<PAGE>
FILED PURSUANT TO 424(B)(2)
FILE NO. 333-01737
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED APRIL 24, 1996)
[LOGO]
$5,000,000,000
NORWEST CORPORATION
MEDIUM-TERM NOTES, SERIES J
-----------------
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
-------------------
NORWEST CORPORATION (THE "COMPANY") MAY OFFER FROM TIME TO TIME ITS
MEDIUM-TERM NOTES, SERIES J (THE "NOTES"), IN AN AGGREGATE INITIAL PUBLIC
OFFERING PRICE NOT TO EXCEED $5,000,000,000, OR THE EQUIVALENT THEREOF IN
FOREIGN CURRENCIES OR FOREIGN CURRENCY UNITS, SUBJECT TO REDUCTION AS A RESULT
OF THE SALE OF OTHER DEBT SECURITIES (AS DEFINED IN THE ACCOMPANYING
PROSPECTUS). EACH NOTE WILL MATURE ON ANY DAY NINE MONTHS OR MORE FROM ITS DATE
OF ISSUE, AS AGREED TO BY THE COMPANY AND THE PURCHASER. IF SO SPECIFIED IN THE
APPLICABLE PRICING SUPPLEMENT TO THIS PROSPECTUS SUPPLEMENT (A "PRICING
SUPPLEMENT"), A NOTE MAY BE REDEEMED OR REPAID BY THE COMPANY ON THE SPECIFIED
DATE OR DATES PRIOR TO STATED MATURITY AT THE SPECIFIED PRICE OR PRICES. THE
NOTES MAY BE DENOMINATED, AND PAYMENTS OF PRINCIPAL, PREMIUM, IF ANY, AND
INTEREST ON THE NOTES MAY BE MADE, IN UNITED STATES DOLLARS OR IN SUCH FOREIGN
CURRENCIES OR FOREIGN CURRENCY UNITS AS MAY BE DESIGNATED BY THE COMPANY IN THE
APPLICABLE PRICING SUPPLEMENT ("FOREIGN CURRENCY NOTES").
EACH NOTE WILL BE REPRESENTED EITHER BY A GLOBAL SECURITY REGISTERED IN THE
NAME OF A NOMINEE OF THE DEPOSITORY TRUST COMPANY, WHICH WILL ACT AS DEPOSITARY,
OR BY A CERTIFICATE ISSUED IN DEFINITIVE FORM. SEE "DESCRIPTION OF NOTES".
THE NOTES MAY BEAR INTEREST AT FIXED OR FLOATING RATES. THE NOTES MAY ALSO
BE ISSUED WITH THE PRINCIPAL AMOUNT THEREOF PAYABLE AT MATURITY OR THE INTEREST
PAYABLE ON ANY INTEREST PAYMENT DATE, OR BOTH, TO BE DETERMINED BY REFERENCE TO
AN INDEX (INCLUDING CURRENCIES, COMPOSITE CURRENCIES, COMMODITIES OR FINANCIAL
OR NON-FINANCIAL INDICES), AS SPECIFIED IN THE APPLICABLE PRICING SUPPLEMENT.
THE SPECIFIC CURRENCY OR COMPOSITE CURRENCY, INDEX, IF ANY, INTEREST RATE OR
RATES AND/OR INTEREST RATE FORMULA OR FORMULAS, IF ANY, ISSUE PRICE AND STATED
MATURITY FOR EACH NOTE WILL BE ESTABLISHED BY THE COMPANY PRIOR TO THE DATE OF
ISSUANCE OF SUCH NOTE AND WILL BE SPECIFIED IN A PRICING SUPPLEMENT. IF
SPECIFIED IN A PRICING SUPPLEMENT, NOTES MAY BE ISSUED AT A DISCOUNT FROM THE
PRINCIPAL AMOUNT PAYABLE AT STATED MATURITY THEREOF AND WILL CONSTITUTE ORIGINAL
ISSUE DISCOUNT NOTES. ZERO COUPON NOTES WILL NOT PROVIDE FOR PERIODIC PAYMENTS
OF INTEREST. SEE "DESCRIPTION OF NOTES".
UNLESS OTHERWISE SPECIFIED IN THE APPLICABLE PRICING SUPPLEMENT, INTEREST ON
FIXED RATE NOTES IS PAYABLE EACH JANUARY 15 AND JULY 15 AND AT MATURITY.
INTEREST ON FLOATING RATE NOTES IS PAYABLE ON THE DATES SPECIFIED THEREIN AND IN
THE APPLICABLE PRICING SUPPLEMENT. SEE "DESCRIPTION OF NOTES--INTEREST AND
INTEREST RATES".
------------------------
THE NOTES ARE UNSECURED OBLIGATIONS OF THE COMPANY AND ARE NOT SAVINGS ACCOUNTS,
DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK OR NONBANK SUBSIDIARY OF THE
COMPANY AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE BANK INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT OR THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
-------------------
<TABLE>
<CAPTION>
AGENTS'
PRICE DISCOUNTS AND PROCEEDS TO
TO PUBLIC(1) COMMISSIONS(2) COMPANY(2)(3)
-------------- --------------------- -------------------------
<S> <C> <C> <C>
PER NOTE........ 100% .125%-.750% 99.250%-99.875%
TOTAL(4)........ $5,000,000,000 $6,250,000-$37,500,000 $4,962,500,000-$4,993,750,000
</TABLE>
- ------------
(1) UNLESS OTHERWISE SPECIFIED IN A PRICING SUPPLEMENT, NOTES WILL BE ISSUED
AT 100% OF THEIR PRINCIPAL AMOUNT.
(2) THE COMPANY WILL PAY A COMMISSION TO EACH AGENT (AS DEFINED HEREIN)
RANGING FROM .125% TO .750% OF THE PRINCIPAL AMOUNT OF ANY NOTE WITH A
STATED MATURITY OF 30 YEARS OR LESS, DEPENDING UPON ITS STATED MATURITY,
SOLD THROUGH SUCH AGENT. COMMISSIONS WITH RESPECT TO NOTES WITH STATED
MATURITIES IN EXCESS OF 30 YEARS THAT ARE SOLD THROUGH AN AGENT WILL BE
NEGOTIATED BETWEEN THE COMPANY AND SUCH AGENT AT THE TIME OF SUCH SALE.
THE COMPANY MAY ALSO SELL NOTES TO ANY AGENT AT A DISCOUNT FOR RESALE TO
ONE OR MORE INVESTORS OR OTHER PURCHASERS AT VARYING PRICES RELATED TO
PREVAILING MARKET PRICES AT THE TIME OF RESALE AS DETERMINED BY SUCH AGENT
OR, IF SO AGREED, AT A FIXED PUBLIC OFFERING PRICE. UNLESS OTHERWISE
SPECIFIED IN THE APPLICABLE PRICING SUPPLEMENT, ANY NOTE SOLD TO AN AGENT
AS PRINCIPAL WILL BE PURCHASED BY SUCH AGENT AT A PRICE EQUAL TO 100% OF
THE PRINCIPAL AMOUNT THEREOF LESS A PERCENTAGE EQUAL TO THE COMMISSION
APPLICABLE TO ANY AGENCY SALE OF A NOTE OF IDENTICAL STATED MATURITY, AND
MAY BE RESOLD BY SUCH AGENT. THE COMPANY HAS AGREED TO INDEMNIFY THE
AGENTS AGAINST CERTAIN LIABILITIES, INCLUDING LIABILITIES UNDER THE
SECURITIES ACT OF 1933. SEE "PLAN OF DISTRIBUTION OF NOTES".
(3) BEFORE DEDUCTING ESTIMATED EXPENSES OF $350,000, PAYABLE BY THE COMPANY,
INCLUDING REIMBURSEMENT OF THE AGENTS' EXPENSES.
(4) OR THE EQUIVALENT THEREOF IN FOREIGN CURRENCIES OR FOREIGN CURRENCY UNITS.
------------------------
THE NOTES ARE BEING OFFERED ON A CONTINUING BASIS BY THE COMPANY THROUGH THE
AGENTS, EACH OF WHICH HAS AGREED TO USE ITS REASONABLE EFFORTS TO SOLICIT OFFERS
TO PURCHASE THE NOTES. THE COMPANY ALSO MAY SELL NOTES TO ANY AGENT ACTING AS
PRINCIPAL FOR RESALE TO INVESTORS OR OTHER PURCHASERS AT VARYING PRICES RELATED
TO PREVAILING MARKET PRICES AT THE TIME OF RESALE, AS DETERMINED BY SUCH AGENT,
AND MAY SELL NOTES DIRECTLY TO INVESTORS ON ITS OWN BEHALF OR THROUGH AFFILIATED
ENTITIES IN JURISDICTIONS WHERE IT IS AUTHORIZED TO DO SO. THE NOTES WILL NOT BE
LISTED ON ANY SECURITIES EXCHANGE, AND THERE CAN BE NO ASSURANCE THAT THE NOTES
OFFERED BY THIS PROSPECTUS SUPPLEMENT WILL BE SOLD OR THAT THERE WILL BE A
SECONDARY MARKET FOR THE NOTES. THE COMPANY RESERVES THE RIGHT TO WITHDRAW,
CANCEL OR MODIFY THE OFFER MADE HEREBY WITHOUT NOTICE. THE COMPANY OR ANY AGENT
MAY REJECT ANY OFFER TO PURCHASE NOTES, IN WHOLE OR IN PART. NO TERMINATION DATE
FOR THE OFFERING OF THE NOTES HAS BEEN ESTABLISHED. SEE "PLAN OF DISTRIBUTION OF
NOTES".
-------------------
MORGANSTANLEY & CO.
INCORPORATED
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
SALOMON BROTHERS INC
JULY 2, 1996
<PAGE>
IN CONNECTION WITH THE DISTRIBUTION OF THE NOTES, THE AGENTS MAY OVER-ALLOT
OR EFFECT TRANSACTIONS IN THE NOTES WITH A VIEW TO STABILIZING OR MAINTAINING
THE MARKET PRICE OF THE NOTES AT LEVELS OTHER THAN THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN ANY
OVER-THE-COUNTER MARKET OR OTHERWISE AND, IF COMMENCED, MAY BE DISCONTINUED AT
ANY TIME.
DESCRIPTION OF NOTES
GENERAL
THE FOLLOWING DESCRIPTION OF THE PARTICULAR TERMS OF THE NOTES OFFERED
HEREBY SUPPLEMENTS, AND TO THE EXTENT INCONSISTENT THEREWITH REPLACES, THE
DESCRIPTION OF THE GENERAL TERMS AND PROVISIONS OF THE DEBT SECURITIES SET FORTH
IN THE ACCOMPANYING PROSPECTUS, TO WHICH DESCRIPTION REFERENCE IS HEREBY MADE.
UNLESS DIFFERENT TERMS OR ADDITIONAL TERMS ARE SPECIFIED IN THE APPLICABLE
PRICING SUPPLEMENT, THE NOTES WILL HAVE THE TERMS DESCRIBED BELOW. REFERENCES TO
INTEREST PAYMENTS AND INTEREST-RELATED INFORMATION DO NOT APPLY TO ZERO COUPON
NOTES (AS DEFINED BELOW).
The Notes will be issued pursuant to the Indenture dated as of December 15,
1993 (such Indenture, as supplemented from time to time, being herein called the
"Indenture"). The Notes will represent senior, unsubordinated debt of the
Company and will rank equally with all other unsecured and unsubordinated debt
of the Company. The Notes constitute a separate series of Debt Securities for
purposes of the Indenture. The Notes are limited to an aggregate initial
offering price of $5,000,000,000, or the equivalent thereof in foreign
currencies or foreign currency units, subject to reduction as a result of the
sale of other Debt Securities (as defined in the accompanying Prospectus). The
following summary of certain provisions of the Indenture does not purport to be
complete and is subject to and is qualified in its entirety by reference to, all
of the provisions of the Indenture, including the definitions therein of certain
terms.
Each Note will mature on any day nine months or more from its date of issue,
as agreed to by the Company and the purchaser and specified in the Note and the
applicable Pricing Supplement. If the Maturity specified in the applicable
Pricing Supplement for any Note is on a day that is not a Market Day, principal,
premium (if any) and interest (if any) will be paid on the next succeeding
Market Day with the same force and effect as if made on the date such payment
was due and no interest will accrue for the period from and after such date.
"Market Day" means (a) with respect to any Note, any day that is not a Saturday
or Sunday and that is not a day on which banking institutions generally are
authorized or obligated by law or executive order to close in the City of
Minneapolis, Minnesota or The City of New York, and (b) with respect to LIBOR
Notes, is also a London Banking Day ("London Banking Day" means any day on which
dealings in deposits in U.S. dollars are transacted in the London interbank
market), and (c) with respect to Foreign Currency Notes only, is also a day
that, in the principal financial center of the country of the currency in which
such Notes are denominated, is not a day on which banking institutions generally
are authorized or obligated by law or executive order to close and (d) with
respect to Foreign Currency Notes denominated in European Currency Units
("ECUs") only, is also an "ECU Settlement Day" ("ECU Settlement Day" means any
day that (i) is not either (A) a Saturday or a Sunday or (B) a day that is
designated as an ECU Non-Settlement Day by the ECU Banking Association in Paris
or otherwise generally regarded in the ECU interbank market as a day on which
payments on ECUs shall not be made, and (ii) is a day on which payments in the
ECU can be settled by commercial banks and in foreign exchange markets in the
place in which the relevant account for payment is located).
Each Note will be denominated in a currency or currency unit ("Specified
Currency") as specified on the face thereof and in the applicable Pricing
Supplement, which may include United States dollars, Australian dollars, New
Zealand dollars, Canadian dollars, Danish kroner, Italian lire, ECUs or any
other currency set forth in the applicable Pricing Supplement. Unless otherwise
indicated in the applicable Pricing Supplement, purchasers are required to pay
for Foreign Currency Notes in the Specified Currency. At the present time there
are limited facilities in the United States for the conversion of U.S. dollars
into foreign currencies or currency units and vice versa, and banks do not
generally offer non-U.S. dollar checking or savings account facilities in the
United States. If requested on or prior to the third Market Day preceding the
date of delivery of the Notes, or by such other day as determined by the Agent
who presented such offer to purchase Notes to the Company, such Agent is
prepared to arrange for the conversion of U.S. dollars into
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<PAGE>
the Specified Currency to enable the purchasers to pay for the Notes. Each such
conversion will be made by such Agent on such terms and subject to such
conditions, limitations and charges as such Agent may from time to time
establish in accordance with its regular foreign exchange practices. All costs
of exchange will be borne by the purchasers of the Foreign Currency Notes. See
"Special Provisions and Risks Related to Foreign Currency Notes".
The applicable Pricing Supplement will specify any redemption or repayment
terms applicable to the Notes. See "Redemption" and "Repayment" below.
Unless otherwise specified in the applicable Pricing Supplement, the Notes,
other than Foreign Currency Notes, will be issuable only in definitive
registered form in denominations of $1,000 and integral multiples of $1,000 in
excess thereof. The authorized denominations of Foreign Currency Notes will be
indicated in the applicable Pricing Supplement.
Each Note will be represented either by a global security (a "Global
Security") registered in the name of a nominee of The Depository Trust Company,
as depositary (the "Depositary") (each such Note represented by a Global
Security being herein referred to as a "Book-Entry Note"), or by a certificate
issued in definitive registered form, without coupons (a "Certificated Note"),
as set forth in the applicable Pricing Supplement. Except as set forth under
"Book-Entry Notes" below, Book-Entry Notes will not be issuable in certificated
form. So long as the Depositary or its nominee is the registered holder of any
Global Security, the Depositary or its nominee, as the case may be, will be
considered the sole registered holder of the Book-Entry Notes represented by
such Global Security for all purposes under the Indenture and such Notes. For a
further description of the respective forms, denominations and transfer and
exchange procedures with respect to any such Global Security and Book-Entry
Note, reference is made to "Book-Entry Notes" below and to the applicable
Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement and except
as provided below under "Book-Entry Notes", principal, premium (if any) and
interest (if any) will be payable, the transfer of any Notes will be registrable
and any Notes will be exchangeable for Notes bearing identical terms and
provisions at the corporate trust office of The First National Bank of Chicago,
the Trustee under the Indenture with regard to the Notes (the "Trustee"), in The
City of New York or at the corporate trust office of Norwest Bank Minnesota,
National Association (the "Paying Agent"), in the City of Minneapolis,
Minnesota, provided that payments of interest on any Interest Payment Date (as
defined below) with respect to any Certificated Note may be made at the option
of the Company by check mailed to the address of the person entitled thereto as
it appears in the Security Register at the close of business on the Regular
Record Date (as defined below) corresponding to the relevant Interest Payment
Date. Unless otherwise specified in the applicable Pricing Supplement, holders
of $10,000,000 or more in aggregate principal amount of Certificated Notes shall
be entitled to receive payments of interest on any Interest Payment Date by wire
transfer of immediately available funds, if appropriate wire transfer
instructions have been given to the Paying Agent in writing not later than the
Regular Record Date preceding such Interest Payment Date.
Unless otherwise specified in the applicable Pricing Supplement, the
principal, premium (if any) and interest (if any) payable at Maturity on each
Certificated Note will be paid in immediately available funds against
presentation of the Note at the above mentioned corporate trust office of the
Trustee or the Paying Agent.
For special payment terms applicable to Foreign Currency Notes, see "Special
Provisions and Risks Related to Foreign Currency Notes" below.
Notes may be issued as Original Issue Discount Notes. An Original Issue
Discount Note is a Note which is issued at a price lower than the principal
amount thereof and which provides that upon redemption or acceleration of the
Stated Maturity thereof, an amount less than the principal thereof shall become
due and payable. In the event of redemption or acceleration of the Stated
Maturity of an Original Issue Discount Note, the amount payable to the Holder of
such Note upon such redemption or acceleration will be determined in accordance
with the terms of the applicable Pricing Supplement, but will be an amount less
than the amount payable at the Stated Maturity of such Note. Original Issue
Discount Notes, as well as certain other Notes offered hereby, may, for United
States federal income tax purposes, be "Discount Notes". See "United States
Taxation--United States Holders--Original Issue Discount".
S-3
<PAGE>
The Notes are subject to defeasance upon the satisfaction of certain
conditions, as provided in the Indenture. See "Description of Debt
Securities--Defeasance and Discharge" in the Prospectus.
INTEREST AND INTEREST RATES
Each Note that bears interest will bear interest at either (a) a fixed rate
(the "Fixed Rate Notes"), (b) an indexed rate (the "Indexed Notes") or (c) a
floating rate determined by reference to one or more interest rate bases, which
may be adjusted by a Spread and/or Spread Multiplier (each as defined below),
and, if so specified in the applicable Pricing Supplement with respect to one or
more Interest Periods (as defined below), one or more fixed rates (the "Floating
Rate Notes"). Any Floating Rate Note may also have either or both of the
following: (i) a maximum interest rate limitation, or ceiling, on the rate of
interest which may accrue during any Interest Period; and (ii) a minimum
interest rate limitation, or floor, on the rate of interest which may accrue
during any Interest Period. The applicable Pricing Supplement may designate one
or more of the following interest rate bases as applicable to one or more
Interest Periods on each Floating Rate Note: (a) the Commercial Paper Rate, in
which case such Note will be a "Commercial Paper Rate Note" with respect to such
Interest Period or Interest Periods; (b) the Federal Funds Rate, in which case
such Note will be a "Federal Funds Rate Note" with respect to such Interest
Period or Interest Periods; (c) LIBOR, in which case such Note will be a "LIBOR
Note" with respect to such Interest Period or Interest Periods; (d) the Prime
Rate, in which case such Note will be a "Prime Rate Note" with respect to such
Interest Period or Interest Periods; (e) the CD Rate, in which case such Note
will be a "CD Rate Note" with respect to such Interest Period or Interest
Periods; (f) the CMT Rate, in which case such Note will be a "CMT Rate Note"
with respect to such Interest Period or Interest Periods; (g) the Treasury Rate,
in which case such Note will be a "Treasury Rate Note" with respect to such
Interest Period or Interest Periods; or (h) such other interest rate basis or
formula as is set forth in the applicable Pricing Supplement. Interest rates
offered by the Company with respect to the Notes may differ depending upon,
among other things, the aggregate principal amount purchased in any single
transaction.
The interest rate on each Floating Rate Note for each Interest Period will
be determined by reference to (i) the applicable interest rate basis specified
in the applicable Pricing Supplement for such Interest Period, plus or minus the
Spread, if any, and/or multiplied by the Spread Multiplier, if any, or (ii) the
applicable fixed rate per annum specified in the applicable Pricing Supplement
for such Interest Period. The "Spread" is the number of basis points specified
in the applicable Pricing Supplement as being applicable to such Floating Rate
Note for such Interest Period, and the "Spread Multiplier" is the percentage
specified in the applicable Pricing Supplement as being applicable to such
Floating Rate Note for such Interest Period.
Each Note that bears interest will bear interest from and including its date
of issue (i) at the fixed rate per annum applicable to the related Interest
Period or Interest Periods, (ii) at the rate determined pursuant to the
applicable index or (iii) at the rate per annum determined pursuant to the
interest rate formula applicable to the related Interest Period or Interest
Periods, in each case as specified therein and in the applicable Pricing
Supplement, until the principal thereof is paid or made available for payment.
Interest will be payable on each Interest Payment Date and at Maturity. Except
as provided below under "Book Entry Notes", interest will be payable to the
person in whose name a Note (or any predecessor Note) is registered at the close
of business on the Regular Record Date (as defined below) next preceding each
Interest Payment Date; provided, however, that interest payable at Maturity will
be payable to the person to whom principal shall be payable. Except as provided
below under "Book Entry Notes", the first payment of interest on any Note
originally issued after a Regular Record Date and on or before the corresponding
Interest Payment Date will be made on the Interest Payment Date following the
next succeeding Regular Record Date to the registered holder thereof on such
next succeeding Regular Record Date. Interest rates and interest rate formulas
are subject to change by the Company from time to time but no such change will
affect any Note theretofore issued or which the Company has agreed to issue.
Unless otherwise specified in the applicable Pricing Supplement, the "Interest
Payment Dates" and the "Regular Record Dates" for Fixed Rate Notes shall be as
described below under "Fixed Rate Notes" and the "Interest Payment Dates" and
the "Regular Record Dates" for Floating Rate Notes shall be as described below
under "Floating Rate Notes".
The interest rate on a Note for any Interest Period will in no event be
higher than the maximum rate permitted by New York law, as the same may be
modified by United States law of general application. Under
S-4
<PAGE>
current New York law, the maximum rate of interest is 25% per annum on a simple
interest basis, with certain exceptions. The limit may not apply to Floating
Rate Notes in which $2,500,000 or more has been invested.
The applicable Pricing Supplement will specify with respect to each Note
that bears interest: (i) the issue price, Interest Payment Dates and Regular
Record Dates; (ii) with respect to any Fixed Rate Note, the interest rate; (iii)
with respect to any Indexed Note, the index; (iv) with respect to any Floating
Rate Note, the Initial Interest Rate (as defined below), the method (which may
vary from Interest Period to Interest Period) of calculating the interest rate
applicable to each Interest Period (including, if applicable, the fixed rate per
annum applicable to one or more Interest Periods, the period to maturity of any
instrument on which the interest rate formula for any Interest Period is based
(the "Index Maturity"), the Spread and/or Spread Multiplier, the Interest
Determination Dates (as defined below), the Interest Reset Dates (as defined
below) and any minimum or maximum interest rate limitations); (v) whether such
Note is an Original Issue Discount Note; and (vi) any other terms not
inconsistent with the Indenture.
FIXED RATE NOTES
Each Fixed Rate Note, whether or not issued as an Original Issue Discount
Note, will bear interest at the annual rate specified therein and in the
applicable Pricing Supplement. Unless otherwise specified in the applicable
Pricing Supplement, the Interest Payment Dates for the Fixed Rate Notes will be
on January 15 and July 15 of each year and the Regular Record Dates for the
Fixed Rate Notes will be the day (whether or not a Market Day) fifteen calendar
days preceding each Interest Payment Date. Unless otherwise specified in the
applicable Pricing Supplement, interest payments for Fixed Rate Notes shall be
the amount of interest accrued from, and including, the next preceding Interest
Payment Date to which interest has been paid or duly provided for (or from, and
including, the date of issue if no interest has been paid or duly provided for
with respect to such Fixed Rate Note) to, but excluding, the relevant Interest
Payment Date. Unless otherwise specified in the applicable Pricing Supplement,
interest on Fixed Rate Notes will be computed and paid on the basis of a 360-day
year of twelve 30-day months. In the event that any Interest Payment Date on a
Fixed Rate Note is not a Market Day, interest will be paid on the next
succeeding Market Day with the same force and effect as if made on such Interest
Payment Date and no interest will accrue for the period from and after such
date.
FLOATING RATE NOTES
The Interest Payment Dates for the Floating Rate Notes shall be as specified
in such Notes and in the applicable Pricing Supplement, and, unless otherwise
specified in the applicable Pricing Supplement, the Regular Record Dates for the
Floating Rate Notes will be the day (whether or not a Market Day) fifteen
calendar days preceding each Interest Payment Date. Unless otherwise specified
in the applicable Pricing Supplement and except as provided below, interest on
Floating Rate Notes will be payable on the following Interest Payment Dates: in
the case of Floating Rate Notes with a daily, weekly or monthly Interest Reset
Date, 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 with a quarterly Interest Reset
Date, on the third Wednesday of March, June, September and December of each
year; in the case of Floating Rate Notes with a semiannual Interest Reset Date,
on the third Wednesday of the two months of each year specified in the
applicable Pricing Supplement; and in the case of Floating Rate Notes with an
annual Interest Reset Date, on the third Wednesday of the month of each year
specified in the applicable Pricing Supplement, and in each case at Maturity. If
any Interest Payment Date (other than at Maturity) for any Floating Rate Note
would otherwise be a day that is not a Market Day, the Interest Payment Date for
such Floating Rate Note shall be postponed to the next day that is a Market Day,
except that in the case of a LIBOR Note, if such Market Day is in the next
succeeding calendar month, such Interest Payment Date shall be the immediately
preceding Market Day.
The rate of interest on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semiannually or annually (the date on which each such reset
occurs, an "Interest Reset Date"), as specified in the applicable Pricing
Supplement. Unless otherwise specified in the applicable Pricing Supplement, the
Interest Reset Date will be as follows: in the case of Floating Rate Notes which
are reset daily, each Market Day; in the case of Floating Rate Notes (other than
Treasury Rate Notes) which are reset weekly, the Wednesday of each week; in the
case of Treasury Rate Notes which are reset weekly, the Tuesday of each week
(except as provided below); in the case of Floating Rate Notes which are reset
monthly, the third
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Wednesday of each month; in the case of Floating Rate Notes which are reset
quarterly, the third Wednesday of March, June, September and December of each
year; in the case of Floating Rate Notes which are reset semiannually, the third
Wednesday of the two months of each year specified in the applicable Pricing
Supplement; and in the case of Floating Rate Notes which are reset annually, the
third Wednesday of the month of each year specified in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
interest rate determined with respect to any Interest Determination Date will
become effective on and as of the next succeeding Interest Reset Date; provided,
however, that the interest rate in effect from the date of issue to the first
Interest Reset Date with respect to a Floating Rate Note (the "Initial Interest
Rate") will be as specified in the applicable Pricing Supplement. If any
Interest Reset Date for any Floating Rate Note would otherwise be a day that is
not a Market Day, such Interest Reset Date shall be postponed to the next day
that is a Market Day, except that in the case of a LIBOR Note, if such Market
Day is in the next succeeding calendar month, such Interest Reset Date shall be
the immediately preceding Market Day.
As used herein, "Interest Determination Date" means the date as of which the
interest rate for a Floating Rate Note is to be calculated, to be effective as
of the following Interest Reset Date and calculated on the related Calculation
Date (as defined below). Unless otherwise specified in the applicable Pricing
Supplement, the Interest Determination Date pertaining to any Interest Reset
Date for a Commercial Paper Rate Note, a Federal Funds Rate Note, a Prime Rate
Note, a CD Rate Note or a CMT Rate Note (the "Commercial Paper Interest
Determination Date", the "Federal Funds Interest Determination Date", the "Prime
Interest Determination Date", the "CD Interest Determination Date" and the "CMT
Interest Determination Date", respectively) will be the second Market Day prior
to such Interest Reset Date. The Interest Determination Date pertaining to an
Interest Reset Date for a LIBOR Note (the "LIBOR Interest Determination Date")
will be the second London Banking Day preceding such Interest Reset Date. Unless
otherwise specified in the applicable Pricing Supplement, the Interest
Determination Date pertaining to an Interest Reset Date for a Treasury Rate Note
(the "Treasury 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, such Friday will be the Treasury Interest
Determination Date pertaining to the Interest Reset Date occurring in the next
succeeding week. If an auction date shall fall on any Interest Reset Date for a
Treasury Rate Note, then such Interest Reset Date shall instead be the first
Market Day immediately following such auction date.
Unless otherwise specified in the applicable Pricing Supplement, (i)
interest payments on an Interest Payment Date for a Floating Rate Note will
include interest accrued from, and including, the next preceding Interest
Payment Date to which interest has been paid or duly provided for (or from, and
including, the date of issue if no interest has been paid or duly provided for
with respect to such Floating Rate Note) to, but excluding, such Interest
Payment Date or Maturity date (each such interest accrual period, an "Interest
Period"). Accrued interest for an Interest Period is calculated by multiplying
the face amount of a Floating Rate Note by the applicable accrued interest
factor (the "Accrued Interest Factor"). The Accrued Interest Factor is computed
by adding together the interest factors calculated for each day in the Interest
Period. The interest factor for each such day is computed by dividing the per
annum interest rate applicable to such day by 360 in the case of Commercial
Paper Rate Notes, Federal Funds Rate Notes, LIBOR Notes, Prime Rate Notes and CD
Rate Notes, or by the actual number of days in the year in the case of Treasury
Rate Notes or CMT Rate Notes. The interest rate in effect on each day will be
(i) if such day is an Interest Reset Date, the interest rate with respect to the
Interest Determination Date pertaining to such Interest Reset Date or (ii) if
such day is not an Interest Reset Date, the interest rate with respect to the
Interest Determination Date pertaining to the next preceding Interest Reset
Date, subject in either case to any maximum or minimum interest rate limitation
referred to above or in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the Paying
Agent, which is a subsidiary of the Company, will be the "Calculation Agent". On
or before each Calculation Date, the Paying Agent, as Calculation Agent, will
determine the interest rate as described below. The Paying Agent will determine
the Accrued Interest Factor applicable to any such Floating Rate Note. The
Paying Agent will, upon the request of the holder of any Floating Rate Note,
provide the interest rate then in effect and the interest rate which will become
effective as a result of a determination made with respect to the most recent
Interest
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Determination Date with respect to such Floating Rate Note. The determinations
of interest rates made by the Calculation Agent shall be conclusive and binding,
and the Trustee shall have no duty to verify determinations of interest rates
made by the Calculation Agent. The determinations of Accrued Interest Factors
made by the Paying Agent shall be conclusive and binding. Unless otherwise
specified in the applicable Pricing Supplement, the "Calculation Date", if
applicable, pertaining to any Interest Determination Date on a Floating Rate
Note will be the earlier of (i) the tenth calendar day after such Interest
Determination Date, or, if any such day is not a Market Day, the next succeeding
Market Day and (ii) the Market Day preceding the applicable Interest Payment
Date or Maturity, as the case may be.
Unless otherwise specified in the applicable Pricing Supplement, all
percentages resulting from any calculation referred to in this Prospectus
Supplement will be rounded, if necessary, to the nearest one hundred-thousandth
of one percentage point, with five one-millionths of one percentage point
rounded upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or
.0987655) and 9.876544% (or .09876544) being rounded to 9.87654% (or .0987654));
and all currency or currency unit amounts used in or resulting from such
calculations on the Notes will be rounded to the nearest one-hundredth of a unit
(with .005 of a unit being rounded upward).
COMMERCIAL PAPER RATE NOTES. Commercial Paper Rate Notes will bear interest
at the interest rates (calculated with reference to the Commercial Paper Rate
and the Spread and/or Spread Multiplier, if any) specified in the Commercial
Paper Rate Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any Commercial Paper Interest Determination
Date, the Money Market Yield (calculated as described below) of the rate on that
date for commercial paper having the Index Maturity specified in the applicable
Pricing Supplement as such rate is published by the Federal Reserve Board
"Statistical Release H.15(519), Selected Interest Rates" or any successor
publication of the Federal Reserve Board ("H.15(519)"), under the heading
"Commercial Paper". If by 3:00 p.m., New York City time, on the Calculation Date
pertaining to such Commercial Paper Interest Determination Date such rate is not
so published, then the Commercial Paper Rate shall be the Money Market Yield of
the rate on that Commercial Paper Interest Determination Date for commercial
paper having the Index Maturity designated in the applicable Pricing Supplement
as published by the Federal Reserve Bank of New York in its daily statistical
release, "Composite 3:30 p.m. Quotations for United States Government
Securities" ("Composite Quotations") under the heading "Commercial Paper". If by
3:00 p.m., New York City time, on such Calculation Date such rate is not so
published in Composite Quotations, the Commercial Paper Rate for that Commercial
Paper Interest Determination Date shall be calculated by the Calculation Agent
and shall be the Money Market Yield of the arithmetic mean of the offered rates
of three leading dealers of commercial paper in The City of New York selected by
the Calculation Agent as of 11:00 a.m., New York City time, on that Commercial
Paper Interest Determination Date, for commercial paper having the Index
Maturity specified in the applicable Pricing Supplement placed for an industrial
issuer whose bond rating is "AA", or the equivalent, from a nationally
recognized securities rating agency; provided, however, that if fewer than three
dealers selected as aforesaid by the Calculation Agent are quoting as specified
in this sentence, the Commercial Paper Rate with respect to such Commercial
Paper Interest Determination Date will remain the Commercial Paper Rate in
effect on such Commercial Paper Interest Determination Date.
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
D X 360
Money Market Yield = ------------------- X 100
360 - (D X M)
where "D" refers to the per annum rate for the commercial paper, quoted on a
bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the interest period for which interest is being calculated.
FEDERAL FUNDS RATE NOTES. Federal Funds Rate Notes will bear interest at
the interest rates (calculated with reference to the Federal Funds Rate and the
Spread and/or Spread Multiplier, if any) specified in the Federal Funds Rate
Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to any Federal Funds Interest Determination
Date, the rate on that day for Federal Funds as
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published in H.15(519) under the heading "Federal Funds (Effective)" or, if not
so published by 3:00 p.m., New York City time, on the Calculation Date
pertaining to such Federal Funds Interest Determination Date, the Federal Funds
Rate will be the rate on such Federal Funds Interest Determination Date as
published in Composite Quotations under the heading "Federal Funds/Effective
Rate". If such rate is not so published by 3:00 p.m., New York City time, on the
Calculation Date pertaining to such Federal Funds Interest Determination Date,
the Federal Funds Rate for such Federal Funds Interest Determination Date will
be calculated by the Calculation Agent and will be the arithmetic mean of the
rates for the last transaction in overnight Federal Funds arranged by three
leading dealers of Federal Funds transactions in The City of New York selected
by the Calculation Agent as of 9:00 a.m., New York City time, on such Federal
Funds Interest Determination Date; provided, however, that if fewer than three
dealers selected as aforesaid by the Calculation Agent are quoting as specified
in this sentence, the Federal Funds Rate with respect to such Federal Funds
Interest Determination Date will remain the Federal Funds Rate in effect on such
Federal Funds Interest Determination Date.
LIBOR NOTES. LIBOR Notes will bear interest at the interest rates
(calculated with reference to LIBOR and the Spread and/or Spread Multiplier, if
any) specified in the LIBOR Notes 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:
(i) With respect to a LIBOR Interest Determination Date, LIBOR will be,
as specified in the applicable Pricing Supplement, either: (a) the
arithmetic mean of the offered rates for deposits in U.S. dollars having the
Index Maturity designated in the applicable Pricing Supplement, commencing
on the second London Banking Day immediately following that LIBOR Interest
Determination Date, that appear on the Reuters Screen LIBO Page (as defined
below) 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 ("LIBOR Reuters"), or (b) the rate for deposits in U.S. dollars having
the Index Maturity designated in the applicable Pricing Supplement,
commencing on the second London Banking Day immediately following that LIBOR
Interest Determination Date, that appears on the Telerate Page 3750 (as
defined below) 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).
"Telerate Page 3750" means the display designated as page "3750" on the
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 for U.S. dollar deposits). If neither LIBOR Reuters nor LIBOR Telerate
is specified in the applicable Pricing Supplement, LIBOR will be determined
as if LIBOR Telerate had been specified. If fewer than two offered rates
appear on the Reuters Screen LIBO Page, 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 (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which fewer
than two offered rates appear on the Reuters Screen LIBO Page, as specified
in (i)(a) above, or on which no rate appears on Telerate Page 3750, as
specified in (i)(b) above, as applicable, LIBOR will be determined on the
basis of the rates at which deposits in U.S. dollars are offered by four
major banks in the London interbank market selected by the Calculation Agent
(the "Reference Banks") at approximately 11:00 a.m., London time, on that
LIBOR Interest Determination Date to prime banks in the London interbank
market having the Index Maturity designated in the applicable Pricing
Supplement commencing on the second London Banking Day immediately following
such LIBOR Interest Determination Date and in a principal amount, not less
than U.S. $1,000,000, that, in the judgment of the Calculation Agent, is
representative for a single transaction in such market at such time. The
Calculation Agent will request the principal London office of each of such
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
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of that LIBOR Interest Determination Date will be the arithmetic mean of the
rates quoted by three major banks in The City of New York selected by the
Calculation Agent at approximately 11:00 a.m., New York City time, on that
LIBOR Interest Determination Date for loans in United States dollars to
leading European banks, having the Index Maturity specified in the
applicable Pricing Supplement, commencing on the second London Banking Day
immediately following that LIBOR Interest Determination Date and in a
principal amount, not less than U.S. $1,000,000, that, in the judgment of
the Calculation Agent, is representative for a single transaction in such
market at such time; provided, however, that if fewer than three banks in
The City of New York selected as aforesaid by the Calculation Agent are
quoting as specified in this sentence, LIBOR with respect to such LIBOR
Interest Determination Date will remain LIBOR in effect on such LIBOR
Interest Determination Date.
PRIME RATE NOTES. Prime Rate Notes will bear interest at the interest rates
(calculated with reference to the Prime Rate and the Spread and/or Spread
Multiplier, if any) specified in the Prime Rate Notes and in the applicable
Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Prime Interest Determination Date the rate on
such date as such rate is published in H.15(519) under the heading "Bank Prime
Loan". If such rate is not published prior to 9:00 a.m., New York City time, on
the Calculation Date, then the Prime Rate shall be the arithmetic mean of the
rates of interest publicly announced by each bank that appears on the Reuters
Screen USPRIME1 Page (as defined below) as such bank's prime rate or base
lending rate as in effect for that Prime Interest Determination Date. If fewer
than four such rates but more than one such rate appear on the Reuters Screen
USPRIME1 Page for such Prime Interest Determination Date, the Prime Rate shall
be the arithmetic mean of the prime rates quoted on the basis of the actual
number of days in the year divided by a 360-day year as of the close of business
on such Prime Interest Determination Date by four major money center banks in
The City of New York selected by the Calculation Agent. If fewer than two such
rates appear on the Reuters Screen USPRIME1 Page, the Prime Rate will be
determined by the Calculation Agent on the basis of the rates furnished in The
City of New York by the appropriate number of substitute banks or trust
companies organized and doing business under the laws of the United States, or
any State thereof, having total equity capital of at least $500,000,000 and
being subject to supervision or examination by federal or state authority,
selected by the Calculation Agent to provide such rate or rates; provided,
however, that if the banks or trust companies selected as aforesaid are not
quoting as mentioned in this sentence, the Prime Rate for such Prime Interest
Determination Date will be the Prime Rate as determined based on the last such
rate published in H.15(519) and provided, further, that if such rate is not so
published in H.15(519), the Prime Rate with respect to such Prime Interest
Determination Date will remain the Prime Rate in effect on such Prime Interest
Determination Date. "Reuters Screen USPRIME1 Page" means the display designated
as page "USPRIME1" on the Reuters Monitor Money Rates Services (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 United States banks).
CD RATE NOTES. CD Rate Notes will bear interest at the interest rates
(calculated with reference to the CD Rate and the Spread and/or Spread
Multiplier, if any) specified in the CD Rate Notes and in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CD Rate"
means, with respect to any CD Interest Determination Date, the rate on such date
for negotiable certificates of deposit having the Index Maturity specified in
the applicable Pricing Supplement as such rate is published in H.15(519) under
the heading "CDs (Secondary Market)". If by 3:00 p.m., New York City time, on
the Calculation Date pertaining to such CD Interest Determination Date such rate
is not so published, then the CD Rate shall be the rate on such CD Interest
Determination Date for negotiable certificates of deposit of the Index Maturity
specified in the applicable Pricing Supplement as published in Composite
Quotations under the heading "Certificates of Deposit". If by 3:00 p.m., New
York City time, on such Calculation Date such rate is not so published in
Composite Quotations, the CD Rate for that CD Interest Determination Date shall
be calculated by the Calculation Agent and shall be the arithmetic mean of the
secondary market offered rates as of 10:00 a.m., New York City time, on such CD
Interest Determination Date, of three leading nonbank dealers in negotiable
United States dollar certificates of deposit in The City of New York selected by
the Calculation Agent for negotiable certificates of deposit of major United
States money market banks with a
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remaining maturity closest to the Index Maturity specified in the applicable
Pricing Supplement in denominations of $5,000,000; provided, however, that if
fewer than three dealers selected as aforesaid by the Calculation Agent are
quoting as specified in this sentence, the CD Rate with respect to such CD
Interest Determination Date will remain the CD Rate in effect on such CD
Interest Determination Date.
CMT RATE NOTES. CMT Rate Notes will bear interest at the rates (calculated
with reference to the CMT Rate and the Spread and/or Spread Multiplier, if any)
specified in such CMT Rate Notes and any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CMT Rate"
means, with respect to any Interest Determination Date relating to a CMT Rate
Note or any Floating Rate Note for which the interest rate is determined with
reference to the CMT Rate (a "CMT Rate Interest Determination Date"), the rate
displayed on the Designated CMT Telerate Page (as defined below) 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 (i) if the Designated CMT Telerate Page is
7055, the rate on such CMT Rate Interest Determination Date and (ii) if the
Designated CMT Telerate Page is 7052, the week, or the month, as specified in
the applicable Pricing Supplement, ended immediately preceding the week in which
the related CMT Rate Interest Determination Date occurs. If such rate 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
Rate Interest Determination Date will be such treasury constant maturity rate
for the Designated CMT Maturity Index as published in the relevant H.15(519). If
such rate 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 Rate
Interest Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index (or other United States Treasury rate for the
Designated CMT Maturity Index) for the CMT Rate Interest 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 United States Department of
the Treasury that the Calculation Agent determines to be comparable to the rate
formerly displayed on the Designated CMT Telerate Page and published in the
relevant H.15(519). If such information 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 United States government securities dealers
(each, a "Reference Dealer") in The City of New York (which may include any
Agent or one of its 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 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. If the Calculation Agent cannot obtain three
such 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 CMT Maturity Index and a remaining term to
maturity closest to the Designated CMT Maturity Index and in an amount of at
least $100 million. 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 the
lowest of such quotes will be eliminated; provided however, that 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 the second preceding sentence have remaining terms to maturity
equally close to the Designated CMT Maturity Index, the quotes for the Treasury
Note with the shorter remaining term to maturity will be used.
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"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.
TREASURY RATE NOTES. Treasury Rate Notes will bear interest at the interest
rates (calculated with reference to the Treasury Rate and the Spread and/or
Spread Multiplier, if any) specified in the Treasury Rate Notes and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Treasury Interest Determination Date, the rate
for the most recent auction of direct obligations of the United States
("Treasury bills") having the Index Maturity specified in the applicable Pricing
Supplement as such rate is published in H.15(5l9) under the heading "United
States Government Securities--Treasury Bills--auction average (investment)" or,
if not so published by 3:00 p.m., New York City time, on the Calculation Date
pertaining to such Treasury Interest Determination Date, the auction average
rate (expressed as a bond equivalent on the basis of a year of 365 or 366 days,
as applicable, and applied on a daily basis) as otherwise announced by the
United States Department of the Treasury. In the event that the results of the
auction of Treasury bills having the Index Maturity designated in the applicable
Pricing Supplement are not otherwise reported as provided above by 3:00 p.m.,
New York City time, on such Calculation Date or no such auction is held in a
particular week, then the Treasury Rate shall be calculated by the Calculation
Agent and shall be a yield to maturity (expressed as a bond equivalent on the
basis of a year of 365 or 366 days, as applicable, and applied on a daily basis)
of the arithmetic mean of the secondary market bid rates, as of 3:30 p.m., New
York City time, on such Treasury Interest Determination Date, of three leading
primary United States government securities dealers selected by the Calculation
Agent for the issue of Treasury bills with a remaining maturity closest to the
Index Maturity designated in the applicable Pricing Supplement; provided,
however, that if fewer than three dealers selected as aforesaid by the
Calculation Agent are quoting as specified in this sentence, the Treasury Rate
with respect to such Treasury Interest Determination Date will remain the
Treasury Rate in effect on such Treasury Interest Determination Date.
ZERO COUPON NOTES
Notes may be issued in the form of Original Issue Discount Notes that do not
provide any periodic payments of interest (the "Zero Coupon Notes"). The
specific terms of any Zero Coupon Notes will be set forth in the applicable
Pricing Supplement.
INDEXED NOTES
GENERAL
Notes may be issued from time to time as Indexed Notes. Indexed Notes are
Notes for which the principal amount payable at Maturity, or the amount of
interest payable on an Interest Payment Date, or both, is determined by
reference to a currency exchange rate, composite currency or currencies,
commodity price or other financial or non-financial index as set forth in the
applicable Pricing Supplement. Specific terms of any Indexed Notes will be set
forth in such Notes and the applicable Pricing Supplement.
RISKS ASSOCIATED WITH INDEXED NOTES
An investment in Notes indexed, as to principal or interest or both, to one
or more values of currencies (including exchange rates between currencies),
commodities or interest rate indices entails significant risks that are not
associated with similar investments in a conventional fixed-rate debt security.
If the interest rate of such a Note is so indexed, it may result in an interest
rate that is less than that payable on a conventional fixed-rate debt security
issued at the same time, including the possibility that no interest will be
paid, and, if the principal amount of such a Note is so indexed, the principal
amount payable at Maturity may be less than the original purchase price of such
Note if allowed pursuant to the terms of such Note, including the possibility
that no principal will be paid. The secondary market for such Notes will be
affected by a number of factors, independent of the creditworthiness of the
Company and the value of the applicable currency,
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commodity or interest rate index, including the volatility of the applicable
currency, commodity or interest rate index, the time remaining to the Maturity
of such Notes, the amount outstanding of such Notes and market interest rates.
The value of the applicable currency, commodity or interest rate index depends
upon a number of interrelated factors, including economic, financial and
political events, over which the Company has no control. Additionally, if the
formula used to determine the principal amount or interest payable with respect
to such Notes contains a multiple or leverage factor, the effect of any change
in the applicable currency, commodity or interest rate index will be increased.
The historical experiences of the relevant currencies, commodities or interest
rate indices should not be taken as an indication of future performance of such
currencies, commodities or interest rate indices during the term of any Note.
Accordingly, prospective investors should consult their own financial and legal
advisors as to the risks entailed by an investment in such Notes and the
suitability of such Notes in light of their particular circumstances.
REDEMPTION
If so specified in the applicable Pricing Supplement, a Note will be
redeemable at the option of the Company on the date or dates prior to the Stated
Maturity specified in the applicable Pricing Supplement at the price or prices
specified in the applicable Pricing Supplement (unless otherwise specified in
such Pricing Supplement, expressed as a percentage of the principal amount of
such Note), together with accrued interest, if any, to the date of redemption
determined as specified in the applicable Pricing Supplement. Unless otherwise
specified in the applicable Pricing Supplement, the Company may redeem any of
the Notes which are redeemable and remain outstanding either in whole or from
time to time in part upon not less than 30 nor more than 60 days' notice mailed
by or on behalf of the Company to the registered holder thereof. Unless
otherwise specified in the applicable Pricing Supplement, the Company will not
be obligated to redeem or purchase the Notes pursuant to any sinking fund or
analogous provision or at the option of any holder. If less than all of the
Notes of like tenor are to be redeemed, the Notes to be redeemed shall be
selected by the Trustee by such method as the Trustee shall deem fair and
appropriate. Upon any redemption of less than all of the principal of a Note
prior to Stated Maturity, a new Note of like tenor and of an authorized
denomination representing the unredeemed portion thereof will be issued to the
registered holder thereof. In the event that a redemption described above is
deemed to be a "tender offer" within the meaning of Rule 14(e)-1 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Company
will comply with all provisions of the Exchange Act.
REPAYMENT
If set forth in the applicable Pricing Supplement, the Notes will be subject
to repayment at the option of the registered holders thereof in accordance with
the terms of the Notes on the repayment dates specified in such Notes (each an
"Optional Repayment Date"). If no Optional Repayment Date is specified with
respect to a Note, such Note will not be repayable at the option of the
registered holder thereof prior to its Stated Maturity. On any Optional
Repayment Date with respect to any Note, such Note will be repayable in whole or
in part in increments of $1,000 at the option of such registered holder at a
price equal to 100% of the principal amount to be repaid, together with interest
thereon payable to the date of repayment, on notice given not more than 45 nor
less than 30 days prior to the Optional Repayment Date.
BOOK-ENTRY NOTES
Upon issuance, all Book-Entry Notes of the same series and bearing interest
(if any) at the same rate or pursuant to the same formula and having the same
date of issuance, redemption provisions (if any), repayment provisions (if any),
Stated Maturity and other terms will be represented by a single Global Security.
Each Global Security representing Book-Entry Notes will be deposited with, or on
behalf of, the Depositary and will be registered in the name of the Depositary
or a nominee of the Depositary. Unless otherwise specified in the applicable
Pricing Supplement, all Book-Entry Notes will be denominated in United States
dollars.
Upon the issuance of a Global Security, the Depositary will credit accounts
held with it with the respective principal or face amounts of the Book-Entry
Notes represented by such Global Security. The accounts to be credited shall be
designated initially by the Agent through which the Note was sold or, to the
extent that such Notes are offered and sold directly, by the Company. Ownership
of beneficial interests in a Global Security will be limited to institutions
that have accounts with the Depositary ("participants") and to persons that may
hold interests through such participants. Ownership of beneficial interests by
participants in a Global Security will be shown on, and the transfer of that
ownership interest will be effected only
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through, records maintained by the Depositary for such Global Security.
Ownership of beneficial interests in such Global Security by persons that hold
through participants will be shown on, and the transfer of that ownership
interest within such participant will be effected only through, records
maintained by such participant.
Payment of principal of, premium (if any) and interest (if any) on
Book-Entry Notes represented by any such Global Security will be made to the
Depositary or its nominee, as the case may be, as the sole registered holder of
the Book-Entry Notes represented thereby for all purposes under the Indenture.
None of the Company, the Trustee, the Paying Agent or any agent of the Company
or the Trustee will have any responsibility or liability for any aspect of the
Depositary's records relating to or payments made on account of beneficial
ownership interests in a Global Security representing any Book-Entry Notes or
any other aspect of the relationship between the Depositary and its participants
or the relationship between such participants and the owner of beneficial
interests in a Global Security owning through such participants or for
maintaining, supervising or reviewing any of the Depositary's records relating
to such beneficial ownership interests.
The Company has been advised by the Depositary that upon receipt of any
payment of principal of, premium (if any) or interest (if any) on any such
Global Security, the Depositary will immediately credit, on its book-entry
registration and transfer system, the accounts of participants with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such Global Security as shown on the records of the Depositary.
Payments by participants to owners of beneficial interests in a Global Security
held through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held by such
participants for customer accounts registered in "street name", and will be the
sole responsibility of such participants.
No Global Security may be transferred except as a whole by a nominee of the
Depositary to the Depositary or to another nominee of the Depositary, or by the
Depositary or any such nominee to a successor of the Depositary or a nominee of
such successor.
Unless otherwise specified in the applicable Pricing Supplement, a Global
Security representing Book-Entry Notes is exchangeable for Certificated Notes of
the same series and bearing interest (if any) at the same rate or pursuant to
the same formula, having the same date of issuance, redemption provisions (if
any), repayment provisions (if any), Stated Maturity and other terms and of
differing authorized denominations aggregating a like amount, only if (x) the
Depositary notifies the Company that it is unwilling or unable to continue as
Depositary for such Global Security or if at any time the Depositary ceases to
be a clearing agency registered under the Exchange Act, (y) the Company in its
sole discretion determines that such Global Security shall be exchangeable for
Certificated Notes or (z) there shall have occurred and be continuing an Event
of Default with respect to the Notes. Such Certificated Notes shall be
registered in the names of the owners of the beneficial interests in such Global
Security as provided by the Depositary's relevant participants (as identified by
the Depositary).
Except as provided above, owners of beneficial interests in a Global
Security will not be entitled to receive physical delivery of Notes in
certificated form and will not be considered the registered holders thereof for
any purpose under the Indenture, and no Global Security representing Book-Entry
Notes shall be exchangeable or transferrable. Accordingly, each person owning a
beneficial interest in such a Global Security must rely on the procedures of the
Depositary 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 registered holder under the Indenture. The laws of some jurisdictions
require that certain purchasers of securities take physical delivery of such
securities in certificated form. Such limits and such laws may impair the
ability to transfer beneficial interests in a Global Security.
The Depositary, as the registered holder of each Global Security, may
appoint agents and otherwise authorize participants to give or take any request,
demand, authorization, direction, notice, consent, waiver or other action which
a registered holder is entitled to give or take under the Indenture. The Company
understands that under existing industry practices, in the event that the
Company requests any action of registered holders or that an owner of a
beneficial interest in such a Global Security desires to give or take any action
which a registered holder is entitled to give or take under the Indenture, the
Depositary would authorize the participants holding the relevant beneficial
interests to give or take such action, and such participants would authorize
beneficial owners owning through such participants to give or take such action
or would otherwise act upon the instructions of beneficial owners owning through
them.
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The Depositary has advised the Company that the Depositary is a
limited-purpose trust company organized under the laws of the State of New York,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered under the Exchange Act. The Depositary was created to hold the
securities of its participants and to facilitate the clearance and settlement of
securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depositary's participants include securities brokers and dealers (including the
Agents), banks (including the Trustee), trust companies, clearing corporations,
and certain other organizations some of whom (and/or their representatives) own
the Depositary. Access to the Depositary's book-entry system is also available
to others, such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a participant, either directly
or indirectly.
REGARDING THE TRUSTEE
The Trustee under the Indenture with regard to the Notes is The First
National Bank of Chicago. The Company and certain subsidiaries from time to time
borrow from the Trustee, maintain deposit accounts with the Trustee and conduct
other banking transactions with the Trustee in the ordinary course of their
business.
SPECIAL PROVISIONS AND RISKS RELATING TO FOREIGN CURRENCY NOTES
GENERAL
Unless otherwise specified in an applicable Pricing Supplement, Notes
denominated in other than United States dollars or ECUs will not be sold in, or
to residents of, the country issuing the Specified Currency in which particular
Notes are denominated. The information set forth in this Prospectus Supplement
is directed to prospective purchasers who are United States residents, and the
Company disclaims any responsibility to advise prospective purchasers who are
residents of countries other than the United States with respect to any matters
that may affect the purchase, holding or receipt of payments of principal of and
interest on the Notes. Such persons should consult their own financial and legal
advisors with regard to such matters.
THIS PROSPECTUS SUPPLEMENT DOES NOT DESCRIBE ALL RISKS OF AN INVESTMENT IN
FOREIGN CURRENCY NOTES THAT RESULT FROM SUCH NOTES BEING DENOMINATED OR PAYABLE
IN A FOREIGN CURRENCY OR CURRENCY UNIT, EITHER AS SUCH RISKS EXIST AT THE DATE
OF THIS PROSPECTUS SUPPLEMENT OR AS SUCH RISKS MAY CHANGE FROM TIME TO TIME.
PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS AS
TO THE RISKS ENTAILED BY AN INVESTMENT IN FOREIGN CURRENCY NOTES. FOREIGN
CURRENCY NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE
UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS.
The information set forth below is by necessity incomplete and prospective
purchasers of Foreign Currency Notes should consult their own financial and
legal advisors with respect to any matters that may affect the purchase or
holding of a Foreign Currency Note or the receipt of payments of principal of
and any premium and interest on a Foreign Currency Note.
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in Foreign Currency Notes entails significant risks that are
not associated with a similar investment in a security denominated in United
States dollars. Such risks include, without limitation, the possibility of
significant changes in rate of exchange between the United States dollar and the
Specified Currency and the possibility of the imposition or modification of
foreign exchange controls by either the United States or foreign governments.
Such risks generally depend on events over which the Company has no control,
such as economic and political events and the supply and demand for relevant
currencies. In recent years, rates of exchange between the United States dollar
and certain foreign currencies have been highly volatile and such 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 Foreign Currency
Note. Depreciation of the Specified Currency applicable to a Foreign Currency
Note against the United States dollar would result in a decrease in the United
States dollar-equivalent yield of such Note, in the United States
dollar-equivalent value of the principal payable at Maturity of such Note and,
generally, in the United States dollar-equivalent market value of such Note.
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Governments have imposed from time to time exchange controls and may in the
future impose or revise exchange controls at or prior to a Foreign Currency
Note's Maturity which could affect exchange rates as well as the availability of
the Specified Currency at a Foreign Currency Note's Maturity. Even if there are
no exchange controls, it is possible that the Specified Currency for any
particular Foreign Currency Note would not be available at such Note's Maturity
due to other circumstances beyond the control of the Company. In that event, the
Company will repay in United States dollars on the basis of the most recently
available exchange rate.
JUDGMENTS
The Notes will be governed by and construed in accordance with the laws of
the State of New York. If an action based on Foreign Currency Notes were
commenced in a court of the United States, it is likely that such court would
grant judgment relating to such Notes only in United States dollars. It is not
clear, however, whether, in granting such judgment, the rate of conversion into
United States dollars would be determined with reference to the date of default,
the date judgment is rendered or some other date. Under current New York law, a
state court in the State of New York rendering a judgment on a Foreign Currency
Note would be required to render such judgment in the Specified Currency in
which such Foreign Currency Note is denominated, and such judgment would be
converted into United States dollars at the exchange rate
prevailing on the date of entry of the judgment. Holders of Foreign Currency
Notes would bear the risk of exchange rate fluctuations between the time the
amount of the judgment is calculated and the time the Paying Agent converts
United States dollars to the Specified Currency for payment of the judgment.
PAYMENT OF PRINCIPAL AND ANY PREMIUM AND INTEREST
The Company is obligated to make payments of principal of and any premium
and interest on Foreign Currency Notes in the Specified Currency (or, if such
Specified Currency is not at the time of such payment legal tender for the
payment of public and private debts, in such other coin or currency of the
country which issued such Specified Currency as at the time of such payment is
legal tender for the payment of such debts). Any such amounts paid by the
Company will, unless otherwise specified in the applicable Pricing Supplement,
be converted by the Exchange Rate Agent named in the applicable Pricing
Supplement to U.S. dollars for payment to Holders. However, unless otherwise
indicated in the applicable Pricing Supplement, the Holder of a Foreign Currency
Note may elect to receive such payments in the Specified Currency as hereinafter
described.
Any U.S. dollar amount to be received by a Holder of a Foreign Currency Note
will be based on the highest bid quotation in The City of New York received by
the Exchange Rate Agent at approximately 11:00 a.m., New York City time, on the
second Market Day preceding the applicable payment date from three recognized
foreign exchange dealers (one of which may be the Exchange Rate Agent) selected
by the Exchange Rate Agent and approved by the Company for the purchase by the
quoting dealer of the Specified Currency for U.S. dollars for settlement on such
payment date in the aggregate amount of the Specified Currency payable to all
Holders of Foreign Currency Notes scheduled to receive U.S. dollar payments and
at which the applicable dealer commits to execute a contract. If such bid
quotations are not available, payments will be made in the Specified Currency.
All currency exchange costs will be borne by the Holder of the Foreign Currency
Note by deductions from such payments.
Unless otherwise specified in the applicable Pricing Supplement, a Holder of
a Foreign Currency Note may elect to receive payment of the principal of and any
premium and interest on such Note in the Specified Currency by submitting a
written request for such payment to the Paying Agent at its corporate trust
office in the City of Minneapolis, Minnesota on or prior to the Regular Record
Date or at least sixteen days prior to Maturity, as the case may be. Such
written request may be mailed or hand delivered or sent by cable, telex or other
form of facsimile transmission. A Holder of a Foreign Currency Note may elect to
receive payment in the Specified Currency for all principal and any premium and
interest payments and need not file a separate election for each payment. Such
election will remain in effect until revoked by written notice to the Paying
Agent, but written notice of any such revocation must be received by the Paying
Agent on or prior to the relevant Regular Record Date or at least the sixteenth
calendar day prior to Maturity, as the case may be. Holders of Foreign Currency
Notes whose Notes are to be held in the name of a broker or nominee should
contact such broker or nominee to determine whether and how an election to
receive payments in the Specified Currency may be made.
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Principal of, and any premium and interest on, a Foreign Currency Note paid
in U.S. dollars will be paid in the manner specified in the Prospectus and this
Prospectus Supplement for interest on Notes denominated in U.S. dollars.
Interest on a Foreign Currency Note paid in the Specified Currency will be paid
by check mailed to the address of the Person entitled thereto as it appears in
the Security Register. All checks payable in a Specified Currency will be drawn
on a bank office located outside the United States. Payments of principal of and
any premium and interest on Foreign Currency Notes paid in the Specified
Currency at Maturity will be made by wire transfer of immediately available
funds to an account with a bank located in the country of the Specified
Currency, as shall have been designated at least sixteen days prior to Maturity
by the Holder, provided that the Note is presented at the principal corporate
trust office of the Trustee or the Paying Agent in time for the Paying Agent to
make such payments in such funds in accordance with its normal procedures.
Unless otherwise specified in the applicable Pricing Supplement, a
beneficial owner of Book-Entry Notes denominated in a Specified Currency
electing to receive payments of principal or any premium or interest in a
currency other than U.S. dollars must notify the participant through which its
interest is held on or prior to the applicable Regular Record Date, in the case
of a payment of interest, and on or prior to the sixteenth day prior to
Maturity, in the case of principal or premium, of such beneficial owner's
election to receive all or a portion of such payment in a Specified Currency.
Such participant must notify the Depositary of such election on or prior to the
third Market Day after such Regular Record Date. The Depositary will notify the
Paying Agent of such election on or prior to the fifth Market Day after such
Regular Record Date. If complete instructions are received by the participant
and forwarded by the participant to the Depositary, and by the Depositary to the
Paying Agent, on or prior to such dates, the beneficial owner will receive
payments in the Specified Currency.
PAYMENT CURRENCY
If a Specified Currency is not available for the payment of principal or any
premium or interest with respect to a Foreign Currency Note due to the
imposition of exchange controls or other circumstances beyond the control of the
Company, the Company will be entitled to satisfy its obligations to Holders of
Foreign Currency Notes by making such payment in U.S. dollars on the basis of
the Market Exchange Rate on the second Market Day prior to such payment, or if
such Market Exchange Rate is not then available, on the basis of the most
recently available Market Exchange Rate or as otherwise indicated in the
applicable Pricing Supplement. The Market Exchange Rate for any Specified
Currency means the noon buying rate in The City of New York for cable transfer
for such Specified Currency as certified for customs purposes by (or if not so
certified, as otherwise determined by) the Federal Reserve Bank of New York. Any
payment made under such circumstances in U.S. dollars where the required payment
is in other than U.S. dollars will not constitute an Event of Default under the
Indenture.
If payment in respect of a Note is required to be made in any currency unit
(E.G., ECU), and such currency unit is unavailable due to the imposition of
exchange controls or other circumstances beyond the Company's control, then the
Company will be entitled, but not required, to make any payments in respect of
such Note in U.S. dollars until such currency unit is again available. The
amount of each payment in U.S. dollars shall be computed on the basis of the
equivalent of the currency unit in U.S. dollars, which shall be determined by
the Company or its agent on the following basis. The component currencies of the
currency unit for this purpose (the "Component Currencies" or, individually, a
"Component Currency") shall be the currency amounts that were components of the
currency unit as of the last day on which the currency unit was used. The
equivalent of the currency unit in U.S. dollars shall be calculated by
aggregating the U.S. dollar equivalents of the Component Currencies. The U.S.
dollar equivalent of each of the Component Currencies shall be determined by the
Company or such agent on the basis of the most recently available Market
Exchange Rate for each such Component Currency, or as otherwise indicated in the
applicable Pricing Supplement.
If the official unit of any Component Currency is altered by way of
combination or subdivision, the number of units of the currency as a Component
Currency shall be divided or multiplied in the same proportion. If two or more
Component Currencies are consolidated into a single currency, the amounts of
those currencies as Component Currencies shall be replaced by an amount in such
single currency equal to the sum of the amounts of the consolidated Component
Currencies expressed in such single currency. If any
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Component Currency is divided into two or more currencies, the amount of the
original Component Currency shall be replaced by the amounts of such two or more
currencies, the sum of which shall be equal to the amount of the original
Component Currency.
All determinations referred to above made by the Company or its agent
(including the Exchange Rate Agent) shall be at its sole discretion and shall,
in the absence of manifest error, be conclusive for all purposes and binding on
the Holders of Notes.
UNITED STATES TAXATION
The following is a summary of the principal United States federal income tax
consequences of ownership of Notes. It deals only with Notes held as capital
assets by initial purchasers, and not with special classes of holders, such as
dealers in securities or currencies, banks, tax-exempt organizations, life
insurance companies, persons that hold Notes that are a hedge or that are hedged
against currency risks or that are part of a straddle or conversion transaction,
or persons 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 United States federal income tax consequences
of ownership of Notes that are due to mature more than 30 years from their date
of issue will be discussed in an applicable Pricing Supplement. The summary is
based on the Internal Revenue Code of 1986, as amended (the "Code"), its
legislative history, existing and proposed regulations thereunder ("Treasury
Regulations"), published rulings and court decisions, all as currently in effect
and all subject to change at any time, perhaps with retroactive effect.
Additionally, the discussions below under "Original Issue Discount--Notes
Subject to Contingencies Including Optional Redemption" and "Original Issue
Discount--Variable Rate Notes" take into account Treasury Regulations that were
issued as final regulations on June 11, 1996 and that will apply to Notes issued
on or after August 13, 1996.
Prospective purchasers of Notes should consult their own tax advisors
concerning the consequences, in their particular circumstances, under the Code
and the laws of any other taxing jurisdiction, of ownership of Notes.
UNITED STATES HOLDERS
PAYMENTS OF INTEREST
Interest on a Note, whether payable in U.S. dollars or a currency, composite
currency or basket of currencies other than U.S. dollars (a "foreign currency"),
other than interest on a "Discount Note" that is not "qualified stated interest"
(each as defined below under "Original Issue Discount--General"), will be
taxable to a United States Holder as ordinary income at the time it is received
or accrued, depending on the holder's method of accounting for tax purposes. A
United States Holder is a beneficial owner who or that is (i) a citizen or
resident of the United States, (ii) a domestic corporation or (iii) otherwise
subject to United States federal income taxation on a net income basis in
respect of the Note.
If an interest payment is denominated in, or determined by reference to, a
foreign currency, the amount of income recognized by a cash basis United States
Holder will be the U.S. dollar value of the interest payment, based on the
exchange rate in effect on the date of receipt, regardless of whether the
payment is in fact converted into U.S. dollars.
An accrual basis United States Holder may determine the amount of income
recognized with respect to an interest payment denominated in, or determined by
reference to, a foreign currency in accordance with either of two methods. Under
the first method, the amount of income accrued will be based on the average
exchange rate in effect during the interest accrual period (or, with respect to
an accrual period that spans two taxable years, the part of the period within
the taxable year).
Under the second method, the United States Holder may elect to determine the
amount of income accrued on the basis of the exchange rate in effect on the last
day of the accrual period or, in the case of an accrual period that spans two
taxable years, the exchange rate in effect on the last day of the part of the
period within the taxable year. Additionally, if a payment of interest is
actually received within five business days of the last day of the accrual
period or taxable year, an electing accrual basis United States Holder may
instead translate such accrued interest into U.S. dollars at the exchange rate
in effect on the day of actual
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receipt. Any such election will apply to all debt instruments held by the United
States Holder at the beginning of the first taxable year to which the election
applies or thereafter acquired by the United States Holder, and will be
irrevocable without the consent of the Internal Revenue Service (the "Service").
Upon receipt of the interest payment (including a payment attributable to
accrued but unpaid interest upon the sale or retirement of a Note) denominated
in, or determined by reference to, a foreign currency, the United States Holder
will recognize ordinary income or loss measured by the difference between (x)
the average exchange rate used to accrue interest income, or the exchange rate
as determined under the second method described above if the United States
Holder elects that method, and (y) the exchange rate in effect on the date of
receipt, regardless of whether the payment is in fact converted into U.S.
dollars.
ORIGINAL ISSUE DISCOUNT
GENERAL. A Note, other than a Note with a term of one year or less (a
"short-term Note"), will be treated as issued at an original issue discount (a
"Discount Note") if the excess of the Note's "stated redemption price at
maturity" over its issue price is more than a "de minimis amount" (as defined
below). Generally, the issue price of a Note will be the first price at which a
substantial amount of Notes included in the issue of which the Note is a part is
sold to other than bond houses, brokers, or similar persons or organizations
acting in the capacity of underwriters, placement agents, or wholesalers. The
stated redemption price at maturity of a Note is the total of all payments
provided by the Note that are not payments of "qualified stated interest". A
qualified stated interest payment is generally any one of a series of stated
interest payments on a Note that are unconditionally payable at least annually
at a single fixed rate (with certain exceptions for lower rates paid during some
periods) applied to the outstanding principal amount of the Note. Special rules
for "Variable Rate Notes" (as defined below under "Original Issue
Discount--Variable Rate Notes") are described below under "Original Issue
Discount--Variable Rate Notes".
In general, if the excess of a Note's stated redemption price at maturity
over its issue price is less than 1/4 of 1 percent of the Note's stated
redemption price at maturity multiplied by the number of complete years to its
maturity (the "de minimis amount"), then such excess, if any, constitutes "de
minimis original issue discount" and the Note is not a Discount Note. Unless the
election described below under "Election to Treat All Interest as Original Issue
Discount" is made, a United States Holder of a Note with de minimis original
issue discount must include such de minimis original issue discount in income as
stated principal payments on the Note are made. The includible amount with
respect to each such payment will equal the product of the total amount of the
Note's de minimis original issue discount and a fraction, the numerator of which
is the amount of the principal payment made and the denominator of which is the
stated principal amount of the Note.
United States Holders of Discount Notes having a maturity of more than one
year from their date of issue must include original issue discount ("OID") in
income calculated on a constant-yield method before the receipt of cash
attributable to such income, and generally will have to include in income
increasingly greater amounts of OID over the life of the Note. The amount of OID
includible in income by a United States Holder of a Discount Note is the sum of
the daily portions of OID with respect to the Discount Note for each day during
the taxable year or portion of the taxable year on which the United States
Holder holds such Discount 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. Accrual periods with respect to a Note may be
of any length selected by the United States Holder and may vary in length over
the term of the Note as long as (i) no accrual period is longer than one year
and (ii) each scheduled payment of interest or principal on the Note occurs on
either the final or first day of an accrual period. The amount of OID allocable
to an accrual period equals the excess of (a) the product of the Discount Note's
adjusted issue price at the beginning of the accrual period and such Note's
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
(b) the sum of the payments of qualified stated interest on the Note allocable
to the accrual period. The "adjusted issue price" of a Discount Note at the
beginning of any accrual period is the issue price of the Note increased by (x)
the amount of accrued OID for each prior accrual period and decreased by (y) the
amount of any payments previously made on the Note that were not qualified
stated interest payments. For purposes of determining the amount of OID
allocable to an accrual period, if an interval between payments of qualified
stated interest on the Note contains more than one accrual period, the amount of
qualified stated
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interest payable at the end of the interval (including any qualified stated
interest that is payable on the first day of the accrual period immediately
following the interval) is allocated pro rata on the basis of relative lengths
to each accrual period in the interval, and the adjusted issue price at the
beginning of each accrual period in the interval must be increased by the amount
of any qualified stated interest that has accrued prior to the first day of the
accrual period but that is not payable until the end of the interval. The amount
of OID allocable to an initial short accrual period may be computed using any
reasonable method if all other accrual periods other than a final short accrual
period are of equal length. The amount of OID allocable to the final accrual
period is the difference between (x) the amount payable at the maturity of the
Note (other than any payment of qualified stated interest) and (y) the Note's
adjusted issue price as of the beginning of the final accrual period.
ACQUISITION PREMIUM. A United States Holder that purchases a Note for an
amount less than or equal to the sum of all amounts payable on the Note after
the purchase date other than payments of qualified stated interest but in excess
of its adjusted issue price (any such excess being "acquisition premium") and
that does not make the election described below under "Election to Treat All
Interest as Original Issue Discount" is permitted to reduce the daily portions
of OID by a fraction, the numerator of which is the excess of the United States
Holder's adjusted basis in the Note immediately after its purchase over the
adjusted issue price of the Note, and the denominator of which is the excess of
the sum of all amounts payable on the Note after the purchase date, other than
payments of qualified stated interest, over the Note's adjusted issue price.
MARKET DISCOUNT. A Note, other than a short-term Note, will be treated as
purchased at a market discount (a "Market Discount Note") if (i) the amount for
which a United States Holder purchased the Note is less than the Note's issue
price (as determined above under "Original Issue Discount--General") and (ii)
the Note's stated redemption price at maturity or, in the case of a Discount
Note, the Note's "revised issue price", exceeds the amount for which the United
States Holder purchased the Note by at least 1/4 of 1 percent of such Note's
stated redemption price at maturity or revised issue price, respectively,
multiplied by the number of complete years to the Note's maturity. If such
excess is not sufficient to cause the Note to be a Market Discount Note, then
such excess constitutes "de minimis market discount". The Code provides that,
for these purposes, the "revised issue price" of a Note generally equals its
issue price, increased by the amount of any OID that has accrued on the Note.
Any gain recognized on the maturity or disposition of a Market Discount Note
will be treated as ordinary income to the extent that such gain does not exceed
the accrued market discount on such Note. Alternatively, a United States Holder
of a Market Discount Note may elect to include market discount in income
currently over the life of the Note. Such an election shall apply to all debt
instruments with market discount acquired by the electing United States Holder
on or after the first day of the first taxable year to which the election
applies. This election may not be revoked without the consent of the Service.
Market discount on a Market Discount Note will accrue on a straight-line
basis unless the United States Holder elects to accrue such market discount on a
constant-yield method. Such an election shall apply only to the Note with
respect to which it is made and may not be revoked. A United States Holder of a
Market Discount Note that does not elect to include market discount in income
currently generally will be required to defer deductions for interest on
borrowings allocable to such Note in an amount not exceeding the accrued market
discount on such Note until the maturity or disposition of such Note.
PRE-ISSUANCE ACCRUED INTEREST. If (i) a portion of the initial purchase
price of a Note is attributable to pre-issuance accrued interest, (ii) the first
stated interest payment on the Note is to be made within one year of the Note's
issue date and (iii) the payment will equal or exceed the amount of pre-issuance
accrued interest, then the United States Holder may elect to decrease the issue
price of the Note by the amount of pre-issuance accrued interest. In that event,
a portion of the first stated interest payment will be treated as a return of
the excluded pre-issuance accrued interest and not as an amount payable on the
Note.
NOTES SUBJECT TO CONTINGENCIES INCLUDING OPTIONAL REDEMPTION. If a Note
provides for an alternative payment schedule or schedules applicable upon the
occurrence of a contingency or contingencies, the timing and amounts of the
payments that comprise each payment schedule are known as of the issue date and
one of such schedules is significantly more likely than not to occur, the yield
and maturity of the Note are determined by assuming that the payments will be
made according to that payment schedule. Notwithstanding this rule for
determining yield and maturity in the case of Notes subject to contingencies, if
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the Company or the United States Holder has an unconditional option or options
that, if exercised, would require payments to be made on the Note under an
alternative payment schedule or schedules, then (i) in the case of an option or
options of the Company, the Company will be deemed to exercise or not exercise
an option or combination of options in the manner that minimizes the yield on
the Note and (ii) in the case of an option or options of the Holder, the Holder
will be deemed to exercise or not exercise an option or combination of options
in the manner that maximizes the yield on the Note. For purposes of those
calculations, the yield on the Note is determined by using any date on which the
Note may be redeemed or repurchased as the maturity date and the amount payable
on such date in accordance with the terms of the Note as the principal amount
payable at maturity.
If a contingency (including the exercise of an option) actually occurs or
does not occur contrary to an assumption made according to the above rules (a
"change in circumstances") then, except to the extent that a portion of the Note
is repaid as a result of a change in circumstances and solely for purposes of
determining the amount and accrual of OID, the yield and maturity of the Note
are redetermined by treating the Note as retired and then reissued on the date
of the change in circumstances for an amount equal to the Note's adjusted issue
price on that date.
ELECTION TO TREAT ALL INTEREST AS ORIGINAL ISSUE DISCOUNT. A United States
Holder may elect to include in gross income all interest that accrues on a Note
using the constant-yield method described above under the heading "Original
Issue Discount--General", with the modifications described below. For purposes
of this election, interest includes stated interest, OID, de minimis original
issue discount, market discount, de minimis market discount and unstated
interest, as adjusted by any amortizable bond premium (described below under
"Notes Purchased at a Premium") or acquisition premium.
In applying the constant-yield method to a Note with respect to which this
election has been made, the issue price of the Note will equal the electing
United States Holder's adjusted basis in the Note immediately after its
acquisition, the issue date of the Note will be the date of its acquisition by
the electing United States Holder, and no payments on the Note will be treated
as payments of qualified stated interest. This election will generally apply
only to the Note with respect to which it is made and may not be revoked without
the consent of the Service. If this election is made with respect to a Note with
amortizable bond premium, then the electing United States Holder will be deemed
to have elected to apply amortizable bond premium against interest with respect
to all debt instruments with amortizable bond premium (other than debt
instruments the interest on which is excludible from gross income) held by the
electing United States Holder as of the beginning of the taxable year in which
the Note with respect to which the election is made is acquired or thereafter
acquired. The deemed election with respect to amortizable bond premium may not
be revoked without the consent of the Service.
If the election to apply the constant-yield method to all interest on a Note
is made with respect to a Market Discount Note, the electing United States
Holder will be treated as having made the election discussed above under
"Original Issue Discount--Market Discount" to include market discount in income
currently over the life of all debt instruments held or thereafter acquired by
such United States Holder.
VARIABLE RATE NOTES. A "Variable Rate Note" is a Note that: (i) has an
issue price that does not exceed the total noncontingent principal payments by
more than the lesser of (1) the product of (x) the total noncontingent principal
payments, (y) the number of complete years to maturity from the issue date and
(z) .015, or (2) 15 percent of the total noncontingent principal payments, and
(ii) does not provide for any stated interest other than stated interest
compounded or paid at least annually at (1) one or more "qualified floating
rates", (2) a single fixed rate and one or more qualified floating rates, (3) a
single "objective rate" or (4) a single fixed rate and a single objective rate
that is a "qualified inverse floating rate".
A qualified floating rate or objective rate in effect at any time during the
term of the instrument must be set at a "current value" of that rate. A "current
value" of a rate is the value of the rate on any day that is no earlier than 3
months prior to the first day on which that value is in effect and no later than
1 year following that first day.
A variable rate is a "qualified floating rate" if (i) variations in the
value of the rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the Note
is denominated or (ii) it is equal to the product of such a rate and either (a)
a fixed multiple that is greater than .65 (zero for a debt instrument issued
before August 13, 1996) but not more than 1.35, or
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(b) a fixed multiple greater than .65 (zero for a debt instrument issued before
August 13, 1996) but not more than 1.35, increased or decreased by a fixed rate.
A rate is not a qualified floating rate, however, if the rate is subject to
certain restrictions (including caps, floors, governors, or other similar
restrictions) unless such restrictions are fixed throughout the term of the Note
or are not reasonably expected to significantly affect the yield on the Note.
An "objective rate" is a rate, other than a qualified floating rate, that is
determined using a single, fixed formula and that is based on objective
financial or economic information that is not within the control of or unique to
the circumstances of the issuer or a related party. A variable rate is not an
objective rate, however, if it is reasonably expected that the average value of
the rate during the first half of the Note's term will be either significantly
less than or significantly greater than the average value of the rate during the
final half of the Note's term. An objective rate is a "qualified inverse
floating rate" if (i) the rate is equal to a fixed rate minus a qualified
floating rate, and (ii) the variations in the rate can reasonably be expected to
inversely reflect contemporaneous variations in the qualified floating rate.
Under these rules, Commercial Paper Rate Notes, Prime Rate Notes, LIBOR Notes,
Treasury Rate Notes, CMT Rate Notes, CD Rate Notes, and Federal Funds Rate Notes
will generally be treated as Variable Rate Notes.
In general, if a Variable Rate Note provides for stated interest at a single
qualified floating rate or objective rate, all stated interest on the Note is
qualified stated interest and the amount of OID, if any, is determined by using,
in the case of a qualified floating rate or qualified inverse floating rate, the
value as of the issue date of the qualified floating rate or qualified inverse
floating rate, or, in the case of any other objective rate, a fixed rate that
reflects the yield reasonably expected for the Note.
If a Variable Rate Note does not provide for stated interest at a single
qualified floating rate or objective rate or at a fixed rate (other than at a
single fixed rate for an initial period), the amount of interest and OID
accruals on the Note are generally determined by (i) determining a fixed rate
substitute for each variable rate provided under the Variable Rate Note
(generally, the value of each variable rate as of the issue date or, in the case
of an objective rate that is not a qualified inverse floating rate, a rate that
reflects the reasonably expected yield on the Note), (ii) constructing the
equivalent fixed rate debt instrument (using the fixed rate substitute described
above), (iii) determining the amount of qualified stated interest and OID with
respect to the equivalent fixed rate debt instrument, and (iv) making the
appropriate adjustments for actual variable rates during the applicable accrual
period.
If a Variable Rate Note provides for stated interest either at one or more
qualified floating rates or at a qualified inverse floating rate, and in
addition provides for stated interest at a single fixed rate (other than at a
single fixed rate for an initial period), the amount of interest and OID
accruals are determined as in the immediately preceding paragraph with the
modification that the Variable Rate Note is treated, for purposes of the first
three steps of the determination, as if it provided for a qualified floating
rate (or a qualified inverse floating rate, as the case may be) rather than the
fixed rate. The qualified floating rate (or qualified inverse floating rate)
replacing the fixed rate must be such that the fair market value of the Variable
Rate Note as of the issue date would be approximately the same as the fair
market value of an otherwise identical debt instrument that provides for the
qualified floating rate (or qualified inverse floating rate) rather than the
fixed rate.
SHORT-TERM NOTES. In general, an individual or other cash basis United
States Holder of a short-term Note is not required to accrue OID (as specially
defined below for the purposes of this paragraph) for United States federal
income tax purposes unless it elects to do so (but may be required to include
any stated interest in income as the interest is received). Accrual basis United
States Holders and certain other United States Holders, including banks,
regulated investment companies, dealers in securities, common trust funds,
United States Holders who hold Notes as part of certain identified hedging
transactions, certain pass-thru entities and cash basis United States Holders
who so elect, are required to accrue OID on short-term Notes on either a
straight-line basis or under the constant-yield method (based on daily
compounding), at the election of the United States Holder. In the case of a
United States Holder not required and not electing to include OID in income
currently, any gain realized on the sale or retirement of the short-term Note
will be ordinary income to the extent of the OID accrued on a straight-line
basis (unless an election is made to accrue the OID under the constant-yield
method) through the date of sale or retirement. United States
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Holders who are not required and do not elect to accrue OID on short-term Notes
will be required to defer deductions for interest on borrowings allocable to
short-term Notes in an amount not exceeding the deferred income until the
deferred income is realized.
For purposes of determining the amount of OID subject to these rules, all
interest payments on a short-term Note, including stated interest, are included
in the short-term Note's stated redemption price at maturity.
FOREIGN CURRENCY DISCOUNT NOTES. OID for any accrual period on a Foreign
Currency Note will be determined in the foreign currency and then translated
into U.S. dollars in the same manner as stated interest accrued by an accrual
basis United States Holder, as described under "Payments of Interest". Upon
receipt of an amount attributable to OID (whether in connection with a payment
of interest or the sale or retirement of a Note), a United States Holder may
recognize ordinary income or loss.
NOTES PURCHASED AT A PREMIUM
A United States Holder that purchases a Note for an amount in excess of its
principal amount may elect to treat such excess as "amortizable bond premium",
in which case the amount required to be included in the United States Holder's
income each year with respect to interest on the Note will be reduced by the
amount of amortizable bond premium allocable (based on the Note's yield to
maturity) to such year. In the case of a Foreign Currency Note, bond premium
will be computed in units of the foreign currency, and amortizable bond premium
will reduce interest income in units of the foreign currency. At the time
amortized bond premium offsets interest income, exchange gain or loss (taxable
as ordinary income or loss) is realized measured by the difference between
exchange rates at that time and at the time of the acquisition of the Notes. Any
election to amortize bond premium shall apply to all bonds (other than bonds the
interest on which is excludible from gross income) held by the United States
Holder at the beginning of the first taxable year to which the election applies
or thereafter acquired by the United States Holder, and is irrevocable without
the consent of the Service. See also "Original Issue Discount--Election to Treat
All Interest as Original Issue Discount".
PURCHASE, SALE AND RETIREMENT OF THE NOTES
A United States Holder's tax basis in a Note will generally be its U.S.
dollar cost (as defined below), increased by the amount of any OID or market
discount included in the United States Holder's income with respect to the Note
and the amount, if any, of income attributable to de minimis original issue
discount and de minimis market discount included in the United States Holder's
income with respect to the Note, and reduced by (i) the amount of any payments
that are not qualified stated interest payments, and (ii) the amount of any
amortizable bond premium applied to reduce interest on the Note. The U.S. dollar
cost of a Note purchased with a foreign currency will generally be the U.S.
dollar value of the purchase price on the date of purchase or, in the case of
Notes traded on an established securities market, as defined in the applicable
Treasury Regulations, that are purchased by a cash basis United States Holder
(or an accrual basis United States Holder that so elects), on the settlement
date for the purchase.
A United States Holder will generally recognize gain or loss on the sale or
retirement of a Note equal to the difference between the amount realized on the
sale or retirement and the tax basis of the Note. The amount realized on a sale
or retirement for an amount in foreign currency will be the U.S. dollar value of
such amount on (i) the date payment is received in the case of a cash basis
United States Holder, (ii) the date of disposition in the case of an accrual
basis United States Holder or (iii) in the case of Notes traded on an
established securities market, as defined in the applicable Treasury
Regulations, sold by a cash basis United States Holder (or an accrual basis
United States Holder that so elects), on the settlement date for the sale.
Except to the extent described above under "Original Issue Discount--Short-Term
Notes" or "Original Issue Discount--Market Discount" or described in the next
succeeding paragraph or attributable to accrued but unpaid interest, gain or
loss recognized on the sale or retirement of a Note will be capital gain or loss
and will be long-term capital gain or loss if the Note was held for more than
one year.
Gain or loss recognized by a United States Holder on the sale or retirement
of a Note that is attributable to changes in exchange rates will be treated as
ordinary income or loss. However, exchange gain or loss is taken into account
only to the extent of total gain or loss realized on the transaction.
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EXCHANGE OF AMOUNTS IN OTHER THAN U.S. DOLLARS
Foreign currency received as interest on a Note or on the sale or retirement
of a Note will have a tax basis equal to its U.S. dollar value at the time such
interest is received or at the time of such sale or retirement. Foreign currency
that is purchased will generally have a tax basis equal to the U.S. dollar value
of the foreign currency on the date of purchase. Any gain or loss recognized on
a sale or other disposition of a foreign currency (including its use to purchase
Notes or upon exchange for U.S. dollars) will be ordinary income or loss.
INDEXED NOTES
The applicable Pricing Supplement will contain a discussion of any special
United States federal income tax rules with respect to Notes that are not
subject to the rules governing Variable Rate Notes, payments on which are
determined by reference to any index.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
holder who is (i) a nonresident alien individual or (ii) a foreign corporation,
partnership or estate or trust, in each case not subject to United States
federal income tax on a net income basis in respect of income or gain from a
Note. This discussion assumes that the Note is not subject to the rules of
Section 871(h)(4)(A) of the Code (relating to interest payments that are
determined by reference to the income, profits, changes in the value of property
or other attributes of the debtor or a related party).
Under present United States federal income and estate tax law and subject to
the discussion of backup withholding below:
(i) payments of principal, premium (if any) and interest (including OID)
by the Company or any of its paying agents to any holder of a Note that is a
United States Alien Holder will not be subject to United States federal
withholding tax if, in the case of interest or OID, (a) the beneficial owner
of the Note does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of the Company entitled to
vote, (b) the beneficial owner of the Note is not a controlled foreign
corporation that is related to the Company through stock ownership, and (c)
either (A) the beneficial owner of the Note certifies to the Company or its
agent, under penalties of perjury, that it is not a United States Holder and
provides its name and address or (B) a securities clearing organization,
bank or other financial institution that holds customers' securities in the
ordinary course of its trade or business (a "financial institution") and
holds the Note certifies to the Company or its agent under penalties of
perjury that such statement has been received from the beneficial owner by
it or by a financial institution between it and the beneficial owner and
furnishes the payor with a copy thereof;
(ii) a United States Alien Holder of a Note will not be subject to
United States federal withholding tax on any gain realized on the sale or
exchange of a Note or coupon; and
(iii) a Note or coupon held by an individual who at death is not a
citizen or resident of the United States will not be includible in the
individual's gross estate for purposes of the United States federal estate
tax as a result of the individual's death (a) if the individual did not
actually or constructively own 10% or more of the total combined voting
power of all classes of stock of the Company entitled to vote and (b) the
income on the Note would not have been effectively connected with a United
States trade or business of the individual at the individual's death.
Recently proposed Internal Revenue Service Treasury regulations (the
"Proposed Regulations") would provide alternative methods for satisfying the
certification requirement described in clause (i)(c) above. The Proposed
Regulations also would require, in the case of Notes held by a foreign
partnership, that (x) the certification described in clause (i)(c) above be
provided by the partners rather than by the foreign partnership and (y) the
partnership provide certain information, including a United States taxpayer
identification number. A look-through rule would apply in the case of tiered
partnerships. The Proposed Regulations are proposed to be effective for payments
made after December 31, 1997. There can be no assurance that the Proposed
Regulations will be adopted or as to the provisions that they will include if
and when adopted in temporary or final form.
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BACKUP WITHHOLDING AND INFORMATION REPORTING
UNITED STATES HOLDERS
In general, information reporting requirements will apply to payments of
principal, any premium and interest on a Note and the proceeds of the sale of a
Note before maturity within the United States to, and to the accrual of OID on a
Discount Note with respect to, non-corporate United States Holders, and "backup
withholding" at a rate of 31% will apply to such payments and to payments of OID
if the United States Holder fails to provide an accurate taxpayer identification
number or is notified by the Internal Revenue Service that it has failed to
report all interest and dividends required to be shown on its federal income tax
returns.
UNITED STATES ALIEN HOLDERS
Under current law, information reporting and backup withholding will not
apply to payments of principal, premium (if any) and interest (including OID)
made by the Company or a paying agent to a United States Alien Holder on a Note
if the certification described in clause (i)(c) under "United States Alien
Holders" above is received, provided that the payor does not have actual
knowledge that the holder is a United States person. The Company or a paying
agent, however, may report (on Internal Revenue Service Form 1042S) payments of
interest (including OID) on Notes. See the discussion above with respect to the
rules applicable to foreign partnerships under the Proposed Regulations.
Payments of the proceeds from the sale by a United States Alien Holder of a
Note made to or through a foreign office of a broker will not be subject to
information reporting or backup withholding, except that if the broker is a
United States person, a controlled foreign corporation for United States tax
purposes or a foreign person 50% or more of whose gross income is effectively
connected with a United States trade or business for a specified three-year
period, information reporting may apply to such payments. Payments of the
proceeds from the sale of a Note to or through the United States office of a
broker is subject to information reporting and backup withholding unless the
holder or beneficial owner certifies as to its non-United States status or
otherwise establishes an exemption from information reporting and backup
withholding.
PLAN OF DISTRIBUTION OF NOTES
The Company has entered into a Distribution Agreement with Morgan Stanley &
Co. Incorporated, Goldman, Sachs & Co., Lehman Brothers, Lehman Brothers Inc.,
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P.
Morgan Securities Inc. and Salomon Brothers Inc and may enter into similar
agreements with other agents (collectively, the "Agents"). Under the terms of
such Distribution Agreement and any such other similar agreements, the Notes
will be offered on a continuing basis by the Company through the Agents, each of
which has agreed or will have agreed to use its reasonable efforts to solicit
purchases of the Notes. The Company will pay each Agent a commission of from
.125% to .750% of the principal amount of each Note with a Stated Maturity of 30
years or less, depending on its Stated Maturity, sold through such Agent.
Commissions with respect to Notes with Stated Maturities in excess of 30 years
that are sold through an Agent will be negotiated between the Company and such
Agent at the time of such sale. The Company will have the sole right to accept
offers to purchase Notes and may reject any offer, in whole or in part. Each
Agent shall have the right to reject any offer to purchase Notes received by it,
in whole or in part. The Company will also have the right to sell Notes to any
Agent, acting as principal, at a discount equivalent to the commission set forth
on the cover page hereof in the case of any such principal transaction in which
no other discount is agreed, for resale to one or more investors or other
purchasers from time to time at varying prices related to prevailing market
prices at the time of such resale, as determined by such Agent or, if so agreed,
at a fixed public offering price. After the initial public offering of Notes to
be resold to investors and other purchasers, the public offering price (in the
case of Notes to be resold at a fixed public offering price), the concession and
the discount may be changed. In addition, such Agent may offer the Notes it has
purchased as principal to other dealers. Such Agent may sell Notes to any dealer
at a discount and, unless otherwise specified in the applicable Pricing
Supplement, such discount allowed to any dealer will not be in excess of the
discount to be received by such Agent.
The Company reserves the right to sell Notes directly to investors on its
own behalf, and to accept offers to purchase Notes through agents other than the
Agents.
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Unless otherwise indicated in the applicable Pricing Supplement, payment of
the purchase price of Notes will be required to be made in immediately available
funds in The City of New York.
The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933 (the "Act"). The Company has agreed or will have agreed
to indemnify the Agents against and contribute toward certain liabilities,
including liabilities under the Act. The Company also has agreed or will have
agreed to reimburse the Agents for certain expenses in connection with the
offering of the Notes.
Each of the Agents may from time to time purchase and sell Notes in the
secondary market, but will not be 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, each of the Agents may
make a market in the Notes.
The Agents do not intend to confirm sales of Notes to any accounts over
which they have discretionary authority.
VALIDITY OF NOTES
The validity of the Notes will be passed upon for the Company by Stanley S.
Stroup, Executive Vice President and General Counsel of the Company, and for the
Agents by Sullivan & Cromwell, 125 Broad Street, New York, New York 10004. As of
March 31, 1996, Mr. Stroup was the beneficial owner of 109,223 shares of the
Company's Common Stock and had options to acquire 238,256 additional shares. Mr.
Stroup may rely upon the opinion of Sullivan & Cromwell with respect to matters
of New York law. Certain tax matters will be passed upon for the Company by
Faegre & Benson LLP ("Faegre & Benson"), 2200 Norwest Center, 90 South Seventh
Street, Minneapolis, Minnesota 55402. Faegre & Benson and certain members of the
firm are indebted to and have other banking and trust relationships with certain
affiliates of the Company. As of March 31, 1996, members of Faegre & Benson and
members of their families owned less than .02% of the Company's outstanding
Common Stock. The opinions of Mr. Stroup and Sullivan & Cromwell will be
conditioned upon, and subject to certain assumptions regarding, future action to
be taken by the Company and the Trustee in connection with the issuance and sale
of any particular Note, the specific terms of Notes and other matters which may
affect the validity of Notes but which cannot be ascertained on the date of such
opinions.
EXPERTS
The consolidated financial statements of the Company and subsidiaries as of
December 31, 1995 and 1994, and for each of the years in the three-year period
ended December 31, 1995, incorporated by reference herein and elsewhere in the
Registration Statement, have been incorporated herein and in the Registration
Statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
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<PAGE>
PROSPECTUS
NORWEST CORPORATION
DEBT SECURITIES AND DEBT WARRANTS
PREFERRED SHARES AND PREFERRED SHARE WARRANTS
COMMON STOCK WARRANTS
UNITS
-----------------
Norwest Corporation (the "Corporation") intends to offer from time to time
in one or more series its unsecured debt securities, which may be senior (the
"Senior Securities") or subordinated (the "Subordinated Securities," and
together with the Senior Securities, the "Debt Securities"), warrants to
purchase the Debt Securities ("Debt Warrants"), shares of preferred stock or
preference stock (the "Preferred Shares"), interests in which may be represented
by depositary shares ("Depositary Shares"), warrants to purchase the Preferred
Shares or Depositary Shares ("Preferred Share Warrants") or warrants to purchase
Common Stock ("Common Stock Warrants," and together with the Debt Warrants and
Preferred Share Warrants, the "Securities Warrants"), with an aggregate initial
public offering price (including the exercise price of any Securities Warrants)
of up to $5,000,000,000 or the equivalent thereof in one or more foreign
currencies or composite currencies, including European Currency Units ("ECU"),
on terms to be determined at the time of sale. The Debt Securities, Preferred
Shares, Depositary Shares and Securities Warrants may be offered separately or
as a part of units consisting of one or more such securities ("Units," and
together with the Debt Securities, Preferred Shares, Depositary Shares and
Securities Warrants, the "Offered Securities"), in separate series, in amounts,
at prices and on terms to be set forth in one or more supplements to this
Prospectus (a "Prospectus Supplement").
The Senior Securities will rank PARI PASSU with all other unsecured Senior
Debt of the Corporation, as defined. The Subordinated Securities will be
subordinated to all existing and future Senior Debt of the Corporation.
Specific terms of the Offered Securities, including such terms as, where
applicable, (i) in the case of Debt Securities, the specific designation,
aggregate principal amount, currency, denominations, maturity, premium, rate and
time of payment of interest, terms for redemption at the option of the
Corporation or repayment at the option of the holder, terms for sinking fund
payments and the initial public offering price; (ii) in the case of Preferred
Shares, the specific title and stated value, any dividend, liquidation,
redemption, conversion, voting and other rights, and the initial public offering
price and whether interests in the Preferred Shares will be represented by
Depositary Shares; and (iii) in the case of Securities Warrants, where
applicable, the duration, offering price, exercise price and detachability, will
be set forth in the accompanying Prospectus Supplement. Units may be issued in
amounts, at prices, on terms and containing such conditions, covenants and other
provisions, and consisting of such Offered Securities, as will be set forth in a
Prospectus Supplement. The Prospectus Supplement will also contain information,
where applicable, about certain United States federal income tax considerations
relating to and any listing on a securities exchange of the Offered Securities
covered by the Prospectus Supplement.
The Offered Securities may be offered directly, through agents designated
from time to time or to or through underwriters or dealers, which may include
affiliates of the Corporation. If any agents or underwriters are involved in the
sale of any of the Offered Securities, their names, and any applicable fee,
commission, purchase price or discount arrangements with them, will be set
forth, or will be calculable from the information set forth, in such Prospectus
Supplement.
This Prospectus may not be used to consummate sales of Offered Securities
unless accompanied by a Prospectus Supplement.
---------------------
THE OFFERED SECURITIES ARE UNSECURED OBLIGATIONS OF THE CORPORATION AND ARE NOT
SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK OR NONBANK
SUBSIDIARY OF THE CORPORATION AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE BANK INSURANCE FUND OR ANY OTHER
GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------
The date of this Prospectus is April 24, 1996.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Corporation with the Securities and
Exchange Commission (the "Commission") are incorporated in and made a part of
this Prospectus by reference: (i) Annual Report on Form 10-K for the year ended
December 31, 1995; (ii) Current Reports on Form 8-K dated January 17, 1996,
February 20, 1996, as amended by Form 8-K/A, February 26, 1996 and April 17,
1996; (iii) Registration Statement on Form 8-A dated December 6, 1988, as
amended by Amendment No. 1 on Form 8 dated July 21, 1989; (iv) Registration
Statement on Form 8-A dated December 21, 1990; and (v) Registration Statement on
Form 8-A dated August 8, 1991.
All documents filed by the Corporation with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), subsequent to the date of this Prospectus and
prior to the termination of the offering of the Offered Securities offered
hereby shall be deemed to be incorporated by reference in this Prospectus and to
be a part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein or in the accompanying Prospectus Supplement modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Corporation will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon the written or oral
request of such person, a copy of any or all of the information incorporated
herein by reference (other than exhibits, unless such exhibits are specifically
incorporated by reference in such documents). Written requests for such copies
should be directed to Laurel A. Holschuh, Senior Vice President and Secretary,
Norwest Corporation, Norwest Center, Sixth and Marquette, Minneapolis, Minnesota
55479-1026. Telephone requests may be directed to (612) 667-8655.
No person is authorized to give any information or to make any
representations other than those contained in this Prospectus or a Prospectus
Supplement in connection with the offering described herein and therein, and any
information or representations not contained herein or therein must not be
relied upon as having been authorized. This Prospectus may not be used to
consummate sales of Offered Securities unless accompanied by a Prospectus
Supplement. The delivery of this Prospectus and a Prospectus Supplement relating
to particular Offered Securities shall not constitute an offer of any of the
other Offered Securities covered by this Prospectus. The delivery of this
Prospectus or any Prospectus Supplement does not constitute an offer to sell or
a solicitation of an offer to buy the Offered Securities in any circumstances in
which such offer or solicitation of an offer to buy the Offered Securities is
unlawful.
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the Exchange
Act and in accordance therewith files reports and other information with the
Commission. Such reports, proxy and information statements and other information
filed by the Corporation can be inspected and copied at the public reference
facilities of the Commission, Room 1024, 450 Fifth Street N.W., Washington, D.C.
20549, and at the regional offices of the Commission located at Seven World
Trade Center, Suite 1300, New York, New York 10048, and at Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and copies of
such materials can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street N.W., Washington, D.C. 20549, at prescribed
rates. Reports, proxy and information statements and other information
concerning the Corporation can also be inspected at the offices of the New York
Stock Exchange at 20 Broad Street, New York, New York 10005, and at the offices
of the Chicago Stock Exchange at One Financial Place, 440 South LaSalle Street,
Chicago, Illinois 60605.
Additional information regarding the Corporation and the Offered Securities
offered hereby is contained in the Registration Statement and the exhibits
relating thereto in respect of the Offered Securities offered hereby, filed with
the Commission under the Securities Act of 1933, as amended (the "Securities
Act"). For further information pertaining to the Corporation and the Offered
Securities offered hereby, reference is made to the Registration Statement and
the exhibits thereto, which may be inspected without charge at the office of the
Commission at 450 Fifth Street N.W., Washington, D.C. 20549, and copies thereof
may be obtained from the Commission at prescribed rates.
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-------------------
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. $").
THE CORPORATION
The Corporation is a diversified financial services company which was
organized under the laws of Delaware in 1929 and is registered under the Bank
Holding Company Act of 1956, as amended (the "BHCA"). The Corporation operates
through subsidiaries engaged in banking and in a variety of related businesses.
The Corporation provides retail, commercial, and corporate banking services to
its customers through banks located in Arizona, Colorado, Illinois, Indiana,
Iowa, Minnesota, Montana, Nebraska, Nevada, New Mexico, North Dakota, Ohio,
South Dakota, Texas, Wisconsin, and Wyoming. The Corporation provides additional
financial services to its customers through subsidiaries engaged in various
businesses, principally mortgage banking, consumer finance, equipment leasing,
agricultural finance, commercial finance, securities brokerage and investment
banking, insurance agency services, computer and data processing services, trust
services, mortgage-backed securities servicing, and venture capital investment.
At December 31, 1995, the Corporation had consolidated total assets of $72.1
billion, total deposits of $42.0 billion, and total stockholders' equity of $5.3
billion. Based on total assets at December 31, 1995, the Corporation was the
thirteenth largest commercial banking organization in the United States.
The Corporation regularly explores opportunities for possible acquisitions
of financial institutions and related businesses. Generally, management of the
Corporation does not make a public announcement about an acquisition until a
definitive agreement has been signed. The Corporation generally provides
information concerning the aggregate asset value of its pending acquisitions in
its annual and quarterly reports filed with the Commission and incorporated
herein by reference. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
The Corporation's principal executive offices are located at Norwest Center,
Sixth and Marquette, Minneapolis, Minnesota 55479-1000, and its telephone number
is (612) 667-1234.
Additional information concerning the Corporation is included in the
documents incorporated by reference herein. See "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE."
CERTAIN REGULATORY MATTERS
GENERAL
As a bank holding company, the Corporation is subject to supervision and
examination by the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"). Under 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 the Federal Reserve Board. In
addition, a bank holding company is generally prohibited under the BHCA from
engaging in nonbanking activities, subject to certain exceptions. Various
proposals are pending before Congress that would allow affiliations between a
bank holding company and nonbank entities that are prohibited or restricted
under current law. Whether Congress will adopt any of these proposals, and if so
in what form, is not known at this time.
The Corporation's banking subsidiaries are subject to supervision and
examination by applicable federal and state banking agencies. The deposits of
the Corporation's banking subsidiaries are primarily insured by the Bank
Insurance Fund ("BIF"); deposits attributable to certain of the Corporation's
savings associations are insured by the Savings Association Insurance Fund
("SAIF"). For that reason, the Corporation's banking subsidiaries are subject to
regulation by the Federal Deposit Insurance Corporation ("FDIC"). In addition to
the impact of regulation, commercial banks are affected significantly by the
actions of the Federal Reserve Board as it attempts to control the money supply
and credit availability in order to influence the economy.
DIVIDEND RESTRICTIONS
Various federal and state statutes and regulations limit the amount of
dividends the subsidiary banks can pay to the Corporation without regulatory
approval. The approval of the Office of the Comptroller of the Currency (the
"OCC") is required for any dividend by a national bank if the total of all
dividends
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declared by the bank in any calendar year would exceed the total of its net
profits, as defined by regulation, for that year combined with its retained net
profits for the preceding two years less any required transfers to surplus or a
fund for the retirement of any preferred stock. In addition, a national bank may
not pay a dividend in an amount greater than its net profits then on hand after
deducting its losses and bad debts. For this purpose, bad debts are defined to
include, generally, loans which have matured and are in arrears with respect to
interest by six months or more, other than such loans which are well secured and
in the process of collection. Under these provisions the Corporation's national
bank subsidiaries could have declared, as of December 31, 1995, aggregate
dividends of at least $274.1 million, without obtaining prior regulatory
approval and without reducing the capital of the banks below minimum regulatory
levels. The Corporation also has several state bank subsidiaries that are
subject to state regulations limiting dividends; however, the amount of
dividends payable by the Corporation's state bank subsidiaries, with or without
state regulatory approval, would represent an immaterial contribution to the
Corporation's revenues.
If, in the opinion of the applicable regulatory authority, a bank under its
jurisdiction is engaged in or is about to engage in an unsafe or unsound
practice (which, depending on the financial condition of the bank, could include
the payment of dividends), such authority may require, after notice and hearing,
that such bank cease and desist from such practice. The Federal Reserve Board,
the OCC, and the FDIC have issued policy statements which provide that
FDIC-insured banks and bank holding companies should generally pay dividends
only out of current operating earnings.
HOLDING COMPANY STRUCTURE
The Corporation is a legal entity separate and distinct from its banking and
nonbanking subsidiaries. Accordingly, the right of the Corporation, and thus the
rights of the Corporation's creditors, to participate in any distribution of the
assets or earnings of any subsidiary other than in its capacity as a bona fide
creditor of the subsidiary is necessarily subject to the prior satisfaction of
claims of creditors of the subsidiary. The principal sources of the
Corporation's revenues are dividends and fees from its subsidiaries.
The Corporation's banking subsidiaries are subject to restrictions under
federal law which limit the transfer of funds by the subsidiary banks to the
Corporation and its nonbank subsidiaries, whether in the form of loans,
extensions of credit, investments, or asset purchases. Such transfers by any
subsidiary bank to the Corporation or any nonbank subsidiary are limited in
amount to 10% of the bank's capital and surplus and, with respect to the
Corporation and all such nonbank subsidiaries, to an aggregate of 20% of such
bank's capital and surplus. Furthermore, such loans and extensions of credit are
required to be secured in specified amounts.
The Federal Reserve Board has a policy to the effect that a bank holding
company is expected to act as a source of financial and managerial strength to
each of its subsidiary banks and to commit resources to support each such
subsidiary bank. This support may be required at times when the Corporation may
not have the resources to provide it. Any capital loans by the Corporation to
any of the subsidiary banks are subordinate in right of payment to deposits and
to certain other indebtedness of such subsidiary bank. In addition, the Crime
Control Act of 1990 provides that 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.
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 after August 9,
1989 in connection with (i) the default of a commonly controlled FDIC-insured
depository institution or (ii) 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.
Federal law (12 U.S.C. Section55) 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 such
pro rata assessment of shareholders of such national bank to cover such
impairment of capital stock by sale, to the extent
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necessary, of the capital stock of any assessed shareholder failing to pay the
assessment. Similarly, the laws of certain states provide for such assessment
and sale with respect to banks chartered by such states. The Corporation, as the
sole shareholder of most of its subsidiary banks, is subject to such provisions.
ACQUISITIONS
Effective September 29, 1995, under the provisions of the Reigle-Neal
Interstate Banking and Branching Efficiency Act of 1994 (the "Reigle-Neal Act"),
the Corporation's banking subsidiaries are permitted to acquire banks located in
any state in which the acquiring subsidiary bank is located (an instrastate
merger). Effective June 1, 1997, the Corporation's banking subsidiaries will be
permitted to acquire a bank located in a state other than the state in which the
acquiring subsidiary bank is located (an interstate merger) through merger,
consolidation or purchase of assets and assumption of liabilities, unless the
state in which either of the banks is located has opted out of the interstate
banking provisions of the Reigle-Neal Act. An interstate merger may occur before
June 1, 1997 if the states in which the merging banks are located have enacted a
law authorizing interstate bank mergers.
All of the Corporation's acquisitions of banking institutions and other
companies are subject to the prior approval of the Federal Reserve Board and any
applicable federal or state regulatory authorities. In addition, under the
provisions of the Reigle-Neal Act, bank mergers are subject to deposit
concentration limits of 10% nationwide and 30% in any one state, unless it is
the initial entry of the Corporation into the state.
CAPITAL REQUIREMENTS
Under the Federal Reserve Board's risk-based capital guidelines for bank
holding companies, the minimum ratio of total capital to risk-adjusted assets
(including certain off-balance sheet items, such as stand-by letters of credit)
is 8%. At least half of the total capital is to be comprised of common
stockholders' equity, minority interests and noncumulative perpetual preferred
stock ("Tier 1 capital"). The remainder ("Tier 2 capital") may consist of hybrid
capital instruments, perpetual debt, mandatory convertible debt securities, a
limited amount of subordinated debt, other preferred stock, and a limited amount
of the allowance for credit losses. The risk-based guidelines also specify that
all intangibles, including core deposit intangibles, as well as mortgage
servicing rights ("MSRs") and purchased credit card relationships ("PCCRs"), be
deducted from Tier 1 capital. The guidelines, however, grandfather identifiable
assets (other than MSRs and PCCRs) acquired on or before February 19, 1992 and
permit the inclusion of readily marketable MSRs and PCCRs in Tier 1 capital to
the extent that (i) MSRs and PCCRs do not collectively exceed 50% of Tier 1
capital and (ii) PCCRs do not exceed 25% of Tier 1 capital. For such purposes,
MSRs and PCCRs each are included in Tier 1 capital only up to the lesser of (i)
90% of their fair market value (which must be determined quarterly) and (ii)
100% of the remaining unamortized book value of such assets. The OCC has adopted
substantially similar regulations. In addition, the Federal Reserve Board's
minimum "leverage ratio" (the ratio of Tier 1 capital to quarterly average total
assets) guidelines for bank holding companies provide for a minimum leverage
ratio of 3% for bank holding companies that meet certain specified criteria,
including that they have the highest regulatory rating. All other bank holding
companies are required to maintain a leverage ratio of 3% plus an additional
cushion of 1% to 2%. The guidelines also provide that banking organizations
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 guidelines
indicate that the Federal Reserve Board will continue to consider a "tangible
Tier 1 leverage ratio" in evaluating proposals for expansion or new activities.
The tangible Tier 1 leverage ratio is the ratio of a banking organization's Tier
1 capital, less all intangibles, to total assets, less all intangibles. Each of
the Corporation's banking subsidiaries is also subject to capital requirements
adopted by applicable regulatory agencies which are substantially similar to the
foregoing. At December 31, 1995, the Corporation's Tier 1 and total capital (the
sum of Tier 1 and Tier 2 capital) to risk-adjusted assets ratios were 8.11% and
10.18%, respectively, and the Corporation's leverage ratio was 5.65%. Neither
the Corporation nor any subsidiary bank has been advised by the appropriate
federal regulatory agency of any specific leverage ratio applicable to it.
As a result of a federal law enacted in 1991 that required each federal
banking agency to revise its risk-based capital standards to ensure that those
standards take adequate account of interest rate risk, concentration of credit
risk and the risks of nontraditional activities, each of the federal banking
agencies has revised the risk-based capital guidelines described above to take
account of concentration of credit risk and risk of
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nontraditional activities. In addition, the Federal Reserve Board, the FDIC and
the OCC recently adopted a new rule that amends, effective September 1, 1995,
the capital standards to include explicitly a bank's exposure to declines in the
economic value of its capital due to changes in interest rates as a factor to be
considered in evaluating a bank's interest rate exposure. Such agencies have
issued for comment a joint policy statement that describes the process to be
used to measure and assess the exposure of a bank's net economic value to
changes in interest rates. These agencies have indicated that in the second step
of this regulation process they intend to issue a rule that would propose to
establish an explicit minimum capital charge for interest rate risk based on the
level of a bank's measured interest rate exposure. The agencies intend to
implement the second step after the agencies and the banking industry have had
more experience with the proposed supervisory and measurement process. The
Corporation does not believe that these recent proposals and revisions to the
capital guidelines will materially impact its operations.
FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991
In December 1991, Congress enacted the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA"), which substantially revised the bank
regulatory and funding provisions of the Federal Deposit Insurance Act ("FDIA")
and makes revisions to several other federal banking statutes. Among other
things, FDICIA requires federal banking regulators to take "prompt corrective
action" in respect of FDIC-insured depository institutions that do not meet
minimum capital requirements. FDICIA establishes five capital tiers: "well
capitalized," "adequately capitalized," "undercapitalized," "significantly
undercapitalized" and "critically undercapitalized." Under applicable
regulations, 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. An insured depository institution will be
considered undercapitalized if it fails to meet any minimum required measure,
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 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.
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. The federal banking
agencies may not accept a capital plan without determining, among other things,
that the plan is based on realistic assumptions and is likely to succeed in
restoring the depository institution's capital. In addition, for a capital
restoration plan to be acceptable, the depository institution's parent holding
company must guarantee that the institution will comply with such capital
restoration plan. The aggregate liability of the parent holding company is
limited to the lesser of (i) an amount equal to 5% of the depository
institution's total assets at the time it became undercapitalized and (ii) the
amount which is necessary (or would have been necessary) to bring the
institution into compliance with all capital standards applicable with respect
to such 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 are subject to the appointment of a
receiver or conservator.
FDICIA, as amended by the Reigle Community Development and Regulatory
Improvement Act of 1994 enacted on August 22, 1994, directs that each federal
banking agency prescribe standards, by regulation or guideline, for depository
institutions relating to internal controls, information systems, internal audit
systems, loan documentation, credit underwriting, interest rate exposure, asset
growth, compensation, asset quality, earnings, stock valuation, and such other
operational and managerial standards as the agency deems appropriate. The FDIC,
in consultation with the other federal banking agencies, has adopted a final
rule and
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guidelines with respect to external and internal audit procedures and internal
controls in order to implement those provisions of FDICIA intended to facilitate
the early identification of problems in financial management of depository
institutions. On July 10, 1995, the federal banking agencies published the final
rules implementing three of the safety and soundness standards required by
FDICIA, including operational and managerial standards, asset quality and
earnings standards, and compensation standards. The impact of such standards on
the Corporation has not yet been fully determined, but management does not
believe it will be material.
FDICIA also contains a variety of other provisions that may affect the
operations of the Corporation, including new reporting requirements, revised
regulatory standards for real estate lending, "truth in savings" provisions, and
the requirement that a depository institution give 90 days' notice to customers
and regulatory authorities before closing any branch.
Under other regulations promulgated under FDICIA a bank cannot accept
brokered deposits (that is, deposits obtained through a person engaged in the
business of placing deposits with insured depository institutions or with
interest rates significantly higher than prevailing market rates) unless (i) it
is "well capitalized" or (ii) it is "adequately capitalized" and receives a
waiver from the FDIC. A bank that cannot receive brokered deposits also cannot
offer "pass-through" insurance on certain employee benefit accounts, unless it
provides certain notices to affected depositors. In addition, a bank that is
"adequately capitalized" and that has not received a waiver from the FDIC may
not pay an interest rate on any deposits in excess of 75 basis points over
certain prevailing market rates. There are no such restrictions on a bank that
is "well capitalized." At December 31, 1995, all of the Corporation's banking
subsidiaries were well capitalized and therefore were not subject to these
restrictions.
FDIC INSURANCE
Each BIF member institution pays FDIC insurance premiums based on the
institution's annual assessment rate assigned to it by the FDIC. The assessment
rate is based on the institution's capitalization risk category and "supervisory
subgroup." An institution's capitalization risk category is based on the FDIC's
determination of whether the institution is well capitalized, adequately
capitalized or less than adequately capitalized. An institution's supervisory
subgroup is based on the FDIC's assessment of the financial condition of the
institution and the probability that FDIC intervention or other corrective
action will be required. Subgroup A institutions are financially sound
institutions with few minor weaknesses; Subgroup B institutions are institutions
that demonstrate weaknesses which, if not corrected, could result in significant
deterioration; and Subgroup C institutions are institutions for which there is a
substantial probability that the FDIC will suffer a loss in connection with the
institution unless effective action is taken to correct the areas of weakness.
The FDIC assessment rate ranges from zero to 27 cents per $100 of domestic
deposits, with Subgroup A institutions assessed at a rate of zero and Subgroup C
institutions assessed at a rate of 27 cents. The FDIC may change the assessment
rate schedule on a semiannual basis. An increase in the rate assessed one or
more of the Corporation's banking subsidiaries could have a material adverse
effect on the Corporation's earnings, depending on the amount of the increase.
The FDIC is authorized to terminate a depository institution's deposit insurance
upon a finding by the FDIC that the institution's financial condition is unsafe
or unsound or that the institution has engaged in unsafe or unsound practices or
has violated any applicable rule, regulation, order or condition enacted or
imposed by the institution's regulatory agency. The termination of deposit
insurance with respect to one or more of the Corporation's subsidiary depository
institutions could have a material adverse effect on the Corporation's earnings,
depending on the collective size of the particular institutions involved.
Deposits insured by the SAIF held by the Corporation's bank subsidiaries as
a result of savings association acquisitions by the Corporation continue to be
assessed at the applicable SAIF insurance premium rate. Current federal law
provides that the SAIF assessment rate may not be less than 0.18% from January
1, 1994 through December 31, 1997. After December 31, 1997, the SAIF assessment
rate must be a rate determined by the FDIC to be appropriate to increase the
SAIF's reserve ratio to 1.25% of insured deposits or such higher percentage as
the FDIC determines to be appropriate, but the assessment rate may not be less
than 0.15%. In order to mitigate the potential effects of a BIF/SAIF premium
disparity, Congress recently proposed legislation that would, among other
things, recapitalize the SAIF by imposing a special one-time assessment on SAIF
deposits. The proposed legislation also contemplates the consolidation or merger
of the BIF and the SAIF into one insurance fund after the SAIF is recapitalized.
Management of the
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Corporation does not anticipate that the impact of the proposed legislation will
be material to the Corporation; however, to provide for such a special
assessment when and if imposed, the Corporation has established a reserve of
$23.5 million based on an estimated insurance premium rate of 66 cents per $100
of insured deposits, which reserve has been funded primarily by the refund of
BIF insurance premiums.
DEPOSITOR PREFERENCE
Under the FDIA, claims of holders of domestic deposits and certain claims of
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.
USE OF PROCEEDS
Unless otherwise specified in an applicable Prospectus Supplement, the net
proceeds to be received by the Corporation from the sale of the Offered
Securities offered hereby will be added to the general funds of the Corporation
and will be available 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, the
Corporation 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
The following are the consolidated ratios of earnings to fixed charges and
to combined fixed charges and preferred stock dividends for each of the years in
the five-year period ended December 31, 1995:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
---------------------------------
1995 1994 1993 1992 1991
----- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits...... 2.06x 2.52 2.39 2.01 1.70
Including interest on deposits...... 1.57x 1.72 1.59 1.39 1.22
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends:
Excluding interest on deposits...... 1.97x 2.39 2.23 1.88 1.64
Including interest on deposits...... 1.53x 1.68 1.55 1.35 1.21
</TABLE>
For purposes of computing the ratios of earnings to fixed charges, income
before income taxes plus fixed charges less capitalized interest has been
divided by fixed charges. For purposes of computing the ratios of earnings to
combined fixed charges and preferred stock dividends, income before income taxes
plus fixed charges less capitalized interest has been divided 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 the Corporation's income tax
rate.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities
offered by any Prospectus Supplement and the extent, if any, to which such
general provisions may apply to the Debt Securities so offered will be described
in the Prospectus Supplement relating to such Debt Securities.
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The Senior Securities are to be issued under an Indenture (the "Senior
Indenture") between the Corporation and the trustee named in the applicable
Prospectus Supplement as trustee (the "Senior Trustee"). The Subordinated
Securities are to be issued under an Indenture (the "Subordinated Indenture")
between the Corporation and the trustee named in the applicable Prospectus
Supplement as trustee (the "Subordinated Trustee," and together with the Senior
Trustee, the "Trustees"). The forms of the Senior Indenture and the Subordinated
Indenture (collectively, the "Indentures") are exhibits to the Registration
Statement. The following summaries of certain provisions of the Indentures do
not purport to be complete and are qualified in their entirety by reference to
the provisions of the Indentures. Numerical references in parentheses below are
to sections of the Indentures. Wherever particular sections or defined terms of
the Indentures are referred to, it is intended that such sections or defined
terms shall be incorporated herein by reference. Unless otherwise indicated,
capitalized terms shall have the meanings ascribed to them in the Indentures.
GENERAL
The amount of Debt Securities offered by this Prospectus will be limited to
the amount set forth on the cover of this Prospectus. Each Indenture provides
that Debt Securities in an unlimited amount may be issued thereunder from time
to time in one or more series. (SECTION 301)
The Senior Securities will be unsecured and will rank PARI PASSU with other
unsecured Senior Debt of the Corporation. The Subordinated Securities will be
unsecured and will rank PARI PASSU with other subordinated debt of the
Corporation and, together with such other subordinated debt, will be
subordinated and junior in right of payment to the prior payment in full of the
Senior Debt of the Corporation as described below under "Subordination."
Reference is hereby made to the Prospectus Supplement relating to the
particular series of Debt Securities for the terms of such Debt Securities,
including, where applicable, (i) the designation and any limit on the aggregate
principal amount of such Debt Securities; (ii) the price (expressed as a
percentage of the aggregate principal amount thereof) at which such Debt
Securities will be issued; (iii) the date or dates on which such Debt Securities
will mature or method by which such dates can be determined; (iv) the currency
or currencies in which such 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 such Debt Securities are
denominated, and if so, the exchange rate, the exchange rate agent and, if the
Holder of any such Debt Securities may elect the currency in which payments
thereon are to be made, the manner of such election; (v) 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 thereof, 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; (vi) the
rate or rates (which may be fixed or variable) at which such Debt Securities
will bear interest, which 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; (vii) the date from which interest on such Debt
Securities will accrue, the dates on which such interest will be payable or
method by which such dates can be determined, the date on which payment of such
interest will commence and the circumstances, if any, in which the Corporation
may defer interest payments; (viii) the dates on which, and the price or prices
at which, such Debt Securities will, pursuant to any mandatory sinking fund
provision, or may, pursuant to any optional redemption or required repayment
provisions, be redeemed or repaid and the other terms and provisions of any such
optional redemption or required repayment; (ix) in the case of the Subordinated
Securities, any terms by which such securities may be convertible into Common
Stock (see "DESCRIPTION OF COMMON STOCK"), Preferred Shares (see "DESCRIPTION OF
PREFERRED SHARES") or Depositary Shares (see "DESCRIPTION OF DEPOSITARY SHARES")
of the Corporation and, in case of Subordinated Securities convertible into
Preferred Shares or Depositary Shares, the terms of such Preferred Shares or
Depositary Shares; (x) whether such 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; (xi) whether such 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 such Global Security or Securities; (xii) if a temporary
global Debt Security is to be issued with respect to such series, the extent to
which, and the manner in which, any interest thereon 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
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of the persons entitled thereto on such interest payment date; (xiii) if a
temporary Global Security is to be issued with respect to such series, the terms
upon which interests in such 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 the series; (xiv) any
additional restrictive covenants included for the benefit of Holders of such
Debt Securities; (xv) any additional Events of Default provided with respect to
such Debt Securities; (xvi) information with respect to book-entry procedures,
if any; (xvii) whether the Debt Securities will be repayable at the option of
the Holder; (xviii) any other terms of the Debt Securities not inconsistent with
the provisions of the applicable Indenture; (xix) the right of the Corporation
to defease the Debt Securities or certain covenants under the Indentures; and
(xx) the terms of any securities being offered together with or separately from
the Debt Securities. Such Prospectus Supplement will also describe any special
provisions for the payment of additional amounts with respect to the Debt
Securities and certain United States federal income tax consequences and any
risk factors or other special considerations applicable to such series of Debt
Securities. If a Debt Security is denominated in a foreign currency, such 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 to accommodate the trading of such Debt Security.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
Debt Securities of a series may be issuable 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. (SECTION 201) Each
Indenture also provides that Bearer Securities or Registered Securities of a
series may be issuable in permanent global form. (SECTION 203) See "Permanent
Global Securities."
Registered Securities of any series will be exchangeable 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 the option of the Holder upon request confirmed in writing, and
subject to the terms of the applicable Indenture, Bearer Securities (with all
unmatured coupons, except as provided below, and all matured coupons in default)
of such series will be exchangeable into Registered Securities of the same
series of any authorized denominations and of a like aggregate principal amount,
tenor and terms. Bearer Securities surrendered 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 shall be surrendered
without the coupon relating to such date for payment of interest, and interest
will not be payable in respect of the Registered Security issued in exchange for
such Bearer Security, but will be payable only to the Holder of such coupon when
due in accordance with the terms of the applicable Indenture. Bearer Securities
will not be issued 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."
Debt Securities may be presented for exchange as provided above, and
Registered Securities may be presented 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 the Corporation for such purpose with respect to such 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 the Corporation with respect to any series of Debt Securities, the
Corporation may at any time rescind the designation of any such transfer agent
or approve a change in the location through which any such transfer agent (or
Security Registrar) acts, except that, if Debt Securities of a series are
issuable solely as Registered Securities, the Corporation will be required to
maintain a transfer agent in each Place of Payment for such series and, if Debt
Securities of a series are issuable as Bearer Securities, the Corporation will
be required to maintain (in addition to the Security Registrar) a transfer agent
in a Place of Payment for such series located outside the United States. The
Corporation may at any time designate additional transfer agents with respect to
any series of Debt Securities. (SECTION 1002)
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The Corporation shall not be required (i) 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, (ii) to 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 (iii) to exchange any Bearer Security so selected for redemption except
that such a Bearer Security may be exchanged for a Registered Security of like
tenor and terms of that series, provided that such Registered Security shall be
surrendered for redemption. (SECTION 305) Additional information regarding
restrictions on the issuance, exchange and transfer of and special United States
federal income tax considerations relating to Bearer Securities will be set
forth in the applicable Prospectus Supplement.
TEMPORARY GLOBAL SECURITIES
If so specified 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 any such temporary
Global Security and described in the applicable Prospectus Supplement, but
within a reasonable time, each such 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 such 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 such exchange.
Additional information regarding restrictions on and special United States
federal income tax consequences relating to temporary Global Securities will be
set forth in the Prospectus Supplement relating thereto.
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 any such permanent Global Security
may exchange such interests for Debt Securities of such series and of like tenor
and principal amount of any authorized form and denomination. Principal of and
any premium and interest on a permanent Global Security will be payable in the
manner described in the Prospectus Supplement relating thereto.
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 such paying agencies outside the
United States as the Corporation may appoint from time to time. Unless otherwise
provided in the Prospectus Supplement, such 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. 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 such
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 the Corporation 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 of 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 of,
and designated by, the Corporation 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) As used in the
Prospectus, "United States" means the United States of America (including the
States and the District of Columbia) and its possessions.
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Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal of and premium, if any, and interest, if any, on a Registered
Security will be payable in the currency designated in the Prospectus
Supplement, and interest will be payable at the office of such paying agent or
paying agents as the Corporation may appoint from time to time, except that at
the option of the Corporation payment of any interest may be made by a check in
such currency mailed to the Holder at such Holder's registered address or by
wire transfer to an account in such currency designated by such Holder in
writing not less than ten days prior to the date of such 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 such Registered Security is registered at the close of business on
the Regular Record Date for such 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 the
Corporation for a series of Debt Securities will be named in the applicable
Prospectus Supplement. The Corporation may terminate the appointment of any of
the paying agents from time to time, except that the Corporation 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 Stock Exchange of the United Kingdom and the
Republic of Ireland or the Luxembourg Stock Exchange or any other stock exchange
located outside the United States and such stock exchange shall so require, the
Corporation 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 such
series of Debt Securities. (SECTION 1002)
All moneys paid by the Corporation 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 such principal, premium or
interest shall have become due and payable will, at request of the Corporation,
be repaid to the Corporation, and the Holder of such Debt Security or any coupon
appertaining thereto will thereafter look only to the Corporation for payment
thereof. (SECTION 1003).
COVENANTS CONTAINED IN INDENTURES
The Senior Indenture provides that the Corporation 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 the total consolidated assets of the Corporation and its Subsidiaries) to
issue, 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: (i) sales of directors' qualifying shares; (ii) sales or other
dispositions for fair market value if, after giving effect to such disposition
and to the issuance of any shares issuable upon conversion or exchange of
securities convertible or exchangeable into Capital Stock, the Corporation would
own directly or indirectly through Subsidiaries not less than 80% of the shares
of each class of Capital Stock of such Principal Subsidiary Bank; (iii) sales or
other dispositions or issuances made in compliance with an order or direction of
a court or regulatory authority of competent jurisdiction; or (iv) 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 the
Corporation. (SECTION 1005 OF THE SENIOR INDENTURE) At the date hereof, the only
Subsidiary Banks which are Principal Subsidiary Banks are Norwest Bank
Minnesota, National Association and Norwest Bank Iowa, National Association.
The Subordinated Indenture does not contain the foregoing covenant.
The Corporation is not restricted by the Indentures from incurring, assuming
or becoming liable for any type of debt or other obligations, from creating
liens on its property for any purpose or from paying dividends or making
distributions on its capital stock or purchasing or redeeming its 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 which would require the Corporation to repurchase or
redeem or otherwise modify the terms of any of its Debt Securities upon a change
in control or other events involving the Corporation which may adversely affect
the creditworthiness of the Debt Securities.
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CONSOLIDATION, MERGER AND SALE OF ASSETS
The Corporation may not consolidate with or merge with or into, or transfer
or lease its assets substantially as an entirety to, any Person unless (i) the
successor Person is a corporation organized and validly existing under the laws
of a domestic jurisdiction and expressly assumes the Corporation's obligations
on the Debt Securities and under the applicable Indenture; and (ii) 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
certain restrictive provisions under each Indenture may be made only with the
consent of the Holders of not less than 66 2/3% in principal amount of the
Outstanding Debt Securities of each series thereunder affected by such
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 thereby, (i) change the Stated Maturity of the
principal or any installment of principal or any installment of interest, if
any; (ii) 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; (iii) change the place of payment or the currency in which
principal or interest is payable, if any; (iv) 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; (v) 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 waiver
of compliance with certain provisions of the applicable Indenture or for waiver
of certain defaults; (vi) reduce the requirements contained in the applicable
Indenture for quorum or voting; (vii) in the case of Subordinated Securities
convertible into Common Stock, impair any right to convert such Subordinated
Securities; or (viii) 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 thereunder 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 such Debt Securities, or upon the request
of the Corporation or the Holders of at least 10% in principal amount of the
Outstanding Debt Securities of such series, in any such case 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
66 2/3% 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 66 2/3%
in principal amount of such 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 such 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 thereto 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 such 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 66 2/3% in principal amount of the Outstanding Debt
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Securities of a series, the Persons holding or representing 66 2/3% in principal
amount of the Outstanding Debt Securities of such 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 Securities issued under the Senior Indenture will provide that
the following shall constitute Events of Default with respect to such series:
(i) default in payment of principal of or premium, if any, on any Senior
Security of such series when due; (ii) default for 30 days in payment of
interest, if any, on any Senior Security of such series or related coupon, if
any, when due; (iii) default in the deposit of any sinking fund payment on any
Senior Security of such series when due; (iv) default in the performance of
certain covenants contained in such Indenture; (v) default in the performance of
any other covenant in such Indenture, continued for 90 days after written notice
thereof by the Trustee thereunder or the Holders of at least 25% in principal
amount of the Outstanding Senior Securities of such series issued under that
Indenture; and (vi) certain events of bankruptcy, insolvency or reorganization
of the Corporation. (SECTION 501 OF THE SENIOR INDENTURE)
Unless otherwise provided in the applicable Prospectus Supplement, any
series of Subordinated Securities issued under the Subordinated Indenture will
provide that the only Event of Default will be certain events of bankruptcy of
the Corporation. (SECTION 501 OF THE SUBORDINATED INDENTURE) Unless specifically
stated in the applicable Prospectus Supplement for a particular series of
Subordinated Securities, there is no right of acceleration of the payment of
principal of the Subordinated Securities upon a default in the payment of
principal, premium, if any, or interest, if any, or in the performance of any
covenant or agreement in the Subordinated Securities or Subordinated Indenture.
In the event of a default in the payment of principal, premium, if any, or
interest, if any, or the performance of any covenant or agreement in the
Subordinated Securities or Subordinated Indenture, the Trustee, subject to
certain limitations and conditions, may institute judicial proceedings to
enforce payment of such principal, premium, if any, or interest, if any, or to
obtain the performance of such covenant or agreement or any other proper remedy.
(SECTION 503 OF THE SUBORDINATED INDENTURE)
The Corporation is required to file with each Trustee annually an Officers'
Certificate concerning the absence of certain defaults under the terms of the
Indentures. (SECTION 1007 OF THE SENIOR INDENTURE, SECTION 1004 OF THE
SUBORDINATED INDENTURE) Each Indenture provides that if an Event of Default
specified therein shall occur and be continuing, either the Trustee thereunder
or the Holders of not less than 25% in principal amount of the Outstanding Debt
Securities of such series issued under that Indenture may declare the principal
of all such Debt Securities (or in the case of Original Issue Discount
Securities, such 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 such
series and any related coupons, waive any past default or Event of Default
except a default (i) in payment of the principal of or premium, if any, or
interest, if any, on any of the Debt Securities of such series and (ii) 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
such series or coupon affected. (SECTION 513)
Each Indenture contains a provision entitling the Trustee thereunder,
subject to the duty of such Trustee during default to act with the required
standard of care, to be indemnified by the Holders of the Debt Securities of any
series thereunder or any related coupons before proceeding to exercise any right
or power under such Indenture with respect to such series at the request of such
Holders. (SECTION 603) Each Indenture provides that no Holder of any Debt
Securities of any series thereunder or any related coupons may institute any
proceeding, judicial or otherwise, to enforce such Indenture except in the case
of failure of the Trustee thereunder, for 60 days, to act after it is given
notice of default, a request to enforce such Indenture by the Holders of not
less than 25% in aggregate principal amount of the Outstanding Debt Securities
of such 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 such Debt Securities or exercising any trust or power conferred on it with
respect to the Debt
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Securities of such series. However, such 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)
Each Indenture provides that the Trustee thereunder will give to the Holders
of Debt Securities notice of a default if not cured or waived, but, except in
the case of a default in the payment of principal of or premium, if any, or
interest, if any, on any Debt Securities of such series or any related coupons
or in the payment of any sinking fund installment with respect to Debt
Securities of such series or in the exchange of Capital Securities for Debt
Securities of such series, the Trustee for such Debt Securities shall be
protected in withholding such notice if it determines in good faith that the
withholding of such notice is in the interest of the Holders of such Debt
Securities. (SECTION 602)
DEFEASANCE AND DISCHARGE
The Corporation 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 such series, replacement of stolen,
lost or mutilated Debt Securities of such series, maintenance of paying
agencies, to hold monies for payment in trust and payment of additional amounts,
if any, required in consequence of United States withholding taxes imposed on
payments to non-U.S. persons) upon the deposit with the 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 such series on the Stated Maturity of such
payments in accordance with the terms of the applicable Indenture and the Debt
Securities of such series. Such a trust may be established only if, among other
things, (a) the Corporation has delivered to the Trustee an Opinion of Counsel
to the effect that (i) the Corporation has received from, or there has been
published by, the Internal Revenue Service a ruling, or (ii) since the date of
the applicable lndenture there has been a change in applicable federal income
tax law, in either case to the effect that, and based thereon such Opinion of
Counsel shall confirm that, the Holders of Debt Securities of such series will
not recognize income, gain or loss for federal income tax purposes as a result
of such deposit, defeasance and discharge, and will be subject to federal income
tax on the same amounts and in the same manner and at the same times as would
have been the case if such deposit, defeasance and discharge had not occurred;
and (b) the Debt Securities of such series, if then listed on any domestic or
foreign securities exchange, will not be delisted as a result of such deposit,
defeasance and discharge. (SECTION 403) In the event of any such defeasance and
discharge of Debt Securities of such series, Holders of Debt Securities of such
series would be able to look only to such trust fund for payment of principal of
and any premium and any interest on their Debt Securities until Maturity.
The Corporation may terminate certain of its obligations under each
Indenture with respect to the Debt Securities of any series thereunder,
including its obligations to comply with the covenants described under the
heading "Covenants Contained in Indentures" above, with respect to such Debt
Securities, on the terms and subject to the conditions contained in such
Indentures, by depositing in trust with the Trustee 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 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 such Debt Securities,
and any mandatory sinking fund, repayment or analogous payments thereon, on the
scheduled due dates therefor. Such deposit and termination is conditioned, among
other things, upon the Corporation's delivery of an opinion of counsel that the
Holders of such Debt Securities will have no federal income tax consequences as
a result of such deposit and termination. Such termination will not relieve the
Corporation of its obligation to pay when due the principal of or interest on
such Debt Securities if such Debt Securities of such 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 such defeasance with respect to
the Debt Securities of a particular series. In the event the Corporation
exercises its option to omit compliance with the covenant described under
"Covenants Contained in Indentures" above with respect to the Debt Securities of
any series as described above and the Debt Securities of such
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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
Trustee will be sufficient to pay amounts due on the Debt Securities of such
series at the time of their Stated Maturity but may not be sufficient to pay
amounts due on the Debt Securities of such series at the time of the
acceleration resulting from such Event of Default. The Corporation shall in any
event remain liable for such payments as provided in the applicable Indenture.
SUBORDINATION
The Subordinated Securities shall be subordinate and junior in right of
payment, to the extent set forth in the Subordinated Indenture, to all Senior
Debt (as defined below) of the Corporation. In the event that the Corporation
shall 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-offs or otherwise) shall be made or agreed to be made for
principal, premium, if any, or interest, if any, on the Subordinated Securities,
or in respect of any redemption, repayment, retirement, purchase or other
acquisition of any of the Subordinated Securities. (SECTION 1801 OF THE
SUBORDINATED INDENTURE) "Senior Debt" means any obligation of the Corporation to
its creditors, whether now outstanding or subsequently incurred, other than (i)
any obligation as to which it is provided that such obligation is not Senior
Debt and (ii) the Subordinated Securities. (SECTION 101 OF THE SUBORDINATED
INDENTURE) As of December 31, 1995, the Corporation had approximately $7.5
billion of Senior Debt outstanding.
In the event of (i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding relating
to the Corporation, its creditors or its property, (ii) any proceeding for the
liquidation, dissolution or other winding up of the Corporation, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings,
(iii) any assignment by the Corporation for the benefit of creditors or (iv) any
other marshalling of the assets of the Corporation, all Senior Debt (including
any interest thereon 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 Securities. In such event, any payment or
distribution on account of the principal of or interest on the Subordinated
Securities, whether in cash, securities or other property (other than securities
of the Corporation or 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 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), which would otherwise (but for the
subordination provisions) be payable or deliverable in respect of the
Subordinated Securities shall be paid or delivered directly to the holders of
Senior Debt in accordance with the priorities then existing among such holders
until all Senior Debt (including any interest thereon accruing after the
commencement of any such 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 Securities, together
with the holders of any obligations of the Corporation ranking on a parity with
the Subordinated Securities, shall be entitled to be repaid from the remaining
assets of the Corporation the amounts at the time due and owing on account of
unpaid principal, premium, if any, and interest, if any, on the Subordinated
Securities and such other obligations before any payment or other distribution,
whether in cash, property or otherwise, shall be made on account of any capital
stock or obligations of the Corporation ranking junior to the Subordinated
Securities and such other obligations. If any payment or distribution on account
of the principal of or interest on the Subordinated Securities of any character
or any security, whether in cash, securities or other property (other than
securities of the Corporation or 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 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 Securities in contravention of any of the terms of the Subordinated
Indenture and before all the Senior Debt shall have been paid in full, such
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
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at the time outstanding in accordance with the priorities then existing among
such holders for application to the payment of all Senior Debt remaining unpaid
to the extent necessary to pay all such Senior Debt in full. (SECTION 1801 OF
THE SUBORDINATED INDENTURE) By reason of such subordination, in the event of the
insolvency of the Corporation, holders of Senior Debt may receive more, ratably,
and holders of the Subordinated Securities having a claim pursuant to such
securities may receive less, ratably, than the other creditors of the
Corporation. Such subordination will not prevent the occurrence of any Event of
Default in respect of the Subordinated Securities.
The Subordinated Indenture may be modified or amended as provided under
"Modification and Waiver" above, provided that no such modification or amendment
may, without the consent of the holders of all Senior Debt outstanding, modify
any of the provisions of the Subordinated Indenture relating to the
subordination of the Subordinated Securities and any related coupons in a manner
adverse to such holders. (SECTION 902 OF THE SUBORDINATED INDENTURE)
CONVERSION OF SUBORDINATED CONVERTIBLE SECURITIES
The Holders of Subordinated Securities of a specified series that are
convertible into Common Stock, Preferred Shares or Depositary Shares of the
Corporation ("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 such 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 thereon 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, such Subordinated
Convertible Securities must be accompanied by funds equal to the interest
payable on such succeeding Interest Payment Date on the principal amount so
converted. (SECTION 1903 OF THE SUBORDINATED INDENTURE) The Corporation is not
required to issue fractional shares of Common Stock upon conversion of
Subordinated Convertible Securities that are convertible into Common Stock and,
in lieu thereof, 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 the Corporation's 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 such 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
indebtedness or assets of the Corporation (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 the Corporation shall distribute any rights or warrants to acquire
capital stock ("Capital Stock Rights") pursuant to which separate certificates
representing such Capital Stock Rights will be distributed subsequent to the
initial distribution of such Capital Stock Rights (whether or not such
distribution shall have occurred prior to the date of the issuance of a series
of Subordinated Convertible Securities), such subsequent distribution shall be
deemed to be the distribution of such Capital Stock Rights; provided that the
Corporation may, in lieu of making any adjustment in the conversion price upon a
distribution of separate certificates representing such Capital Stock Rights,
make proper provision so that each Holder of such a Subordinated Convertible
Security who converts such Subordinated Convertible Security (or any portion
thereof) (a) before the record date for such distribution of separate
certificates shall be entitled to receive upon such conversion shares of Common
Stock issued
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with Capital Stock Rights and (b) after such 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 such 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 such Subordinated Convertible Security were converted
immediately prior to the record date for such distribution. Common Stock owned
by or held for the account of the Corporation or any majority owned subsidiary
shall not be deemed outstanding for the purpose of any adjustment.
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 such adjustment would
require a change of at least 1% in the conversion price then in effect,
provided, that any such adjustment not so made will be carried forward and taken
into account in any subsequent adjustment; and provided further that any such
adjustment not so made shall be made no later than three years after the
occurrence of the event requiring such adjustment to be made or carried forward.
Notwithstanding any of the foregoing, the issuance of Common Stock under the
Norwest Corporation Dividend Reinvestment and Optional Cash Payment Plan shall
not require an adjustment to the conversion price of Subordinated Convertible
Securities that are convertible into Common Stock. The Corporation reserves the
right to make such reductions in the conversion price in addition to those
required in the foregoing provisions as the Corporation in its discretion shall
determine to be advisable in order that certain stock-related distributions
thereafter made by the Corporation to its stockholders shall 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.
In the case of (i) a reclassification or change of the Common Stock, (ii) a
consolidation or merger involving the Corporation or (iii) a sale or conveyance
to another corporation of the property and assets of the Corporation as an
entirety or substantially as an entirety, in each case as a result of which
holders of Common Stock shall be entitled to receive stock, securities, other
property or assets (including cash) with respect to, or in exchange for, such
Common Stock, the Holders of the Subordinated Convertible Securities then
outstanding that are convertible into Common Stock will be entitled thereafter
to convert such Subordinated Convertible Securities 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 such Subordinated Convertible Securities been converted into Common Stock
immediately prior to such 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 (or other
transaction) which results in any adjustment of the conversion price of
Subordinated Convertible Securities that are convertible into Common Stock, the
Holders of such Subordinated Convertible Securities may, in certain
circumstances, be deemed to have received a distribution subject to United
States 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 such Subordinated Convertible Securities.
DESCRIPTION OF PREFERRED SHARES
The following description of the terms of 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 the
Preferred Shares offered by any Prospectus Supplement will be described in the
Prospectus Supplement relating to such series of the Preferred Shares. If so
indicated in the Prospectus Supplement, the terms of any such 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.
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GENERAL
Pursuant to the Corporation's Restated Certificate of Incorporation, as
amended, the Board of Directors of the Corporation has the authority, without
further stockholder action, to issue from time to time a maximum of 5,000,000
shares of preferred stock, without par value ("Preferred Stock"), and a maximum
of 4,000,000 shares of preference stock, without par value ("Preference Stock"),
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 the Board of
Directors of the Corporation may determine. The authority of the Board of
Directors of the Corporation includes the determination or fixing of the
following with respect to shares of any series thereof: (i) the number of shares
and designation or title thereof; (ii) rights as to dividends; (iii) whether and
upon what terms the shares are to be redeemable; (iv) the rights of the holders
upon the dissolution, or upon the distribution of assets, of the Corporation;
(v) whether and upon what terms the shares shall have a purchase, retirement or
sinking fund; (vi) whether and upon what terms the shares are to be convertible;
(vii) the voting rights, if any, which shall apply, provided that holders of
Preference Stock shall not be entitled to more than one vote per share; and
(viii) any other preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions of such series.
At December 31, 1995, 2,119,681 shares of Preferred Stock and no shares of
Preference Stock were outstanding. Shares of ESOP Preferred Stock, 1995 ESOP
Preferred Stock, Tracking Preferred Stock and 1996 ESOP Preferred Stock (as
hereinafter defined) purchased, redeemed or converted by the Corporation shall
be retired and cancelled and restored to the status of authorized but unissued
shares of Preferred Stock, without designation as to series, and may thereafter
be issued.
As described under "DESCRIPTION OF DEPOSITARY SHARES," the Corporation may,
at its option, elect to offer 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 Depositary (as defined
below).
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 as described under
"Voting Rights" below, such series may then be deemed a "class of voting
securities" and a holder of 25% or more of such series (or a holder of 5% or
more if it otherwise exercises a "controlling influence" over the Corporation)
may then be subject to regulation as a bank holding company in accordance with
the BHCA. In addition, at such time as such 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 such 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 such series.
The Preferred Shares shall have the dividend, liquidation, redemption,
voting and conversion rights set forth below unless otherwise provided in the
Prospectus Supplement relating to a particular series of the Preferred Shares.
Reference is made to the Prospectus Supplement relating to the particular series
of the Preferred Shares offered thereby for specific terms, including (i) the
title, stated value and liquidation preference of such Preferred Shares and the
number of shares offered; (ii) the initial public offering price at which such
Preferred Shares will be issued; (iii) the dividend rate or rates (or method of
calculation), the dividend periods, the dates on which dividends shall be
payable and whether such dividends shall be cumulative or noncumulative and, if
cumulative, the dates from which dividends shall commence to cumulate; (iv) any
repurchase, redemption or sinking fund provisions; (v) any conversion
provisions; (vi) whether the Corporation has elected to offer Depositary Shares
as described under "DESCRIPTION OF DEPOSITARY SHARES"; and (vii) 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 the outstanding shares of the Corporation's
Preferred Stock and Preference Stock described below and each other series of
the Preferred Shares and will rank senior to the Corporation's Series A Junior
Participating Preferred Stock described below. The Preferred Shares will have no
preemptive rights to subscribe for any additional securities which may be
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issued by the Corporation. Unless otherwise specified in the applicable
Prospectus Supplement, Norwest Bank Minnesota, National Association will be the
transfer agent and registrar for the Preferred Shares and any Depositary Shares.
DIVIDENDS
The holders of the Preferred Shares of each series will be entitled to
receive, when, as and if declared by the Board of Directors of the Corporation
or a duly authorized committee thereof, out of funds legally available therefor,
cash dividends at such rates and on such dates as will be set forth in the
Prospectus Supplement relating to such series. Such 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 the stock
books of the Corporation on such record dates as will be fixed by the Board of
Directors of the Corporation 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 the Board
of Directors of the Corporation 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 such
series of the Preferred Shares will have no right to receive a dividend in
respect of the dividend period ending on such dividend payment date, and the
Corporation will have no obligation to pay the dividend accrued for such period,
whether or not dividends on such series are declared payable on any future
dividend payment dates.
No full dividends will be declared or paid or set apart for payment on any
stock of the Corporation ranking, 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 such payment. When dividends are not paid in full
upon any series of Preferred Shares and any Preferred Stock or Preference Stock
ranking on a parity as to dividends with the Preferred Shares, all dividends
declared or made upon Preferred Shares of each series and any Preferred Stock or
Preference Stock ranking on a parity as to dividends with the Preferred Shares
shall be declared pro rata so that the amount of dividends declared per share on
Preferred Shares of each series and such Preferred Stock and Preference Stock
shall in all cases bear to each other the same ratio that accrued dividends per
share (which, in the case of Noncumulative Preferred Shares, shall not include
any accumulation in respect of unpaid dividends for prior dividend periods) on
shares of each series of the Preferred Shares and such Preferred Stock and
Preference Stock 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 stock of the Corporation ranking junior to the Preferred
Shares as to dividends and upon liquidation) shall be declared or paid or set
aside for payment or other distribution declared or made upon the Common Stock
or any other stock of the Corporation ranking junior to or on a parity with the
Preferred Shares as to dividends or upon liquidation, nor shall any Common Stock
nor any other stock of the Corporation ranking 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 any moneys be paid to or made
available for a sinking fund for the redemption of any shares of any such stock)
by the Corporation (except by conversion into or exchange for stock of the
Corporation ranking 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
the option of the Corporation, 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
such series. Preferred Shares redeemed by the Corporation will be restored to
the status of authorized but unissued shares of Preferred Stock or Preference
Stock, as the case may be.
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The Prospectus Supplement relating to a series of the Preferred Shares which
is subject to mandatory redemption will specify the number of shares of such
series of the Preferred Shares which shall be redeemed by the Corporation 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 thereon to the date of redemption. The redemption price may be payable
in cash or other property, as specified in the Prospectus Supplement relating to
such series of the Preferred Shares. If the redemption price is payable only
from the net proceeds of the issuance of capital stock of the Corporation, the
terms of such 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
such series of the Preferred Shares shall automatically and mandatorily be
converted into shares of the applicable capital stock of the Corporation
pursuant to conversion provisions specified in the Prospectus Supplement
relating to such 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 shares to be redeemed will be
determined by the Board of Directors of the Corporation and such shares shall be
redeemed pro rata from the holders of record of such shares in proportion to the
number of such shares held by such 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 such
series shall be redeemed unless all outstanding Preferred Shares of such series
are simultaneously redeemed, and the Corporation shall not purchase or otherwise
acquire any Preferred Shares of such series; provided, however, that the
foregoing shall not prevent the purchase or acquisition of Preferred Shares of
such series pursuant to a purchase or exchange offer provided such offer is made
on the same terms to all holders of such series of the Preferred Shares.
Notice of redemption shall be given by mailing the same to each record
holder of the shares to be redeemed, not less than 40 nor more than 70 days
prior to the date fixed for redemption thereof, to the respective addresses of
such holders as the same shall appear on the stock books of the Corporation.
Each such notice shall state (i) the redemption date; (ii) the number of shares
and series of the Preferred Shares to be redeemed; (iii) the redemption price;
(iv) the place or places where certificates for such Preferred Shares are to be
surrendered for payment of the redemption price; (v) that dividends on the
shares to be redeemed will cease to accrue on such redemption date; and (vi) the
date upon which the holder's conversion rights as to such shares, if any, shall
terminate. If fewer than all shares of any series of the Preferred Shares held
by any holder are to be redeemed, the notice mailed to such holder shall also
specify the number of shares to be redeemed from such 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 default shall be made by the Corporation in providing money for the
payment of the redemption price of the shares so called for redemption),
dividends on the Preferred Shares so called for redemption shall cease to accrue
and such shares shall no longer be deemed to be outstanding, and all rights of
the holders thereof as stockholders of the Corporation (except the right to
receive the redemption price) shall cease. Upon surrender in accordance with
such notice of the certificates representing any shares so redeemed (properly
endorsed or assigned for transfer, if the Board of Directors of the Corporation
shall so require and the notice shall so state), the redemption price set forth
above shall be paid out of funds provided by the Corporation. If fewer than all
of the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without cost to
the holder thereof.
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, the Company will
comply with all applicable provisions of the Exchange Act.
CONVERSION
The Prospectus Supplement relating to a series of the Preferred Shares which
is convertible will state the terms on which shares of that series are
convertible into shares of Common Stock or a series of Preferred Stock or
Preference Stock.
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RIGHTS UPON LIQUIDATION
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the holders of shares of each series of the
Preferred Shares and any Preferred Stock and Preference Stock ranking on a
parity with such series of Preferred Shares upon liquidation will be entitled to
receive out of the assets of the Corporation 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 stock of the Corporation ranking junior to
such series of the Preferred Shares upon liquidation, liquidation distributions
in the amount set forth in the Prospectus Supplement relating to such 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 such series of the Preferred Shares is cumulative, for all
dividend periods prior thereto. Neither the sale of all or substantially all of
the property and assets of the Corporation, nor the merger or consolidation of
the Corporation into or with any other corporation nor the merger or
consolidation of any other corporation into or with the Corporation, shall be
deemed to be a dissolution, liquidation or winding up. If, upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, the
assets of the Corporation available for distribution to the holders of the
Preferred Shares of any series and any other shares of stock of the Corporation
ranking as to any such distribution on a parity with such series of the
Preferred Shares shall be insufficient to pay in full all amounts to which such
holders are entitled, no such distribution shall be made on account of any
shares of any other series of the Preferred Shares or other securities of the
Corporation ranking as to any such distribution on a parity with the Preferred
Shares of such series upon such dissolution, liquidation or winding up unless
proportionate distributive amounts shall be paid on account of the Preferred
Shares of such 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 which they are entitled, the holders of such series
of the Preferred Shares will have no right or claim to any of the remaining
assets of the Corporation.
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 the Corporation issues shares of a series of the Preferred
Shares, unless otherwise indicated in the Prospectus Supplement relating to such
series, each share will be entitled to one vote on matters on which holders of
such series are entitled to vote. However, as more fully described under
"DESCRIPTION OF DEPOSITARY SHARES," if the Corporation elects to provide for the
issuance of Depositary Shares representing fractional interests in a share of
such series of the Preferred Shares, the holders of each such Depositary Share
will, in effect, be entitled through the Depositary to such 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 such series are entitled to
vote, the voting power of such series, on matters on which holders of such
series and holders of any other series of Preferred Shares or a series of
Preferred Stock or Preference Stock are entitled to vote as a single class, will
depend on the number of shares in such series, not the aggregate stated value,
liquidation preference or initial offering price of the shares of such series of
the Preferred Shares.
Whenever dividends on any series of the Preferred Shares shall be in arrears
for such number of dividend periods which shall in the aggregate contain not
less than 540 days, the holders of shares of the Preferred Shares of such series
(voting together as a class with holders of shares of any one or more series of
Preferred Stock or Preference Stock ranking on a parity with the Preferred
Shares either as to dividends or the distribution of assets upon liquidation,
dissolution or winding up and upon which like voting rights have been conferred
and are exercisable) will be entitled to vote for the election of two additional
directors on the terms set forth below and until all past dividends accumulated
on Preferred Shares of such series shall have been paid in full. Each holder of
Preferred Shares of such series will have one vote for each share of stock held
and each other series will have such number of votes, if any, for each share of
stock held as may be granted to them. In such case, the Board of Directors will
be increased by two directors, and the holders of the Preferred Shares of such
series (together with the holders of shares of any one or more series of
Preferred Stock or Preference Stock ranking on such a parity and upon which like
voting rights have been conferred and are exercisable) will have the exclusive
right as members of such class, as outlined above, to elect two directors at the
next annual meeting of stockholders.
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So long as any Preferred Shares of any series remain outstanding, the
Corporation will not, without the consent of the holders of the outstanding
Preferred Shares of such series and outstanding shares of all series of
Preferred Stock and Preference Stock ranking on a parity with the Preferred
Shares of such series either as to dividends or the distribution of assets upon
liquidation, dissolution or winding up and upon which like voting rights have
been conferred and are then exercisable, by a vote of at least two-thirds of all
such outstanding Preferred Shares and shares of Preferred Stock and Preference
Stock voting together as a class, given in person or by proxy, either in writing
or at a meeting, (i) 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 (ii) amend, alter or repeal, whether
by merger, consolidation or otherwise, the provisions of the Corporation's
Restated Certificate of Incorporation, as amended, or of the resolutions
contained in a Certificate of Designations for any series of the Preferred
Shares designating such 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 materially and adversely affect
any right, preference, privilege or voting power of the Preferred Shares or the
holders thereof; provided, however, that any increase in the amount of the
authorized Preferred Stock or Preference Stock or the creation and issuance of
other series of Preferred Stock or Preference Stock, or any increase in the
amount of authorized shares of any series of Preferred Stock or Preference
Stock, in each case ranking on a parity with or junior to the Preferred Shares
with respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up will not be deemed to materially and
adversely affect such rights, preferences, privileges or voting powers.
The holders of ESOP Preferred Stock, 1995 ESOP Preferred Stock, Tracking
Preferred Stock and 1996 ESOP Preferred Stock described under "Outstanding
Preferred Stock" below have voting rights similar to those described in this
section.
OUTSTANDING PREFERRED STOCK
The Preferred Shares will rank on a parity in all respects with the
outstanding Preferred Stock and Preference Stock of the Corporation. The Common
Stock of the Corporation, including the Common Stock that may be issued upon
conversion of the Preferred Shares or in exchange for, or upon conversion of,
Subordinated Securities, will be subject to any prior rights of the Preferred
Stock and Preference Stock then outstanding. Therefore, the rights of the
outstanding Preferred Stock, described below, and any Preferred Stock or
Preference Stock that may be subsequently issued, may limit the rights of the
holders of the Preferred Shares and Common Stock of the Corporation. At December
31, 1995, the Corporation had outstanding 1,127,125 shares of 10.24% Cumulative
Preferred Stock (the "10.24% Preferred Stock"), 12,984 shares of ESOP Cumulative
Convertible Preferred Stock (the "ESOP Preferred Stock"), 24,572 shares of 1995
ESOP Cumulative Convertible Preferred Stock (the "1995 ESOP Preferred Stock")
and 980,000 shares of Cumulative Tracking Preferred Stock (the "Tracking
Preferred Stock"), of which 25,000 shares are held by a subsidiary of the
Corporation. On January 2, 1996, the Corporation redeemed all outstanding shares
of the 10.24% Preferred Stock. On February 27, 1996, the Corporation issued
59,000 shares of 1996 ESOP Cumulative Convertible Preferred Stock (the "1996
ESOP Preferred Stock"). No shares of Preference Stock are currently outstanding.
ESOP PREFERRED STOCK. The ESOP Preferred Stock has a stated value of
$1,000.00 per share. The ESOP Preferred Stock provides for cumulative quarterly
dividends at the rate of 9% per annum calculated as a percentage of stated
value. All outstanding shares of ESOP Preferred Stock are held of record by a
trustee acting on behalf of the Norwest Corporation Savings Investment Plan and
Master Savings Trust, or any successor to such plan (the "Plan"). The ESOP
Preferred Stock is subject to redemption, in whole or in part, at the option of
the Corporation at a price equal to the higher of (i) $1,000.00 per share, plus
accrued and unpaid dividends thereon to the date fixed for redemption, and (ii)
the Fair Market Value (as defined in the Certificate of Designations for the
ESOP Preferred Stock) per share of ESOP Preferred Stock on the date fixed for
redemption.
The ESOP Preferred Stock is mandatorily convertible, without any further
action on the part of the Corporation or the holder thereof, into the
Corporation's Common Stock at the then applicable Conversion Price (as defined
in the Certificate of Designations for the ESOP Preferred Stock) when (i) the
ESOP Preferred Stock is released from the unallocated reserve of the Plan in
accordance with the terms thereof, or (ii) when record ownership of the shares
of ESOP Preferred Stock is transferred to any person other than a
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successor trustee under the Plan. In addition, a holder of ESOP Preferred Stock
is entitled, at any time prior to the date fixed for redemption, to convert
shares of ESOP Preferred Stock held by such holder into shares of the
Corporation's Common Stock at the then applicable Conversion Price.
In the event of voluntary or involuntary liquidation, dissolution or winding
up of the Corporation, the holders of ESOP Preferred Stock are entitled to
receive out of the assets of the Corporation available for distribution to
stockholders, before any distribution of assets is made to holders of the
Corporation's Common Stock, $1,000.00 per share, plus accrued and unpaid
dividends. Except as required by law, the holders of ESOP Preferred Stock are
not entitled to vote, except under the limited circumstances described in
"Voting Rights" above. The ESOP Preferred Stock does not have preemptive rights
and is not subject to any sinking fund or other obligation of the Corporation to
repurchase or redeem the ESOP Preferred Stock.
1995 ESOP PREFERRED STOCK. The 1995 ESOP Preferred Stock has a stated value
of $1,000.00 per share. The 1995 ESOP Preferred Stock provides for cumulative
quarterly dividends at the rate of 10% per annum calculated as a percentage of
stated value. All outstanding shares of 1995 ESOP Preferred Stock are held of
record by a trustee acting on behalf of the Plan. The 1995 ESOP Preferred Stock
is subject to redemption, in whole or in part, at the option of the Corporation
at a price equal to the higher of (i) $1,000.00 per share, plus accrued and
unpaid dividends thereon to the date fixed for redemption, and (ii) the Fair
Market Value (as defined in the Certificate of Designations for the 1995 ESOP
Preferred Stock) per share of 1995 ESOP Preferred Stock on the date fixed for
redemption.
The ESOP Preferred Stock is mandatorily convertible, without any further
action on the part of the Corporation or the holder thereof, into the
Corporation's Common Stock at the then applicable Conversion Price (as defined
in the Certificate of Designations for the 1995 ESOP Preferred Stock) when (i)
the 1995 ESOP Preferred Stock is released from the unallocated reserve of the
Plan in accordance with the terms thereof, or (ii) when record ownership of the
shares of 1995 ESOP Preferred Stock is transferred to any person other than a
successor trustee under the Plan. In addition, a holder of 1995 ESOP Preferred
Stock is entitled, at any time prior to the date fixed for redemption, to
convert shares of 1995 ESOP Preferred Stock held by such holder into shares of
the Corporation's Common Stock at the then applicable Conversion Price.
In the event of voluntary or involuntary liquidation, dissolution or winding
up of the Corporation, the holders of 1995 ESOP Preferred Stock are entitled to
receive out of the assets of the Corporation available for distribution to
stockholders, before any distribution of assets is made to holders of the
Corporation's Common Stock, $1,000.00 per share, plus accrued and unpaid
dividends. Except as required by law, the holders of 1995 ESOP Preferred Stock
are not entitled to vote, except under the limited circumstances described in
"Voting Rights" above. The 1995 ESOP Preferred Stock does not have preemptive
rights and is not subject to any sinking fund or other obligation of the
Corporation to repurchase or redeem the 1995 ESOP Preferred Stock.
TRACKING PREFERRED STOCK. The Tracking Preferred Stock has a stated value
of $200.00 per share. The holders of the Tracking Preferred Stock are also
collectively the assignees of the Corporation's entire beneficial ownership
interest in Class A preferred limited liability company interests (the "Class A
Preferred Securities") of Residential Home Mortgage, L.L.C. (the "Limited
Liability Company").
The Tracking Preferred Stock provides for cumulative annual cash dividends
per share of Tracking Preferred Stock equal to the product of the Dividend Rate
(as defined in the Certificate of Designations for the Tracking Preferred Stock)
and $200.00, payable quarterly. The Dividend Rate is currently 9.3%, and will be
reset on January 1, 2000 and on January 1 of each fifth year thereafter as
described in the Certificate of Designations for the Tracking Preferred Stock.
The Tracking Preferred Stock also provides for certain additional cash
distributions that are based upon the results of operations of the Limited
Liability Company, payable on December 31, 1999 and on December 31 of each fifth
year thereafter. The terms of the Tracking Preferred Stock provide that the
amount of certain dividends distributed or distributions paid to the holders of
Tracking Preferred Stock as assignees of the Corporation's interest in the Class
A Preferred Securities of the Limited Liability Company will reduce dollar for
dollar, respectively, the dividends and distributions to which the holders of
the Tracking Preferred Stock would otherwise be entitled pursuant to the terms
of the Certificate of Designations for the Tracking Preferred Stock.
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The Tracking Preferred Stock is subject to redemption, in whole or in part,
at the option of the Corporation, at a per share price equal to the greater of
(i) $200.00 per share, plus accrued and unpaid dividends thereon to the date
fixed for redemption, and (ii) the Fair Market Value of a Per Share Tracking
Interest in the Limited Liability Company (as defined in the Certificate of
Designations for the Tracking Preferred Stock). Subject to certain exceptions
set forth in the Certificate of Designations for the Tracking Preferred Stock,
the Tracking Preferred Stock is not subject to redemption prior to December 31,
1999. Any redemption payments received by a holder of Tracking Preferred Stock
as an assignee of the Corporation's interest in Class A Preferred Securities of
the Limited Liability Company will reduce dollar for dollar the amount of
redemption payments to which the holders of Tracking Preferred Stock would
otherwise be entitled pursuant to the terms of the Certificate of Designations
for the Tracking Preferred Stock.
In the event of voluntary or involuntary liquidation, dissolution or winding
up of the Corporation, the holders of Tracking Preferred Stock are entitled to
receive out of the assets of the Corporation available for distribution to
stockholders, before any distribution of assets is made to holders of the
Corporation's Common Stock, a per share amount equal to the greater of (i)
$200.00 per share, plus accrued and unpaid dividends to the date of final
distribution, and (ii) the Fair Market Value of a Per Share Tracking Interest in
the Limited Liability Company. Any liquidation payments received by a holder of
Tracking Preferred Stock as an assignee of the Corporation's interest in Class A
Preferred Securities of the Limited Liability Company will reduce dollar for
dollar the amount to which the holders of the Tracking Preferred Stock would
otherwise be entitled pursuant to the terms of the Certificate of Designations
for the Tracking Preferred Stock, provided that no such reduction shall result
from a payment made prior to December 31, 1999 in connection the voluntary
dissolution of the Limited Liability Company.
Except as required by law, the holders of Tracking Preferred Stock are not
entitled to vote, except under the limited circumstances described in "Voting
Rights" above. The Tracking Preferred Stock does not have preemptive rights and
is not subject to any sinking fund or other obligation of the Corporation to
repurchase or redeem the Tracking Preferred Stock.
1996 ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCK. The 1996 ESOP Preferred
Stock has a stated value of $1,000.00 per share. The 1996 ESOP Preferred Stock
provides for cumulative quarterly dividends at the rate of $85.00, $90.00 or
$95.00 per annum based on the Current Market Price (as defined in the
Certificate of Designations for the 1996 ESOP Preferred Stock) of one share of
the Corporation's Common Stock as of a fixed trading date. All outstanding
shares of 1996 ESOP Preferred Stock are held of record by a trustee acting on
behalf of the Plan. The 1996 ESOP Preferred Stock is subject to redemption, in
whole or in part, at the option of the Corporation at a price equal to the
higher of (i) $1,000.00 per share, plus accrued and unpaid dividends thereon to
the date fixed for redemption, and (ii) the Fair Market Value (as defined in the
Certificate of Designations for the 1996 ESOP Preferred Stock) per share of 1996
ESOP Preferred Stock on the date fixed for redemption.
The ESOP Preferred Stock is mandatorily convertible, without any further
action on the part of the Corporation or the holder thereof, into the
Corporation's Common Stock at the then applicable Conversion Price (as defined
in the Certificate of Designations for the 1996 ESOP Preferred Stock) when (i)
the 1996 ESOP Preferred Stock is released from the unallocated reserve of the
Plan in accordance with the terms thereof, or (ii) when record ownership of the
shares of 1996 ESOP Preferred Stock is transferred to any person other than a
successor trustee under the Plan. In addition, a holder of 1996 ESOP Preferred
Stock is entitled, at any time prior to the date fixed for redemption, to
convert shares of 1996 ESOP Preferred Stock held by such holder into shares of
the Corporation's Common Stock at the then applicable Conversion Price.
In the event of voluntary or involuntary liquidation, dissolution or winding
up of the Corporation, the holders of 1996 ESOP Preferred Stock are entitled to
receive out of the assets of the Corporation available for distribution to
stockholders, before any distribution of assets is made to holders of the
Corporation's Common Stock, $1,000.00 per share, plus accrued and unpaid
dividends. Except as required by law, the holders of 1996 ESOP Preferred Stock
are not entitled to vote, except under the limited circumstances described in
"Voting Rights" above. The 1996 ESOP Preferred Stock does not have preemptive
rights and is not subject to any sinking fund or other obligation of the
Corporation to repurchase or redeem the 1996 ESOP Preferred Stock.
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DESCRIPTION OF DEPOSITARY SHARES
The description set forth below and in any Prospectus Supplement of certain
provisions of the Deposit Agreement (as defined below) and of the Depositary
Shares and Depositary Receipts does not purport to be complete and is subject to
and qualified in its entirety by reference to the Deposit Agreement and
Depositary Receipts relating to each series of the Preferred Shares which will
be filed with the Commission at or prior to the time of the offering of such
series of the Preferred Shares.
GENERAL
The Corporation may, at its option, elect to offer fractional interests in
Preferred Shares, rather than full Preferred Shares. In the event such option is
exercised, the Corporation will provide for the issuance by a Depositary to the
public 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 the Corporation and a bank or trust company selected by the
Corporation 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 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 such Depositary Share, to all the
rights and preferences of the Preferred Shares underlying such Depositary Share
(including dividend, voting, redemption, conversion and liquidation rights).
Pending the preparation of definitive engraved Depositary Receipts, the
Depositary may, upon the written order of the Corporation, 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 the Corporation's expense.
Upon surrender of the Depositary Receipts at the principal office of the
Depositary in Minneapolis, Minnesota (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
such 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 such
holder at the same time a new Depositary Receipt evidencing such 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. The Corporation does not expect that there
will be any public trading market for the Preferred Shares 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 shall 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 shall 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 thereto, unless the Depositary determines that it is not feasible to
make such distribution, in which case the Depositary may, with the approval of
the Corporation, sell such property and distribute the net proceeds from such
sale to such 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 the Corporation to holders
of the Preferred Shares shall 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 such series of the Preferred Shares held by the Depositary. The Depositary
shall 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 the Corporation redeems 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 such redemption and any money or other property to which the
holders of such Depositary Shares were entitled upon such redemption upon
surrender to the Depositary of the Depositary Receipts evidencing such
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 such notice of meeting to the record holders of the Depositary Shares
relating to such Preferred Shares. Each record holder of such 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 such holder's Depositary Shares. The Depositary will endeavor,
insofar as practicable, to vote the number of Preferred Shares underlying such
Depositary Shares in accordance with such instructions, and the Corporation 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 such Preferred Shares.
TAXATION
Owners of Depositary Shares will be treated for federal income tax purposes
as if they were owners of the Preferred Shares represented by such Depositary
Shares and, accordingly, will be entitled to take into account for federal
income tax purposes income and deductions to which they would be entitled if
they were holders of such Preferred Shares. In addition, (i) no gain or loss
will be recognized for federal income tax purposes upon the withdrawal of
Preferred Shares in exchange for Depositary Shares as provided in the Deposit
Agreement, (ii) 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 (iii) the holding period
for the Preferred Shares in the hands of an exchanging owner of Depositary
Shares who held such Depositary Shares as a capital asset at the time of the
exchange thereof for Preferred Shares will include the period during which such
person owned such Depositary Shares.
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 the Corporation 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 such 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 the Corporation or the Depositary only
if (i) all outstanding Depositary Shares relating thereto have been
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redeemed or (ii) 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 the Corporation and such distribution has been distributed to the
holders of the related Depositary Shares.
CHARGES OF DEPOSITARY
The Corporation will pay all transfer and other taxes and governmental
charges arising solely from the existence of the depositary arrangements. The
Corporation 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 such 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 the Corporation which are delivered to the Depositary
and which the Corporation is required to furnish to the holders of the Preferred
Shares.
Neither the Depositary nor the Corporation will be liable if it is prevented
or delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Corporation and
the Depositary under the Deposit Agreement will be limited to performance in
good faith of their duties thereunder and they 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. They 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 the Corporation
notice of its election to do so, and the Corporation 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 such appointment. Such 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.
DESCRIPTION OF COMMON STOCK
GENERAL
The Board of Directors of the Corporation is authorized to issue a maximum
of 500,000,000 shares of Common Stock. As of December 31, 1995, 358,332,153
shares of Common Stock were issued, of which 352,760,457 were outstanding and
5,571,696 were held as treasury shares. Subject to any prior rights of any
Preferred Stock or Preference Stock then outstanding, holders of the Common
Stock are entitled to receive such dividends as are declared by the Board of
Directors of the Corporation out of funds legally available therefor. For
information concerning legal limitations on the ability of the Corporation's
banking subsidiaries to supply funds to the Corporation, see "CERTAIN REGULATORY
MATTERS." Subject to the rights, if any, of any Preferred Stock or Preference
Stock then outstanding, all voting rights are vested in the holders of Common
Stock, each share being entitled to one vote. Subject to any prior rights of any
such Preferred Stock or Preference Stock, in the event of liquidation,
dissolution or winding up of the Corporation, holders of shares of Common Stock
are entitled to receive pro rata any assets distributable to stockholders in
respect of shares held by them. Holders of shares of Common Stock do not have
any preemptive right to subscribe for any additional securities which may be
issued by the Corporation. The outstanding shares of Common Stock are fully paid
and nonassessable. The transfer agent and registrar for the Common Stock is
Norwest Bank Minnesota, National Association. Each share of Common Stock also
includes a right to purchase certain Preferred Stock. See "Rights Agreement"
below.
RIGHTS PLAN
The Corporation has in effect a rights plan (the "Rights Plan") pursuant to
which each share of Common Stock now outstanding has attached to it, and each
share of Common Stock issued in this offering
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will have attached to it, one preferred stock purchase right (a "Right")
entitling the holder thereof to purchase one four-hundredth of a share of the
Corporation's Series A Junior Participating Preferred Stock without par value
("Series A Preferred Stock") at a price of $175.00 per one one-hundredth of a
share of Series A Preferred Stock, subject to adjustment upon the occurrence of
certain events, including stock dividends on the Series A Preferred Stock or the
issuance of warrants for, or securities convertible on certain terms into,
shares of Series A Preferred Stock. Each Right is inseparable from, and trades
automatically with, the share of Common Stock to which it is attached. No
separate Right certificates will be issued. Until exercised, a Right by itself
does not confer any rights on its holder as a stockholder of the Corporation,
including, but not limited to, the right to vote or receive dividends. All
Rights expire November 23, 1998, unless earlier exercised by the holders thereof
or redeemed or extended by the Corporation. Subject to certain limited
exceptions, the Corporation may amend or otherwise modify the provisions of the
Rights and the Rights Plan without any vote or other action on the part of the
holders of the Rights.
The Rights are exercisable only if a person or group acquires or announces
an offer to acquire 25% or more (the "Triggering Percentage") of the outstanding
shares of Common Stock. The Corporation's Board of Directors may, without any
vote or other action on the part of stockholders, reduce the Triggering
Percentage to not less than 15% at any time prior to the Rights becoming
exercisable. The Rights have certain additional rights that will be triggered
upon the occurrence of the following specified events:
(1) If a person or group acquires at least the Triggering Percentage of
Common Stock, the Rights permit the holders thereof, other than such person
or group, to acquire shares of Common Stock at 50% of such shares' market
value at the time. This feature will not apply, however, if a person or
group that owns less than the Triggering Percentage acquires at least 85% of
the outstanding shares of Common Stock pursuant to a cash tender offer for
100% of the outstanding shares of Common Stock.
(2) After a person or group acquires at least the Triggering Percentage
of Common Stock but before such person or group acquires 50% of the
outstanding shares of Common Stock, the Corporation's Board of Directors may
exchange each Right, other than Rights owned by such acquiror, for one share
of Common Stock or one four-hundredth of a share of Series A Preferred
Stock.
(3) In the event of certain business combinations involving the
Corporation or the sale of 50% or more of the assets or earning power of the
Corporation, the Rights permit the holders thereof to purchase the stock of
the acquiror at 50% of such shares' market value.
Each share of Series A Preferred Stock will have 400 votes, voting together
with shares of Common Stock. Each share of Series A Preferred Stock will be
entitled to a preferential quarterly dividend payment equal to the greater of
$1.00 per share or, subject to certain adjustments, 400 times the dividend
declared per share of Common Stock. In the event of a merger, consolidation or
other transaction in which Common stock is exchanged, each share of Series A
Preferred Stock will be entitled to receive 400 times the amount received per
share of Common Stock. In the event of liquidation of the Corporation, the
holders of the Series A Preferred Stock will be entitled to a preferential
liquidation payment equal to the greater of $400 per share plus accrued and
unpaid dividends or 400 times the payment made per share of Common Stock. The
Series A Preferred Stock will not be redeemable. The rights of the holder of
Series A Preferred Stock are protected by customary antidilution provisions.
The Corporation's Board of Directors may redeem the Rights in whole, but not
in part, at a price of $.0025 per Right (the "Redemption Price") at any time
prior to the acquisition by a person or group of at least the Triggering
Percentage of the outstanding shares of Common Stock. The Corporation's Board of
Directors may effect the redemption at such time, upon such terms and subject to
such conditions as the Board may deem in it sole discretion necessary or
advisable. Immediately upon redemption of the Rights, all rights of the holders
thereof (including the right to exercise the Rights) will terminate except for
the right to receive the Redemption Price.
The operation of the Rights Plan may result in immediate substantial
dilution to, or otherwise materially adversely affect, any person or group that
acquires the Triggering Percentage of Common Stock or otherwise triggers a
provision of the Rights Plan. For that reason, the existence of the Rights Plan
may have the effect of delaying, deterring or preventing a takeover of the
Corporation.
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The foregoing discussion of the Rights Plan is qualified in its entirety by
reference to the rights agreement dated November 22, 1988 between the
Corporation and Citibank, N.A., as rights agent, a copy of which agreement has
been filed as part of this Registration Statement.
DESCRIPTION OF SECURITIES WARRANTS
The Corporation 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 such 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
between the Corporation and a bank or trust company, as 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 an agent of the Corporation in connection with 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 such Securities Warrants, including, in the case of
Securities Warrants for the purchase of Debt Securities, the following where
applicable: (i) the offering price; (ii) the currencies in which such Securities
Warrants are being offered; (iii) the designation, aggregate principal amount,
currencies, denominations and terms of the series of Debt Securities purchasable
upon exercise of such Securities Warrants; (iv) the designation and terms of any
series of Debt Securities, Preferred Shares or Depositary Shares with which such
Securities Warrants are being offered and the number of such Securities Warrants
being offered with each such Debt Security, Preferred Share or Depositary Share;
(v) the date on and after which such Securities Warrants and the related series
of Debt Securities, Preferred Shares or Depositary Shares will be transferable
separately; (vi) the principal amount of the series of Debt Securities
purchasable upon exercise of each such Securities Warrant and the price at which
and currencies in which such principal amount of Debt Securities of such series
may be purchased upon such exercise; (vii) the date on which the right to
exercise such Securities Warrants shall commence and the date (the "Expiration
Date") on which such right shall expire; (viii) whether the Securities Warrants
will be issued in registered or bearer form; (ix) United States federal income
tax consequences; and (x) any other terms of such 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 such Securities Warrants, including the following where
applicable: (i) the offering price; (ii) the aggregate number of shares
purchasable upon exercise of such Securities Warrants and, in the case of
Securities Warrants for Preferred Shares or Depositary Shares, the designation,
aggregate number and terms of the series of Preferred Shares purchasable upon
exercise of such Securities Warrants or underlying the Depositary Shares
purchasable upon exercise of such Securities Warrants; (iii) the designation and
terms of the series of Debt Securities, Preferred Shares or Depositary Shares
with which such Securities Warrants are being offered and the number of such
Securities Warrants being offered with each such Debt Security, Preferred Share
or Depositary Share; (iv) the date on and after which such Securities Warrants
and the related series of Debt Securities, Preferred Shares or Depositary Shares
will be transferable separately; (v) the number of Preferred Shares, Depositary
Shares or shares of Common Stock purchasable upon exercise of each such
Securities Warrant and the price at which such number of Preferred Shares or
Depositary Shares of such series or shares of Common Stock may be purchased upon
each exercise; (vi) the date on which the right to exercise such Securities
Warrants shall commence and the Expiration Date; (vii) United States federal
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income tax consequences; and (viii) any other terms of such 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 such Securities Warrants will
not have any of the rights of Holders of the Debt Securities purchasable upon
such exercise, including the right to receive payments of principal of, premium,
if any, or interest, if any, on the Debt Securities purchasable upon such
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 such 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 such
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 the Corporation), 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 such Securities
Warrants. Upon receipt of such 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, the Corporation 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 such exercise. If fewer than all of
the Securities Warrants represented by such Securities Warrant Certificate 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 thereunder 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 (i) the
issuance of capital stock as a dividend or distribution on the Common Stock;
(ii) subdivisions and combinations of the Common Stock; (iii) 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 such rights or
warrants, at less than the current market price (as defined in the Warrant
Agreement for such series of Common Stock Warrants); (iv) the distribution to
all holders of Common Stock of evidences of indebtedness or assets of the
Corporation (excluding certain cash dividends and distributions described below)
or rights or warrants (excluding those referred to above). In the event that the
Corporation shall distribute any rights or warrants to acquire capital stock
pursuant to clause (iii) above (the "Capital Stock Rights"), pursuant to which
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separate certificates representing such Capital Stock Rights will be distributed
subsequent to the initial distribution of such Capital Stock Rights (whether or
not such distribution shall have occurred prior to the date of the issuance of a
series of Common Stock Warrants), such subsequent distribution shall be deemed
to be the distribution of such Capital Stock Rights; provided that the
Corporation 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 such Capital Stock Rights,
make proper provision so that each holder of such a Common Stock Warrant who
exercises such Common Stock Warrant (or any portion thereof) (a) before the
record date for such distribution of separate certificates shall be entitled to
receive upon such exercise shares of Common Stock issued with Capital Stock
Rights and (b) after such record date and prior to the expiration, redemption or
termination of such Capital Stock Rights shall be entitled to receive upon such
exercise, in addition to the shares of Common Stock issuable upon such exercise,
the same number of such 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 such Common Stock Warrant
was exercised immediately prior to the record date for such distribution. Common
Stock owned by or held for the account of the Corporation or any majority owned
subsidiary 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 such adjustment would require a change of at
least 1% in the exercise price then in effect; provided that any such adjustment
not so made will be carried forward and taken into account in any subsequent
adjustment; and provided further that any such adjustment not so made shall be
made no later than three years after the occurrence of the event requiring such
adjustment to be made or carried forward. Except as stated above, the exercise
price of and the number of shares of Common Stock covered 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 (i) a reclassification or change of the Common Stock, (ii) a
consolidation or merger involving the Corporation or (iii) a sale or conveyance
to another corporation of the property and assets of the Corporation as an
entirety or substantially as an entirety, in each case as a result of which
holders of the Corporation's Common Stock shall be entitled to receive stock,
securities, other property or assets (including cash) with respect to or in
exchange for such Common Stock, the holders of the Common Stock Warrants then
outstanding will be entitled thereafter to convert such 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 such Common Stock Warrants been
exercised immediately prior to such reclassification, change, consolidation,
merger, sale or conveyance.
PLAN OF DISTRIBUTION
The Corporation may offer and sell the Offered Securities in any of three
ways: (i) through agents (including certain affiliates of the Corporation), (ii)
through underwriters or dealers (including certain affiliates of the
Corporation), or (iii) directly to one or more purchasers. The Prospectus
Supplement with respect to any of the Offered Securities will set forth the
terms of the offering of such Offered Securities, including the name or names of
any underwriters or agents, the purchase price of such Offered Securities, the
proceeds to the Corporation from such 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 such Offered
Securities may be listed.
The distribution of the Offered Securities may be effected from time to time
in one or more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
Underwriters, dealers and agents may be entitled, under agreements entered
into with the Corporation, to indemnification by the Corporation against certain
civil liabilities, including liabilities under the Securities
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Act, or to contributions with respect to payments which the underwriters or
agents may be required to make in respect thereof. Underwriters and agents, and
affiliates thereof, may be customers of, engage in transactions with, or perform
services for the Corporation and its affiliates in the ordinary course of
business.
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 such Bearer Securities, it will not
offer, sell or deliver, directly or indirectly, Bearer Securities to a United
States person or to any person within the United States, except to the extent
permitted under United States Treasury regulations.
All Offered Securities will be new issues of securities with no established
trading market. Any underwriters to whom Offered Securities are sold by the
Corporation for public offering and sale may make a market in such Offered
Securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given concerning the liquidity of the trading market for any Offered Securities.
Norwest Investment Services Inc. ("NISI"), a wholly-owned subsidiary of the
Corporation, may assist in the placement of certain Offered Securities. Any such
placement will be pursuant to the terms of an agreement (a "Brokerage
Agreement") between the Corporation and NISI, whereby NISI will be acting as
agent for certain of its existing customers. Any such placement of Offered
Securities will be made in compliance with Schedule E to the By-Laws of the
National Association of Securities Dealers, Inc. Any such Brokerage Agreement
will authorize NISI to contact existing customers which are financial
institutions or sophisticated investors to inform them of the availability of
the Offered Securities and the terms on which the Offered Securities may be
purchased. NISI will forward any orders for the Offered Securities to the
Corporation for acceptance, and the Corporation will pay NISI a commission at
the same rate as the commissions paid to other agents placing Offered
Securities. As part of such arrangement, it is anticipated that the Corporation
will agree to indemnify NISI against and contribute towards certain liabilities,
including liabilities under the Securities Act.
VALIDITY OF SECURITIES
The validity of the Offered Securities will be passed upon for the
Corporation by Stanley S. Stroup, Executive Vice President and General Counsel
of the Corporation. As of December 31, 1995, Mr. Stroup was the beneficial owner
of 107,753 shares of the Corporation's Common Stock and had options to acquire
247,410 additional shares. Certain tax matters will be passed upon for the
Corporation by Faegre & Benson LLP ("Faegre & Benson"), 2200 Norwest Center, 90
South Seventh Street, Minneapolis, Minnesota 55402. Faegre & Benson and certain
members of the firm are indebted to and have other banking and trust
relationships with certain affiliated banks of the Corporation. Members of
Faegre & Benson and members of their families own less than .02% of the
Corporation's Common Stock outstanding.
EXPERTS
The consolidated financial statements of Norwest Corporation and
subsidiaries as of December 31, 1995 and 1994 and for each of the years in the
three-year period ended December 31, 1995, incorporated by reference herein,
have been incorporated herein in reliance upon the report of KPMG Peat Marwick
LLP, independent certified public accountants, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing.
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NO DEALER, SALESMAN, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN CONNECTION WITH THE
OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANY PERSON IN ANY STATE
IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
DESCRIPTION OF NOTES...................................................... S-2
SPECIAL PROVISIONS AND RISKS RELATING TO FOREIGN CURRENCY NOTES........... S-14
UNITED STATES TAXATION.................................................... S-17
PLAN OF DISTRIBUTION OF NOTES............................................. S-24
VALIDITY OF NOTES......................................................... S-25
EXPERTS................................................................... S-25
PROSPECTUS
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................... 2
AVAILABLE INFORMATION..................................................... 2
THE CORPORATION........................................................... 3
CERTAIN REGULATORY MATTERS................................................ 3
USE OF PROCEEDS........................................................... 8
RATIOS OF EARNINGS TO FIXED CHARGES AND
TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS................................................ 8
DESCRIPTION OF DEBT SECURITIES............................................ 8
DESCRIPTION OF PREFERRED SHARES........................................... 18
DESCRIPTION OF DEPOSITARY SHARES.......................................... 26
DESCRIPTION OF COMMON STOCK............................................... 28
DESCRIPTION OF SECURITIES WARRANTS........................................ 30
PLAN OF DISTRIBUTION...................................................... 32
VALIDITY OF SECURITIES.................................................... 33
EXPERTS................................................................... 33
</TABLE>
$5,000,000,000
[LOGO]
NORWEST CORPORATION
MEDIUM-TERM NOTES, SERIES J
-----------------
PROSPECTUS SUPPLEMENT
-----------------
MORGAN STANLEY & CO.
INCORPORATED
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
SALOMON BROTHERS INC
JULY 2, 1996
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