond our control, in which case
those payments will be made as described under "Risk Factors -- Currency
Risks -- Payment Currency" below.
Unless otherwise specified in the applicable pricing supplement, U.S.
dollar payments of interest on notes (other than interest payable at the stated
maturity date) will be made, except as provided below, by check mailed to the
registered holders of those notes (which, in the case of global securities
representing notes issued in book-entry form, will be a nominee of the
Depositary); provided, however, that, in the case of a note issued between a
regular record date and the related interest payment date, unless otherwise
specified in the related pricing supplement, interest for the period beginning
on the original issue date for that note and ending on such interest payment
date shall be paid on the next succeeding interest payment date to the
registered holder of that note on the related regular record date. A holder of
$10,000,000 (or the equivalent of $10,000,000 in a currency other than U.S.
dollars) or more in aggregate principal amount of notes of like tenor and term
shall be entitled to receive such U.S. dollar payments by wire transfer of
immediately available funds, but only if appropriate wire transfer instructions
have been received in writing by the Trustee or a paying agent not later than
fifteen calendar days prior to the applicable interest payment date.
Simultaneously with the election by any holder to receive payments in a currency
other than U.S. dollars (as provided above), such holder shall provide
appropriate wire transfer instructions to the Trustee or paying agent. Unless
otherwise specified in the applicable pricing supplement, we will pay principal
and any premium and interest payable at the stated maturity date nine months or
more from the date of issue of a note in immediately available funds upon
surrender of such note at the corporate trust office or agency of the Trustee in
The City of New York.
Notwithstanding the foregoing, while the notes are represented by one or
more book-entry notes registered in the name of DTC or its nominee, payments of
principal of, and premium, if any, and interest on such book-entry notes will be
made to DTC or its nominee, as the case may be, by wire transfer, to the extent,
in the funds and in the manner required by agreements with, or regulations or
procedures prescribed by, DTC or its nominee, and otherwise in accordance with
such agreements, regulations and procedures.
Unless otherwise specified in the applicable pricing supplement, if the
principal of any note issued at a discount is declared to be due and payable
immediately, the amount of principal due and payable with respect to that note
will be limited to the aggregate principal amount (or face amount, in the case
of an indexed principal note) of that note multiplied by the sum of its issue
price (expressed as a percentage of the aggregate principal amount) plus the
original issue discount amortized from the date of issue to the
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date of declaration. This amortization will be calculated using the "interest
method" (computed in accordance with generally accepted accounting principles in
effect on the date of declaration).
Unless otherwise specified in the applicable pricing supplement, the
regular record date with respect to any payment date for interest (which will
generally be semi-annual for fixed rate notes on each March 1 and September 1
(each an "INTEREST PAYMENT DATE")) for a floating rate note or for an indexed
rate note shall be the date (whether or not a Business Day) fifteen calendar
days immediately preceding that interest payment date, and for a fixed rate note
(unless otherwise specified in the applicable pricing supplement) will be the
March 15 or September 15 (whether or not a Business Day) immediately preceding
that interest payment date.
Interest rates offered by us with respect to the notes may differ depending
upon, among other factors, the aggregate principal amount of notes purchased in
any single transaction. Notes with different variable terms other than interest
rates may also be offered concurrently to different investors. Interest rates or
formulas and other terms of notes are subject to change by us from time to time,
but no such change will affect any note previously issued or as to which an
offer to purchase has been accepted by us.
FIXED RATE NOTES
Each fixed rate note will bear interest from its original issue date, or
from the last interest payment date to which interest has been paid or duly
provided for, at the rate per annum stated in the applicable pricing supplement
until the principal amount of that note is paid or made available for payment,
except as described below under "-- Subsequent Interest Periods" and
"-- Extension of Maturity," and except that if so specified in the applicable
pricing supplement, the rate of interest payable on certain fixed rate notes may
be subject to adjustment from time to time as described in such pricing
supplement. Unless otherwise set forth in the applicable pricing supplement, we
will pay interest on each fixed rate note semiannually in arrears on each
interest payment date. If an interest payment date with respect to any fixed
rate note would otherwise be a day that is not a Business Day, that interest
payment date will not be postponed; provided, however, that any payment required
to be made in respect of such note on a date (including the day of stated
maturity of the note) that is not a Business Day for such note need not be made
on that date, but may be made on the next succeeding Business Day with the same
force and effect as if made on that date, and no additional interest shall
accrue as a result of such delayed payment. Each payment of interest in respect
of an interest payment date shall include interest accrued through the day
before such interest payment date. Interest on fixed rate notes will be computed
on the basis of a 360-day year of twelve 30-day months.
FLOATING RATE NOTES
Unless otherwise specified in the applicable pricing supplement, each
floating rate note will bear interest from its original issue date to the first
interest reset date (such period, the "INITIAL INTEREST PERIOD") for such note
at the initial interest rate set forth on the face of that note and in the
applicable pricing supplement. The interest rate on such note for each interest
reset period (and for the initial interest period if so specified in the
applicable pricing supplement) will be determined by reference to an interest
rate basis (the "BASE RATE"), plus or minus the spread, if any, or multiplied by
the spread multiplier, if any. The "SPREAD" is the number of basis points that
may be specified in the applicable pricing supplement as being applicable to
such note, and the "SPREAD MULTIPLIER" is the percentage that may be specified
in the applicable pricing supplement as being applicable to such note, except in
each case as described below under "-- Subsequent Interest Periods" and
"-- Extension of Maturity," and except that if so specified in the applicable
pricing supplement, the spread or spread multiplier on certain floating rate
notes may be subject to adjustment from time to time as described in such
pricing supplement.
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<PAGE> 10
The applicable pricing supplement will designate one of the following base
rates as applicable to a floating rate note:
- the CD rate (a "CD RATE NOTE");
- the commercial paper rate (a "COMMERCIAL PAPER RATE NOTE");
- the federal funds rate (a "FEDERAL FUNDS RATE NOTE");
- LIBOR (a "LIBOR NOTE");
- the treasury rate (a "TREASURY RATE NOTE");
- the prime rate (a "PRIME RATE NOTE");
- CMT rate (a "CMT NOTE");
- the eleventh district cost of funds rate (an "ELEVENTH DISTRICT COST OF
FUNDS RATE NOTE"); or
- such other base rate as is set forth in such pricing supplement and in
such note.
The "INDEX MATURITY" for any floating rate note is the period of maturity
of the instrument or obligation from which the base rate is calculated.
"H.15(519)" means the publication entitled "Statistical Release H.15(519),
'Selected Interest Rates,' " or any successor publication, published by the
Board of Governors of the Federal Reserve System. "COMPOSITE QUOTATIONS" means
the daily statistical release entitled "Composite 3:30 p.m. Quotations for U.S.
Government Securities" published by the Federal Reserve Bank of New York. "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.bog.frb.fed.us/releases/h15/update, or any successor site or
publication.
As specified in the applicable pricing supplement, a floating rate note may
also have either or both of the following (in each case expressed as a rate per
annum on a simple interest basis): (a) a maximum limitation, or ceiling, on the
rate at which interest may accrue during any interest period ("MAXIMUM INTEREST
RATE"), and (b) a minimum limitation, or floor, on the rate at which interest
may accrue during any interest period ("MINIMUM INTEREST RATE"). In addition to
any maximum interest rate that may be applicable to any floating rate note, the
interest rate on a floating rate note will in no event be higher than the
maximum rate permitted by applicable law, as the same may be modified by U.S.
law of general application. The notes will be governed by the law of the State
of New York and, under such law as of the date of this prospectus supplement,
the maximum rate of interest under provisions of the penal law, with certain
exceptions, is 25% per annum on a simple interest basis. Such maximum rate of
interest only applies to obligations that are less than $2,500,000.
Unless otherwise specified in the applicable pricing supplement, the
Trustee will be the "CALCULATION AGENT." Upon 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 will become effective as a result
of a determination on a date (the "INTEREST RATE DETERMINATION DATE") for the
next interest reset date with respect to the 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 (a) the tenth calendar day after the interest determination date, or,
if this day is not a Business Day, the next succeeding Business Day, or (b) the
Business Day immediately preceding the applicable interest payment date or the
stated maturity date, as the case may be.
The interest rate on each floating rate note will be reset daily, weekly,
monthly, quarterly, semiannually or annually (such period being the "INTEREST
RESET PERIOD" for such note, and the first day of each interest reset period
being an "INTEREST RESET DATE"), as specified in the applicable pricing
supplement. Unless otherwise specified in the applicable pricing supplement, the
interest reset dates will be, in the case of floating rate notes that reset
daily, each Business Day; in the case of floating rate notes (other than
treasury rate notes) that reset weekly, Wednesday of each week; in the case of
treasury rate notes that reset weekly, Tuesday of each week (except as provided
below under "-- Treasury Rate Notes"); in the
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case of floating rate notes that reset monthly, the third Wednesday of each
month; in the case of floating rate notes that reset quarterly, the third
Wednesday of March, June, September and December of each year; in the case of
floating rate notes that reset semiannually, the third Wednesday of each of two
months of each year specified in the applicable pricing supplement; and, in the
case of floating rate notes that reset annually, the third Wednesday of one
month of each year specified in the applicable pricing supplement. If an
interest reset date for any floating rate note would otherwise be a day that is
not a Business Day, that interest reset date shall be postponed to the next
succeeding Business Day, except that, in the case of a LIBOR note, if that
Business Day is in the next succeeding calendar month, that interest reset date
shall be the immediately preceding Business Day.
Unless otherwise specified in the applicable pricing supplement, the rate
of interest that goes into effect on any interest reset date shall be determined
on the interest determination date preceding that interest reset date, as
further described below. Unless otherwise specified in the applicable pricing
supplement the interest determination date pertaining to an interest reset date
for a CD rate note or any floating rate note for which the interest rate is
determined with reference to the CD rate (the "CD RATE INTEREST DETERMINATION
DATE"), for a commercial paper rate note or any floating rate note for which the
interest rate is determined with reference to the commercial paper rate (the
"COMMERCIAL PAPER RATE INTEREST DETERMINATION DATE"), for a federal funds rate
note or any floating rate note for which the interest rate is determined with
reference to the federal funds rate (the "FEDERAL FUNDS RATE INTEREST
DETERMINATION DATE"), or for a prime rate note or any floating rate note for
which the interest rate is determined with reference to the prime rate (the
"PRIME RATE INTEREST DETERMINATION DATE"), or for a CMT rate note or any
floating rate note for which the interest rate is determined with reference to
the CMT rate (the "CMT RATE INTEREST DETERMINATION DATE"), will be the second
Business Day preceding the interest reset date.
The interest determination date pertaining to an interest reset date for a
LIBOR note or any floating rate note for which the interest rate is determined
with reference to LIBOR (the "LIBOR RATE INTEREST DETERMINATION DATE") will be
the second London Business Day immediately preceding the interest reset date
with respect to that note. The interest determination date pertaining to an
interest reset date for an eleventh district cost of funds rate note or any
floating rate note for which the interest rate is determined with reference to
the eleventh district cost of funds rate (the "ELEVENTH DISTRICT COST OF FUNDS
RATE INTEREST DETERMINATION DATE") will be the last working day of the month
immediately preceding the applicable interest reset date on which the Federal
Home Loan Bank of San Francisco publishes the Index (as defined below). The
interest determination date pertaining to an interest reset date for a treasury
rate note or any floating rate note for which the interest rate is determined
with reference to the treasury rate (the "TREASURY RATE INTEREST DETERMINATION
DATE") will be the day of the week on which Treasury bills would normally be
auctioned in the week in which such interest reset date falls. Treasury bills
are usually sold at auction on Monday of each week, unless that day is a legal
holiday, in which case the auction is usually held on the following Tuesday,
except that such auction may be held on the preceding Friday. If, as the result
of a legal holiday, an auction is so held on the preceding Friday, that Friday
will be the treasury rate interest determination date pertaining to an interest
reset date occurring in the next succeeding week. If an auction date shall fall
on a day which would otherwise be an interest reset date for a treasury rate
note, then such interest reset date shall instead be the first Business Day
immediately following such auction date.
The interest determination date pertaining to a floating rate note the
interest rate of which is determined by reference to two or more interest rate
bases will be the most recent Business Day which is at least two Business Days
prior to the applicable interest reset date for such floating rate note on which
each interest rate basis is determinable. Each interest rate basis will be
determined on that date, and the applicable interest rate will take effect on
the applicable interest reset date.
Unless otherwise specified in the applicable pricing supplement, interest
payable in respect of floating rate notes shall be the accrued interest from and
including the original issue date or the last date to which interest has been
paid, as the case may be, up to but excluding the applicable interest payment
date.
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<PAGE> 12
With respect to a floating rate note, accrued interest shall be calculated
by multiplying the principal amount of such note (or, in the case of a floating
rate note that is an indexed principal note, its face amount) by an accrued
interest factor. This accrued interest factor will be computed by adding the
interest factors calculated for each day in the period for which accrued
interest is being calculated. Unless otherwise specified in the applicable
pricing supplement the interest factor (expressed as a decimal calculated to
seven decimal places without rounding) for each such day is computed by dividing
the interest rate in effect on such day by 360, in the case of LIBOR notes,
prime rate notes, commercial paper rate notes, federal funds rate notes,
eleventh district cost of funds rate notes, and CD rate notes, or by the actual
number of days in the year, in the case of CMT rate notes or treasury rate
notes. For purposes of making the foregoing calculation, the interest rate in
effect on any interest reset date will be the applicable rate as reset on such
date.
Unless otherwise specified in the applicable pricing supplement, all
percentages resulting from any calculation of the rate of interest on a floating
rate note will be rounded, if necessary, to the nearest 1/100,000 of 1%
(.0000001), with five one-millionths of a percentage point rounded upward, and
all currency amounts used in or resulting from such calculation on floating rate
notes will be rounded to the nearest one-hundredth of a unit (with .005 of a
unit being rounded upward).
Unless otherwise indicated in the applicable pricing supplement and except
as provided below, interest will be payable, in the case of floating rate notes
that reset daily, weekly or monthly, on 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; in the case of floating rate
notes that reset quarterly, on the third Wednesday of March, June, September,
and December of each year; in the case of floating rate notes that reset
semiannually, on the third Wednesday of each of two months of each year
specified in the applicable pricing supplement; and, in the case of floating
rate notes that reset annually, on the third Wednesday of one month of each year
specified in the applicable pricing supplement (each such day being an "INTEREST
PAYMENT DATE"). If an interest payment date with respect to any floating rate
note would otherwise be a day that is not a Business Day, that interest payment
date shall be postponed to the next succeeding Business Day, except that, in the
case of a LIBOR note, if such Business Day is in the next succeeding calendar
month, such interest payment date shall be the immediately preceding Business
Day.
CD RATE NOTES
Each CD rate note will bear interest for each interest reset period at the
interest rate calculated with reference to the CD rate and the spread or spread
multiplier, if any, and subject to the minimum interest rate and the maximum
interest rate, if any, specified in such note and in the applicable pricing
supplement.
Unless otherwise specified in the applicable pricing supplement, the "CD
RATE" for each interest reset period will be:
(a) the rate on the CD rate interest determination date for negotiable
certificates of deposit having the index maturity designated in the
applicable pricing supplement as published in H.15(519) under the heading
"CDs (Secondary Market)," or
(b) if the rate referred to in clause (a) above is not published prior
to 3:00 p.m., New York City time, on the calculation date pertaining to
such CD rate interest determination date, then the "CD rate" for such CD
rate interest reset period will be the rate on such CD rate interest
determination date for negotiable U.S. dollar certificates of deposit of
the index maturity specified in the applicable pricing supplement as
published in H.15 Daily Update, or other recognized electronic source used
for the purpose of displaying such rate, or
(c) if the rate referred to in clause (b) is not published by 3:00
p.m., New York City time, on such calculation date, then the "CD rate" for
such interest reset period will be calculated by the calculation agent for
such CD rate note and will be the arithmetic mean of the secondary market
S-12
<PAGE> 13
offered rates as of 10:00 a.m., New York City time, on such CD rate
interest determination date of three leading nonbank dealers in negotiable
U.S. dollar certificates of deposit in The City of New York selected by the
calculation agent for such CD rate note for negotiable certificates of
deposit of major U.S. money center banks of the highest credit standing (in
the market for negotiable certificates of deposit) with a remaining
maturity closest to the index maturity designated in the pricing supplement
in an amount that is representative for a single transaction in that market
at that time, or
(d) if the dealers selected as aforesaid by such calculation agent are
not quoting offered rates as mentioned in this sentence, the "CD rate" for
such interest reset period will be the same as the CD rate for the
immediately preceding interest reset period (or, if there was no such
interest reset period, the initial interest rate).
COMMERCIAL PAPER RATE NOTES
Each commercial paper rate note will bear interest for each interest reset
period at the interest rate calculated with reference to the commercial paper
rate and the spread or spread multiplier, if any, specified in that note and in
the applicable pricing supplement.
Unless otherwise specified in the applicable pricing supplement, the
"COMMERCIAL PAPER RATE" for each interest reset period will be determined by the
calculation agent for such commercial paper rate note as of the commercial paper
rate interest determination date and shall be:
(a) the Money Market Yield on such commercial paper rate interest
determination date of the rate for commercial paper having the index
maturity specified in the applicable pricing supplement, as such rate shall
be published in H.15(519) under the heading "Commercial
Paper -- Nonfinancial," or
(b) if the rate referred to in clause (a) is not published prior to
3:00 p.m., New York City time, on the calculation date pertaining to such
commercial paper rate interest determination date, then the "commercial
paper rate" for such interest reset period shall be the Money Market Yield
on such commercial paper rate interest determination date of the rate for
commercial paper of the specified index maturity as published in H.15 Daily
Update, or such other recognized electronic source used for the purpose of
displaying such rate, under the heading "Commercial Paper-Nonfinancial," or
(c) if by 3:00 p.m., New York City time, on such calculation date the
rate referred to in clause (b) is not yet published in either H.15(519) or
H.15 Daily Update or another recognized electronic source used for the
purpose of displaying such rate, then the "commercial paper rate" for such
interest reset period shall be the Money Market Yield of the arithmetic
mean of the offered rates, as of 11:00 a.m., New York City time, on such
commercial paper rate interest determination date of three leading dealers
of commercial paper in The City of New York (which may include one or more
of the Agents or their affiliates) selected by the calculation agent for
such commercial paper rate note for commercial paper of the specified index
maturity placed for an industrial issuer whose bonds are rated "AA" or the
equivalent by a nationally recognized rating agency; provided, however,
that if the dealers selected as aforesaid by such calculation agent are not
quoting offered rates as mentioned in this sentence, the "commercial paper
rate" for such interest reset period will be the same as the commercial
paper rate for the immediately preceding interest reset period (or, if
there was no such interest reset period, the initial interest rate).
"MONEY MARKET YIELD" shall be a yield calculated in accordance with the
following formula:
<TABLE>
<S> <C>
D X 360
-------------
360 - (D X M)
Money Market Yield =
</TABLE>
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.
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<PAGE> 14
FEDERAL FUNDS RATE NOTES
Each federal funds rate note will bear interest for each interest reset
period at the interest rate calculated with reference to the federal funds rate
and the spread or spread multiplier, if any, specified in such note and in the
applicable pricing supplement.
Unless otherwise specified in the applicable pricing supplement, the
"FEDERAL FUNDS RATE" for each interest reset period shall be:
(a) the effective rate on the federal funds rate interest
determination date for federal funds as published in H.15(519) under the
heading "Federal Funds (Effective)," as such rate is displayed on Bridge
Telerate, Inc. (or any successor service) on page 120 (or any other page as
may replace such page on such service) ("TELERATE PAGE 120"), or
(b) if the rate referred to in clause (a) does not appear on Telerate
Page 120 or is not yet published prior to 3:00 p.m., New York City time, on
the calculation date pertaining to such interest determination date, the
"federal funds rate" for such interest reset period shall be the rate on
such interest determination date as published in H.15 Daily Update, or such
other recognized electronic service used for the purpose of displaying such
rate under the heading "Federal Funds/Effective Rate," or
(c) if by 3:00 p.m., New York City time, on such calculation date the
rate referred to in clause (b) does not appear on Telerate Page 120 or is
not yet published in either H.15(519) or H.15 Daily Update or such other
recognized electronic source, then the "federal funds rate" for such
interest reset period will be calculated by the calculation agent and will
be the arithmetic mean of the rates prior to 9:00 a.m., New York City time,
on such interest determination date of the last transaction in overnight
federal funds arranged by three leading brokers of federal funds
transactions in The City of New York (which may include one or more of the
Agents or their affiliates) selected by the calculation agent, provided,
that if the brokers selected by the calculation agent are not quoting as
mentioned in this sentence, the federal funds rate will be the federal
funds rate in effect on such federal funds rate interest determination
date.
LIBOR NOTES
Each LIBOR note will bear interest for each interest reset period at the
interest rate (calculated with reference to LIBOR and the spread and/or spread
multiplier, if any, and subject to the minimum interest rate and the maximum
interest rate, if any, specified in such note and in the applicable pricing
supplement).
Unless otherwise specified in the applicable pricing supplement, "LIBOR"
will be determined by the calculation agent in accordance with the following
provisions:
(a) With respect to any interest determination date relating to a
LIBOR note or any floating rate note for which the interest is determined
with reference to LIBOR (a "LIBOR INTEREST DETERMINATION DATE"), LIBOR will
be, as specified, in the applicable pricing supplement, either:
(1) the arithmetic mean of the offered rates for deposits in the
index currency having the index maturity designated in the
applicable pricing supplement, commencing on the second London
Business Day immediately following that LIBOR interest
determination date, which appear on the Reuters Screen LIBO
Page as of 11:00 a.m., London time, on that LIBOR interest
determination date, if at least two such offered rates appear
on the Reuters Screen LIBO Page, unless such Reuters Screen
LIBO Page by its terms provides only for a single rate, in
which case such single rate shall be used ("LIBOR REUTERS"), or
(2) the rate for deposits in the index currency having the index
maturity designated in the applicable pricing supplement,
commencing on the second London Business Day immediately
following that LIBOR interest determination date, which appears
on the
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<PAGE> 15
Telerate Page 3750 as of 11:00 a.m., London time, on that LIBOR
interest determination date ("LIBOR TELERATE"). "REUTERS SCREEN
LIBO PAGE" means the display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may
replace the LIBO page on that service for the purpose of
displaying London interbank offered rates of major banks for the
applicable index currency). "TELERATE PAGE 3750" means the
display designated as page "3750" on the Dow Jones Telerate
Service (or such other page as may replace the 3750 page on that
service or such other service or services as may be nominated by
the British Bankers' Association for the purpose of displaying
London interbank offered rates of major banks for the applicable
index currency). If neither LIBOR Reuters nor LIBOR Telerate is
specified in the applicable pricing supplement, LIBOR for the
applicable index currency will be determined as if LIBOR Telerate
(and, if the U.S. dollar is the index currency, page 3750) had
been specified. If fewer than two offered rates appear on the
Reuters Screen LIBO Page (unless, as aforesaid, only a single
rate is required), or if no rate appears on the Telerate Page
3750, as applicable, LIBOR in respect of that LIBOR interest
determination date will be determined as if the parties had
specified the rate described in (b) below.
(b) With respect to a LIBOR interest determination date on which fewer
than two offered rates (unless, as aforesaid, only a single rate is
required) appear on the Reuters Screen LIBO Page, as specified in (a)(1)
above, or on which no rate appears on Telerate Page 3750, as specified in
(a)(2) above, as applicable, LIBOR will be determined on the basis of the
rates at which deposits in the index currency having the index maturity
designated in the applicable pricing supplement are offered at
approximately 11:00 a.m., London time, on that LIBOR interest determination
date by four major banks in the London interbank market selected by the
calculation agent ("REFERENCE BANKS") to prime banks in the London
interbank market, commencing on the second London Business Day immediately
following that LIBOR interest determination date and in a principal amount
that is representative for a single transaction in such index currency in
such market at such time. The calculation agent will request the principal
London office of each of the reference banks to provide a quotation of its
rate. If at least two such quotations are provided, LIBOR in respect of
that LIBOR interest determination date will be the arithmetic mean of such
quotations. If fewer than two quotations are provided, LIBOR in respect of
that LIBOR interest determination date will be the arithmetic mean of the
rates quoted at approximately 11:00 a.m., in the principal financial center
for the country of the index currency, on the LIBOR interest determination
date by three major banks in such principal financial center (which may
include affiliates of the Agents) selected by the calculation agent for
loans in the index currency to leading European banks, having the index
maturity designed in the applicable pricing supplement commencing on the
second London Business Day immediately following such LIBOR interest
determination date and in a principal amount that is representative for a
single transaction in such index currency in such market at such time;
provided, however, that if the banks selected as aforesaid by the
calculation agent are not quoting as mentioned in this sentence, LIBOR with
respect to such LIBOR interest determination date will be the rate of LIBOR
in effect on such LIBOR interest determination date.
"INDEX CURRENCY" means the currency specified in the applicable pricing
supplement as the currency for which LIBOR shall be calculated. If no such
currency is specified in the applicable pricing supplement, the index currency
shall be U.S. dollars.
TREASURY RATE NOTES
Each treasury rate note will bear interest for each interest reset period
at the interest rate calculated with reference to the treasury rate and the
spread or spread multiplier, if any, specified in such note and in the
applicable pricing supplement.
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Unless otherwise specified in the applicable pricing supplement, the
"TREASURY RATE" for each interest reset period will be:
(a) the rate from the auction held on the applicable treasury rate
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 service ("TELERATE PAGE 56") or
page 57 or any other page as may replace page 57 on that service ("TELERATE
PAGE 57"), or
(b) if the rate described in clause (a) 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
(c) if the rate described in clause (b) 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 U.S. Department of the Treasury, or
(d) in the event that the rate referred to in clause (c) is not
announced by the U.S. Department of the Treasury, or if the Auction is not
held, the Bond Equivalent Yield of the rate on the applicable Treasury Rate
interest determination date 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
(e) if the rate referred to in clause (d) is not so published by 3:00
p.m., New York City time, on the related calculation date, the rate on the
applicable Treasury Rate Interest Determination Date 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
(f) if the rate referred to in clause (e) is not so published by 3:00
p.m., New York City time, on the related calculation date, the rate on the
applicable treasury rate 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
U.S. government securities dealers (which may include one or more of the
Agents or their 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
(g) if the dealers selected by the calculation agent are not quoting
as mentioned in clause (f), the rate in effect on the applicable treasury
rate interest determination date.
"BOND EQUIVALENT YIELD" means a yield calculated in accordance with the
following formula and expressed as a percentage:
<TABLE>
<S> <C> <C>
D X N
------------- X 100
360 - (D X M)
Bond Equivalent Yield =
</TABLE>
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.
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PRIME RATE NOTES
Each prime rate note will bear interest at the interest rate calculated
with reference to the prime rate and the spread or spread multiplier, if any,
specified in such note and in the applicable pricing supplement.
Unless otherwise specified in the applicable pricing supplement, the "PRIME
RATE" means, with respect to any prime rate interest determination date:
(a) the rate on the applicable prime rate interest determination date
as published in H.15(519) under the heading "Bank Prime Loan," or
(b) if the rate referred to in clause (a) is not so published by 3:00
p.m., New York City time, on the related calculation date, the rate on the
applicable Prime Rate 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
(c) if the rate referred to in clause (b) is not so published by 3:00
p.m., New York City time, on the calculation date pertaining to such prime
rate interest determination date, then the prime rate will be determined by
the calculation agent and will be the arithmetic mean of the rates of
interest publicly announced by each bank that appears on the Reuters Screen
USPRIME1 Page as such bank's prime rate or base lending rate as in effect
for that prime rate interest determination date.
"REUTERS SCREEN USPRIME1" means the display designated as page "USPRIME1"
on the Reuters Monitor Money Rates Service (or such other page as may replace
the USPRIME1 page on that service for the purpose of displaying prime rates or
base lending rates of major U.S. banks). If fewer than four such rates but more
than one such rate appear on the Reuters Screen USPRIME1 Page for such prime
rate interest determination date, the prime rate shall be determined by the
calculation agent and will be the arithmetic mean of the prime rates quoted on
the basis of actual number of days in the year divided by 360 as of the close of
business on such prime rate interest determination date by at least three major
money center banks in New York City selected by the calculation agent (after
consulting with us). If the banks selected as aforesaid are not quoting as
mentioned in this sentence, the prime rate will remain the prime rate in effect
on such prime rate interest determination date.
CMT RATE NOTES
CMT rate notes will bear interest at the interest rate (calculated with
reference to the CMT rate and the spread and/or spread multiplier, if any)
specified on the face of the CMT rate note and in the applicable pricing
supplement.
Unless otherwise specified in the applicable pricing supplement, "CMT RATE"
means, with respect to any CMT rate interest determination date:
(a) the rate displayed on the Designated CMT Telerate Page under the
caption ". . . Treasury Constant Maturities . . . Federal Reserve Board
Release H.15. . . . Mondays Approximately 3:45 p.m.," under the column for
the Designated CMT Maturity Index (as defined below) for (1) if the
Designated CMT Telerate Page is 7051, the rate on such CMT interest
determination date and (2) if the Designated CMT Telerate Page is 7052, the
rate for the week, or the month, as applicable, ended immediately preceding
the week in which the related CMT interest determination date occurs, or
(b) if the rate referred to in clause (a) is no longer displayed on
the relevant page, or if not displayed by 3:00 p.m., New York City time, on
the related calculation date, then the CMT rate for such CMT interest
determination date will be such treasury constant maturity rate for the
Designated CMT Maturity Index as published in H.15(519), or
(c) if the rate referred to in clause (b) is no longer published, or
if not published by 3:00 p.m., New York City time, on the related
calculation date, then the CMT rate for such CMT interest determination
date will be such Treasury Constant Maturity Rate for the Designated CMT
Maturity Index (or other U.S. Treasury rate for the Designated CMT Maturity
Index) for the CMT interest
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determination date with respect to such interest reset date as may then be
published by either the Board of Governors of the Federal Reserve System or
the U.S. Department of the Treasury that the calculation agent determines
to be comparable to the rate formerly displayed on the Designated CMT
Telerate Page and published in the relevant H.15(519), or
(d) if the rate referred to in clause (c) is not provided by 3:00
p.m., New York City time, on the related calculation date, then the CMT
rate for the CMT rate interest determination date will be calculated by the
calculation agent and will be a yield to maturity, based on the arithmetic
mean of the secondary market closing offer side prices as of approximately
3:30 p.m., New York City time, on the CMT rate interest determination date
reported, according to their written records, by three leading primary U.S.
government securities dealers (each, a "REFERENCE DEALER") in The City of
New York (which may include one or more of the Agents or their affiliates)
selected by the calculation agent (from five such 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 the most recently
issued direct noncallable fixed rate obligations of the United States
("TREASURY NOTES") with an original maturity of approximately the
Designated CMT Maturity Index and a remaining term to maturity of not less
than such Designated CMT Maturity Index minus one year, or
(e) if the calculation agent cannot obtain three such CMT rate
Treasury note quotations, the CMT rate for such CMT rate interest
determination date will be calculated by the calculation agent and will be
a yield to maturity based on the arithmetic mean of the secondary market
offer side prices as of approximately 3:30 p.m., New York City time, on the
CMT rate interest determination date of three reference dealers in The City
of New York (from five such 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 Treasury notes with an original maturity of the
number of years that is the next highest to the Designated CMT Maturity
Index and a remaining term to maturity closest to the Designated CMT
Maturity Index in an amount of at least $100 million, or
(f) if three or four (and not five) of such reference dealers are
quoting as described above, then the CMT rate will be based on the
arithmetic mean of the offer prices obtained and neither the highest nor
lowest of such quotes will be eliminated, or
(g) if fewer than three reference dealers selected by the calculation
agent are quoting as described herein, the CMT rate will be the CMT rate in
effect on such CMT rate interest determination date. If two Treasury notes
with an original maturity as described in clause (f) have remaining terms
to maturity equally close to the Designated CMT Maturity Index, the quotes
for the Treasury notes with the shorter remaining term to maturity will be
used.
"DESIGNATED CMT TELERATE PAGE" means the display on the Dow Jones Telerate
Service on the page designated in the applicable pricing supplement (or any
other page as may replace such page on that service for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519)) for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519). If
no such page is specified in the applicable pricing supplement, the Designated
CMT Telerate Page shall be 7052 for the most recent week.
"DESIGNATED CMT MATURITY INDEX" means the original period to maturity of
the U.S. 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. If no such maturity is specified in the applicable
pricing supplement, the Designated CMT Maturity Index shall be 2 years.
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ELEVENTH DISTRICT COST OF FUNDS RATE NOTES
Each eleventh district cost of funds rate note will bear interest at
interest rates calculated with reference to the eleventh district cost of funds
rate and the spread or spread multiplier, if any, specified on the face of the
eleventh district cost of funds rate note and in the applicable pricing
supplement.
Unless otherwise specified in the applicable pricing supplement, "ELEVENTH
DISTRICT COST OF FUNDS RATE" means, with respect to any eleventh district cost
of funds rate interest determination date:
(a) the rate equal to the monthly weighted average cost of funds for
the calendar month immediately preceding the month in which such eleventh
district cost of funds rate interest determination date falls, as set forth
under the caption "11th District" on Telerate Page 7058 as of 11:00 a.m.,
San Francisco time, on such eleventh district cost of funds rate interest
determination date, or
(b) if such rate does not appear on Telerate Page 7058 on any related
eleventh district cost of funds rate interest determination date, the
eleventh district cost of funds rate on such eleventh district cost of
funds rate interest determination date shall be the monthly weighted
average cost of funds paid by member institutions of the Eleventh Federal
Home Loan Bank District that was most recently announced (the "INDEX") by
the Federal Home Loan Bank of San Francisco as such cost of funds for the
calendar month immediately preceding the date of such announcement, or
(c) if the Federal Home Loan Bank of San Francisco fails to announce
such rate for the calendar month immediately preceding such eleventh
district cost of funds rate interest determination date, then the eleventh
district cost of funds rate determined as of such eleventh district cost of
funds rate interest determination date shall be the eleventh district cost
of funds rate in effect on such eleventh district cost of funds rate
interest determination date.
"TELERATE PAGE 7058" means the display designated as page "7058" on the
Bridge Telerate Inc. (or such other page as may replace the 7058 page on that
service for the purpose of displaying the monthly weighted average cost of funds
paid by member institutions of the Eleventh Federal Home Loan Bank District).
SUBSEQUENT INTEREST PERIODS
The pricing supplement relating to each note will indicate whether we have
the option to reset the interest rate (in the case of a fixed rate note) with
respect to that note or the spread or spread multiplier (in the case of a
floating rate note) with respect to that note and, if so, the date or dates on
which such interest rate or such spread or spread multiplier, as the case may
be, may be reset (each an "OPTIONAL RESET DATE").
We will notify the Trustee for a note whether or not we intend to exercise
such option with respect to such note at least 45 but not more than 60 calendar
days prior to an optional reset date for such note. Not later than 40 calendar
days prior to such optional reset date, the Trustee for such note will mail to
the holder of such note a notice (the "RESET NOTICE"), first class, postage
prepaid, indicating whether we have elected to reset the interest rate (in the
case of a fixed rate note) or the spread or spread multiplier (in the case of a
floating rate note) and if so, (a) such new interest rate or such new spread or
spread multiplier, as the case may be, and (b) the provisions, if any, for
redemption during the period from such optional reset date to the next optional
reset date or, if there is no such next optional reset date, to the stated
maturity date of the note (each such period a "SUBSEQUENT INTEREST PERIOD"),
including the date or dates on which or the period or periods during which and
the price or prices at which such redemption may occur during such subsequent
interest period.
Notwithstanding the foregoing, not later than 20 calendar days prior to an
optional reset date for a note, we may, at our option, revoke the interest rate
(in the case of a fixed rate note) or the spread or spread multiplier (in the
case of a floating rate note) provided for in the reset notice with respect to
such optional reset date and establish a higher interest rate (in the case of a
fixed rate note) or a higher spread
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or spread multiplier (in the case of a floating rate note) for the subsequent
interest period commencing on such optional reset date by causing the Trustee
for such note to mail notice of such higher interest rate or higher spread or
spread multiplier, as the case may be, first class, postage prepaid, to the
holder of such note. Such notice shall be irrevocable. All notes with respect to
which the interest rate or spread or spread multiplier is reset on an optional
reset date will bear such higher interest rate (in the case of fixed rate notes)
or higher spread or spread multiplier (in the case of floating rate notes),
whether or not tendered for repayment.
The holder of a note will have the option to elect repayment of such note
by us on each optional reset date at a price equal to the principal amount
thereof, plus interest accrued to such optional reset date. In order for a note
to be repaid on an optional reset date, the holder of the note must follow the
procedures set forth below under "Optional Redemption, Repayment and Repurchase"
for optional repayment, except that the period for delivery of such note or
notification to the Trustee for such note shall be at least 25 but not more than
35 calendar days prior to such optional reset date, and except that a holder who
has tendered a note for repayment pursuant to a reset notice may, by written
notice to the Trustee for such note, revoke any such tender for repayment until
the close of business on the tenth day prior to such optional reset date.
INDEXED NOTES
We may from time to time offer notes ("INDEXED NOTES") on which certain or
all interest payments (in the case of an "INDEXED RATE NOTE"), and/or the
principal amount payable at the stated maturity date or earlier redemption or
retirement (in the case of an "INDEXED PRINCIPAL NOTE"), is determined by
reference to the principal amount of such notes (or, in the case of an indexed
principal note, to the amount designated in the applicable pricing supplement as
the "face amount" of such indexed note) and by reference to indices of prices,
changes in prices, or differences between prices, of securities, currencies,
intangibles, goods, articles or commodities, or by such other objective price,
economic or other measures as are described in the applicable pricing
supplement. A description of the index used in any determination of an interest
or principal payment, and the method or formula by which interest or principal
payments will be determined by reference to such index, will be set forth in the
applicable pricing supplement.
In the case of a fixed rate note, floating rate note or indexed rate note
that is also an indexed principal note, the amount of any interest payment will
be determined by reference to the face amount of such indexed note unless
specified otherwise in the applicable pricing supplement. In the case of an
indexed principal note, the principal amount payable at the stated maturity date
or any earlier redemption or repayment of the indexed note may be different from
the face amount.
If the determination of the index on which any interest payment or the
principal amount of an indexed note is calculated or announced by a third party,
which may be Firstar Bank, N.A. or an affiliate of ours, and such third party
either suspends the calculation or announcement of such index or changes the
basis upon which such index is calculated (other than changes consistent with
policies in effect at the time such indexed note was issued and permitted
changes described in the applicable pricing supplement), then such index shall
be calculated for purposes of such indexed note by another third party selected
by us, which may be Firstar Bank, N.A. or another affiliate of ours, subject to
the same conditions and controls as applied to the original third party. If for
any reason such index cannot be calculated on the same basis and subject to the
same conditions and controls as applied to the original third party, then the
indexed interest payments, if any, or any indexed principal amount of such
indexed note, shall be calculated in the manner set forth in the applicable
pricing supplement. Any determination of such third party shall in the absence
of manifest error be binding on all parties. See "Risk Factors."
AMORTIZING NOTES
We may from time to time offer amortizing notes ("AMORTIZING NOTES") on
which a portion or all the principal amount is payable prior to its stated
maturity date in accordance with a schedule, by application of a formula, or by
reference to an index. Unless otherwise specified in the applicable pricing
supplement,
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interest on each amortizing note will be computed on the basis of a 360-day year
of twelve 30-day months. Payments with respect to amortizing notes will be
applied first to interest due and payable on the amortizing notes and then to
the reduction of the unpaid principal amount of the amortizing notes. Further
information concerning additional terms and conditions of any amortizing notes,
including terms for repayment thereof, will be set forth in the applicable
pricing supplement.
EXTENSION OF MATURITY
The pricing supplement relating to each note will indicate whether we have
the option to extend the stated maturity date of such note for one or more
periods of whole years from one to five (each an "EXTENSION PERIOD") up to but
not beyond the date (the "FINAL MATURITY") set forth in such pricing supplement.
We may exercise such option with respect to a note by notifying the Trustee
for such note at least 45 but not more than 60 calendar days prior to the old
stated maturity date of the note. Not later than 40 calendar days prior to the
old stated maturity date of such note, the Trustee for such note will mail to
the holder of such note a notice (the "EXTENSION NOTICE"), first class, postage
prepaid. The extension notice will set forth:
- our election to extend the stated maturity date of such note;
- the new stated maturity date;
- in the case of a fixed rate note, the interest rate applicable to the
extension period or, in the case of a floating rate note, the spread or
spread multiplier applicable to the extension period; and
- the provisions, if any, for redemption during the extension period,
including the date or dates on which or the period or periods during
which and the price or prices at which such redemption may occur during
the extension period.
Upon the mailing by the Trustee of an extension notice to the holder of a
note, the stated maturity date of that note shall be extended automatically,
and, except as modified by the extension notice and as described in the next
paragraph, that note will have the same terms as prior to the mailing of such
extension notice.
Notwithstanding the foregoing, not later than 20 calendar days prior to the
old stated maturity date of such note, we may, at our option, revoke the
interest rate (in the case of a fixed rate note) or the spread or spread
multiplier (in the case of a floating rate note) provided for in the extension
notice for such note and establish a higher interest rate (in the case of a
fixed rate note) or a higher spread or spread multiplier (in the case of a
floating rate note) for the extension period, by causing the Trustee for such
note to mail notice of such higher interest rate or higher spread or spread
multiplier, as the case may be, first class, postage prepaid, to the holder of
such note. Such notice shall be irrevocable. All notes with respect to which the
stated maturity date is extended will bear such higher interest rate (in the
case of fixed rate notes) or higher spread or spread multiplier (in the case of
floating rate notes) for the extension period, whether or not tendered for
repayment.
If we extend the stated maturity date of a note, the holder of that note
will have the option to elect repayment of such note by us on the old stated
maturity date at a price equal to the principal amount thereof, plus interest
accrued to such date. In order for a note to be repaid on the old stated
maturity date once we have extended the stated maturity date of that note, the
holder of that note must follow the procedures set forth below under
"-- Optional Redemption, Repayment and Repurchase" for optional repayment,
except that the period for delivery of such note or notification to the Trustee
shall be at least 25 but not more than 35 days prior to the old stated maturity
date, and except that a holder who has tendered a note for repayment pursuant to
an extension notice may, by written notice to the Trustee, revoke any such
tender for repayment until the close of business on the tenth day before the old
stated maturity date.
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OPTIONAL REDEMPTION, REPAYMENT AND REPURCHASE
The pricing supplement relating to each note will indicate either that such
note cannot be redeemed prior to its stated maturity date or that such note will
be redeemable at our option, in whole or in part, and the date or dates (each an
"OPTIONAL REDEMPTION DATE") on which such note may be redeemed and the price at
which (together with accrued interest to such optional redemption date) such
note may be redeemed on each such optional redemption date. We may exercise such
option with respect to a note by notifying the Trustee at least 45 days prior to
any optional redemption date.
Unless otherwise specified in the applicable pricing supplement, not more
than 60 days prior to the date of redemption, the Trustee shall mail notice of
such redemption, first class, postage prepaid, to the holder of such note. In
the event of redemption of a note in part only, a new note or notes for the
unredeemed portion thereof shall be issued to the holder thereof upon the
cancellation thereof. The notes will not be subject to any sinking fund.
The pricing supplement relating to each note will also indicate whether the
holder of such note will have the option to elect repayment of such note by us
prior to its stated maturity date, and, if so, such pricing supplement will
specify the date or dates on which such note may be repaid (each an "OPTIONAL
REPAYMENT DATE") and the price at which, together with accrued interest to such
optional repayment date, such note may be repaid on each such optional repayment
date.
In order for a note to be repaid, the Trustee must receive, at least 30 but
not more than 45 days prior to an optional repayment date, (a) such note with
the form entitled "Option to Elect Repayment" on the reverse thereof duly
completed, or (b) a telegram, telex, facsimile transmission or letter from a
member of a national securities exchange or the National Association of
Securities Dealers, Inc. or a commercial bank or trust company in the United
States setting forth the name of the holder of such note, the principal amount
of such note to be repaid, the certificate number or a description of the tenor
and terms of such note, a statement that the option to elect repayment is being
exercised thereby and a guarantee that the note to be repaid with the form
entitled "Option to Elect Repayment" on the reverse of the note duly completed
will be received by such Trustee not later than five Business Days after the
date of such telegram, telex, facsimile transmission or letter. If the procedure
described in clause (b) of the preceding sentence is followed, then such note
and form duly completed must be received by the Trustee by such fifth Business
Day. Any tender of a note by the holder for repayment (except pursuant to a
reset notice or an extension notice) shall be irrevocable. The repayment option
may be exercised by the holder of a note for less than the entire principal
amount of such note provided that the principal amount of such note remaining
outstanding after repayment is an authorized denomination. Upon such partial
repayment, such note shall be cancelled and a new note or notes for the
remaining principal amount thereof shall be issued in the name of the holder of
such repaid note.
If a note is represented by a global security, the nominee of the
Depository Trust Company ("DTC") will be the holder of such note and therefore
will be the only entity that can exercise a right to repayment. In order to
ensure that DTC's nominee will timely exercise a right to repayment with respect
to a particular note, the beneficial owner of such note must instruct the broker
or other direct or indirect participant through which it holds an interest in
such note to notify DTC 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 direct or indirect participant through which it holds an
interest in a note in order to ascertain the cut-off time by which such an
instruction must be given in order for timely notice to be delivered to DTC.
Notwithstanding anything in this prospectus supplement to the contrary, if
a note is an original issue discount note (other than an indexed note), the
amount payable on such note in the event of redemption or repayment prior to its
stated maturity date shall be the amortized face amount of such note as of the
date of redemption or the date of repayment, as the case may be. The "amortized
face amount" of a note issued at a discount shall be the amount equal to: (a)
the issue price set forth in the applicable pricing supplement, plus (b) that
portion of the difference between the issue price and the principal amount of
such note that has accrued at the yield to maturity set forth in the pricing
supplement (computed in
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<PAGE> 23
accordance with generally accepted U.S. bond yield computation principles) by
such date of redemption or repayment, but in no event shall the amortized face
amount of a note issued at a discount exceed its principal amount.
We may at any time purchase notes at any price in the open market or
otherwise. Notes so purchased by us may, at our discretion, be held or resold or
surrendered to the Trustee for cancellation.
BOOK-ENTRY SYSTEM
DTC will act as securities depositary for the notes. Upon issuance, and
subject to the rules of DTC, all book-entry notes having the same original issue
date and otherwise identical terms will be represented by a single global
security for each $200,000,000 principal amount of such notes or portion
thereof. Each global security representing book-entry notes will be deposited
with, or on behalf of, DTC, and registered in the name of Cede & Co., DTC's
nominee.
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 Securities Exchange
Act of 1934 ("EXCHANGE ACT"). DTC holds securities that its participants
("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" 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. and the National Association of Securities
Dealers, Inc. Access to the DTC 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 ("INDIRECT PARTICIPANTS"). The rules applicable to DTC and its
Participants are on file with the Securities and Exchange Commission.
Purchases of notes under the DTC system must be made by or through Direct
Participants, which will receive a credit for the notes on DTC's records. The
ownership interest of each actual purchaser of each note ("BENEFICIAL OWNER") is
in turn to be recorded on the Direct and Indirect Participants' records.
Beneficial Owners 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 or Indirect Participant through which the Beneficial
Owner entered into the transaction. Transfers of ownership interests in the
notes are to be accomplished by entries made on the books of Participants acting
on behalf of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in notes, except in the event that use of
the book-entry system for the notes is discontinued.
To facilitate subsequent transfers, all notes deposited by Participants
with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The
deposit of notes with 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 notes; DTC's records reflect only the identities of the
Direct Participants to whose accounts such notes 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.
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.
Principal, premium and interest payments on the notes will be made to Cede
& Co. as nominee of DTC. DTC's practice is to credit Direct Participants'
accounts, upon DTC's receipt of funds and corresponding information from the
issuer or trustee on the payment date in accordance with their
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respective holdings shown on DTC's records. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices, as is the case with notes held for the accounts of customers in
bearer form registered in "street name," and will be the responsibility of such
Participant and not of DTC, the trustee or Firstar, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
principal and interest to Cede & Co. is the responsibility of Firstar, the
trustee or a paying agent, disbursement of such payments to Direct Participants
is the responsibility of DTC, and disbursement of such payments to the
Beneficial Owners is the responsibility of Direct and Indirect Participants.
Redemption notices will be sent to Cede & Co. If less than all the notes
within an issue are being redeemed, DTC's current practice is to determine by
lot the amount of the interest of each Direct Participant in such issue to be
redeemed.
A Beneficial Owner shall give notice to elect to have the notes purchased
or tendered through its Participant to the tender or remarketing agent and shall
effect delivery of such notes by causing the Direct Participant to transfer the
Participant's interest in the notes on DTC's records to the tender or
remarketing agent.
So long as DTC or its nominee is the registered owner of a global note, DTC
or such nominee, as the case may be, will be considered the sole owner and
holder of the notes represented by such global note for all purposes of the
notes and the indenture, as the case may be. Owners of beneficial interests in
global notes will not be entitled to have the notes represented by such global
notes registered in their names. Accordingly, each person owning a beneficial
interest in a global note must rely on the procedures of DTC, or its nominee,
and, if such person is not a Participant, on the procedures of the Participant
through which such person owns its interest, to exercise any rights of a holder
of notes.
If DTC notifies Firstar that it is unwilling or unable to continue as
depositary or if at any time the depositary ceases to be a clearing agency
registered under the Exchange Act, Firstar has agreed to appoint a successor
depositary. If such a successor is not appointed by Firstar within 90 days,
Firstar will issue notes in individual certificated form in exchange for the
global notes. In addition, Firstar may at any time and in its sole discretion
determine that the notes will no longer be represented by global notes. In that
event, Firstar will issue notes in individual certificated form in exchange for
such global notes. In any such case, an owner of a beneficial interest in a
global note will be entitled to physical delivery in individual certificated
form of notes equal in principal amount to such beneficial interest and to have
such notes registered in such owner's name. Notes so issued in individual
certificated form will be issued in denominations of $1,000 and integral
multiples of $1,000.
DTC management is aware that some computer applications, systems and the
like for processing data ("SYSTEMS") that are dependent upon calendar dates,
including dates before, on, and after January 1, 2000, may encounter "Year 2000
problems." DTC has informed its participants and other members of the financial
community (the "INDUSTRY") that it has developed and is implementing a program
so that its Systems, as the same relate to the timely payment of distributions
(including principal and income payments) to securityholders, book-entry
deliveries and settlement of trades within DTC ("DTC SERVICES"), continue to
function appropriately. This program includes a technical assessment and a
remediation plan, each of which is complete. Additionally, DTC's plan includes a
testing phase, which is expected to be completed within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as third party vendors from whom DTC licenses software and hardware, and
third party vendors on whom DTC relies for information or the provision of
services, including telecommunication and electrical utility service providers,
among others. DTC has informed the Industry that it is contacting (and will
continue to contact) third party vendors from whom DTC acquires services to: (a)
impress upon them the importance of such services being Year 2000 compliant, and
(b) determine the extent of their efforts for Year 2000 remediation (and, as
appropriate, testing) of their services. In addition, DTC is in the process of
developing such contingency plans as it deems appropriate. According to DTC, the
foregoing information with respect to DTC has been provided
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to the Industry for informational purposes only and is not intended to serve as
a representation, warranty, or contract modification of any kind.
A further description of DTC's procedures with respect to Global Securities
representing book-entry notes is set forth in the prospectus under "Description
of Debt Securities -- Temporary Global Securities." DTC has confirmed to us, the
Agents and the Trustees that it intends to follow such procedures.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary describes certain U.S. federal income tax
consequences of the ownership of notes as of the date hereof. Except where
noted, it deals only with notes held as capital assets and does not deal with
special situations, such as those of dealers in securities or currencies,
traders in securities who elect to use a mark-to-market method of accounting,
financial institutions, life insurance companies, persons holding notes as part
of a hedging or conversion transaction or straddle or U.S. holders (as defined
below) whose "functional currency" is not the U.S. dollar. Moreover, the summary
deals only with notes that are due to mature 30 years or less from the date on
which they are issued. The U.S. federal income tax consequences of ownership of
notes due to mature more than 30 years from their date of issue will be
discussed in the applicable pricing supplement. Furthermore, the discussion
below is based upon the provisions of the Internal Revenue Code of 1986, as
amended (the "CODE"), and regulations, rulings and judicial decisions thereunder
as of the date hereof, and such authorities may be repealed, revoked or modified
so as to result in federal income tax consequences different from those
discussed below. Persons considering the purchase, ownership or disposition of
notes should consult their own tax advisors concerning the federal income tax
consequences in light of their particular situations as well as any consequences
arising under the laws of any other taxing jurisdiction.
U.S. HOLDERS
As used herein, a "U.S. HOLDER" of a note means a holder that is (i) a
citizen or resident of the United States, (ii) a corporation or partnership
created or organized in or under the laws of the United States or any political
subdivision thereof, (iii) an estate the income of which is subject to United
States federal income taxation regardless of its source or (iv) a trust (X) that
is subject to the primary supervision of a court within the United States and
the control of a United States fiduciary as described in section 7701(a)(30) of
the Code or (Y) that has a valid election in effect under applicable U.S.
Treasury regulations to be treated as a U.S. person. A "NON-U.S. HOLDER" is a
holder that is not a U.S. holder.
PAYMENTS OF INTEREST
Except as described below, interest on a note will generally be taxable to
a U.S. holder as ordinary income from domestic sources at the time it is paid or
accrued in accordance with the U.S. holder's method of accounting for tax
purposes.
ORIGINAL ISSUE DISCOUNT
The following is a summary of the principal U.S. federal income tax
consequences of the ownership of notes originally issued at a discount by U.S.
holders. The following discussion does not address notes providing for
contingent payments other than notes that bear qualified stated interest.
Additional rules applicable to notes which are denominated in or determined by
reference to a specified currency other than the U.S. dollar are described under
"Foreign Currency Notes" below.
A note may be issued for an amount that is less than its stated redemption
price at maturity (the sum of all payments to be made on the note other than
"qualified stated interest"). The difference between the stated redemption price
at maturity of the note and its "issue price," if such difference is at least
0.25% of the stated redemption price at maturity multiplied by the number of
complete years to maturity or, in the case of amortizing notes, by the weighted
average maturity, will be "original issue discount" ("OID").
The "issue price" of each note in a particular offering is the first price
at which a substantial amount of that particular offering is sold (other than to
an underwriter, placement agent or wholesaler). "Qualified stated interest" is
stated interest that is unconditionally payable in cash or in property (other
than debt
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instruments of the issuer) at least annually at a single fixed rate or, subject
to certain conditions, based on one or more interest indices. Interest is
payable at a single fixed rate only if the rate appropriately takes into account
the length of the interval between payments.
In the case of a note issued with de minimis OID (i.e., discount that is
not treated as OID because it is less than 0.25 percent of the stated redemption
price at maturity multiplied by the number of complete years to maturity or, in
the case of amortizing notes, by the weighted average maturity), the U.S. holder
generally must include such de minimis OID in income as capital gain as stated
principal payments on the notes are made in proportion to the stated principal
amount of the note.
Certain notes may be redeemed or repaid prior to their stated maturity date
at the option of Firstar and/or at the option of the holder. Notes originally
issued at a discount and containing such features may be subject to rules that
differ from the general rules discussed herein. Persons considering the purchase
of notes originally issued at a discount with such features should carefully
examine the applicable pricing supplement and should consult their own tax
advisors with respect to such features since the tax consequences with respect
to OID will depend, in part, on the particular terms and features of the notes.
U.S. holders of notes originally issued at a discount with a maturity upon
issuance of more than one year must, in general, include OID in income in
advance of the receipt of some or all of the related cash payments. The amount
of OID includible in income by the initial U.S. holder of a note originally
issued at a discount is the sum of the "daily portions" of OID with respect to
the note for each day during the taxable year or portion of the taxable year in
which such U.S. holder held such note ("ACCRUED OID"). The daily portion is
determined by allocating to each day in any "accrual period" a pro rata portion
of the OID allocable to that accrual period. The "accrual period" for a note
originally issued at a discount may be of any length and may vary in length over
the term of the note, provided that each accrual period is no longer than one
year and each scheduled payment of principal or interest occurs on the first day
or the final day of an accrual period. The amount of OID that will be allocated
to any accrual period is an amount equal to the excess, if any, of: the product
of the note's adjusted issue price at the beginning of such accrual period and
its yield to maturity (determined on the basis of compounding at the close of
each accrual period and properly adjusted for the length of the accrual period)
over; the sum of any qualified stated interest allocable to the accrual period.
OID that will be allocated to a final accrual period is the difference between
the amount payable at maturity (other than a payment of qualified stated
interest) and the adjusted issue price at the beginning of the final accrual
period. Special rules will apply for calculating OID for an initial short
accrual period. The "adjusted issue price" of a note at the beginning of any
accrual period is equal to its issue price increased by the accrued OID for each
prior accrual period (determined without regard to the amortization of any
acquisition or bond premium, as described below) and reduced by any payments
(other than qualified stated interest) made with respect to such note on or
before the first day of the accrual period. Under these rules, a U.S. holder
will have to include in income increasingly greater amounts of OID in successive
accrual periods. We are required to provide information returns stating the
amount of OID accrued on notes held of record by persons other than corporations
and other exempt holders.
In the case of a note that is originally issued at a discount that is a
floating rate note, both the "yield to maturity" and "qualified stated interest"
will be determined solely for purposes of calculating the accrual of OID as
though the note will bear interest in all periods at a fixed rate generally
equal to the rate that would be applicable to interest payments on the note on
its date of issue or, in the case of certain floating rate notes, the rate that
reflects the yield to maturity that is reasonably expected for the note.
Additional rules may apply if interest on a floating rate note is based on more
than one interest index. Persons considering the purchase of floating rate notes
should carefully examine the applicable pricing supplement and should consult
their own tax advisors regarding the United States federal income tax
consequences of the holding and disposition of such notes.
U.S. holders may elect to treat all interest on any note as OID and
calculate the amount includible in gross income under the constant yield method
described above. For the purposes of this election, interest includes stated
interest, acquisition discount, OID, de minimis OID, market discount, de minimis
market
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discount and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium. A U.S. holder must choose the treatment for the taxable
year in which the U.S. holder acquired the note, and may not be revoked without
the consent of the IRS. U.S. holders should consult with their own tax advisors
about this election.
SHORT-TERM NOTES
In the case of notes originally issued at a discount and having a term of
one year or less ("SHORT-TERM ORIGINAL ISSUE DISCOUNT NOTES"), all payments
(including all stated interest) will be included in the stated redemption price
at maturity and, thus, U.S. holders will generally be taxable on the discount in
lieu of stated interest. The discount will be equal to the excess of the stated
redemption price at maturity over the issue price of a short-term original issue
discount note, unless the U.S. holder elects to compute this discount using tax
basis instead of issue price. An election to compute this discount using tax
basis will apply to all obligations acquired by the holder in or after the first
taxable year to which the election applies and may not be revoked without the
consent of the IRS. In general, individuals and certain other cash method U.S.
holders of short-term original issue discount notes are not required to include
accrued discount in their income currently unless they elect to do so (but may
be required to include any stated interest in income as it is received). U.S.
holders who report income for federal income tax purposes on the accrual method
and certain other U.S. holders are required to accrue discount on such
short-term original issue discount notes (as ordinary income) on a straight-line
basis, unless an election is made to accrue the discount according to a constant
yield method based on daily compounding. In the case of a U.S. holder who is not
required, and does not elect, to include discount in income currently, any gain
realized on the sale, exchange or retirement of the short-term original issue
discount note will be ordinary income to the extent of the discount accrued
through the date of sale, exchange or retirement. In addition, a U.S. holder who
is not required, and does not elect, to include accrued discount in income
currently may be required to defer deductions for all or a portion of the U.S.
holder's interest expense with respect to any indebtedness incurred or continued
to purchase or carry such notes.
MARKET DISCOUNT
If a U.S. holder purchases a note other than an original issue discount
note for an amount that is less than its stated redemption price at maturity, or
an original issue discount note for an amount that is less than its "revised
issue price" (defined as the sum of the issue price of the note and the
aggregate amount of the OID includible, if any, without regard to the rules for
acquisition premium discussed below, in the gross income of all previous holders
of the note), the amount of the difference will be treated as "market discount"
for U.S. federal income tax purposes, unless such difference is less than a
specified de minimis amount. Under the market discount rules, a U.S. holder will
be required to treat any principal payment on, or any gain on the sale,
exchange, retirement or other disposition of, a note as ordinary income to the
extent of 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. In addition, the U.S. holder may be required to defer, until the
maturity of the note or its earlier disposition in a taxable transaction, the
deduction of all or a portion of the interest expense on any indebtedness
incurred or continued to purchase or carry such note.
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the stated maturity date of the note, unless the
U.S. holder elects to accrue on a constant interest rate method. A U.S. holder
of a note may elect to include market discount in income currently as it accrues
(on either a ratable or constant interest rate basis), in which case the rules
described above regarding the deferral of interest deductions and the treatment
of principal payments on, or gain on the sale, exchange, retirement or other
disposition of, a note will not apply. This election to include market discount
in income currently, once made, applies to all market discount obligations
acquired in or after the first taxable year to which the election applies, and
may not be revoked without the consent of the IRS.
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ACQUISITION PREMIUM; AMORTIZABLE BOND PREMIUM
A U.S. holder who purchases a note for an amount that is greater than its
adjusted issue price, but equal to or less than the sum of all amounts payable
on the note after the purchase date (other than payments of qualified stated
interest), will be considered to have purchased such note at an "acquisition
premium." Under the acquisition premium rules, the amount of OID which such
holder must include in its gross income with respect to such note for any
taxable year will be reduced by the portion of such acquisition premium properly
allocable to such year.
A U.S. holder who purchases a note for an amount in excess of the sum of
all amounts payable on the note after the purchase date (other than payments of
qualified stated interest) will be considered to have purchased the note at a
"premium" and will not be required to include any OID in income. A U.S. holder
generally may elect to amortize the premium over the remaining term of the note
on a constant yield method as an offset to interest when includible in income
under the U.S. holder's regular method of accounting. Bond premium on a note
held by a U.S. holder that does not make such an election will decrease the gain
or increase the loss otherwise recognized on disposition of the note. The
election to amortize premium on a constant yield method once made applies to all
debt obligations held or subsequently acquired by the electing U.S. holder on or
after the first day of the first taxable year to which the election applies and
may not be revoked without the consent of the IRS.
SALE, EXCHANGE AND RETIREMENT OF NOTES
A U.S. holder's tax basis in a note will, in general, be the U.S. holder's
cost therefor, increased by OID, market discount or any discount with respect to
a short-term original issue discount note, previously included in income by the
U.S. holder and reduced by any amortized premium and any cash payments on the
note other than qualified stated interest. Upon the sale, exchange or retirement
of a note, a U.S. holder will recognize gain or loss equal to the difference
between the amount realized upon the sale, exchange or retirement (less any
accrued but unpaid qualified stated interest, which will be taxable as such) and
the adjusted tax basis of the note. Except as described above with respect to
certain short-term original issue discount notes or with respect to market
discount, or with respect to gain or loss attributable to changes in exchange
rates as described below with respect to certain foreign currency notes, such
gain or loss will be capital gain or loss and will be long-term capital gain or
loss if at the time of sale, exchange or retirement the note has been held for
more than one year. Under current law, net capital gains of individuals are,
under certain circumstances, taxed at lower rates than items of ordinary income.
The deductibility of capital losses is subject to limitations.
EXTENSION OF MATURITY, OPTIONAL REDEMPTION AND OPTIONAL REPAYMENT
If so specified in an applicable pricing supplement relating to a note, we
may have the option to extend the maturity of a note. See "Description of
Notes -- Extension of Maturity." The treatment of a U.S. holder of notes with
respect to which such an option has been exercised may depend, in part, on the
terms established for such notes by Firstar pursuant to the exercise of such
option (the "REVISED TERMS"). Such U.S. holder may be treated for United States
federal income tax purposes as having exchanged such notes (the "OLD NOTES") for
new notes with the revised terms (the "NEW NOTES"). If the exercise of the
option by us is not treated as an exchange of old notes for new notes, no gain
or loss will be recognized by a U.S. holder as a result thereof. If the exercise
of the option is treated as a taxable exchange of old notes for new notes, a
U.S. holder may recognize gain or loss equal to the difference between the issue
price of the new notes and the holder's tax basis in the old notes.
If so specified in an applicable pricing supplement relating to a note, we
may have the right to redeem the note prior to its stated maturity date, and the
holder may have the right to elect repayment of the note prior to its stated
maturity date. See "Description of Notes -- Optional Redemption, Repayment and
Repurchase."
The presence of such options may also affect the calculation of OID, among
other things. The OID Regulations provide that, solely for purposes of the
accrual of OID, an issuer of a debt instrument having an option or combination
of options to extend the term of the debt instrument or to redeem the debt
instrument prior to its stated maturity date will be presumed to exercise such
option or options in the
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manner that minimizes the yield on the debt instrument. Conversely, a holder
having an option to elect repayment of the debt instrument prior to its stated
maturity date or a combination of such options will be presumed to exercise such
option or options in a manner that maximizes the yield on the debt instrument.
If the exercise of such option or options to extend the term of the debt
instrument, to redeem the debt instrument prior to its stated maturity date or
to elect repayment of the debt instrument prior to its stated maturity date
actually occurs or does not occur, contrary to the presumption made under the
OID Regulations (a "CHANGE OF CIRCUMSTANCES"), then, solely for purposes of the
accrual of OID, the debt instrument is treated as reissued on the date of the
change in circumstances for an amount equal to its adjusted issue price on that
date. Persons considering the purchase of notes involving an option of Firstar
to extend the stated maturity date of the notes or to redeem the notes prior to
their stated maturity date or an option of a holder to elect repayment of a note
prior to its stated maturity date should carefully examine the applicable
pricing supplement and should consult their own tax advisors regarding the
United States federal income tax consequences of the holding and disposition of
such notes.
FOREIGN CURRENCY NOTES
The following is a summary of the principal U.S. federal income tax
consequences to a U.S. holder of the ownership of a note (a "FOREIGN CURRENCY
NOTE") denominated in a specified currency other than the U.S. dollar (a
"FOREIGN CURRENCY"). If interest payments are made in a foreign currency to a
U.S. holder that is not required to accrue such interest prior to its receipt,
such holder will be required to include in income the U.S. dollar value of the
amount received (determined by translating the foreign currency received at the
"spot rate" for such foreign currency on the date such payment is received),
regardless of whether the payment is in fact converted into U.S. dollars. No
separate exchange gain or loss is recognized with respect to the receipt of such
payment, except to the extent that such gain or loss arises on the actual
disposition of the foreign currency involved.
A U.S. holder that is required or elects to accrue interest on a foreign
currency note prior to the receipt of such interest will be required to include
in income for each taxable year the U.S. dollar value of the interest that has
accrued during such year, determined by translating such interest at the average
rate of exchange for the period or periods during which such interest accrued.
The average rate of exchange for an interest accrual period is the simple
average of the exchange rates for each business day of such period (or such
other average that is reasonably derived and consistently applied by the
holder). A U.S. holder may elect to translate interest income at the spot rate
on the last day of the accrual period (or last day of the taxable year in the
case of an accrual period that straddles the holder's taxable year) or on the
date the interest payment is received if such date is within five days of the
end of the accrual period. Upon receipt of an interest payment on such note,
such holder will recognize ordinary income or loss in an amount equal to the
difference between the U.S. dollar value of such payment (determined by
translating any foreign currency received at the "spot rate" for such foreign
currency on the date received) and the U.S. dollar value of the interest income
that such holder has previously included in income with respect to such payment.
OID on a note that is also a foreign currency note will be determined for
any accrual period in the applicable foreign currency and then translated into
U.S. dollars in the same manner as interest income accrued by a holder on the
accrual basis, as described above. Likewise, a U.S. holder will recognize
exchange gain or loss when the OID is paid to the extent of the difference
between the U.S. dollar value of the accrued OID (determined in the same manner
as for accrued interest) and the U.S. dollar value of such payment (determined
by translating any foreign currency received at the spot rate for such foreign
currency on the date of payment). For this purpose, all receipts on a note will
be viewed first as the receipt of any stated interest payments called for under
the terms of the note, second as receipts of previously accrued OID (to the
extent thereof), with payments considered made for the earliest accrual periods
first, and thereafter as the receipt of principal.
The amount of market discount on foreign currency notes includible in
income will generally be determined by translating the market discount
determined in the foreign currency into U.S. dollars at the spot rate on the
date the foreign currency note is retired or otherwise disposed of. If the U.S.
holder has
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elected to accrue market discount currently, then the amount which accrues is
determined in the foreign currency and then translated into U.S. dollars on the
basis of the average exchange rate in effect during such accrual period. A U.S.
holder will recognize exchange gain or loss with respect to market discount
which is accrued currently using the approach applicable to the accrual of
interest income as described above.
Bond premium on a foreign currency note will be computed in the applicable
foreign currency. With respect to a U.S. holder that elects to amortize the
premium, the amortizable bond premium will reduce interest income in the
applicable foreign currency. At the time bond premium is amortized, exchange
gain or loss (which is generally ordinary income or loss) will be realized based
on the difference between spot rates at such times and at the time of
acquisition of the foreign currency note. A U.S. holder that does not elect to
amortize bond premium will translate the bond premium, computed in the
applicable foreign currency, into U.S. dollars at the spot rate on the maturity
date and such bond premium will constitute a capital loss which may be offset or
eliminated by exchange gain.
A U.S. holder's tax basis in a foreign currency note will be the U.S.
dollar value of the foreign currency amount paid for such foreign currency note
determined at the time of such purchase (or, as discussed below, determined on
the settlement date for such purchase in the case of a publicly-traded foreign
currency note). A U.S. holder that purchases a note with previously owned
foreign currency will recognize exchange gain or loss at the time of purchase
attributable to the difference at the time of purchase, if any, between his tax
basis in such foreign currency and the fair market value of the note in U.S.
dollars on the date of purchase (or settlement). Such gain or loss will be
ordinary income or loss.
For purposes of determining the amount of any gain or loss recognized by a
U.S. holder on the sale, exchange, retirement or other disposition of a foreign
currency note, the amount realized upon such sale, exchange, retirement or other
disposition will be the U.S. dollar value of the amount realized in foreign
currency (other than amounts attributable to accrued but unpaid interest not
previously included in the holder's income), determined at the time of the sale,
exchange, retirement or other disposition.
A U.S. holder will recognize exchange gain or loss attributable to the
movement in exchange rates between the time of purchase and the time of
disposition (including the sale, exchange, retirement or other disposition) of a
foreign currency note. Such gain or loss will be treated as ordinary income or
loss. The realization of such gain or loss will be limited to the amount of
overall gain or loss realized on the disposition of a foreign currency note.
A U.S. holder's tax basis in foreign currency received as interest on (or
OID with respect to), or received on the sale, exchange, retirement or other
disposition of, a foreign currency note will be the U.S. dollar value thereof at
the spot rate at the time the holder received such foreign currency. Regulations
issued under Section 988 of the Code provide a special rule for purchases and
sales of publicly-traded foreign currency notes by a cash method taxpayer, under
which units of foreign currency paid or received are translated into dollars at
the spot rate on the settlement date of the purchase or sale. Accordingly, no
foreign currency gain or loss will result from currency fluctuations between the
trade date and the settlement date of such a purchase or sale. An accrual method
taxpayer may elect the same treatment required of cash method taxpayers with
respect to the purchase and sale of publicly-traded foreign currency notes,
provided that the election is applied consistently. Such election cannot be
changed without the consent of the IRS. Any gain or loss recognized by a U.S.
holder on a sale, exchange or other disposition of foreign currency will be
ordinary income or loss and will not be treated as interest income or expense,
except to the extent provided in regulations promulgated by the U.S. Department
of the Treasury or administrative pronouncements of the IRS.
INDEXED NOTES
The tax treatment of a U.S. holder of an indexed note will depend on
factors including the specific index or indices used to determine indexed
payments on the note and the amount and timing of any contingent payments of
principal and interest. Persons considering the purchase of indexed notes should
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carefully examine the applicable pricing supplement and should consult their own
tax advisors regarding the U.S. federal income tax consequences of the holding
and disposition of such notes.
NON-U.S. HOLDERS
Under present U.S. federal income and estate tax law, and subject to the
discussion below concerning backup withholding:
(a) no withholding of U.S. federal income tax will be required with
respect to the payment by us or any paying agent (in its capacity as such)
of principal, premium (if any) or interest (which for purposes of this
discussion includes OID) on a note owned by a Non-U.S. holder, provided
that
(1) such Non-U.S. holder does not actually or constructively own
10% or more of the total combined voting power of all of our classes of
stock entitled to vote within the meaning of section 871(h)(3) of the
Code and the regulations thereunder,
(2) such Non-U.S. holder is not a controlled foreign corporation
that is related to us through stock ownership,
(3) such Non-U.S. holder is not a bank whose receipt of interest on
a note is described in section 881(c)(3)(A) of the Code,
(4) the statement described below has been provided by or with
respect to the beneficial owner and
(5) such interest is not contingent interest within the meaning of
section 871(h)(4)(A) of the Code and the regulations thereunder;
(b) no withholding of U.S. federal income tax will be required with
respect to any gain or income realized by a Non-U.S. holder upon the sale,
exchange or retirement of a note; and
(c) a note beneficially owned by an individual who at the time of
death is a Non-U.S. holder will not be subject to U.S. federal estate tax
as a result of such individual's death, provided that such individual does
not actually or constructively own 10% or more of the total combined voting
power of all of our classes of stock entitled to vote within the meaning of
section 871(h)(3) of the Code and provided that the interest payments with
respect to such note would not have been, if received at the time of such
individual's death, effectively connected with the conduct of a U.S. trade
or business by such individual.
To qualify for the exemption from withholding tax referred to in (a) above,
the beneficial owner of such note, or a financial institution holding the note
on behalf of such owner, must provide, in accordance with specified procedures,
a paying agent of ours with a statement to the effect that the beneficial owner
is not a U.S. person, citizen or resident. Pursuant to current temporary
Treasury regulations, which generally apply to payments on a note on or before
December 31, 2000, these requirements will be met if (1) the beneficial owner
provides his name and address, and certifies, under penalties of perjury, that
he is not a U.S. person, citizen or resident (which certification may be made on
an Internal Revenue Service Form W-8 (or successor form)) or (2) a financial
institution holding the note on behalf of the beneficial owner certifies, under
penalties of perjury, that such statement has been received by it and furnishes
a paying agent with a copy thereof. On October 6, 1997, the Treasury Department
issued final regulations relating to withholding tax, information reporting and
backup withholding that unify current certification procedures and forms and
clarify reliance standards (the "FINAL REGULATIONS"). The Final Regulations,
which generally apply to payments on a note after December 31, 2000, provide
alternative methods for satisfying the certification requirement described
above.
Payments of premium, if any, and interest (including OID) to Non-U.S.
holders not meeting the requirements of paragraph (a) above will be subject to a
30% withholding unless the beneficial owner of the note provides us with a
properly executed (1) IRS Form 1001 (or successor form) claiming an exemption
from or reduction in withholding under the benefit of a tax treaty or
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(2) IRS Form 4224 (or successor form) stating that interest paid on the note is
not subject to withholding tax because it is effectively connected with the
owner's conduct of a trade or business in the United States.
If a Non-U.S. holder is engaged in a trade or business in the United States
and premium, if any, or interest (including OID) on the note is effectively
connected with the conduct of such trade or business, the Non-U.S. holder,
although exempt from the withholding tax discussed above, will be subject to
U.S. federal income tax on such interest and OID on a net income basis in the
same manner as if it were a U.S. holder. In addition, if such holder is a
foreign corporation, it may be subject to a branch profits tax equal to 30% of
its effectively connected earnings and profits for the taxable year, subject to
adjustments. For this purpose, such premium, if any, and interest (including
OID) on a note will be included in such foreign corporation's earnings and
profits.
Any gain or income realized upon the sale, exchange, retirement or other
disposition of a note generally will not be subject to U.S. federal income tax
unless (a) such gain or income is effectively connected with a trade or business
in the United States of the Non-U.S. holder, or (b) in the case of a Non-U.S.
holder who is an individual, such individual is present in the United States for
183 days or more in the taxable year of such sale, exchange, retirement or other
disposition, and certain other conditions are met.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to certain
payments of principal, interest, OID and premium paid on notes and to the
proceeds of a sale of a note made to U.S. holders other than certain exempt
recipients (such as corporations). Backup withholding at a 31% rate will apply
to such payments if the U.S. holder fails to provide a taxpayer identification
number or certification of foreign or other exempt status or fails to report in
full dividend and interest income.
No information reporting or backup withholding will be required with
respect to payments made by us or any paying agent to Non-U.S. holders if a
statement described in (a)(4) under "-- Non-U.S. holders" has been received and
the payor does not have actual knowledge (and, with respect to payments made
after December 31, 2000, does not have reason to know) that the beneficial owner
is a U.S. person.
In addition, backup withholding and information reporting will not apply if
payments of the principal, interest, OID or premium on a note is paid or
collected by a foreign office of a custodian, nominee or other foreign agent on
behalf of the beneficial owner of such note, or if a foreign office of a broker
(as defined in applicable Treasury Regulations) pays the proceeds of the sale of
a note to the owner thereof. If, however, such nominee, custodian, agent or
broker is, for U.S. federal income tax purposes, a U.S. person, a controlled
foreign corporation, a foreign person that derives 50% or more of its gross
income for certain periods from the conduct of a trade or business in the United
States, or, in the case of payments made after December 31, 2000, a foreign
partnership at least 50 percent of the capital or profits interests of which are
owned by U.S. persons or that is engaged in the conduct of a United States trade
or business. Such payment will not be subject to backup withholding but may be
subject to information reporting.
Payments of principal, interest, OID and premium on a note paid to the
beneficial owner of a note by a U.S. office of a custodian, nominee or agent, or
the payment by the U.S. office of a broker of the proceeds of sale of a note,
will be subject to both backup withholding and information reporting unless the
beneficial owner provides a statement described in (a)(4) above and the payor
does not have actual knowledge that the beneficial owner is a U.S. person (and,
with respect to payments made after December 31, 2000, does not have reason to
know) or the beneficial owner otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules will be allowed as
a refund or a credit against such holder's U.S. federal income tax liability
provided the required information is furnished to the IRS.
S-32
<PAGE> 33
PLAN OF DISTRIBUTION
We are offering the notes for sale on a continuing basis through Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Banc of America
Securities LLC, Bear, Stearns & Co. Inc., Donaldson, Lufkin & Jenrette
Securities Corporation, Credit Suisse First Boston Corporation, Goldman, Sachs &
Co., Lehman Brothers Inc., Morgan Stanley & Co. Incorporated and Salomon Smith
Barney Inc. (our "AGENTS"), who will purchase the notes, as 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 the agent as principal will be purchased by the
Agents 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. If agreed to by
us and the Agents, the Agents may utilize their 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. We
will pay a commission to the Agents, ranging from .125% to .750% 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 the applicable Agent at the time of sale.
The Agents may sell notes they have purchased from us as principal to other
dealers for resale to investors, and may allow any portion of the discount
received in connection with such purchases from us to such dealers. After the
initial public offering of notes, the public offering price, in the case of
notes to be resold at a fixed public offering price, the concession and the
discount allowed to dealers may be changed.
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 the Agents. The Agents will have the
right, in their discretion reasonably exercised, to reject in whole or in part
any offer to purchase notes received by the Agents. Unless otherwise specified
in an applicable pricing supplement, payment of the purchase price of the notes
will be required to be made in immediately available funds in U.S. dollars or
such other 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. The Agents 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. 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 thereof. 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 such sales.
In connection with the offering of notes purchased by the Agents as
principal on a fixed price basis, the Agents are 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 the Agents create a short position in the notes in
connection with the offering, i.e., if they sell notes in an aggregate principal
amount exceeding that set forth in the applicable pricing supplement, then the
Agents 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 the Agents make 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 the Agents make any
representation that the Agents will engage in any such transactions or that such
transactions, once commenced, will not be discontinued without notice.
S-33
<PAGE> 34
LEGAL MATTERS
The validity of the notes, as well as certain other legal matters, will be
passed upon for Firstar by Jennie P. Carlson, Esq., Senior Vice President,
General Counsel and Secretary of Firstar, and by Wachtell, Lipton, Rosen & Katz,
New York, New York. Certain legal matters will be passed upon for the Agents by
Simpson Thacher & Bartlett, New York, New York. As of March 31, 1999. Ms.
Carlson was the beneficial owner of 47,654 shares of Firstar Common Stock and
had options to acquire 45,000 additional shares.
S-34
<PAGE> 35
PROSPECTUS
FIRSTAR CORPORATION
[FIRSTAR LOGO]
$1,000,000,000
DEBT SECURITIES AND DEBT WARRANTS
PREFERRED SHARES AND PREFERRED SHARE WARRANTS
DEPOSITARY SHARES
COMMON STOCK AND COMMON STOCK WARRANTS
UNITS
----------------------
We may offer and sell from time to time:
- debt securities;
- warrants to purchase debt securities;
- preferred shares;
- warrants to purchase preferred shares;
- fractions of preferred shares represented by depositary receipts;
- common stock;
- warrants to purchase common stock; and
- units consisting of one or more of these securities.
We will provide the specific terms of each series or issue of securities we
issue in supplements to this prospectus. You should read this prospectus and the
supplements carefully before you invest. We may only use this prospectus to
offer and sell our securities if it is accompanied by a prospectus supplement.
We may offer the securities directly or through underwriters, agents or
dealers. The applicable prospectus supplement will designate the terms of that
plan of distribution.
OUR DEBT SECURITIES ARE OUR UNSECURED OBLIGATIONS AND ARE NOT SAVINGS
ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY OF OUR BANKS OR NONBANK
SUBSIDIARIES. OUR DEBT SECURITIES ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE BANK INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY.
THIS PROSPECTUS MAY NOT BE USED TO SELL SECURITIES UNLESS ACCOMPANIED BY A
PROSPECTUS SUPPLEMENT.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS JUNE 23, 1999.
<PAGE> 36
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Firstar..................................................... 2
Where You Can Find More Information......................... 2
Use of Proceeds............................................. 4
Ratios of Earnings to Fixed Charges and to Combined Fixed
Charges and Preferred Stock Dividends..................... 4
Certain Regulatory Matters.................................. 5
Description of Debt Securities.............................. 10
Description of Preferred Shares............................. 22
Description of Depositary Shares............................ 27
Description of Common Stock................................. 30
Description of Securities Warrants.......................... 31
European Monetary Union..................................... 35
Plan of Distribution........................................ 36
Validity of Securities...................................... 36
Experts..................................................... 36
Forward-Looking Statements.................................. 37
</TABLE>
1
<PAGE> 37
FIRSTAR
Firstar Corporation ("FIRSTAR") is the organization created by the merger
of Star Banc Corporation and Firstar Corporation ("OLD FIRSTAR CORPORATION") on
November 20, 1998. We are a regional, multi-state bank holding company
headquartered in Milwaukee, Wisconsin. We own 100 percent of the capital stock
of eight bank subsidiaries having over 700 banking offices in Wisconsin, Ohio,
Iowa, Minnesota, Illinois, Indiana, Kentucky, Tennessee and Arizona. We also own
various nonbank and limited purpose bank subsidiaries engaged in related
financial services.
We provide banking services throughout the midwestern United States. All of
our banking subsidiaries other than Firstar Bank, N.A. were part of old Firstar
Corporation. Our banks provide a broad range of financial services for companies
based in its market region, national business organizations, governmental
entities and individuals. These commercial and consumer banking activities
include accepting demand, time and savings deposits; making both secured and
unsecured business and personal loans; and issuing and servicing credit cards.
Our banks also engage in correspondent banking and provide a full range of trust
and investment management services to individual and corporate customers. We
also provide international banking services consisting of foreign trade
financing, issuance and confirmation of letters of credit, funds collection and
foreign exchange transactions. Our nonbank subsidiaries provide retail brokerage
services, trust and investment management services, residential mortgage
banking, consumer financing, title insurance, business insurance, consumer and
credit related insurance, and corporate operational services.
Our operations include three primary business segments: consumer banking,
wholesale banking, and trust and private banking.
Our principal executive offices are located at 777 East Wisconsin Avenue,
Milwaukee, Wisconsin 53202, and the telephone number is (414) 765-4321.
Additional information about Firstar is included in the documents
incorporated by reference in this document. See "Where You Can Find More
Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the Securities and Exchange Commission (the "COMMISSION"). Our
Commission filings are available to the public over the internet at the
Commission's web site at http://www.sec.gov. You may also read and copy any
document we file at the Commission's public reference rooms in Washington, D.C.,
New York, New York and Chicago, Illinois. Please call the Commission at
1-800-SEC-0330 for further information on the public reference rooms and their
copy charges. Our common stock, par value $.01 per share ("COMMON STOCK") is
listed on the New York Stock Exchange, Inc. (the "NYSE"). You can obtain
information about us from the NYSE at 20 Broad Street, New York, New York 10005.
The Commission allows us to "incorporate by reference" the information we
file with the Commission, which means that we can disclose important information
to you by referring you to those documents. The information incorporated by
reference is an important part of this prospectus, and information that we file
later with the Commission will automatically update and supersede this
information. We incorporate by reference the documents listed below and any
future filings made with the Commission under Sections 13(a), 13(c), 14, or
15(d) of the Securities and Exchange Act of 1934, as amended (the "EXCHANGE
ACT") until we, or our agents, sell all of the securities offered under this
prospectus:
- Annual Report on Form 10-K (excluding the report, dated January 11, 1999
of Arthur Andersen LLP set forth in Exhibit 13 thereto) for the year
ended December 31, 1998;
- Quarterly Report on Form 10-Q for the quarter ended March 31, 1999;
2
<PAGE> 38
- Current Reports on Form 8-K filed on March 16, 1999 (as amended on April
2, 1999), May 4, 1999 (as amended on May 19, 1999) and May 20, 1999;
- The description of the common stock contained in our Form 8-A dated
August 5, 1971, as amended; and
- The description of the preferred share purchase rights (the "PREFERRED
STOCK PURCHASE RIGHTS") issued pursuant to the Rights Agreement, dated as
of November 23, 1998, between Firstar and Firstar Bank Milwaukee N.A., as
rights agent (the "RIGHTS AGREEMENT") and described in our Registration
Statement on Form 8-A dated December 1, 1998 and any amendment or report
filed for the purpose of updating such description.
This prospectus is part of a registration statement that we filed with the
Commission utilizing a "shelf" registration process. Under this shelf
registration process, we may sell any combination of the securities described in
this prospectus (referred to from time to time in this document as the "OFFERED
SECURITIES") in one or more offerings up to a total dollar amount of
$1,000,000,000. This prospectus provides you with a general description of the
securities we may offer. As permitted by Commission rules, this prospectus does
not contain all of the information included in the registration statement and
the accompanying exhibits and schedules we file with the Commission. Each time
we sell securities, we will provide a prospectus supplement that will contain
specific information about the terms of that offering. The prospectus supplement
may also add, update or change information contained in this prospectus. You
should read both this prospectus and any prospectus supplement together with the
registration statement, the exhibits and schedules for more information about us
and our securities.
Unless otherwise indicated or unless the context requires otherwise, all
references in this prospectus to "we," "us," "our" or similar references mean
Firstar Corporation and its subsidiaries.
We will provide a copy of any or all of the reports or documents
incorporated by reference (other than exhibits, unless such exhibits are
specifically incorporated by reference in such documents), without charge, to
any person who makes a written or oral request to us for such material. You
should send your written request for such material to David M. Moffett, Chief
Financial Officer, Firstar Corporation, 777 East Wisconsin Avenue, Milwaukee,
Wisconsin 53202. Telephone requests may be directed to 414-765-4518.
----------------------
Unless otherwise indicated, currency amounts in this prospectus and any
prospectus supplement are stated in United States dollars ("$," "dollars," "U.S.
dollars," or "U.S. $").
3
<PAGE> 39
USE OF PROCEEDS
Unless otherwise specified in an applicable prospectus supplement, we will
use the net proceeds we receive from the sale of the securities offered by this
prospectus and the accompanying prospectus supplement for general corporate
purposes, including investments in or advances to existing or future
subsidiaries, repayment of maturing obligations, and redemption of outstanding
indebtedness. Pending such use, we may temporarily invest the net proceeds or
use them to reduce short-term indebtedness.
RATIOS OF EARNINGS TO FIXED CHARGES AND TO COMBINED
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Our consolidated ratios of earnings to fixed charges and our ratio of
earnings to combined fixed charges and preferred stock dividends for each of the
years in the five-year period ended December 31, 1998 and for the quarterly
period ended March 31, 1999 are as follows:
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED FISCAL YEAR ENDED DECEMBER 31,
MARCH 31, -----------------------------------------
1999 1998 1997 1996 1995 1994
--------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits........ 4.25x 2.90x 3.65x 3.46x 3.10x 4.11x
Including interest on deposits........ 1.88x 1.51x 1.70x 1.60x 1.55x 1.74x
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends:
Excluding interest on deposits........ 4.25x 2.90x 3.64x 3.45x 3.09x 4.08x
Including interest on deposits........ 1.88x 1.51x 1.70x 1.60x 1.55x 1.74x
</TABLE>
The consolidated ratio of earnings to fixed charges is computed by dividing
income before income taxes plus fixed charges less capitalized interest by fixed
charges. The consolidated ratio of earnings to combined fixed charges and
preferred stock dividends is computed by dividing income before income taxes
plus fixed charges less capitalized interest by fixed charges and pretax
earnings required to cover preferred stock dividends. Fixed charges, excluding
interest on deposits, consist of interest on short-term borrowings and long-term
debt, amortization of debt expense, capitalized interest and one-third of net
rental expense (which is deemed representative of the interest factor). Fixed
charges, including interest on deposits, consist of the foregoing items plus
interest on deposits. Pretax earnings required to cover preferred stock
dividends have been computed by dividing preferred stock dividends by one minus
our effective income tax rate.
4
<PAGE> 40
CERTAIN REGULATORY MATTERS
GENERAL
As a bank holding company, we are subject to supervision and examination by
the Board of Governors of the Federal Reserve System (the "FEDERAL RESERVE
BOARD"). Under the Bank Holding Company Act of 1956, as amended (the "BHCA"), a
bank holding company generally may not, directly or indirectly, acquire the
ownership or control of more than 5% of the voting securities or all or
substantially all of the assets of any company, including a bank, without the
prior approval of (or, in the case of certain non-bank companies, prior notice
to) the Federal Reserve Board. In addition, under the BHCA, a bank holding
company is generally prohibited from engaging in nonbanking activities.
Proposals to change the laws and regulations governing the banking industry are
frequently raised in Congress, in the state legislatures and before the various
bank regulatory agencies. The likelihood and timing of any changes and the
impact such changes might have on our banks and their affiliates are difficult
to determine.
Our banks are subject to supervision and examination by applicable U.S.
federal and state banking agencies. Our bank subsidiaries with national charters
are primarily regulated by the Office of the Comptroller of the Currency (the
"OCC"). Our subsidiary banks with state charters are supervised and examined by
their respective state banking agencies and either by the Federal Reserve Board
(if a member bank of the Federal Reserve System) or by the Federal Deposit
Insurance Corporation (the "FDIC") if a nonmember. The deposits of our banks are
primarily insured by the Bank Insurance Fund (the "BIF") and certain deposits of
our banks are insured by the Savings Association Insurance Fund (the "SAIF");
for that reason, all of our banks are also subject to regulation by the FDIC.
Our banks are also affected by the fiscal and monetary policies of the federal
government and its agencies, including the Federal Reserve Board. An important
purpose of these policies is to curb inflation and control recessions through
control of the supply of money and credit. The Federal Reserve Board uses its
powers to establish reserve requirements of insured depository institutions, to
set the discount rate on its extensions of credit to insured depository
institutions and to conduct open market operations in U.S. government securities
so as to influence the supply of money and credit. These policies have a direct
effect on the amount of bank loans and deposits and on the interest rates
charged on loans and paid on deposits, with the result that federal policies
have a material effect on bank earnings. Future policies of the Federal Reserve
Board and other authorities cannot be predicted nor can their effect on the
future earnings of our banks be predicted.
To the extent that the following information describes statutory or
regulatory provisions, it is qualified in its entirety by reference to such
statutory or regulatory provisions.
DIVIDEND RESTRICTIONS
Various U.S. federal and state statutory provisions limit the amount of
dividends that our banking subsidiaries can pay to us without regulatory
approval. The approval of applicable U.S. federal bank regulatory agencies is
required for the payment of any dividend if the total of all dividends declared
in any calendar year would exceed the total of the institution's net profits, as
defined by those regulatory agencies, for that year combined with its retained
net profits for the preceding two years. In addition, a national bank may not
pay a dividend in an amount greater than its net profits then on hand. The
payment of dividends by the banking subsidiaries may also be affected by other
factors, such as the maintenance of adequate capital.
Under these provisions our banks could have declared, as of March 31, 1999,
aggregate dividends of at least $143.6 million, without obtaining prior
regulatory approval and without reducing the capital of our banks below "well
capitalized" minimum regulatory levels.
In addition, if, in the opinion of the applicable U.S. federal bank
regulatory agency, a depository institution under its jurisdiction is engaged in
or is about to engage in an unsafe and unsound practice (which, depending on the
financial condition of the institution, could include the payment of dividends),
such agency may require, after notice and hearing, that the institution in
question cease and desist from
5
<PAGE> 41
such practice. The OCC has indicated that paying dividends that would deplete a
depository institution's capital base to an inadequate level would be an unsafe
and unsound practice. Moreover, an insured depository institution may not pay
any dividends if that payment would cause it to become undercapitalized or once
it is undercapitalized. See "-- Capital Requirements." Also, the U.S. federal
bank regulatory agencies have issued policy statements that provide that
depository institutions and their holding companies should generally pay
dividends only out of current operating earnings.
HOLDING COMPANY STRUCTURE
We are a legal entity separate and distinct from our banking and nonbanking
subsidiaries. Accordingly, our right, and thus the rights of our creditors, to
participate in any distribution of the assets or earnings of any subsidiary
other than in our capacity as a bona fide creditor of the subsidiary is
necessarily subject to the prior satisfaction of claims of creditors of the
subsidiary. Any capital loan by us to a bank subsidiary is subordinate in right
of payment to deposits and to other indebtedness of the bank subsidiary. The
principal sources of our revenues are dividends and fees from our subsidiaries.
There are various legal restrictions on the extent to which a bank holding
company, such as Firstar, and certain of its nonbank subsidiaries can borrow or
otherwise obtain credit from their bank subsidiaries. In general, these
restrictions require that any extensions of credit must be on non-preferential
terms and fully secured by designated amounts of specified collateral. These
restrictions also limit any holding company or its nonbank subsidiaries to 10%
of the lending bank's capital stock and surplus, and all of the holding
company's nonbank subsidiaries to 20% of the lending bank's capital stock and
surplus in the aggregate.
Under Federal Reserve Board policy, a bank holding company is expected to
act as a source of financial and managerial strength to its subsidiary banks and
to commit resources to support its subsidiary banks. This support may be
required at times when we may not have the resources to provide it. Consistent
with the policy regarding bank holding companies serving as a source of
financial strength for their subsidiary banks, the Federal Reserve Board has
stated that, as a matter of prudent banking, a bank holding company generally
should not maintain a rate of cash dividends unless its net income available to
common shareholders has been sufficient to fully fund such dividend rate, and
the prospective rate of earnings retention appears consistent with the bank
holding company's capital needs, asset quality and overall financial condition.
In addition, in the event of a bank holding company's bankruptcy, any commitment
by the bank holding company to a federal bank regulatory agency to maintain the
capital of a subsidiary bank will be assumed by the bankruptcy trustee and
entitled to a priority of payment.
Moreover, a depository institution insured by the FDIC can be held liable
for any loss incurred by, or reasonably expected to be incurred by, the FDIC in
connection with:
- the default of a commonly controlled FDIC-insured depository institution,
or
- any assistance provided by the FDIC to a commonly controlled FDIC-insured
depository institution in danger of default.
"DEFAULT" is defined generally as the appointment of a conservator or receiver
and "in danger of default" is defined generally as the existence of certain
conditions indicating that a "default" is likely to occur in the absence of
regulatory assistance.
In addition, federal law (12 U.S.C. Section 55) permits the OCC to order
the pro rata assessment of shareholders of a national bank whose capital stock
has become impaired, by losses or otherwise, to relieve a deficiency in such
national bank's capital stock. This statute also provides for the enforcement of
any pro rata assessment of shareholders of a national bank to cover such
impairment of capital stock by sale, to the extent necessary, of the capital
stock of any assessed shareholder failing to pay the assessment. As the sole
shareholder of our banks, we are subject to those provisions.
6
<PAGE> 42
ACQUISITIONS
Effective September 29, 1995, under the provisions of the Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994 (the "RIEGLE-NEAL ACT"),
we have been able to acquire banks located in any state, notwithstanding the
permissibility of those acquisitions under state law. However, those
acquisitions are subject to any state law requiring the bank being acquired to
have been organized and operating for a minimum period of time, not to exceed
five years. In addition, under the Riegle-Neal Act, bank mergers are subject to
federal and state deposit concentration limits (10% nationwide, and 30% in any
one state). State deposit concentration limit may be more or less than 30%,
depending on state law.
The Riegle-Neal Act also permits interstate branching through interstate
bank mergers or de novo branching. Under this provision, our banks may merge
with each other or with other banks across state lines, subject to certain
restrictions. In addition, subject to state law, a bank may open branches in
states in which it does not already have branches.
CAPITAL REQUIREMENTS
The Federal Reserve Board has issued standards for measuring capital
adequacy for bank holding companies. These standards are designed to provide
risk-responsive capital guidelines and to incorporate a consistent framework for
use by financial institutions operating in major international financial
markets. The banking regulators have issued standards for banks that are
substantially similar to the standards for bank holding companies.
In general, the risk-related standards require banks and bank holding
companies to maintain certain capital levels based on "risk-adjusted" assets, so
that categories of assets with potentially higher credit risk will require more
capital backing than categories with lower credit risk. In addition, banks and
bank holding companies are required to maintain capital to support certain
activities which are not reflected on their balance sheets, such as loan
commitments of one year or longer.
Under the risk-based capital standard, the minimum consolidated ratio of
total capital to risk-adjusted assets (including certain off-balance sheet
items) required by the Federal Reserve Board for bank holding companies is
currently 8%. At least one-half of the total capital, which the Federal Reserve
Board refers to as Tier 1 Capital, must be comprised of common equity, retained
earnings, qualifying noncumulative perpetual preferred stock, a limited amount
of qualifying cumulative perpetual preferred stock and a minority interest in
the equity accounts of consolidated subsidiaries, less certain items such as
goodwill and certain other intangible assets. The remainder may consist of
qualifying hybrid capital instruments, perpetual debt, mandatory convertible
debt securities, a limited amount of subordinated debt, preferred stock that
does not qualify as Tier 1 Capital, and a limited amount of loan and lease loss
reserves. As of March 31, 1999, our Tier 1 Capital and total capital to risk
adjusted assets ratios were 9.29% and 11.29%, respectively.
In addition to the risk-based standard, the Federal Reserve Board has
established minimum leverage ratio guidelines for bank holding companies.
Similar guidelines exist for banks. These guidelines provide for a minimum ratio
of Tier 1 Capital to adjusted average total assets less goodwill and certain
other intangibles (the "LEVERAGE RATIO") of 3% for bank holding companies that
meet certain specified criteria, including having the highest regulatory rating.
Other bank holding companies generally are required to maintain a Leverage Ratio
of at least 4% to 5%.
The guidelines also provide that bank holding companies experiencing
internal growth or making acquisitions are expected to maintain strong capital
positions substantially above the minimum supervisory levels without significant
reliance on intangible assets. Furthermore, the Federal Reserve Board has
indicated that it will consider a "tangible Tier 1 Capital Leverage Ratio"
(deducting all intangibles) and other indicators of capital strength in
evaluating proposals for expansion or new activities.
At March 31, 1999, our consolidated Leverage Ratio was 8.07%.
7
<PAGE> 43
In December 1991, Congress enacted the Federal Deposit Insurance
Corporation Improvement Act of 1991 (the "FDICIA"), which substantially revised
the Federal Deposit Insurance Act (the "FDIA") and makes revisions to several
other federal banking statutes. Among other things, the FDICIA requires federal
banking regulators to take "prompt corrective action" in respect of FDIC-insured
depository institutions that do not meet minimum capital requirements. The
FDICIA establishes five capital tiers: "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized" and
"critically undercapitalized." Under the regulations of the applicable U.S.
federal bank regulatory agency, an FDIC-insured depository institution is
defined to be well capitalized if it maintains a leverage ratio of at least 5%,
a risk-adjusted Tier 1 capital ratio of at least 6% and a risk-adjusted total
capital ratio of at least 10% and is not subject to a directive, order or
written agreement to meet and maintain specific capital levels. An insured
depository institution is defined to be adequately capitalized if it meets all
of its minimum capital requirements as described above under "-- Capital
Requirements." An adequately capitalized institution may only accept brokered
deposits if it receives a waiver from the FDIC approval. An insured depository
institution will be considered undercapitalized if it fails to meet any minimum
required measure; it will be considered significantly undercapitalized if it has
a risk-adjusted total capital ratio of less than 6%, risk-adjusted Tier 1
capital ratio of less than 3% or a leverage ratio of less than 3%; and it will
be considered critically undercapitalized if it fails to maintain a level of
tangible equity equal to at least 2% of total assets. An insured depository
institution may be deemed to be in a capitalization category that is lower than
is indicated by its actual capital position if it receives an unsatisfactory
examination rating.
The FDICIA generally prohibits a depository institution from making any
capital distribution (including payment of a dividend) or paying any management
fee to its holding company if the depository institution would thereafter be
undercapitalized. Undercapitalized depository institutions are subject to a wide
range of limitations on operations and activities, including growth limitations,
and are required to submit a capital restoration plan. Undercapitalized
institutions may not accept brokered deposits. The depository institution's
parent holding company must guarantee that the institution will comply with the
capital restoration plan. The parent holding company's obligations under that
guarantee would take priority over the claims of unsecured creditors in the
event of the parent holding company's bankruptcy. The aggregate liability of the
parent holding company is limited to the lesser of (a) an amount equal to 5% of
the depository institution's total assets at the time it became undercapitalized
and (b) the amount which is necessary (or would have been necessary) to bring
the institution into compliance with all capital standards applicable with
respect to that institution as of the time it fails to comply with the plan. If
a depository institution fails to submit an acceptable plan, it is treated as if
it were significantly undercapitalized.
Significantly undercapitalized depository institutions may be subject to a
number of requirements and restrictions, including orders to sell sufficient
voting stock to become adequately capitalized, requirements to reduce total
assets, and cessation of receipt of deposits from correspondent banks.
Critically undercapitalized institutions may not, beginning 60 days after
becoming critically undercapitalized, make any payment of principal or interest
on their subordinated debt. In addition, critically undercapitalized
institutions are subject to the appointment of a receiver or conservator.
The Federal Reserve Board and the other U.S. federal banking agencies are
also required by regulation to take into account risks stemming from
non-traditional activities, such as credit risk, as well as interest rate risk,
in considering the capital adequacy of an institution. Bank holding companies
and banks with substantial trading exposure are also required to hold capital
based on their exposure to market risk.
Based on the above criteria and our bank subsidiaries' capital ratios as of
March 31, 1999, each of our bank subsidiaries qualifies as "well capitalized"
under FDICIA and the applicable prompt corrective action regulations. The
terminology used in FDICIA and the prompt corrective action regulations, as
described above, should not necessarily be viewed as describing the condition or
prospects of any depository institutions, including our bank subsidiaries.
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FDIC INSURANCE
Our banks are subject to FDIC deposit insurance assessments. The FDIC has
adopted a risk-based premium schedule. Each financial institution is assigned to
one of three capital groups: "well capitalized," "adequately capitalized" or
"undercapitalized". Each financial institution is further assigned to one of
three subgroups within a capital group on the basis of supervisory evaluations
by the institution's primary U.S. federal and, if applicable, state supervisors,
and on the basis of other information relevant to the institution's financial
condition and the risk posed to the applicable insurance fund. The FDIC may
modify the assessment rate for each category semiannually. A significant
increase in assessment rates could have a material impact on us.
DEPOSITOR PREFERENCE
Under the FDICIA, claims of holders of domestic deposits and a number of
claims for administrative expenses and employee compensation against an
FDIC-insured depository institution have priority over other general unsecured
claims against the institution in the "liquidation or other resolution" of the
institution by a receiver.
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DESCRIPTION OF DEBT SECURITIES
This section describes the general terms and provisions of the debt
securities. Each time we offer debt securities, we will describe in a prospectus
supplement, and possibly a pricing supplement, the specific terms of that
particular offering.
We may from time to time offer to sell debt securities, consisting of
unsecured debt securities, which may be senior (the "SENIOR SECURITIES") or
subordinated (the "SUBORDINATED SECURITIES," and, together with the senior
securities, the "DEBT SECURITIES").
We will issue the senior debt securities under an indenture (the "SENIOR
INDENTURE"), between Firstar and Citibank, N.A., as trustee (the "SENIOR
TRUSTEE"). We will issue the Subordinated Securities under an indenture (the
"SUBORDINATED INDENTURE"), between Firstar and Citibank, N.A., as trustee (the
"SUBORDINATED TRUSTEE" and, together with the Senior Trustee, the "TRUSTEES").
The Senior Indenture and a form of the Subordinated Indenture (collectively, the
"INDENTURES") are attached as an exhibit to the registration statement.
The Indentures are contracts between us and the Trustees. If we default on
the debt securities, the Trustee has the power to enforce your rights against
us. In addition, the Trustee performs administrative duties on our behalf, such
as sending you interest payments and transferring your debt securities to a new
purchaser.
We have summarized selected provisions of the Indentures below. Because
this is only a summary, it is not complete and does not describe every aspect of
the debt securities. Numerical references in parentheses below are to sections
of the Indentures. Wherever we refer to particular sections or defined terms of
the Indentures, we intend that such sections or defined terms be incorporated in
this document by reference. Unless otherwise indicated, capitalized terms have
the meanings ascribed to them in the Indentures.
We are a bank holding company, and our right to participate as a
shareholder in any distribution of assets of any subsidiary upon its liquidation
or reorganization or winding-up is subject to the prior claims of creditors of
that subsidiary. Consequently, the ability of the holders of the debt securities
to benefit, as our creditors, from any distributions is also subject to these
prior claims. Our banks are subject to claims by creditors for long-term and
short-term debt obligations, including deposit liabilities, obligations for
federal funds purchased and securities sold under repurchase agreements. There
are also various legal limitations on the extent to which our banks may pay
dividends or otherwise supply funds to us or our affiliates. See "Certain
Regulatory Matters."
GENERAL
Each Indenture permits us to issue debt securities from time to time in an
unlimited amount in one or more series. (Section 301)
The senior debt securities will be unsecured and will rank pari passu with
our other unsecured unsubordinated indebtedness. The subordinated debt
securities will be unsecured and will rank pari passu with our other
subordinated debt, and, together with that other subordinated debt, will be
subordinated and junior in right of payment to the prior payment in full of our
senior debt.
A prospectus supplement for a specific series of offered debt securities
will describe the specific terms of those offered debt securities. That
prospectus supplement will address some or all of the following:
- the title and type and any limit on the aggregate principal amount of the
debt securities;
- the price (expressed as a percentage of the aggregate principal amount)
at which the debt securities will be issued;
- the date or dates on which the debt securities will mature or method by
which those dates can be determined and the dates on which premiums, if
any, will be payable;
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- the currency or currencies in which the debt securities are being sold
and are denominated and the circumstances, if any, under which any debt
securities may be payable in a currency other than the currency in which
the debt securities are denominated and, if so, the exchange rate, the
Exchange Rate Agent and, if the holder of any debt securities may elect
the currency in which payments on the debt securities are to be made, the
manner of that election;
- the denominations in which any debt securities which are Registered
Securities will be issuable, if other than denominations of $1,000 and
any integral multiple of $1,000, and the denomination or denominations in
which any debt securities which are Bearer Securities will be issuable,
if other than the denomination of $5,000;
- the interest rate or rates (which may be fixed or variable) for the debt
securities, which interest rate may be zero in the case of certain debt
securities issued at an issue price representing a discount from the
principal amount payable at maturity;
- the date from which interest on the debt securities will accrue, the
dates on which interest will be payable or the method by which those
dates can be determined, the date on which payment of interest will
commence and the circumstances, if any, in which we may defer interest
payments;
- the dates on which, and the price or prices at which, the debt securities
will, pursuant to any mandatory sinking fund provision, or may, pursuant
to any optional redemption provision, be redeemed or repaid, and the
other terms and provisions of any optional redemption or required
repayment;
- the place or places where the principal (and premium if any) and interest
may be payable;
- in the case of the subordinated debt securities, any terms by which those
securities may be convertible into common stock, preferred shares or
depositary shares, and, in the case of subordinated debt securities
convertible into preferred shares or depositary shares, the terms of
those preferred shares or depositary shares;
- whether the debt securities are to be issuable as Bearer Securities
and/or Registered Securities, and, if issuable as Bearer Securities, the
terms upon which any Bearer Securities may be exchanged for Registered
Securities;
- whether the debt securities are to be issued in the form of one or more
temporary or permanent Global Securities, and, if so, the identity of the
depositary for the Global Security or Securities;
- if a temporary global debt security is to be issued with respect to that
series, the extent to which, and the manner in which, any interest
payable on an Interest Payment Date prior to the issuance of a permanent
Global Security or definitive Bearer Securities will be credited to the
accounts of the persons entitled to the payment on that interest payment
date;
- if a temporary Global Security is to be issued with respect to that
series, the terms upon which interests in that temporary Global Security
may be exchanged for interests in a permanent Global Security or for
definitive debt securities of the series, and the terms upon which
interests in a permanent Global Security, if any, may be exchanged for
definitive debt securities of that series;
- any additional restrictive covenants included for the benefit of Holders
of the debt securities;
- any additional Events of Default applicable to the debt securities;
- information with respect to book-entry procedures, if any;
- whether the debt securities will be repayable at the option of the
Holder;
- any other terms of the debt securities not inconsistent with the
provisions of the applicable Indenture;
- our right to defease the debt securities or certain covenants under the
Indentures;
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- the Person or Persons who shall be the Security Registrar; and
- the terms of any securities being offered together with or separately
from the debt securities.
The applicable prospectus supplement will also describe any special
provisions for the payment of additional amounts with respect to the debt
securities, certain U.S. federal income tax consequences, and any risk factors
or other special considerations applicable to the debt securities. If a debt
security is denominated in a foreign currency, that debt security may not trade
on a U.S. national securities exchange unless and until the Commission has
approved appropriate rule changes pursuant to the Securities Act of 1933, as
amended (the "SECURITIES ACT") to accommodate the trading of that debt security.
Neither Indenture contains any restriction on our ability to enter into
highly leveraged transactions or any provision affording special protection to
holders of debt securities in the event we engage in a highly leveraged
transaction. Further, neither Indenture contains any provisions that would
provide protection to holders of debt securities upon a sudden and dramatic
decline in our credit quality resulting from a takeover, recapitalization or
similar restructuring.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
We may issue debt securities of a series in definitive form solely as
Registered Securities, solely as Bearer Securities or as both Registered
Securities and Bearer Securities. Unless otherwise indicated in the prospectus
supplement, Bearer Securities other than Bearer Securities in temporary or
permanent global form will have interest coupons attached. Each Indenture also
provides that we may issue Bearer Securities or Registered Securities of a
series in permanent global form. See "-- Permanent Global Securities."
You may exchange Registered Securities of any series for other Registered
Securities of the same series of authorized denominations and of a like
aggregate principal amount, tenor and terms. In addition, if debt securities of
any series are issuable as both Registered Securities and Bearer Securities, at
your option upon receipt of a request confirmed in writing, and subject to the
terms of the applicable Indenture, you may exchange Bearer Securities (with all
unmatured coupons, except as provided below, and all matured coupons in default)
for Registered Securities of the same series of any authorized denominations and
of a like aggregate principal amount, tenor and terms. If you surrender Bearer
Securities in exchange for Registered Securities between the close of business
on a Regular Record Date or a Special Record Date and the relevant date for
payment of interest, you should surrender them without the coupon relating to
that date for payment of interest because interest will not be payable in
respect of the Registered Security issued in exchange for that Bearer Security,
but will be payable only to the Holder of that coupon when due in accordance
with the terms of the applicable Indenture. We will not issue Bearer Securities
in exchange for Registered Securities. (Section 305) Each Bearer Security, other
than a temporary global Bearer Security, and each interest coupon will bear the
following legend: "Any United States Person who holds this obligation will be
subject to limitations under the United States federal income tax laws including
the limitations provided in Sections 165(j) and 1287(a) of the Internal Revenue
Code."
You may present debt securities for exchange as provided above, and you may
present Registered Securities for registration of transfer (duly endorsed or
accompanied by a satisfactory written instrument of transfer), at the office of
the Security Registrar or at the office of any transfer agent designated by us
for that purpose with respect to that series of debt securities, without service
charge and upon payment of any taxes and other governmental charges. (Section
305) If the applicable prospectus supplement refers to any transfer agent (in
addition to the Security Registrar) initially designated by us with respect to
any series of debt securities, we may at any time rescind the designation of
that transfer agent or approve a change in the location through which that
transfer agent (or Security Registrar) acts, except that, if debt securities of
a series are issuable solely as Registered Securities, we will be required to
maintain a transfer agent in each Place of Payment for that series and, if debt
securities of a series are issuable as Bearer Securities, we will be required to
maintain (in addition to the Security Registrar) a transfer agent in a Place of
Payment for that series located outside the United States. We may at any time
designate additional transfer agents with respect to any series of debt
securities. (Section 1002)
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We will not be required to:
- issue, register the transfer of or exchange debt securities of any
particular series to be redeemed for a period of 15 days preceding the
first publication of the relevant notice of redemption, or, if Registered
Securities are outstanding and there is no publication, the mailing of
the relevant notice of redemption;
- register the transfer of or exchange any Registered Security so selected
for redemption in whole or in part, except the unredeemed portion of any
Registered Security being redeemed in part; or
- exchange any Bearer Security so selected for redemption except that you
may exchange a Bearer Security for a Registered Security of like tenor
and terms of that series, provided that you will be required to surrender
that Registered Security for redemption. (Section 305)
Additional information regarding restrictions on the issuance, exchange and
transfer of and special U.S. federal income tax considerations relating to
Bearer Securities will be set forth in the applicable prospectus supplement.
TEMPORARY GLOBAL SECURITIES
If we specify in the applicable prospectus supplement, all or any portion
of the debt securities of a series which are issuable as Bearer Securities will
initially be represented by one or more temporary Global Securities, without
interest coupons, to be deposited with a common depositary in London for Morgan
Guaranty Trust Corporation of New York, Brussels Office, as operator of the
Euroclear System ("EUROCLEAR") and Cedel S.A. ("CEDEL") for credit to designated
accounts. On and after the date determined as provided in that temporary Global
Security and described in the applicable prospectus supplement, but within a
reasonable time, that temporary Global Security will be exchangeable for
definitive Bearer Securities, definitive Registered Securities or all or a
portion of a permanent global Bearer Security, or any combination thereof, as
specified in the applicable prospectus supplement. No definitive Bearer Security
or permanent global Bearer Security delivered in exchange for a portion of a
temporary Global Security shall be mailed or otherwise delivered to any location
in the United States in connection with that exchange. (Section 304)
Additional information regarding restrictions on and special U.S. federal
income tax consequences relating to temporary Global Securities will be set
forth in the applicable prospectus supplement.
PERMANENT GLOBAL SECURITIES
If any debt securities of a series are issuable in permanent global form,
the applicable prospectus supplement will describe the circumstances, if any,
under which beneficial owners of interests in that permanent Global Security may
exchange those interests for debt securities of that series and of like tenor
and principal amount of any authorized form and denomination. The principal and
any premium and interest on a permanent Global Security will be payable in the
manner described in the applicable prospectus supplement.
PAYMENTS AND PAYING AGENTS
Unless otherwise indicated in the applicable prospectus supplement,
payments of principal of and premium, if any, and interest, if any, on Bearer
Securities will be payable in the currency designated in the prospectus
supplement, subject to any applicable laws and regulations, at paying agencies
outside the United States as we may appoint from time to time. Unless otherwise
provided in the prospectus supplement, those payments may be made, at the option
of the Holder, by a check in the designated currency or by transfer to an
account in the designated currency maintained by the payee with a bank located
outside the United States.
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Unless otherwise indicated in the applicable prospectus supplement, payment
of interest on Bearer Securities on any Interest Payment Date will be made only
against surrender of the coupon relating to that Interest Payment Date to a
paying agent outside the United States. (Section 1001)
No payment with respect to any Bearer Security will be made at any office
or paying agency maintained by us in the United States nor will any such payment
be made by transfer to an account, or by mail to an address, in the United
States. Notwithstanding the foregoing, payments of principal and premium, if
any, and interest, if any, on Bearer Securities denominated and payable in U.S.
dollars will be made in U.S. dollars at an office or agency that we designate,
located in the United States, if payment of the full amount thereof in U.S.
dollars at all paying agencies outside the United States is illegal or
effectively precluded by exchange controls or other similar restrictions, and
the Trustee receives an opinion of counsel that such payment within the United
States is legal. (Section 1002)
Unless otherwise indicated in the applicable prospectus supplement, payment
of principal and premium, if any, and interest, if any, on a Registered Security
will be payable in the currency designated in the prospectus supplement.
Interest will be payable at the office of the paying agent or paying agents we
may appoint from time to time, except that, at our option, payment of any
interest may be made by a check in the designated currency mailed to the Holder
at the Holder's registered address or by wire transfer to an account in the
currency designated by the Holder in writing not less than ten days prior to the
date of the payment. Unless otherwise indicated in the applicable prospectus
supplement, payment of any installment of interest on a Registered Security will
be made to the Person in whose name that Registered Security is registered at
the close of business on the Regular Record Date for the payments. (Section 307)
Unless otherwise indicated in the applicable prospectus supplement, principal
payable at maturity will be paid to the registered holder upon surrender of the
Registered Security at the office of a duly appointed paying agent.
The paying agents outside the United States initially appointed by us for a
series of debt securities will be named in the applicable prospectus supplement.
We may terminate the appointment of any of the paying agents from time to time,
except that we will maintain at least one paying agent outside the United States
so long as any Bearer Securities are outstanding where Bearer Securities may be
presented for payment and may be surrendered for exchange, provided that so long
as any series of debt securities is listed on the Republic of Ireland or the
Luxembourg Stock Exchange or any other stock exchange located outside the United
States and that stock exchange shall so require, we will maintain a paying agent
in London or Luxembourg or any other required city located outside the United
States, as the case may be, for that series of debt securities. (Section 1002)
All moneys we pay to a paying agent for the payment of principal of or
premium, if any, or interest, if any, on any debt security that remains
unclaimed at the end of two years after that principal, premium or interest
shall have become due and payable will, at our request, be repaid to us, and the
Holder of that debt security or any coupon relating to that debt security will
thereafter look only to us for payment thereof. (Section 1003)
COVENANTS CONTAINED IN INDENTURES
The Senior Indenture provides that we will not, and will not permit any
Subsidiary to, sell or otherwise dispose of, or permit any "PRINCIPAL SUBSIDIARY
BANK" (defined as any Subsidiary Bank having total assets in excess of 10% of
our total consolidated assets and those of our Subsidiaries) to issue (except to
us), shares of "CAPITAL STOCK" (defined as outstanding shares of stock of any
class), or securities convertible into Capital Stock, of any Principal
Subsidiary Bank, or any Subsidiary owning, directly or indirectly, in whole or
in part, Capital Stock of a Principal Subsidiary Bank, with the following
exceptions:
- sales of directors' qualifying shares;
- sales or other dispositions for fair market value if, after giving effect
to that disposition and to the issuance of any shares issuable upon
conversion or exchange of securities convertible or
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exchangeable into Capital Stock, we would own, directly or indirectly,
through Subsidiaries, not less than 80% of the shares of each class of
Capital Stock of that Principal Subsidiary Bank;
- sales or other dispositions or issuances made in compliance with an order
or direction of a court or regulatory authority of competent
jurisdiction; or
- sales of Capital Stock by any Principal Subsidiary Bank to its
stockholders where the sale does not reduce the percentage of shares of
the same class owned by us. (Section 1006 of the Senior Indenture)
At the date hereof, the only Subsidiary Banks which are Principal
Subsidiary Banks are Firstar Bank, N.A., Firstar Bank Milwaukee, N.A., Firstar
Bank Wisconsin, Firstar Bank Minnesota, N.A. and Firstar Bank U.S.A., N.A.
Notwithstanding the foregoing, any Principal Subsidiary Bank may be merged into
or consolidated with another banking institution organized under the laws of the
United States, any of its states or the District of Columbia, if, after giving
effect to that merger or consolidation, we or any wholly-owned Subsidiary owns
at least 80% of the Capital Stock of that other banking institution then issued
and outstanding free and clear of any security interest and if, immediately
after giving effect thereto, no default or Event of Default shall have happened
and be continuing.
The Subordinated Indenture does not contain the foregoing covenant.
We are not restricted by the Indentures from incurring, assuming or
becoming liable for any type of debt or other obligations, from creating liens
on property for any purpose, or from paying dividends or making distributions on
our Capital Stock or purchasing or redeeming our Capital Stock. The Indentures
do not require the maintenance of any financial ratios or specified levels of
net worth or liquidity. In addition, the Indentures do not contain any provision
that would require us to repurchase or redeem or otherwise modify the terms of
any of the debt securities upon a change in control or other events involving us
which may adversely affect the creditworthiness of the debt securities.
CONSOLIDATION, MERGER AND SALE OF ASSETS
We may not consolidate with or merge with or into, or transfer or lease our
assets substantially as an entirety to, any Person unless (a) the successor
Person is a corporation organized and validly existing under the laws of a
domestic jurisdiction and expressly assumes our obligations on the debt
securities and under the applicable Indenture, and (b) after giving effect to
the transaction no Event of Default, and no event which, after notice or lapse
of time, or both, would become an Event of Default, shall have occurred and be
continuing. (Section 801)
MODIFICATION AND WAIVER
Except as to certain modifications and amendments not adverse to Holders of
debt securities, modifications and amendments of and waivers of compliance with
provisions of each Indenture may be made only with the consent of the Holders of
not less than a majority in principal amount of the outstanding debt securities
of each series affected by that modification, amendment or waiver; provided that
no such modification or amendment may, without the consent of the Holder of each
outstanding debt security or coupon affected by that modification or amendment:
- change the Stated Maturity of the principal or any installment of
principal or any installment of interest, if any;
- reduce the amount of principal or interest thereon, or any premium
payable upon redemption or repayment thereof or in the case of an
Original Issue Discount Security the amount of principal payable upon
acceleration of the Maturity thereof;
- change the place of payment or the currency in which principal or
interest is payable, if any;
- impair the right to institute suit for the enforcement of any payment of
the principal, premium, if any, and interest, if any, or adversely affect
the right of repayment, if any, at the option of the Holder;
- reduce the percentage in principal amount of outstanding debt securities
of any series, the consent of whose Holders is required for modification
or amendment of the applicable Indenture or for
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waiver of compliance with certain provisions of the applicable Indenture
or for waiver of certain defaults;
- reduce the requirements contained in the applicable Indenture for quorum
or voting;
- in the case of subordinated debt securities convertible into common
stock, impair any right to convert such subordinated debt securities; or
- modify any of the above provisions. (Section 902)
Each Indenture contains provisions for convening meetings of the Holders of
debt securities of a series issued under that Indenture if debt securities of
that series are issuable in whole or in part as Bearer Securities. (Section 1401
of the Senior Indenture, Section 1601 of the Subordinated Indenture) A meeting
may be called at any time by the Trustee for those debt securities, or upon our
request or the request of the Holders of at least 10% in principal amount of the
outstanding debt securities of that series, in any of those cases upon notice
given in accordance with the Indenture with respect thereto. (Section 1402 of
the Senior Indenture, Section 1602 of the Subordinated Indenture)
Except as limited by the proviso in the preceding paragraph, any resolution
presented at a meeting or adjourned meeting at which a quorum is present may be
adopted by the affirmative vote of the Holders of a majority in principal amount
of the outstanding debt securities of that series; provided, however, that,
except as limited by the proviso in the preceding paragraph, any resolution with
respect to any consent or waiver which may be given by the Holders of not less
than a majority in principal amount of the outstanding debt securities of a
series issued under an Indenture may be adopted at a meeting or an adjourned
meeting at which a quorum is present only by the affirmative vote of the Holders
of a majority in principal amount of those outstanding debt securities of that
series; and provided, further, that, except as limited by the proviso in the
preceding paragraph, any resolution with respect to any demand, consent, waiver
or other action which may be made, given or taken by the Holders of a specified
percentage, which is less than a majority in principal amount of the outstanding
debt securities of a series issued under an Indenture, may be adopted at a
meeting or adjourned meeting at which a quorum is present by the affirmative
vote of the Holders of that specified percentage in principal amount of the
outstanding debt securities of that series. (Section 1404 of the Senior
Indenture, Section 1604 of the Subordinated Indenture)
Any resolution passed or decision taken at any meeting of Holders of debt
securities of any series duly held in accordance with the applicable Indenture
with respect to those debt securities will be binding on all Holders of debt
securities of that series and the related coupons issued under that Indenture.
The quorum at any meeting of Holders of a series of debt securities called to
adopt a resolution, and at any reconvened meeting, will be persons holding or
representing a majority in principal amount of the outstanding debt securities
of that series; provided, however, that if any action is to be taken at such
meeting with respect to a consent or waiver which may be given by the Holders of
not less than a majority in principal amount of the outstanding debt securities
of a series, the Persons holding or representing a majority in principal amount
of the outstanding debt securities of that series issued under that Indenture
will constitute a quorum. (Section 1404 of the Senior Indenture, Section 1604 of
the Subordinated Indenture)
EVENTS OF DEFAULT
Unless otherwise provided in the applicable prospectus supplement, any
series of senior debt securities issued under the Senior Indenture will provide
that the following will constitute Events of Default with respect to that
series:
- default in the deposit of any sinking fund payment on any senior debt
security of that series when due;
- failure to perform specific covenants contained in that Indenture;
- failure to perform any other covenant in that Indenture, continued for 30
days after written notice of failure by the Trustee or the Holders of at
least 25% in principal amount of the outstanding senior debt securities
of that series issued under that Indenture; and
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- specific events of bankruptcy, insolvency or reorganization of Firstar.
(Section 501 of the Senior Indenture)
Unless otherwise provided in the applicable prospectus supplement, any
series of subordinated debt securities issued under the Subordinated Indenture
will provide that the only Event of Default will be specific events of
bankruptcy of Firstar. (Section 501 of the Senior Subordinated Indenture) In the
event of a default in the payment of principal, premium, if any, or interest, if
any; or a default of any sinking fund payment; or the nonperformance of any
covenant or agreement in the debt securities or Indentures, the Trustees,
subject to specific limitations and conditions, may institute judicial
proceedings to enforce payment of the principal, premium, if any, or interest,
if any, or to obtain the performance of the applicable covenant or agreement or
any other proper remedy. (Section 503)
We are required to file with each Trustee annually an Officers' Certificate
concerning the absence of certain defaults under the terms of the Indentures.
(Section 1008 of the Senior Indenture, Section 1004 of the Subordinated
Indenture) Each Indenture provides that if an Event of Default specified in that
Indenture shall occur and be continuing, either the Trustee under the Indenture
or the Holders of not less than 25% in principal amount of the outstanding debt
securities of that series issued under that Indenture may declare the principal
of all those debt securities (or in the case of original issue discount
securities, that portion of the principal amount thereof as may be specified in
the terms thereof) to be due and payable. (Section 502) In certain cases, the
Holders of a majority in principal amount of the outstanding debt securities of
any series may, on behalf of the Holders of all debt securities of any series
and the related coupons, waive any past default or Event of Default except a
default (a) in payment of the principal of or premium, if any, or interest, if
any, on any of the debt securities of that series, and (b) in respect of a
covenant or provision of the Indenture which cannot be modified or amended
without the consent of the Holder of each outstanding debt security of the
series or coupon affected.
Each Indenture contains a provision entitling the Trustee under the
Indenture, subject to the duty of that Trustee during default to act with the
required standard of care, to be indemnified by the Holders of the debt
securities of any series under the Indenture or any related coupons before
proceeding to exercise any right or power under the Indenture with respect to
that series at the request of those Holders. (Section 603) Each Indenture
provides that no Holder of any debt securities of any series under the Indenture
or any related coupons may institute any proceeding, judicial or otherwise, to
enforce that Indenture except in the case where the Trustee under the Indenture
fails to act for 60 days after it receives written notice of default and the
Trustee receives a request to enforce that Indenture by the Holders of not less
than 25% in aggregate principal amount of the outstanding debt securities of
that series and an offer of reasonable indemnity. (Section 507) This provision
will not prevent any Holder of debt securities or any related coupons from
enforcing payment of the principal thereof and premium, if any, and interest, if
any, thereon at the respective due dates thereof. (Section 508) The Holders of a
majority in aggregate principal amount of the outstanding debt securities of any
series issued under an Indenture may direct the time, method and place of
conducting any proceedings for any remedy available to the Trustee for those
debt securities or exercising any trust or power conferred on it with respect to
the debt securities of those series. However, that Trustee may refuse to follow
any direction that conflicts with law or the Indenture under which it serves or
which would be unjustly prejudicial to Holders not joining therein. (Section
512)
The Subordinated Indenture provides that the Subordinated Trustee will give
to the Holders of subordinated debt securities notice of a default if not cured
or waived, but, except in the case of a default in the payment of principal, or
premium, if any, or interest, if any, on any subordinated debt securities of
that series or any related coupons or in the payment of any sinking fund
installment with respect to subordinated debt securities of that series or in
the exchange of Capital Securities for subordinated debt securities of that
series, the Trustee for that subordinated debt securities shall be protected in
withholding that notice if it determines in good faith that the withholding of
that notice is in the interest of the Holders of those subordinated debt
securities. (Section 602 of the Subordinated Indenture)
The Senior Indenture provides that the Senior Trustee will give to the
Holders of senior securities notice of a default; however, in the case of
default in the performance, or breach, of any covenant or
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warranty by us under the Senior Indenture, and continuance of that default or
breach for 30 days after notice of default is given to us by the Senior Trustee
or to us and the Senior Trustee by the Holders of at least 25% in principal
amount of the outstanding debt securities of that series, requiring it to be
remedied, the Senior Trustee for those senior securities will not give notice to
Holders of senior debt securities until at least 30 days after the occurrence of
that default. (Section 602 of the Subordinated Indenture)
DEFEASANCE AND DISCHARGE
We may be discharged from any and all obligations in respect of the debt
securities of any series (except for certain obligations relating to temporary
debt securities and exchange of debt securities, registration of transfer or
exchange of debt securities of that series, replacement of stolen, lost or
mutilated debt securities of that series, maintenance of paying agencies,
obligations to hold monies for payment in trust and payment of additional
amounts, if any, required in consequence of U.S. withholding taxes imposed on
payments to non-U.S. persons) upon the deposit with the appropriate Trustee, in
trust, of money and/or, to the extent such debt securities are denominated and
payable in U.S. dollars only, Eligible Instruments which through the payment of
interest and principal in respect thereof in accordance with their terms will
provide money in an amount sufficient to pay the principal of (and premium, if
any), each installment of interest on, and any mandatory sinking fund or
analogous payments on, the debt securities of that series on the Stated Maturity
of those payments in accordance with the terms of the applicable Indenture and
the debt securities of that series. Such a trust may be established only if,
among other things:
- we delivered to the appropriate Trustee an opinion of counsel to the
effect that (a) Firstar has received from, or there has been published
by, the Internal Revenue Service a ruling, or (b) since the date of the
applicable Indenture there has been a change in applicable U.S. federal
income tax law, in either case, to the effect that, and based thereon
that opinion of counsel shall confirm that, the Holders of debt
securities of that series will not recognize income, gain or loss for
U.S. federal income tax purposes as a result of that deposit, defeasance
and discharge, and will be subject to U.S. federal income tax on the same
amounts and in the same manner and at the same times as would have been
the case if that deposit, defeasance and discharge had not occurred; and
- the debt securities of that series, if then listed on any domestic or
foreign securities exchange, will not be delisted as a result of that
deposit, defeasance and discharge. (Section 403)
In the event of any defeasance and discharge of debt securities of that
series, Holders of debt securities of that series would be able to look only to
the trust fund for payment of principal of and any premium and any interest on
their debt securities until maturity.
We may terminate certain of our obligations under each Indenture with
respect to the debt securities of any series under the Indenture, including its
obligations to comply with the covenants described under "-- Covenants Contained
in Indentures" above, with respect to those debt securities, on the terms and
subject to the conditions contained in those Indentures, by depositing in trust
with the applicable Trustee money and/or, to the extent those debt securities
are denominated and payable in U.S. dollars only, Eligible Instruments which,
through the payment of principal and interest in accordance with their terms,
will provide money in an amount sufficient to pay the principal and premium, if
any, and interest, if any, on those debt securities, and any mandatory sinking
fund, repayment or analogous payments thereon, on the scheduled due dates
therefor. That deposit and termination is conditioned, among other things, upon
our delivery of an opinion of counsel that the Holders of those debt securities
will have no U.S. federal income tax consequences as a result of that deposit
and termination. That termination will not relieve us of our obligation to pay
when due the principal of or interest on those debt securities if those debt
securities of that series are not paid from the money or Eligible Instruments
held by the Trustee for the payment thereof. (Section 1501 of the Senior
Indenture, Section 1701 of the Subordinated Indenture)
The applicable prospectus supplement may further describe the provisions,
if any, permitting or restricting this defeasance with respect to the debt
securities of a particular series. In the event we exercise our option to omit
compliance with the covenants described under "-- Covenants Contained in
Indentures" above with respect to the debt securities of any series as described
above and the debt
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securities of that series are declared due and payable because of the occurrence
of any Event of Default, then the amount of money and Eligible Instruments on
deposit with the applicable Trustee will be sufficient to pay amounts due on the
debt securities of that series at the time of their Stated Maturity but may not
be sufficient to pay amounts due on the debt securities of that series at the
time of the acceleration resulting from such Event of Default. In any event, we
will remain liable for those payments as provided in the applicable Indenture.
SUBORDINATION
The subordinated debt securities will be subordinate and junior in right of
payment, to the extent set forth in the Subordinated Indenture, to all of our
Senior Debt. In the event that we default in the payment of any principal,
premium, if any, or interest, if any, on any Senior Debt when the same becomes
due and payable, whether at maturity or at a date fixed for prepayment or by
declaration of acceleration or otherwise, then, unless and until such default
shall have been cured or waived or shall have ceased to exist, no direct or
indirect payment (in cash, property, securities, by set-off or otherwise) shall
be made or agreed to be made for principal, premium, if any, or interest, if
any, on the subordinated debt securities, or in respect of any redemption,
repayment, retirement, purchase or other acquisition of any of the subordinated
debt securities. "SENIOR DEBT" means any of our obligations to our creditors,
whether now outstanding or subsequently incurred, other than (a) any obligation
as to which it is provided that such obligation is not Senior Debt and (b) the
subordinated debt securities. As of March 31, 1999, we had outstanding Senior
Debt of approximately $329 million.
In the event of:
- any insolvency, bankruptcy, receivership, liquidation, reorganization,
readjustment, composition or other similar proceeding relating to us, our
creditors or our property,
- any proceeding for our liquidation, dissolution or other winding-up,
voluntary or involuntary, whether or not involving insolvency or
bankruptcy proceedings,
- any assignment for the benefit of our creditors, or
- any other marshalling of our assets,
then all Senior Debt (including any interest on that Senior Debt accruing after
the commencement of any such proceedings) shall first be paid in full before any
payment or distribution, whether in cash, securities or other property, shall be
made on account of the principal of or interest on the subordinated debt
securities. In that event, any payment or distribution on account of the
principal of or interest on the subordinated debt securities, whether in cash,
securities or other property (other than our securities or those of any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinate, at least to the extent provided in the
subordination provisions with respect to the subordinated debt securities, to
the payment of all Senior Debt at the time outstanding, and to any securities
issued in respect thereof under any plan of reorganization or readjustment),
which would otherwise (but for the subordination provisions) be payable or
deliverable in respect of the subordinated debt securities shall be paid or
delivered directly to the holders of Senior Debt in accordance with the
priorities then existing among those holders until all Senior Debt (including
any interest on that Senior Debt accruing after the commencement of any of those
proceedings) shall have been paid in full. (Section 1801 of the Subordinated
Indenture)
In the event of any such proceeding, after payment in full of all sums
owing with respect to Senior Debt, the Holders of subordinated debt securities,
together with the holders of any of our obligations ranking on a parity with the
subordinated debt securities, shall be entitled to be repaid from our remaining
assets the amounts at the time due and owing on account of unpaid principal,
premium, if any, and interest, if any, on the subordinated debt securities and
those other obligations before any payment or other distribution, whether in
cash, property or otherwise, shall be made on account of any capital stock or
our obligations ranking junior to the subordinated debt securities and those
other obligations. If any payment or distribution on account of the principal of
or interest on the subordinated debt securities of any character or any
security, whether in cash, securities or other property (other than our
securities or those of any other corporation provided for by a plan of
reorganization or readjustment, the payment of which is
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subordinate, at least to the extent provided in the subordination provisions
with respect to the subordinated debt securities, to the payment of all Senior
Debt at the time outstanding and to any securities issued in respect thereof
under any such plan of reorganization or readjustment) shall be received by any
Holder of any subordinated debt securities in contravention of any of the terms
of the Subordinated Indenture, and before all the Senior Debt shall have been
paid in full, that payment or distribution or security shall be received in
trust for the benefit of, and shall be paid over or delivered and transferred
to, the holders of the Senior Debt at the time outstanding in accordance with
the priorities then existing among those holders for application to the payment
of all Senior Debt remaining unpaid to the extent necessary to pay all that
Senior Debt in full. (Section 1801 of the Subordinated Indenture) By reason of
that subordination, in the event of our insolvency, holders of Senior Debt may
receive more, ratably, and holders of the subordinated debt securities having a
claim pursuant to those securities may receive less, ratably, than our other
creditors. That subordination will not prevent the occurrence of any Event of
Default in respect of the subordinated debt securities.
CONVERSION OF SUBORDINATED CONVERTIBLE SECURITIES
The Holders of subordinated debt securities of a specified series that are
convertible into our common stock, preferred shares or depositary shares
("SUBORDINATED CONVERTIBLE SECURITIES") will be entitled at certain times
specified in the applicable prospectus supplement, subject to prior redemption,
repayment or repurchase, to convert any subordinated convertible securities of
that series (in denominations set forth in the applicable prospectus supplement)
into common stock, preferred shares or depositary shares, as the case may be, at
the conversion price set forth in the applicable prospectus supplement, subject
to adjustment as described below and in the applicable prospectus supplement.
Except as described below, no adjustment will be made on conversion of any
subordinated convertible securities for interest accrued on those securities or
for dividends on any common stock, preferred shares or depositary shares issued.
(Section 1903 of the Subordinated Indenture) If any subordinated convertible
securities (not called for redemption or submitted for repayment) are converted
between a Regular Record Date for the payment of interest and the next
succeeding Interest Payment Date, that subordinated convertible securities must
be accompanied by funds equal to the interest payable on that succeeding
Interest Payment Date on the principal amount so converted. (Section 1903 of the
Subordinated Indenture) We are not required to issue fractional shares of common
stock upon conversion of subordinated convertible securities that are
convertible into common stock. In lieu thereof, we will pay a cash adjustment
based upon the Closing Price (as defined in the Subordinated Indenture) of the
common stock on the last business day prior to the date of conversion. (Section
1904 of the Subordinated Indenture) In the case of subordinated convertible
securities called for redemption or submitted for repayment, conversion rights
will expire at the close of business on the redemption date or repayment date,
as the case may be. (Section 1902 of the Subordinated Indenture)
Unless otherwise indicated in the applicable prospectus supplement, the
conversion price for subordinated convertible securities that are convertible
into common stock is subject to adjustment under formulas set forth in the
Subordinated Indenture upon the occurrence of certain events, including the
issuance of our capital stock as a dividend or distribution on the common stock;
subdivisions and combinations of the common stock; the issuance to all holders
of common stock of certain rights or warrants entitling them to subscribe for or
purchase common stock, within 45 days after the date fixed for the determination
of the stockholders entitled to receive those rights or warrants, at less than
the current market price (as defined in the Subordinated Indenture); and the
distribution to all holders of common stock of evidences of our indebtedness or
assets (excluding certain cash dividends and distributions described in the next
paragraph) or rights or warrants (excluding those referred to above). (Section
1906 of the Subordinated Indenture)
In the event that we distribute any rights or warrants to acquire capital
stock ("CAPITAL STOCK RIGHTS") under which separate certificates representing
those capital stock rights will be distributed subsequent to the initial
distribution of those capital stock rights (whether or not that distribution
shall have occurred prior to the date of the issuance of a series of
subordinated convertible securities), that subsequent distribution shall be
deemed to be the distribution of those capital stock rights; provided that we
may, in
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lieu of making any adjustment in the conversion price upon a distribution of
separate certificates representing those capital stock rights, make proper
provision so that each Holder of such a subordinated convertible security who
converts that subordinated convertible security (or any portion thereof), (a)
before the record date for that distribution of separate certificates shall be
entitled to receive upon that conversion shares of common stock issued with
capital stock rights, and (b) after that record date and prior to the
expiration, redemption or termination of such capital stock rights, shall be
entitled to receive upon such conversion, in addition to the shares of common
stock issuable upon such conversion, the same number of those capital stock
rights as would a holder of the number of shares of common stock that such
subordinated convertible security so converted would have entitled the holder
thereof to acquire in accordance with the terms and provisions applicable to the
capital stock rights if that subordinated convertible security were converted
immediately prior to the record date for such distribution. Common stock owned
by or held for our account or any majority owned subsidiary will not be deemed
outstanding for the purpose of any adjustment. (Section 1906 of the Subordinated
Indenture)
No adjustment in the conversion price of subordinated convertible
securities that are convertible into common stock will be made for regular
quarterly or other periodic or recurring cash dividends or distributions or for
cash dividends or distributions to the extent paid from retained earnings. No
adjustment in the conversion price of subordinated convertible securities that
are convertible into common stock will be required unless that adjustment would
require a change of at least 1% in the conversion price then in effect, provided
that any adjustment not so made will be carried forward and taken into account
in any subsequent adjustment; and provided, further, that any adjustment not so
made will be made no later than three years after the occurrence of the event
requiring that adjustment to be made or carried forward. We reserve the right to
make those reductions in the conversion price in addition to those required in
the foregoing provisions as we, in our discretion, shall determine to be
advisable in order that certain stock-related distributions thereafter made by
us to our stockholders will not be taxable. (Section 1906 of the Subordinated
Indenture) Except as stated above, the conversion price will not be adjusted for
the issuance of common stock or any securities convertible into or exchangeable
for common stock, or securities carrying the right to purchase any of the
foregoing.
If we (a) reclassify or change the common stock, (b) consolidate or merge,
or (c) sell or convey all or substantially all of our property and assets to
another corporation, in each case as a result of which holders of common stock
will be entitled to receive stock, securities, other property or assets
(including cash) with respect to, or in exchange for, that common stock, the
Holders of the subordinated convertible securities then outstanding that are
convertible into common stock will be entitled thereafter to convert those
subordinated convertible securities into the kind and amount of shares of stock
and other securities or property which they would have received upon that
reclassification, change, consolidation, merger, sale or conveyance had that
subordinated convertible securities been converted into common stock immediately
prior to that reclassification, change, consolidation, merger, sale or
conveyance. (Section 1907 of the Subordinated Indenture)
In the event of a taxable distribution to holders of common stock which
results in any adjustment of the conversion price of subordinated convertible
securities that are convertible into common stock, the Holders of those
subordinated convertible securities may, in certain circumstances, be deemed to
have received a distribution subject to U.S. income tax as a dividend; in
certain other circumstances, the absence of such an adjustment may result in a
taxable dividend to the holders of common stock or those subordinated
convertible securities.
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DESCRIPTION OF PREFERRED SHARES
The following description of the terms of the preferred stock, par value
$1.00 per share (the "PREFERRED SHARES") sets forth certain general terms and
provisions of the preferred shares to which any prospectus supplement may
relate. Certain other terms of any series of preferred shares will be described
in the prospectus supplement. If so indicated in the prospectus supplement, the
terms of any of those series may differ from the terms set forth below. The
description of certain provisions of the preferred shares set forth below and in
any prospectus supplement does not purport to be complete and is subject to and
qualified in its entirety by reference to the certificate of designations
relating to each series of the preferred shares.
GENERAL
Pursuant to our Articles of Incorporation, our Board of Directors has the
authority, without further stockholder action, to issue from time to time a
maximum of preferred shares, including shares issued or reserved for issuance,
in one or more series and with such terms and at such times and for such
consideration as our Board of Directors may determine. The terms and conditions
of the preferred shares are governed by the laws of the state of Wisconsin as
well as by our Articles of Incorporation. The authority of our Board of
Directors includes the determination or fixing of the following with respect to
any series of preferred shares:
- the number of preferred shares and designation or title thereof;
- rights as to dividends;
- whether and upon what terms the preferred shares are to be redeemable;
- the rights of the holders upon our liquidation, dissolution, or winding
up;
- whether and upon what terms the preferred shares shall have a redemption,
purchase or retirement requirement, or sinking fund;
- whether and upon what terms the preferred shares are to be convertible;
- the voting rights, if any, which shall apply;
- whether we may issue the preferred shares as a share dividend; and
- any other term, condition or provision of such series.
No preferred shares are currently outstanding.
As described under "Description of Depositary Shares," we may, at our
option, elect to offer interests in preferred shares by depositary shares
("DEPOSITARY SHARES") evidenced by depositary receipts ("DEPOSITARY RECEIPTS"),
each representing a fractional interest (to be specified in the prospectus
supplement relating to the particular series of the preferred shares) in a share
of the particular series of the preferred shares issued and deposited with a
bank or trust company selected by us having its principal executive office in
the United States and having a combined capital and surplus of at least
$50,000,000 (the "DEPOSITARY").
The preferred shares will have the dividend, liquidation, redemption,
voting and conversion rights discussed below unless otherwise provided in the
prospectus supplement relating to a particular series of the preferred shares.
For information concerning legal limitations on the ability of one of our banks
to supply funds to us, see "Certain Regulatory Matters."
The prospectus supplement relating to the particular series of the
preferred shares offered thereby may include certain specific terms, including:
- the title, stated value and liquidation preference of those preferred
shares and the number of preferred shares offered;
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- the initial public offering price at which those preferred shares will be
issued;
- the dividend rate or rates (or method of calculation), the dividend
periods, the dates on which dividends will be payable, and whether those
dividends will be cumulative or noncumulative and, if cumulative, the
dates from which dividends will commence to cumulate;
- any repurchase, redemption or sinking fund provisions;
- any conversion provisions;
- whether we elect to offer depositary shares; and
- any additional dividend, liquidation, redemption, sinking fund and other
rights, preferences, privileges, limitations and restrictions.
The preferred shares will, when issued, be fully paid and nonassessable.
Unless otherwise specified in the prospectus supplement relating to a particular
series of the preferred shares, each series of the preferred shares will rank on
a parity in all respects with each other series of the preferred shares and will
rank senior to our series A junior participating preferred stock described
below. The preferred shares will have no preemptive rights to subscribe for any
additional securities which we may issue. Unless otherwise specified in the
applicable prospectus supplement, Firstar Bank, N.A. will be the transfer agent
and registrar for the preferred shares and any depositary shares.
Unless otherwise specified in the applicable prospectus supplement, the
preferred shares will rank senior to the series A junior participating preferred
stock as to the payment of dividends and the distribution of assets. The common
stock, including the common stock that may be issued upon conversion of the
preferred shares or in exchange for, or upon conversion of, subordinated debt
securities, will be subject to any prior rights of the preferred shares then
outstanding.
DIVIDENDS
The holders of the preferred shares of each series will be entitled to
receive, when, as and if declared by our Board of Directors or a duly authorized
committee thereof, out of funds legally available therefor, cash dividends at
those rates and on those dates as will be set forth in the prospectus supplement
relating to that series. Those rates may be fixed or variable or both. If
variable, the formula used for determining the dividend rate for each dividend
period will be set forth in the prospectus supplement. Dividends will be payable
to the holders of record as they appear on our stock books on those record dates
as will be fixed by our Board of Directors or a duly authorized committee
thereof.
Dividends on any series of the preferred shares may be cumulative or
noncumulative, as provided in the applicable prospectus supplement. If our Board
of Directors fails to declare a dividend payable on a dividend payment date on
any series of the preferred shares for which dividends are noncumulative
("NONCUMULATIVE PREFERRED SHARES"), then the holders of that series of the
preferred shares will have no right to receive a dividend in respect of the
dividend period ending on that dividend payment date, and we will have no
obligation to pay the dividend accrued for that period, whether or not dividends
on that series are declared payable on any future dividend payment dates.
No full dividends may be declared or paid or set apart for payment on any
of our capital stock that ranks, as to dividends, on a parity with or junior to
the preferred shares for any period unless full dividends on the preferred
shares of each series (including any accumulated dividends) have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for that payment. When dividends are not paid in full
upon any series of preferred shares, all dividends declared or made upon
preferred shares of each series will be declared pro rata so that the amount of
dividends declared per share on preferred shares of each series will in all
cases bear to each other the same ratio that accrued dividends per share (which,
in the case of noncumulative preferred shares, will not include any accumulation
in respect of unpaid dividends for prior dividend periods) on
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shares of each series of the preferred shares bear to each other. Except as
provided in the preceding sentence, no dividend (other than dividends or
distributions paid in shares of, or options, warrants or rights to subscribe for
or purchase shares of, common stock or any other capital stock of ours that
ranks junior to the preferred shares as to dividends and upon liquidation) will
be declared or paid, or set aside for payment or other distribution declared or
made upon the common stock or any other capital stock of ours that ranks junior
to, or on a parity with, the preferred shares as to dividends or upon
liquidation, nor shall any common stock, nor any other capital stock of ours
that ranks junior to or on a parity with the preferred shares as to dividends or
upon liquidation, be redeemed, purchased or otherwise acquired for any
consideration (or that any money be paid to or made available for a sinking fund
for the redemption of any shares of that stock) by us (except by conversion into
or exchange for capital stock of ours that ranks junior to the preferred shares
as to dividends and upon liquidation) unless, in each case, the full dividends
on each series of the preferred shares shall have been paid, or declared and set
aside for payment. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on any series of the
preferred shares which may be in arrears.
REDEMPTION
A series of the preferred shares may be redeemable, in whole or in part, at
our option, and may be subject to mandatory redemption pursuant to a sinking
fund or otherwise, in each case, upon terms, at the times and at the redemption
prices set forth in the prospectus supplement relating to that series. Preferred
shares redeemed by us will be restored to the status of authorized but unissued
preferred shares.
The prospectus supplement relating to a series of the preferred shares
which is subject to mandatory redemption will specify the number of shares of
that series which shall be redeemed by us in each year commencing after a date
to be specified, at a redemption price per share to be specified, together with
an amount equal to all accrued and unpaid dividends on those preferred shares to
the date of redemption. The redemption price may be payable in cash or other
property, as specified in the prospectus supplement relating to that series of
the preferred shares. If the redemption price is payable only from the net
proceeds of the issuance of our capital stock, the terms of that series may
provide that, if no such capital stock shall have been issued or to the extent
the net proceeds from any issuance are insufficient to pay in full the aggregate
redemption price then due, the applicable shares of that series of the preferred
shares will automatically and mandatorily be converted into shares of our
applicable capital stock pursuant to conversion provisions specified in the
prospectus supplement relating to that series of the preferred shares.
If fewer than all of the outstanding shares of any series of the preferred
shares are to be redeemed, the number of preferred shares to be redeemed will be
determined by our Board of Directors and those preferred shares will be redeemed
pro rata from the holders of record of those preferred shares in proportion to
the number of those preferred shares held by those holders (with adjustments to
avoid redemption of fractional shares).
Notwithstanding the foregoing, if any dividends, including any
accumulation, on preferred shares of any series are in arrears, no preferred
shares of that series will be redeemed unless all outstanding preferred shares
of that series are simultaneously redeemed, and we are prohibited from
purchasing or otherwise acquiring any preferred shares of that series; provided,
however, that the foregoing will not prevent the purchase or acquisition of
preferred shares of that series pursuant to a purchase or exchange offer,
provided that that offer is made on the same terms to all holders of that series
of the preferred shares.
Notice of redemption will be given by mailing the same to each record
holder of the preferred shares to be redeemed, not less than 30 nor more than 60
days prior to the date fixed for redemption of those preferred shares to the
respective addresses of such holders as the same shall appear on our stock
books. Each such notice shall state:
- the redemption date;
- the number of preferred shares and series of the preferred shares to be
redeemed;
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- the redemption price;
- the place or places where certificates for the preferred shares are to be
surrendered for payment of the redemption price;
- that dividends on the preferred shares to be redeemed will cease to
accrue on such redemption date; and
- the date upon which the holder's conversion rights as to the preferred
shares, if any, shall terminate.
If fewer than all preferred shares of any series of the preferred shares
held by any holder are to be redeemed, the notice mailed to that holder will
also specify the number or percentage of preferred shares to be redeemed from
that holder.
If notice of redemption has been given, from and after the redemption date
for the shares of the series of the preferred shares called for redemption
(unless we default in providing money for the payment of the redemption price of
the preferred shares so called for redemption), dividends on the preferred
shares so called for redemption will cease to accrue and those preferred shares
will no longer be deemed to be outstanding, and all rights of the holders of
those preferred shares as our stockholders (except the right to receive the
redemption price) will cease. Upon surrender in accordance with such notice of
the certificates representing any preferred shares so redeemed (properly
endorsed or assigned for transfer, if our Board of Directors so requires and the
notice shall so state), the redemption price set forth above will be paid out of
funds provided by us. If fewer than all of the preferred shares represented by
any such certificate are redeemed, a new certificate will be issued representing
the unredeemed preferred shares without cost to the holder of those preferred
shares.
In the event that a redemption described above is deemed to be a "tender
offer" within the meaning of Rule 14e-1 under the Exchange Act, we will comply
with all applicable provisions of the Securities and Exchange Act of 1934, as
amended (the "EXCHANGE ACT").
CONVERSION
The prospectus supplement relating to a series of the preferred shares
which is convertible will state the terms on which preferred shares of that
series are convertible into shares of common stock or a series of preferred
shares.
RIGHTS UPON LIQUIDATION
In the event of our voluntary or involuntary liquidation, dissolution or
winding up, the holders of shares of each series of the preferred shares upon
liquidation will be entitled to receive out of our assets available for
distribution to stockholders, before any distribution of assets is made to
holders of the common stock or any other class or series of our capital stock
that ranks junior to such series of the preferred shares upon liquidation,
liquidation distributions in the amount set forth in the prospectus supplement
relating to that series of the preferred shares plus an amount equal to the sum
of all accrued and unpaid dividends (whether or not earned or declared) for the
then current dividend period and, if that series of the preferred shares is
cumulative, for all dividend periods prior thereto. Neither the sale of all or
substantially all of our property and assets, nor our merger or consolidation
into or with any other corporation nor the merger or consolidation of any other
corporation into or with us, will be deemed to be a dissolution, liquidation or
winding up. If, upon our voluntary or involuntary liquidation, dissolution or
winding up, our assets available for distribution to the holders of the
preferred shares of any series are insufficient to pay in full all amounts to
which those holders are entitled, no such distribution will be made on account
of any shares of any other series of the preferred shares unless proportionate
distributive amounts shall be paid on account of the preferred shares of that
series, ratably, in proportion to the full distributive amounts for which
holders of all such parity shares are respectively entitled upon such
dissolution, liquidation or winding up. After payment of the full amount of the
liquidation distribution to
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which they are entitled, the holders of that series of the preferred shares will
have no right or claim to any of our remaining assets.
VOTING RIGHTS
Except as indicated below or in the prospectus supplement relating to a
particular series of the preferred shares, or except as expressly required by
applicable law, the holders of the preferred shares will not be entitled to
vote. In the event we issue shares of a series of the preferred shares, unless
otherwise indicated in the prospectus supplement relating to that series, each
share will be entitled to one vote on matters on which holders of that series
are entitled to vote. However, as more fully described under "Description of
Depositary Shares," if we elect to provide for the issuance of depositary shares
representing fractional interests in a share of that series of the preferred
shares, the holders of each such depositary share will, in effect, be entitled
through the Depositary to a fraction of a vote, rather than a full vote. In the
case of any series of preferred shares having one vote per share on matters on
which holders of that series are entitled to vote, the voting power of that
series, on matters on which holders of that series and holders of any other
series of preferred shares are entitled to vote as a single class, will depend
on the number of shares in that series, not the aggregate stated value,
liquidation preference or initial offering price of the shares of that series of
the preferred shares.
Under interpretations adopted by the Federal Reserve Board, if the holders
of any series of the preferred shares become entitled to vote for the election
of directors because dividends on such series are in arrears, that series may
then be deemed a "class of voting securities" and a holder of 25% or more of
that series (or a holder of 5% or more if it otherwise exercises a "controlling
influence" over us) may then be subject to regulation as a bank holding company
in accordance with the BHCA. In addition, at the time that series is deemed a
class of voting securities, any other bank holding company may be required to
obtain the prior approval of the Federal Reserve Board to acquire 5% or more of
that series, and any person other than a bank holding company may be required to
obtain the prior approval of the Federal Reserve Board to acquire 10% or more of
that series.
So long as any preferred shares of any series remain outstanding, we will
not, without the consent of the holders of the outstanding preferred shares of
that series, by a vote of at least two-thirds of all those outstanding preferred
shares voting together as a class, given in person or by proxy, either in
writing or at a meeting, (a) authorize, create or issue, or increase the
authorized or issued amount of, any class or series of stock ranking prior to
the preferred shares with respect to payment of dividends or the distribution of
assets on liquidation, dissolution or winding up, or (b) amend, alter or repeal,
whether by merger, consolidation or otherwise, the provisions of our Articles of
Incorporation or of the resolutions contained in a Certificate of Designations
for any series of the preferred shares designating that series of the preferred
shares and the preferences and relative, participating, optional or other
special rights and qualifications, limitations and restrictions thereof, so as
to adversely affect any right, preference, privilege or voting power of the
preferred shares or the holders of the preferred shares.
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DESCRIPTION OF DEPOSITARY SHARES
The following description and any description in any prospectus supplement
of certain provisions of the Deposit Agreement and of the depositary shares and
depositary receipts is a summary and does not purport to be complete. The
summary is qualified in its entirety by reference to the Deposit Agreement and
depositary receipts relating to each series of the preferred shares, a form of
which is filed as an exhibit to the registration statement to which this
prospectus pertains.
GENERAL
We may, at our option, elect to offer fractional interests in preferred
shares, rather than full preferred shares. If we exercise this option, we will
provide for the issuance to the public by a Depositary of depositary receipts
evidencing depositary shares, each of which will represent a fractional interest
(to be set forth in the prospectus supplement relating to a particular series of
the preferred shares) in a share of a particular series of the preferred shares
as described below.
The shares of any series of the preferred shares underlying the depositary
shares will be deposited under a separate deposit agreement (the "DEPOSIT
AGREEMENT") between us and the Depositary. The prospectus supplement relating to
a series of depositary shares will set forth the name and address of the
principal executive office of the Depositary. Subject to the terms of the
Deposit Agreement, each owner of a depositary share will be entitled, in
proportion to the applicable fractional interest in a preferred share underlying
that depositary share, to all the rights and preferences of the preferred shares
underlying that depositary share (including dividend, voting, redemption,
conversion and liquidation rights).
Pending the preparation of definitive engraved depositary receipts, the
Depositary may, upon our written order, issue temporary depositary receipts
substantially identical to (and entitling the holders thereof to all the rights
pertaining to) the definitive depositary receipts but not in definitive form.
Definitive depositary receipts will be prepared thereafter without unreasonable
delay, and temporary depositary receipts will be exchangeable for definitive
depositary receipts at our expense.
Upon surrender of the depositary receipts at the principal office of the
Depositary (unless the related depositary shares have previously been called for
redemption), the owner of the depositary shares evidenced thereby is entitled to
delivery at such office, to or upon his order, of the number of preferred shares
and any money or other property represented by those depositary shares. Partial
preferred shares will not be issued. If the depositary receipts delivered by the
holder evidence a number of depositary shares in excess of the number of
depositary shares representing the number of whole preferred shares to be
withdrawn, the Depositary will deliver to that holder at the same time a new
depositary receipt evidencing the excess number of depositary shares. Holders of
preferred shares thus withdrawn will not thereafter be entitled to deposit such
shares under the Deposit Agreement or to receive depositary shares therefor. We
do not expect that there will be any public trading market for the preferred
shares represented by depositary receipts except as represented by the
depositary shares.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the preferred shares to the record holders
of depositary shares relating to such preferred shares in proportion to the
numbers of such depositary shares owned by such holders on the relevant record
date. The Depositary will distribute only such amount, however, as can be
distributed without attributing to any holder of depositary shares a fraction of
one cent, and any balance not so distributed will be added to and treated as
part of the next sum received by the Depositary for distribution to record
holders of depositary shares.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of depositary shares
entitled to that property, unless the Depositary determines that it is not
feasible to make that distribution, in which case the Depositary may, with our
approval, sell such property and distribute the net proceeds from that sale to
the holders.
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The Deposit Agreement will also contain provisions relating to the manner
in which any subscription or similar rights offered by us to holders of the
preferred shares will be made available to holders of depositary shares.
REDEMPTION OF DEPOSITARY SHARES
If a series of the preferred shares underlying the depositary shares is
subject to redemption, the depositary shares will be redeemed from the proceeds
received by the Depositary resulting from the redemption, in whole or in part,
of that series of the preferred shares held by the Depositary. The Depositary
will mail notice of redemption not less than 30 and not more than 60 days prior
to the date fixed for redemption to the record holders of the depositary shares
to be so redeemed at their respective addresses appearing in the Depositary's
books. The redemption price per depositary share will be equal to the applicable
fraction of the redemption price per share payable with respect to such series
of the preferred shares. Whenever we redeem preferred shares held by the
Depositary, the Depositary will redeem as of the same redemption date the number
of depositary shares relating to the preferred shares so redeemed. If less than
all the depositary shares are to be redeemed, the depositary shares to be
redeemed will be selected by lot or pro rata as may be determined by the
Depositary.
After the date fixed for redemption, the depositary shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the depositary shares will cease, except the right to receive the
moneys payable upon that redemption and any money or other property to which the
holders of those depositary shares were entitled upon that redemption, upon
surrender to the Depositary of the depositary receipts evidencing those
depositary shares.
VOTING THE PREFERRED SHARES
Upon receipt of notice of any meeting at which the holders of the preferred
shares are entitled to vote, the Depositary will mail the information contained
in that notice of meeting to the record holders of the depositary shares
relating to those preferred shares. Each record holder of those depositary
shares on the record date (which will be the same date as the record date for
the preferred shares) will be entitled to instruct the Depositary as to the
exercise of the voting rights pertaining to the number of shares of preferred
shares underlying that holder's depositary shares. The Depositary will endeavor,
insofar as practicable, to vote the number of preferred shares underlying those
depositary shares in accordance with those instructions, and we will agree to
take all action which may be deemed necessary by the Depositary in order to
enable the Depositary to do so. The Depositary will abstain from voting
preferred shares to the extent it does not receive specific instructions from
the holders of depositary shares relating to those preferred shares.
TAXATION
Owners of depositary shares will be treated for U.S. federal income tax
purposes as if they were owners of the preferred shares represented by those
depositary shares, and, accordingly, will be entitled to take into account for
U.S. federal income tax purposes income and deductions to which they would be
entitled if they were holders of those preferred shares. In addition,
- no gain or loss will be recognized for U.S. federal income tax purposes
upon the withdrawal of preferred shares in exchange for depositary shares
as provided in the Deposit Agreement;
- the tax basis of each preferred share to an exchanging owner of
depositary shares will, upon such exchange, be the same as the aggregate
tax basis of the depositary shares exchanged therefor; and
- the holding period for the preferred shares in the hands of an exchanging
owner of depositary shares will include the period during which that
person owned those depositary shares.
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AMENDMENT AND TERMINATION OF THE DEPOSITARY AGREEMENT
The form of depositary receipt evidencing the depositary shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between us and the Depositary. However, any amendment which materially and
adversely alters the rights of the existing holders of depositary shares will
not be effective unless that amendment has been approved by the record holders
of at least a majority of the depositary shares then outstanding. A Deposit
Agreement may be terminated by us or the Depositary only if (a) all outstanding
depositary shares relating thereto have been redeemed, or (b) there has been a
final distribution in respect of the preferred shares of the relevant series in
connection with any liquidation, dissolution or winding up of Firstar, and that
distribution has been distributed to the holders of the related depositary
shares.
CHARGES OF DEPOSITARY
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. We will pay charges of
the Depositary in connection with the initial deposit of the preferred shares
and any redemption of the preferred shares. Holders of depositary shares will
pay other transfer and other taxes and governmental charges and those other
charges as are expressly provided in the Deposit Agreement to be for their
accounts.
MISCELLANEOUS
The Depositary will forward to the holders of depositary shares all reports
and communications from us which are delivered to the Depositary and which we
are required to furnish to the holders of the preferred shares.
Neither us nor the Depositary will be liable if either of us is prevented
or delayed by law or any circumstance beyond its control in performing our
obligations under the Deposit Agreement. Our obligations and those of the
Depositary under the Deposit Agreement will be limited to performance in good
faith of our duties thereunder and we will not be obligated to prosecute or
defend any legal proceeding in respect of any depositary shares or preferred
shares unless satisfactory indemnity is furnished. We may rely upon written
advice of counsel or accountants, or information provided by persons presenting
preferred shares for deposit, holders of depositary shares, or other persons
believed to be competent and on documents believed to be genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to us notice of its
election to do so, and we may at any time remove the Depositary, any such
resignation or removal to take effect upon the appointment of a successor
Depositary and its acceptance of that appointment. A successor Depositary must
be appointed within 60 days after delivery of the notice of resignation or
removal and must be a bank or trust company having its principal office in the
United States and having a combined capital and surplus of at least $50,000,000.
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DESCRIPTION OF COMMON STOCK
GENERAL
Our Board of Directors is authorized to issue a maximum of 800,000,000
shares of common stock. As of March 31, 1999, approximately 661,214,244 shares
of common stock were issued and outstanding. The terms and conditions of the
common stock are governed by the laws of the State of Wisconsin as well as by
our Articles of Incorporation.
Subject to any prior rights of any preferred shares then outstanding,
holders of the common stock are entitled to receive such dividends as are
declared by our Board of Directors out of funds legally available for those
dividends. For information concerning legal limitations on the ability of our
banks to supply funds to us, see "Certain Regulatory Matters." Subject to the
rights, if any, of any preferred shares then outstanding, all voting rights are
vested in the holders of common stock. Holders of common stock are entitled to
one vote per share on all matters to be voted upon by our shareholders.
The common stock has no preemptive rights. The transfer agent and registrar
for the common stock is Firstar Bank Milwaukee N.A.
RIGHTS PLAN
Each share of common stock outstanding (and each share issued by us prior
to the occurrence of certain events) carries with it one preferred stock
purchase right to purchase, at a price of $300.00, one-hundredth of a share of
our series A junior participating preferred stock. The preferred stock purchase
rights are exercisable only if a person or group (an "ACQUIRING PERSON")
acquires or obtains the right to acquire ownership of 15% or more of our common
stock, commences a tender or exchange offer for 15% or more of the common stock
or is declared an Acquiring Person by our Board of Directors. We are entitled to
redeem the preferred stock purchase rights at a price of one cent per preferred
stock purchase right at any time before the date a 15% position has been
acquired.
Each preferred stock purchase right entitles its holder (other than an
Acquiring Person) to purchase common stock having a market value at that time of
twice the preferred stock purchase right's exercise price under certain
circumstances where a person or group has acquired a 15% block of our common
stock or commenced a tender or exchange offer for 15% or more of our common
stock. The plan also allows our Board of Directors to lower the threshold to not
less than 10% if appropriate in light of specific circumstances. The preferred
stock purchase rights also provide a similar right for holders (other than an
Acquiring Person) to purchase, at the preferred stock purchase right's
then-current exercise price, a number of the acquiring company's common shares
having a market value at that time of twice the preferred stock purchase right's
exercise price.
As long as the preferred stock purchase rights are attached to and
evidenced by the certificates representing the common stock, we will continue to
issue one preferred stock purchase right with each share of common stock that
shall become outstanding. A preferred stock purchase right is presently attached
to each issued and outstanding share of common stock. The preferred stock
purchase rights will expire on December 1, 2008 unless earlier redeemed.
The preferred stock purchase rights have certain antitakeover effects. The
preferred stock purchase rights may cause substantial dilution to a person or
group that attempts to acquire us on terms not approved by our Board of
Directors. The preferred stock purchase rights should not interfere with any
merger or other business combination approved by our Board of Directors since
they may be redeemed by us prior to the consummation of that transaction.
The rights agreement has been filed by us as an exhibit to our Form 8-A
dated as of December 1, 1998. The description of the preferred stock purchase
rights found in the foregoing Form 8-A has been incorporated by reference herein
and copies of that Form 8-A can be obtained in the manner set forth under "Where
You Can Find More Information."
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DESCRIPTION OF SECURITIES WARRANTS
We may issue securities warrants for the purchase of debt securities,
preferred shares, depositary shares or common stock. Securities warrants may be
issued independently or together with debt securities, preferred shares or
depositary shares offered by any prospectus supplement and may be attached to or
separate from those debt securities, preferred shares or depositary shares. Each
series of securities warrants will be issued under a separate warrant agreement
(a "SECURITIES WARRANT AGREEMENT") to be entered into by us and a bank or trust
company, as securities warrant agent (the "SECURITIES WARRANT AGENT"), all as
set forth in the prospectus supplement relating to the particular issue of
offered securities warrants. The Securities Warrant Agent will act solely as our
agent in connection with securities warrant certificates (the "SECURITIES
WARRANT CERTIFICATES") and will not assume any obligation or relationship of
agency or trust for or with any holders of securities warrant certificates or
beneficial owners of securities warrants. Copies of the forms of Securities
Warrant Agreements, including the forms of securities warrant certificates
representing the securities warrants, are filed as exhibits to the registration
statement to which this prospectus pertains. The following summaries of certain
provisions of the forms of Securities Warrant Agreements and securities warrant
certificates do not purport to be complete and are subject to, and are qualified
in their entirety by reference to, all the provisions of the Securities Warrant
Agreements and the securities warrant certificates.
GENERAL
If securities warrants are offered, the applicable prospectus supplement
will describe the terms of those securities warrants, including, in the case of
securities warrants for the purchase of debt securities, the following where
applicable:
- the offering price and exercise price;
- the currencies in which those securities warrants are being offered;
- the designation, aggregate principal amount, currencies, denominations
and terms of the series of debt securities purchasable upon exercise of
those securities warrants;
- the designation and terms of any series of debt securities, preferred
shares or depositary shares with which those securities warrants are
being offered and the number of those securities warrants being offered
with each debt security, preferred share or depositary share;
- the date on and after which those securities warrants and the related
series of debt securities, preferred shares or depositary shares will be
transferable separately;
- the principal amount of the series of debt securities purchasable upon
exercise of each securities warrant and the price at which and currencies
in which the principal amount of debt securities of that series may be
purchased upon such exercise;
- the date on which the right to exercise those securities warrants shall
commence and the date on which that right shall expire (the "EXPIRATION
DATE");
- whether the securities warrants will be issued in registered or bearer
form;
- U.S. federal income tax consequences; and
- any other terms of those securities warrants.
In the case of securities warrants for the purchase of preferred shares,
depositary shares or common stock, the applicable prospectus supplement will
describe the terms of those securities warrants, including the following where
applicable:
- the offering price and exercise price;
- the aggregate number of shares purchasable upon exercise of those
securities warrants and, in the case of securities warrants for preferred
shares or depositary shares, the designation, aggregate
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number and terms of the series of preferred shares purchasable upon
exercise of those securities warrants or underlying the depositary shares
purchasable upon exercise of those securities warrants;
- the designation and terms of the series of debt securities, preferred
shares or depositary shares with which those securities warrants are
being offered, and the number of those securities warrants being offered
with each such debt security, preferred share or depositary share;
- the date on and after which those securities warrants and the related
series of debt securities, preferred shares or depositary shares will be
transferable separately;
- the number of preferred shares, depositary shares or shares of common
stock purchasable upon exercise of each securities warrant and the price
at which that number of preferred shares or depositary shares of that
series or shares of common stock may be purchased upon each exercise;
- the date on which the right to exercise those securities warrants will
commence and the expiration date;
- U.S. federal income tax consequences; and
- any other terms of those securities warrants.
Securities warrants for the purchase of preferred shares, depositary shares
or common stock will be offered and exercisable for U.S. dollars only and will
be in registered form only.
Securities warrant certificates may be exchanged for new securities warrant
certificates of different denominations, may (if in registered form) be
presented for registration of transfer, and may be exercised at the corporate
trust office of the securities warrant agent or any other office indicated in
the applicable prospectus supplement. Prior to the exercise of any securities
warrant to purchase debt securities, holders of those securities warrants will
not have any of the rights of holders of the debt securities purchasable upon
exercise of those securities warrants, including the right to receive payments
of principal of, premium, if any, or interest, if any, on the debt securities
purchasable upon that exercise, or to enforce covenants in the applicable
indenture. Prior to the exercise of any securities warrants to purchase
preferred shares, depositary shares or common stock, holders of those securities
warrants will not have any rights of holders of the preferred shares, depositary
shares or common stock purchasable upon such exercise, including the right to
receive payments of dividends, if any, on the preferred shares, depositary
shares or common stock purchasable upon such exercise or to exercise any
applicable right to vote.
EXERCISE OF SECURITIES WARRANTS
Each securities warrant will entitle the holder thereof to purchase that
principal amount of debt securities or number of preferred shares, depositary
shares or shares of common stock, as the case may be, at such exercise price as
shall in each case be set forth in, or calculable from, the prospectus
supplement relating to the offered securities warrants. After the close of
business on the expiration date (or such later date to which such expiration
date may be extended by us), unexercised securities warrants will become void.
Securities warrants may be exercised by delivering to the securities
warrant agent payment as provided in the applicable prospectus supplement of the
amount required to purchase the debt securities, preferred shares, depositary
shares or common stock, as the case may be, purchasable upon such exercise
together with certain information set forth on the reverse side of the
securities warrant certificate. Securities warrants will be deemed to have been
exercised upon receipt of payment of the exercise price, subject to the receipt,
within five business days, of the securities warrant certificate evidencing
those securities warrants. Upon receipt of that payment and the securities
warrant certificate properly completed and duly executed at the corporate trust
office of the Securities Warrant Agent or any other office indicated in the
applicable prospectus supplement, we will, as soon as practicable, issue and
deliver the debt securities, preferred shares, depositary shares or common
stock, as the case may be, purchasable upon that exercise. If fewer than all of
the securities warrants represented by that securities warrant certificate
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are exercised, a new securities warrant certificate will be issued for the
remaining amount of securities warrants.
AMENDMENTS AND SUPPLEMENTS TO SECURITIES WARRANT AGREEMENTS
The Securities Warrant Agreements may be amended or supplemented without
the consent of the holders of the securities warrants issued under those
agreements to effect changes that are not inconsistent with the provisions of
the securities warrants and that do not adversely affect the interests of the
holders of the securities warrants.
COMMON STOCK WARRANT ADJUSTMENTS
Unless otherwise indicated in the applicable prospectus supplement, the
exercise price of, and the number of shares of common stock covered by, a common
stock warrant are subject to adjustment in certain events, including:
- the issuance of capital stock as a dividend or distribution on the common
stock;
- subdivisions and combinations of the common stock;
- the issuance to all holders of common stock of rights or warrants
entitling them to subscribe for or purchase common stock within 45 days
after the date fixed for the determination of the stockholders entitled
to receive those rights or warrants, at less than the Current Market
Price (as defined in the Securities Warrant Agreement for that series of
common stock warrants); and
- the distribution to all holders of common stock of our evidences of
indebtedness or assets (excluding certain cash dividends and
distributions described below) or rights or warrants (excluding those
referred to above).
In the event that we distribute any rights or warrants to acquire capital
stock pursuant to the penultimate clause set forth above (the "CAPITAL STOCK
RIGHTS"), pursuant to which separate certificates representing those capital
stock rights will be distributed subsequent to the initial distribution of those
capital stock rights (whether or not that distribution shall have occurred prior
to the date of the issuance of a series of common stock warrants), that
subsequent distribution will be deemed to be the distribution of those capital
stock rights; provided that we may, in lieu of making any adjustment in the
exercise price of and the number of shares of common stock covered by a common
stock warrant upon a distribution of separate certificates representing those
capital stock rights, make proper provision so that each holder of such a common
stock warrant who exercises that common stock warrant (or any portion of that
common stock warrant), (a) before the record date for the distribution of
separate certificates will be entitled to receive upon that exercise shares of
common stock issued with capital stock rights, and (b) after that record date
and prior to the expiration, redemption or termination of those capital stock
rights, will be entitled to receive upon that exercise, in addition to the
shares of common stock issuable upon that exercise, the same number of those
capital stock rights as would a holder of the number of shares of common stock
that such common stock warrant so exercised would have entitled the holder
thereof to acquire in accordance with the terms and provisions applicable to the
capital stock rights if that common stock warrant was exercised immediately
prior to the record date for that distribution. Common stock owned by or held
for our account or the account of any majority owned subsidiary of ours shall
not be deemed outstanding for the purpose of any adjustment.
No adjustment in the exercise price of and the number of shares of common
stock covered by a common stock warrant will be made for regular quarterly or
other periodic or recurring cash dividends or distributions, or for cash
dividends or distributions to the extent paid from retained earnings. No
adjustment will be required unless that adjustment would require a change of at
least 1% in the exercise price then in effect; provided, that any adjustment not
so made will be carried forward and taken into account in any subsequent
adjustment; provided, further, that any adjustment not so made shall be made no
later than three years after the occurrence of the event requiring that
adjustment to be made or carried forward. Except as stated above, the exercise
price of and the number of shares of common stock covered
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by a common stock warrant will not be adjusted for the issuance of common stock
or any securities convertible into or exchangeable for common stock, or
securities carrying the right to purchase any of the foregoing.
In the case of (a) a reclassification or change of the common stock, (b) a
consolidation or merger involving us, or (c) our sale or conveyance to another
corporation of our property and assets as an entirety or substantially as an
entirety, in each case, as a result of which holders of our common stock will be
entitled to receive stock, securities, other property or assets (including cash)
with respect to, or in exchange for, their common stock, the holders of the
common stock warrants then outstanding will be entitled thereafter to convert
those common stock warrants into the kind and amount of shares of stock and
other securities or property which they would have received upon such
reclassification, change, consolidation, merger, sale or conveyance had those
common stock warrants been exercised immediately prior to that reclassification,
change, consolidation, merger, sale or conveyance.
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EUROPEAN MONETARY UNION
Stage III of the European Economic and Monetary Union ("STAGE III")
commenced on January 1, 1999 for those member states of the European Union that
satisfied the economic convergence criteria set forth in the Treaty on European
Union. On March 25, 1998, the European Commission officially recommended that
eleven of the member states of the European Union be allowed to participate in
Stage III; these eleven member states are Austria, Belgium, Finland, France,
Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain
(collectively, the "PARTICIPATING MEMBER STATES"). It is possible that
additional member states of the European Union may participate in Stage III in
the future, in which case each such additional member state will also become a
"Participating Member State." Certain of the foreign currencies in which debt
securities may be denominated or payments in respect of debt warrants may be due
or by which amounts due on the offered securities may be calculated may be
issued by Participating Member States (each such country, a "RELEVANT
JURISDICTION" with respect to such offered securities). Stage III includes the
introduction of a single currency (the "EURO") which will be legal tender in the
Participating Member States, existing in parallel with the present national
currency of each Participating Member State. It is currently anticipated that on
and after January 1, 2002, the national currencies of Participating Member
States will cease to exist and the sole legal tender in such states will be the
Euro. It is anticipated that the European Union will adopt regulations or other
legislation providing specific rules for the introduction of the Euro in
substitution for the respective current national currencies of such member
states, which regulations or legislation may be supplemented by legislation of
the individual member states. The laws and regulations of the European Union
(and, if any, of such Relevant Jurisdiction) relating to the Euro implemented
pursuant to or by virtue of the Treaty on European Union may apply to certain of
the securities offered pursuant to this prospectus or the Indentures. Such laws
and regulations, and future market conventions applicable in the European Union
to securities similar to the relevant offered securities, may be inconsistent in
varying degrees with the terms and conditions of the relevant offered securities
established at their issuance. To the extent that references in an Indenture or
any relevant offered securities or in the terms and conditions of any relevant
offered securities to any business day, day-count, day-count fraction or other
convention are inconsistent with such European Union laws, regulations or market
conventions that are applicable to securities similar to the relevant offered
securities held in international clearing systems, we, in our discretion (but
after consultation with the applicable trustee or warrant agent, and with any
principal paying agent located in a European Union member state), may amend such
references and terms and conditions to be in harmony with, or to otherwise
comply with, such laws, regulations and/or market conventions. Any such
amendment will be effected without the necessity of obtaining the consent of any
holder of the relevant offered securities.
If, following the commencement of Stage III, we have the option, pursuant
to applicable law, to make payments of principal of, or interest on, or any
other amounts in respect of, the relevant offered securities, or to calculate
amounts due thereon, in either the current national currency of a Relevant
Jurisdiction or Euro, we will make those payments or calculations in that
national currency or Euro in our sole discretion. To the extent that the
introduction of the Euro necessitates the rounding up or down of certain amounts
or quotations expressed in Euros with respect to the relevant offered
securities, that rounding will be made in conformity with prevailing market
conventions in the European Union or, in the absence of an applicable market
convention, to the nearest Euro cent.
The circumstances and consequences described in this section and any
resultant amendment to the terms and conditions of the relevant offered
securities will not entitle any holder of those offered securities (a) to any
legal remedy, including, without limitation, redemption, rescission, notice,
repudiation, adjustment or renegotiation of the terms and conditions of the
offered securities or an Indenture, or (b) to raise any defense or make any
claim (including, without limitation, claims of breach, force majeure,
frustration of purpose or impracticability) or any other claim for compensation,
damages or any other relief.
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PLAN OF DISTRIBUTION
We may sell the securities offered pursuant to this prospectus in any of
two ways: (a) through agents or underwriters, or (b) directly to one or more
purchasers. The prospectus supplement will supply the details of the plan of
distribution, including the name or names of any underwriters or agents, the
purchase price of those offered securities, our proceeds from the sale, any
underwriting discounts or agency fees and other items constituting underwriters'
or agents' compensation, the initial public offering price, any discounts or
concessions allowed or reallowed or paid to dealers, and any securities
exchanges on which those offered securities may be listed.
Underwriters, dealers and agents that participate in the distribution of
the securities offered pursuant to this prospectus may be underwriters as
defined in the Securities Act. Any discounts or commissions they receive from us
and any profits they receive on the resale of the offered securities may be
treated as underwriting discounts and commissions under the Securities Act. We
have agreements with the underwriters and agents to indemnify them against
certain civil liabilities, including liabilities under the Securities Act.
Agents and underwriters may engage in transactions with, or perform services
for, us in the ordinary course of business. This includes commercial banking and
investment banking transactions.
If underwriters are used in the sale, they will acquire the securities
offered pursuant to this prospectus for their own account. The underwriters will
resell the securities in one or more transactions, including negotiated
transactions. These sales will be made at a fixed public offering price or at
varying prices determined at the time of the sale. We may offer the debt
securities to the public through an underwriting syndicate or through a single
underwriter.
Each underwriter, dealer and agent participating in the distribution of any
debt securities that are issuable as Bearer Securities will agree that, in
connection with the original issuance of those Bearer Securities, it will not
offer, sell or deliver, directly or indirectly, Bearer Securities to a U.S.
person or to any person within the United States, except to the extent permitted
under U.S. Treasury regulations.
All offered securities, except for the common stock, will be new issues of
securities with no established trading market. Any underwriters to whom we sell
offered securities for public offering and sale may make a market in the
securities offered pursuant to this prospectus, but such underwriters will not
be obligated to do so and may discontinue any market making at any time without
notice. We can give no assurance concerning the liquidity of the trading market
for any of the securities offered pursuant to this prospectus.
VALIDITY OF SECURITIES
Ms. Jennie P. Carlson, Esq., Senior Vice President, General Counsel and
Secretary of Firstar, will pass upon the validity of the offered securities. As
of March 31, 1999, Ms. Carlson was the beneficial owner of 47,654 shares of
Common Stock and had options to acquire 45,000 additional shares.
EXPERTS
The consolidated financial statements of Firstar as of December 31, 1998
and 1997 and for each of the three years in the period ended December 31, 1998,
incorporated by reference in this prospectus, have been audited by
PricewaterhouseCoopers LLP, independent public accountants, as indicated in
their report with respect thereto, and are incorporated herein in reliance upon
the authority of said firm as experts in giving said report.
The consolidated financial statements of Mercantile Bancorporation Inc. at
December 31, 1998, 1997 and 1996 and for the three years ended December 31,
1998, are incorporated by reference in the Registration Statement to which this
prospectus pertains from Firstar's Current Report on Form 8-K filed on May 4,
1999 (as amended on May 19, 1999), have been audited by KPMG LLP, independent
auditors, as set forth in their report on those consolidated financial
statements incorporated herein in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
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FORWARD-LOOKING STATEMENTS
This prospectus and accompanying prospectus supplements contain or
incorporate statements that constitute "forward-looking statements" within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. Those statements can be identified by the use of forward-looking language
such as "will likely result," "may," "are expected to," "is anticipated,"
"estimate," "projected," "intends to," or other similar words. Our actual
results, performance or achievements could differ materially from the results
expressed in, or implied by, those forward-looking statements. Those statements
are subject to certain risks and uncertainties, including but not limited to,
certain risks described in the applicable prospectus supplement. When
considering those forward-looking statements, you should keep in mind these
risks, uncertainties and other cautionary statements made in this prospectus and
the applicable prospectus supplement. You should not place undue reliance on any
forward-looking statement which speaks only as of the date made.
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$600,000,000
[FIRSTAR LOGO]
FIRSTAR CORPORATION
MEDIUM-TERM NOTES, SERIES A
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PROSPECTUS SUPPLEMENT
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MERRILL LYNCH & CO.
BANC OF AMERICA SECURITIES LLC
BEAR, STEARNS & CO. INC.
DONALDSON, LUFKIN & JENRETTE
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MORGAN STANLEY DEAN WITTER
SALOMON SMITH BARNEY
JULY 19, 1999
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