<PAGE>
Filed Pursuant to Rule 424(b)(2)
File Nos. 333-79493, 33-61045, 33-50435
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JUNE 16, 1999.
[LOGO OF WELLS FARGO STAGECOACH]
$1,500,000,000
WELLS FARGO & COMPANY
6 5/8% Notes Due July 15, 2004
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We will pay interest on the notes each January 15 and July 15. We will make
the first interest payment on January 15, 2000. We may not redeem the notes
prior to their maturity. There is no sinking fund for the notes.
We have applied to the London Stock Exchange Limited to admit the notes to
its Official List. The notes are being offered for sale where we are permitted
by law to offer the notes.
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UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC (1) COMMISSIONS WELLS FARGO
-------------- ------------- --------------
<S> <C> <C> <C>
Per note............................ 99.945% .35% 99.595%
Total............................... $1,499,175,000 $5,250,000 $1,493,925,000
</TABLE>
(1) Plus accrued interest, if any, from July 28, 1999.
Delivery of the notes in book-entry form only through The Depository Trust
Company, Cedelbank or the Euroclear System, as the case may be, will be made
on or about July 28,1999.
The notes are our unsecured obligations and are not savings accounts,
deposits or other obligations of any of our bank or nonbank subsidiaries and
are not insured by the Federal Deposit Insurance Corporation, the Bank
Insurance Fund or any other governmental agency.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus supplement or the prospectus to which it relates is truthful
or complete. Any representation to the contrary is a criminal offense.
JOINT BOOKRUNNERS
CREDIT SUISSE FIRST BOSTON SALOMON SMITH BARNEY
------------
BANC ONE CAPITAL MARKETS, INC. GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC. LEHMAN BROTHERS
CHASE SECURITIES INC. MORGAN STANLEY DEAN WITTER
------------
ABN AMRO INCORPORATED FIRST UNION CAPITAL MARKETS CORP.
BARCLAYS CAPITAL HSBC MARKETS
BNY CAPITAL MARKETS, INC. MELLON FINANCIAL MARKETS, INC.
The date of this prospectus supplement is July 21, 1999.
<PAGE>
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TABLE OF CONTENTS
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Page
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PROSPECTUS SUPPLEMENT
Forward Looking Statements...... S-3
Wells Fargo & Company........... S-4
Directors of Wells Fargo &
Company........................ S-10
Capitalization.................. S-14
Selected Financial Information.. S-15
Description of the Notes........ S-17
Certain U.S. Federal Tax
Considerations................. S-22
Underwriting.................... S-26
Legal Matters................... S-28
General Information............. S-28
</TABLE>
<TABLE>
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Page
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PROSPECTUS
About This Prospectus.............. 2
Where You Can Find More
Information....................... 2
The Company........................ 4
Use of Proceeds.................... 5
Ratios of Earnings to Fixed Charges
and to Fixed Charges and Preferred
Stock Dividends................... 6
Description of Debt Securities..... 7
Description of Preferred Stock..... 18
Description of Depositary Shares... 32
Description of Common Stock........ 36
Description of Securities
Warrants.......................... 40
Plan of Distribution............... 44
Legal Opinions..................... 45
Experts............................ 46
</TABLE>
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS
SUPPLEMENT, THE PROSPECTUS TO WHICH IT RELATES AND THE DOCUMENTS THEY
INCORPORATE BY REFERENCE. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS TO
WHICH IT RELATES MAY ONLY BE USED WHERE IT IS LEGAL TO SELL THESE SECURITIES.
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS TO WHICH IT
RELATES MAY ONLY BE ACCURATE AS OF THEIR RESPECTIVE DATES.
Offers and sales of the notes are subject to restrictions in relation to the
United Kingdom, details of which are set out in "Underwriting," and in other
jurisdictions. The distribution of this prospectus supplement and the
prospectus to which it relates may also be restricted by law in some
jurisdictions.
We have made application to the London Stock Exchange Limited to admit the
notes to its Official List. We cannot assure you, however, that the notes will
be admitted to listing on the London Stock Exchange. The delivery of the notes
is not contingent on their admission to listing on any exchange. Therefore, we
cannot give you any assurance as to the existence or liquidity of any trading
market for the notes.
The information contained in the London Stock Exchange listing particulars
will be filed in accordance with the requirements of the London Stock Exchange
Limited and may include information in addition to the information included in
this prospectus supplement and the prospectus to which it relates. Any such
additional information is not incorporated by reference in or made a part of
this prospectus supplement or the prospectus to which it relates.
S-2
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FORWARD LOOKING STATEMENTS
This prospectus supplement and the accompanying prospectus include and
incorporate by reference forward looking statements about our financial
condition, results of operations, plans, objectives and future performance and
business. When we use the words "believe," "expect," "anticipate," "estimate,"
"may" or similar expressions, we are making forward looking statements.
These forward looking statements involve inherent risks and uncertainties. A
number of factors -- many of which are beyond our control -- could cause actual
results to differ from those in our forward looking statements. The factors
include:
. changes in political and economic conditions and interest rate
fluctuations;
. technological changes, including the "Year 2000" data systems compliance
issue;
. customer disintermediation;
. competitive product and pricing pressures in our geographic and product
markets;
. equity and fixed income market fluctuations;
. personal and commercial customers' bankruptcies;
. inflation;
. changes in law;
. changes in fiscal, monetary, regulatory and tax policies;
. monetary fluctuations;
. credit quality and credit risk management;
. mergers and acquisitions;
. the integration of merged and acquired companies; and
. success in gaining regulatory approvals when required.
Also, actual results could differ from those predicted in our forward
looking statements because of factors relating to the combination of the former
Wells Fargo and the former Norwest, each as defined below, including the
following: expected cost savings from the combination of the former Wells Fargo
and the former Norwest are not fully realized within the expected time frame or
additional or unexpected costs are incurred; and costs or difficulties related
to the integration of the former Wells Fargo and the former Norwest are greater
than expected.
S-3
<PAGE>
WELLS FARGO & COMPANY
GENERAL
We are a diversified financial services company organized under the laws of
Delaware and registered as a bank holding company under the Bank Holding
Company Act of 1956, or the "BHC Act." As a diversified financial services
organization, we own subsidiaries engaged in banking and a variety of related
businesses. Our subsidiaries provide retail, commercial and corporate banking
services to customers through banks located in Arizona, California, Colorado,
Idaho, Illinois, Indiana, Iowa, Minnesota, Montana, Nebraska, Nevada, New
Mexico, North Dakota, Ohio, Oregon, South Dakota, Texas, Utah, Washington,
Wisconsin and Wyoming. Additional financial services are provided to customers
by our subsidiaries engaged in various businesses, such as wholesale banking,
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. Our
significant subsidiaries are Norwest Bank Minnesota, N.A. and its consolidated
subsidiaries and WFC Holdings Corporation and its consolidated subsidiaries,
including its principal subsidiary, Wells Fargo Bank, N.A.
At March 31, 1999, we had consolidated total assets of $201 billion, total
deposits of $132 billion and total stockholders' equity of $21 billion. Based
on total assets at March 31, 1999, we were the seventh largest bank holding
company in the United States.
On November 2, 1998, we changed our name from "Norwest Corporation" to
"Wells Fargo & Company" following the merger, or the "Merger," of the former
Wells Fargo & Company into a wholly-owned subsidiary of the former Norwest.
When we refer to the "former Norwest" or the "former Wells Fargo" in this
prospectus supplement we are referring to each of those companies prior to the
Merger. When we refer to "Wells Fargo," "we," "our" and "us" in this prospectus
supplement we mean only Wells Fargo & Company, and not Wells Fargo & Company
together with any of its subsidiaries, unless the context indicates otherwise.
We provide various services to our subsidiaries, including strategic
planning, asset and liability management, investment administration and
portfolio planning, tax planning, new product and business development,
advertising, administration and internal auditing, employee benefits and
payroll management. In addition, we provide funds to our subsidiaries. We
derive substantially all our income from investments in and advances to our
subsidiaries, and service fees received from our subsidiaries.
Prior to the Merger, as the former Norwest, we provided banking services to
customers in 16 states and additional financial services through subsidiaries
engaged in a variety of businesses including mortgage banking and consumer
finance. As a result of the Merger, we now also provide banking services and
financial services through the former Wells Fargo and its consolidated
subsidiaries, including Wells Fargo Bank, in five additional states in the
western United States, including California, and we have expanded these
services in five other western states where subsidiaries of the former Norwest
also offered such services.
We expand our business, in part, by acquiring banking institutions and other
companies engaged in activities closely related to banking. We continue to
explore opportunities to acquire banking institutions and other companies
permitted by the BHC Act. We continually engage in discussions related to such
acquisitions. We do not currently know whether, or on what terms, these
discussions will result in further acquisitions. It is our policy not to
comment on these discussions or possible acquisitions until a definitive
agreement has been executed with respect to an acquisition.
As discussed in more detail under the heading "--Regulation and
Supervision--Bank Holding Company Activities," the acquisition of banking
institutions and other companies is generally subject to the prior approval of
federal and state regulatory authorities.
S-4
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COMPETITION
Legislative and regulatory changes, coupled with technological advances,
have significantly increased competition in the financial services industry.
Our banking and financial services subsidiaries compete with other financial
services providers, such as commercial banks and financial institutions,
including savings and loan associations, credit unions, finance companies,
mortgage banking companies and mutual funds. In addition, our subsidiaries
compete with nonbank institutions such as brokerage houses and insurance
companies, as well as financial services subsidiaries of commercial and
manufacturing companies. Many of these competitors are not subject to the same
regulatory restrictions as banks and bank holding companies.
REGULATION AND SUPERVISION
The following discussion describes the material elements of the regulatory
framework applicable to bank holding companies and their subsidiaries and
provides certain specific information relevant to our company. This regulatory
framework is intended primarily for the protection of depositors, federal
deposit insurance funds, and the banking system in the United States as a
whole. The statutes, regulations and policies discussed in this section are
continually under review by the United States Congress, state legislatures and
federal and state regulatory agencies. A change in statutes, regulations or
regulatory policies applicable to us or our subsidiaries could have a material
adverse effect on our business.
This regulatory environment, among other things, may restrict our ability to
diversify into certain areas of financial services, acquire depository
institutions in certain states and pay dividends on our capital stock. It may
also require us to provide financial support to one or more of our banking
subsidiaries, maintain capital balances in excess of those desired by
management and pay higher deposit insurance premiums as a result of the
deterioration in the financial condition of depository institutions in general.
GENERAL
Bank Holding Company. As a bank holding company, we are subject to
regulation under the BHC Act and to inspection, examination and supervision by
the Federal Reserve Board, or "FRB."
Subsidiary Banks. Our national bank subsidiaries are subject to regulation
and examination primarily by the Office of the Comptroller of the Currency, or
"OCC," and secondarily by the Federal Deposit Insurance Corporation, or "FDIC,"
and the FRB. Our state-chartered banks are subject to primary federal
regulation and examination by the FDIC or the FRB and, in addition, are
regulated and examined by their respective state banking departments.
Nonbanking Subsidiaries. Many of our nonbank subsidiaries are also subject
to regulation by the FRB and other federal and state agencies. Our brokerage
subsidiaries are regulated by the SEC, the National Association of Securities
Dealers, Inc. and state securities regulators. Our insurance subsidiaries are
subject to regulation by state insurance regulatory agencies. Other nonbanking
subsidiaries are subject to the laws and regulations of both the federal
government and the various states in which they conduct business.
BANK HOLDING COMPANY ACTIVITIES
Banking-Related Requirement. Under the BHC Act, bank holding companies
generally may not acquire the beneficial ownership or control of more than 5%
of the voting shares or substantially all the assets of any company, including
a bank, without the FRB's prior approval. Also, bank holding companies
generally may engage, directly or indirectly, only in banking and such other
activities as the FRB determines to be closely related to banking.
Interstate Banking. Under the Riegle-Neal Interstate Banking and Branching
Act, or "Riegle-Neal Act," a bank holding company may acquire banks in states
other than its home state, subject to any state requirement that the bank has
been organized and operating for a minimum period of time, not to exceed five
years, and the requirement that the bank holding company not control, prior to
or following the proposed acquisition, more
S-5
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than 10% of the total amount of deposits of insured depository institutions
nationwide or, unless the acquisition is the bank holding company's initial
entry into the state, more than 30% of such deposits in the state, or such
lesser or greater amount set by the state.
The Riegle-Neal Act also authorizes banks to merge across state lines,
thereby creating interstate branches. States may opt out of the Riegle-Neal Act
and thereby prohibit interstate mergers in the state. We will be unable to
consolidate our banking operations in one state with those of another state if
either state in question has opted out of the Riegle-Neal Act. The State of
Montana has opted out until at least the year 2001.
Regulatory Approval. In determining whether to approve a proposed bank
acquisition, federal banking regulators consider, among other factors, the
effect of the acquisition on competition, the public benefits expected to be
received from the acquisition, the projected capital ratios and levels on a
post-acquisition basis and the acquiring institution's record of addressing the
credit needs of the communities it serves, including the needs of low and
moderate income neighborhoods, consistent with the safe and sound operation of
the bank, under the Community Reinvestment Act of 1977.
DIVIDEND RESTRICTIONS
We are a legal entity separate and distinct from our subsidiary banks and
other subsidiaries. Our principal source of funds to pay dividends on our
common and preferred stock and debt service on our debt is dividends from our
subsidiaries. Various federal and state statutory provisions and regulations
limit the amount of dividends our subsidiary banks may pay without regulatory
approval. Dividends payable by a national bank to us without the express
approval of the OCC are limited to that bank's retained net profits for the
preceding two calendar years plus retained net profits up to the date of any
dividend declaration in the current calendar year. Retained net profits are
defined by the OCC as net income, less dividends declared during the period,
both of which are based on regulatory accounting principles. We also have
state-chartered subsidiary banks that are subject to state regulations that
limit dividends. Under those provisions, and except for Wells Fargo Bank, our
national and state-chartered subsidiary banks could have declared dividends as
of March 31, 1999 of at least $669 million without obtaining prior regulatory
approval. Before Wells Fargo Bank can declare dividends in 1999 without the
approval of the OCC, it must have net income of $1.5 billion plus an amount
equal to or greater than the dividends declared in 1999. Since it is not
expected to meet this requirement, Wells Fargo Bank will need to obtain the
approval of the OCC before it declares any dividends in 1999.
Federal bank regulatory agencies have the authority to prohibit our
subsidiary banks from engaging in unsafe or unsound practices in conducting
their businesses. The payment of dividends, depending on the financial
condition of the bank in question, could be deemed an unsafe or unsound
practice. The ability of our subsidiary banks to pay dividends in the future is
currently influenced, and could be further influenced, by bank regulatory
policies and capital guidelines.
HOLDING COMPANY STRUCTURE
Transfer of Funds from Subsidiary Banks. Our subsidiary banks are subject to
restrictions under federal law that limit the transfer of funds or other items
of value from these subsidiaries to us and our nonbanking subsidiaries,
including affiliates, whether in the form of loans and other extensions of
credit, investments and asset purchases, or as other transactions involving the
transfer of value from a subsidiary to an affiliate or for the benefit of an
affiliate. Unless an exemption applies, these transactions by a subsidiary bank
with a single affiliate are limited to 10% of the subsidiary bank's capital and
surplus and, with respect to all covered transactions with affiliates in the
aggregate, to 20% of the subsidiary bank's capital and surplus. Also, loans and
extensions of credit to affiliates generally are required to be secured in
specified amounts.
Source of Strength Doctrine. The FRB has a policy that a bank holding
company is expected to act as a source of financial and managerial strength to
each of its subsidiary banks and, under appropriate circumstances, to commit
resources to support each subsidiary bank. This support may be required at
times
S-6
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when we may not have the resources to provide it. Any capital loans by us to
any of our subsidiary banks are subordinate in right of payment to deposits and
certain other indebtedness of the subsidiary bank. In addition, in the event of
our 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.
Depositor Preference. The Federal Deposit Insurance Act, or the "FDI Act,"
provides that, in the event of the "liquidation or other resolution" of an
insured depository institution, the claims of depositors of the institution,
including the claims of the FDIC as subrogee of insured depositors, and certain
claims for administrative expenses of the FDIC as a receiver will have priority
over other general unsecured claims against the institution. If an insured
depository institution fails, insured and uninsured depositors, along with the
FDIC, will have priority in payment ahead of unsecured nondeposit creditors,
including us.
Liability of Commonly Controlled Institutions. Under the FDI Act, an insured
depository institution is generally liable for any loss incurred, or reasonably
expected to be incurred, by the FDIC in connection with (a) the default of a
commonly controlled insured depository institution or (b) any assistance
provided by the FDIC to a commonly controlled 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.
CAPITAL REQUIREMENTS
We and each of our subsidiary banks are subject to capital adequacy
requirements and guidelines administered by the FRB, the OCC and the FDIC.
The Federal Deposit Insurance Corporation Improvement Act of 1991, or
"FDICIA," requires that the FRB, the OCC and the FDIC adopt regulations
defining five capital tiers for banks: well capitalized, adequately
capitalized, under capitalized, significantly undercapitalized and critically
under capitalized. Failure to meet minimum capital requirements can initiate
certain mandatory and possibly additional discretionary actions by regulators
that, if undertaken, could have a material adverse effect on our business.
Quantitative measures, established by the regulators to ensure capital
adequacy, require that we and each of our subsidiary banks maintain minimum
ratios of total capital to risk-weighted assets of at least eight percent (8%)
and of Tier 1 capital to risk-weighted assets of at least four percent (4%).
There are two categories of capital under the guidelines. Tier 1 capital
includes common stockholders' equity, qualifying preferred stock and, for bank
holding companies, trust preferred securities, less goodwill and certain other
deductions, including the unrealized net gains and losses, after applicable
taxes, on available-for-sale securities carried at fair value. Tier 2 capital
includes preferred stock not qualifying as Tier 1 capital, mandatory
convertible debt, subordinated debt, certain unsecured senior debt issued by
us, the allowance for loan losses and net unrealized gains on marketable equity
securities, subject to limitations established by the guidelines. At least half
of total capital must be in the form of Tier 1 capital.
Under the guidelines, capital is compared to the relative risk related to
the balance sheet. To derive the risk included in the balance sheet, one of
four risk weights (0%, 20%, 50% and 100%) is applied to different balance sheet
and off-balance sheet assets, primarily based on the relative credit risk of
the counterparty. For example, claims guaranteed by the U.S. government or one
of its agencies are risk-weighted at 0%. Off-balance sheet items, such as loan
commitments and derivative financial instruments, are also assigned one of the
above risk weights after calculating balance sheet equivalent amounts. For
example, certain loan commitments are converted at 50% and then risk-weighted
at 100%. Derivative financial instruments are converted to balance sheet
equivalents based on notional values, replacement costs and remaining
contractual terms. The capital amounts and classification are also subject to
qualitative judgments by the regulators about components, risk
S-7
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weightings and other factors. In addition, the federal banking agencies have
specified minimum "leverage ratio" (the ratio of Tier 1 capital to quarterly
average total assets) guidelines for bank holding companies and state member
banks. The minimum leverage ratio guideline is three percent (3%) for banking
organizations that meet certain specified criteria, including that they have
the highest regulatory rating. All other banking organizations and state member
banks are required to maintain a leverage ratio of three percent (3%) plus an
additional cushion of at least one to two percent (1% to 2%).
The FRB's capital guidelines 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. Also, the guidelines indicate that
the FRB will 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 (excluding intangibles)
to total assets (excluding intangibles).
The FRB, the FDIC and the OCC have adopted rules to incorporate market and
interest rate risk components into their risk-based capital standards.
Amendments to the risk-based capital requirements, incorporating market risk,
became effective January 1, 1998. Under the market risk requirements, capital
will be allocated to support the amount of market risk related to a financial
institution's ongoing trading activities.
At March 31, 1999, our ratio of total capital (the sum of Tier 1 and Tier 2
capital) to risk-weighted assets was 10.97% and our ratio of Tier 1 capital to
risk-weighted assets was 8.23%. Our management believes that, as of March 31,
1999, we and each of our subsidiary banks met all capital adequacy requirements
to which they are subject.
As an additional means to identify problems in the financial management of
depository institutions, the FDI Act requires federal bank regulatory agencies
to establish certain non-capital safety and soundness standards for
institutions for which they are the primary federal regulator. The standards
relate generally to operations and management, asset quality, interest rate
exposure and executive compensation. The agencies are authorized to take action
against institutions that fail to meet these standards.
Under FDICIA's prompt corrective action provisions applicable to banks, the
most recent regulatory notification from the OCC concerning each of our
subsidiary banks categorized them as well capitalized. To be categorized as
well capitalized, the institution must maintain a risk-based total capital
ratio of at least ten percent (10%), a risk-based Tier 1 capital ratio of at
least six percent (6%) and a leverage ratio of at least five percent (5%), and
not be subject to a capital directive order. There are no conditions or events
since that notification that our management believes have changed the risk-
based capital category of our subsidiary banks.
The FDI Act requires federal bank regulatory agencies to take "prompt
corrective action" with respect to FDIC-insured depository institutions that do
not meet minimum capital requirements. A depository institution's treatment for
purposes of the prompt corrective action provisions will depend upon how its
capital levels compare to various capital measures and certain other factors,
as established by regulation.
FDIC INSURANCE
Through the Bank Insurance Fund, or "BIF," the FDIC insures the deposits of
our depository institution subsidiaries up to prescribed limits for each
depositor. The amount of FDIC assessments paid by each BIF member institution
is based on its relative risk of default as measured by regulatory capital
ratios and other factors. Specifically, the assessment rate is based on the
institution's capitalization risk category and supervisory subgroup category.
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 category 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.
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The BIF assessment rate currently ranges from zero to 27 cents per $100 of
domestic deposits. The FDIC may increase or decrease the assessment rate
schedule on a semi-annual basis. An increase in the BIF assessment rate could
have a material adverse effect on our 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 for one or more of our subsidiary depository
institutions could have a material adverse effect on our earnings, depending on
the collective size of the particular institutions involved.
All FDIC-insured depository institutions must pay an annual assessment to
provide funds for the payment of interest on bonds issued by the Financing
Corporation, a federal corporation chartered under the authority of the Federal
Housing Finance Board. The bonds, commonly referred to as FICO bonds, were
issued to capitalize the Federal Savings and Loan Insurance Corporation. FDIC-
insured depository institutions will continue to pay approximately 1.2 cents
per $100 of BIF-assessable deposits until the earlier of December 31, 1999 or
the date the last savings and loan association ceases to exist.
FISCAL AND MONETARY POLICIES
Our business and earnings are affected significantly by the fiscal and
monetary policies of the federal government and its agencies. We are
particularly affected by the policies of the FRB, which regulates the supply of
money and credit in the United States. Among the instruments of monetary policy
available to the FRB are:
. conducting open market operations in United States government
securities;
. changing the discount rates of borrowings of depository institutions;
. imposing or changing reserve requirements against depository
institutions' deposits; and
. imposing or changing reserve requirements against certain borrowings by
banks and their affiliates.
These methods are used in varying degrees and combinations to directly affect
the availability of bank loans and deposits, as well as the interest rates
charged on loans and paid on deposits. For that reason alone, the policies of
the FRB have a material effect on our earnings.
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DIRECTORS OF WELLS FARGO & COMPANY
The following chart sets forth information relating to members of our board
of directors as of March 22, 1999.
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<CAPTION>
YEAR FIRST
ELECTED TO
SERVE AS A
DIRECTOR OF
WELLS FARGO
(INCLUDING
THE FORMER
NAME AGE POSITION WELLS FARGO)
- ------------------------ --- ----------------------------------------- -----------
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Leslie S. Biller........ 51 Vice Chairman, Chief Operating Officer 1997
J. A. Blanchard III..... 56 Audit and Examination Committee, Board 1996
Affairs Committee, Credit Committee
Michael R. Bowlin....... 56 Finance Committee, Human Resources 1996
Committee
Edward M. Carson........ 69 Board Affairs Committee, Credit Committee 1996
David A. Christensen.... 63 Audit and Examination Committee, Board 1977
Affairs Committee, Credit Committee
William S. Davila....... 67 Audit and Examination Committee, Finance 1990
Committee
Susan E. Engel.......... 52 Credit Committee, Finance Committee 1998
Paul Hazen.............. 57 Chairman 1984
William A. Hodder....... 67 Board Affairs Committee, Human Resources 1971
Committee
Rodney L. Jacobs........ 58 Vice Chairman, Chief Financial Officer 1998
Reatha Clark King....... 60 Audit and Examination Committee, Credit 1986
Committee
Richard M. Kovacevich... 55 President and Chief Executive Officer 1986
Richard D. McCormick.... 58 Finance Committee, Human Resources 1983
Committee
Cynthia H. Milligan..... 52 Audit and Examination Committee, Finance 1992
Committee
Benjamin F. Montoya..... 63 Audit and Examination Committee, Finance 1996
Committee
Philip J. Quigley....... 56 Audit and Examination Committee, Board 1994
Affairs Committee, Credit Committee
Donald B. Rice.......... 59 Board Affairs Committee, Human Resources 1993
Committee
Ian M. Rolland.......... 65 Finance Committee, Human Resources 1993
Committee
Judith M. Runstand...... 54 Audit and Examination Committee, Finance 1998
Committee
Susan G. Swenson........ 50 Audit and Examination Committee, Credit 1994
Committee
Daniel M. Tellep........ 67 Credit Committee, Finance Committee, 1996
Human Resources Committee
Chang-Lin Tien.......... 63 Audit and Examination Committee, Finance 1990
Committee
</TABLE>
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<TABLE>
<CAPTION>
YEAR FIRST
ELECTED TO
SERVE AS A
DIRECTOR OF
WELLS FARGO
(INCLUDING
THE FORMER
NAME AGE POSITION WELLS FARGO)
- ------------------------ --- ------------------------------------------ -----------
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Michael W. Wright....... 60 Board Affairs Committee, Credit Committee, 1991
Human Resources Committee
John A. Young........... 66 Board Affairs Committee, Credit Committee, 1977
Human Resources Committee
</TABLE>
LESLIE S. BILLER Mr. Biller is chief operating officer of Wells Fargo. Prior
to the Merger, Mr. Biller served as president and chief operating officer of
the former Norwest from February 1997 to November 1998 and as executive vice
president and head of South Central Community Banking from 1990 until February
1997. Mr. Biller is also a director of Ecolab Inc. and Minnesota Life Insurance
Company. He became a director of the former Norwest in 1997.
J. A. BLANCHARD III Mr. Blanchard has been president and chief executive
officer of Deluxe Corporation in Shoreview, Minnesota, since May 1995, and
chairman since May 1996. Deluxe Corporation supplies paper products and
electronic payment, payment protection and related services to the financial
and retail industries. From January 1994 until May 1995, he served as executive
vice president of General Instrument Corporation, a supplier of systems and
equipment to the cable and satellite television industry. Mr. Blanchard is also
a director of Deluxe Corporation and Saville Systems PLC. He became a director
of the former Norwest in 1996.
MICHAEL R. BOWLIN Mr. Bowlin has been chairman of the board of Atlantic
Richfield Company (ARCO), an integrated petroleum products company in Los
Angeles, California, since 1995. He has also been chief executive officer of
ARCO since 1994 and president and chief operating officer of ARCO since June
1993. Mr. Bowlin is also a director of ARCO. He became a director of the former
Wells Fargo in 1996.
EDWARD M. CARSON Mr. Carson was chairman of the board of First Interstate
Bancorp, a bank holding company in Los Angeles, California, from 1990 through
his retirement in April 1995, and chief executive officer from 1990 through
1994. First Interstate Bancorp was acquired by the former Wells Fargo in 1996.
He is also a director of Aztar Corporation, Castle & Cook, Inc., Schuff Steel,
Inc. and Terra Industries, Inc. Mr. Carson was a director of First Interstate
Bancorp from 1985 until 1996, when he joined the board of the former Wells
Fargo.
DAVID A. CHRISTENSEN Mr. Christensen has been president and chief executive
officer of Raven Industries, Inc., a diversified manufacturer of plastics,
electronics and special-fabric products in Sioux Falls, South Dakota, since
1971. He also serves as a director of Beta Raven, Inc., Glasstite, Inc.,
Northern States Power Company and Raven Industries, Inc. Mr. Christensen became
a director of the former Norwest in 1977.
WILLIAM S. DAVILA Mr. Davila served as president and chief operating officer
of The Vons Companies, Inc., a Los Angeles-based chain of supermarkets, from
1984 until his retirement in 1992. He is now president emeritus of The Vons
Companies, Inc. and serves as a director of Geo. A. Hormel & Company, Pacific
Gas and Electric Company and PG&E Corporation. Mr. Davila became a director of
the former Wells Fargo in 1990.
SUSAN E. ENGEL Ms. Engel, became chairwoman, president and chief executive
officer of Department 56, Inc., a designer and marketer of collectibles and
specialty giftware in Eden Prairie, Minnesota, in November 1996. She had been
president and chief operating officer of Department 56, Inc. from September
1994 until November 1996. From 1991 until 1994, Ms. Engel was president and
chief executive officer of Champion Products, Inc., the athletic apparel
division of Sara Lee Corporation. She also serves as a director of Coty Inc.,
Department 56, Inc., K2 Inc. and The Penn Traffic Company. Ms. Engel became a
director of the former Norwest in May 1998.
S-11
<PAGE>
PAUL HAZEN Mr. Hazen served as chairman of the board and chief executive
officer of the former Wells Fargo from 1995 to November 1998, when he was named
chairman of the board of Wells Fargo following the Merger. He served as
president of the former Wells Fargo from 1984 to 1995 and again from July 1997
to May 1998. He is a director of AirTouch Communications, Inc., Phelps Dodge
Corporation and Safeway, Inc. Mr. Hazen became a director of the former Wells
Fargo in 1984.
WILLIAM A. HODDER Mr. Hodder served as chairman and chief executive officer
of Donaldson Company, Inc., a manufacturer of filtration and emission control
products in Minneapolis, Minnesota, from August 1994 until his retirement in
1996. Prior to August 1994, he served as chairman, president, and chief
executive officer of Donaldson Company, Inc. Mr. Hodder is also a director of
Musicland Stores Corporation, ReliaStar Financial Corp. and SUPERVALU INC. Mr.
Hodder became a director of the former Norwest in 1971.
RODNEY L. JACOBS Mr. Jacobs had been vice chairman and chief financial
officer of the former Wells Fargo from 1991 to May 1998, when he became
president. He held this position until November 1998, when he became vice
chairman and chief financial officer of Wells Fargo following the Merger. Mr.
Jacobs became a director of the former Wells Fargo in May 1998.
REATHA CLARK KING Dr. King has been president and executive director of the
General Mills Foundation, a charitable foundation in Minneapolis, Minnesota,
since 1988. She also serves as a vice president of General Mills, Inc., with
responsibility for its citizenship programs. She is a director of Exxon
Corporation, H.B. Fuller Company, and Minnesota Life Insurance Company. Dr.
King became a director of the former Norwest in 1986.
RICHARD M. KOVACEVICH Mr. Kovacevich was chief executive officer of the
former Norwest from January 1993 to November 1998. During this time he also
served as president through January 1997 and as chairman from May 1995 to
November 1998. He was named president and chief executive officer of Wells
Fargo in November 1998 following the Merger. Mr. Kovacevich also serves as a
director of Cargill, Incorporated, Dayton Hudson Corporation, Northern States
Power Company and ReliaStar Financial Corp. Mr. Kovacevich became a director of
the former Norwest in 1986.
RICHARD D. MCCORMICK Mr. McCormick has been chairman of the board of U S
WEST, Inc., a telecommunications and data networking company in Denver,
Colorado, since June 1998. Before June 1998, when Mediaone Group was separated
from U S WEST, Inc., he had been chairman, president, and chief executive
officer since 1992 of their former parent company, also called U S WEST, Inc.
Mr. McCormick also serves as a director of Concept Five Technologies, U S WEST,
Inc., United Airlines Corporation and United Technologies Corporation. He
became a director of the former Norwest in 1983.
CYNTHIA H. MILLIGAN Ms. Milligan became dean of the College of Business
Administration at the University of Nebraska-Lincoln in June 1998. From 1991 to
1998, she was president and chief executive officer of Cynthia Milligan &
Associates in Lincoln, Nebraska, a consulting firm to financial institutions.
Ms. Milligan also serves as a director of The Gallup Organization. She became a
director of the former Norwest in 1992.
BENJAMIN F. MONTOYA Mr. Montoya has been president and chief executive
officer of Public Service Company of New Mexico, a public utility in
Albuquerque, New Mexico, since August 1993. He is also a director of Brown and
Caldwell, The Environmental Company, Furrs Corp. and Public Service Company of
New Mexico. Mr. Montoya became a director of the former Norwest in 1996.
PHILIP J. QUIGLEY Mr. Quigley had been chairman, president and chief
executive officer since 1994 of Pacific Telesis Group, a telecommunications
holding company, prior to his retirement in December 1997. From 1987 to 1994,
he was president and chief executive officer of Pacific Bell, the California
operating subsidiary of Pacific Telesis Group. Mr. Quigley also serves as a
director of SRI International. Mr. Quigley became a director of the former
Wells Fargo in 1994.
DONALD B. RICE Mr. Rice has been president, chief executive officer and a
director of UroGenesys, Inc., a biotechnology research and development company
in Santa Monica, California, since 1996. He was president,
S-12
<PAGE>
chief operating officer and a director of Teledyne, Inc. from 1993 to 1996, and
Secretary of the Air Force from 1989 to 1993. He is also a director and serves
as chairman of the board of Scios, Inc., and a director of Vulcan Materials
Company and Unocal Corporation. Mr. Rice served as a director of the former
Wells Fargo from 1980 to 1989, and rejoined the board of the former Wells Fargo
in 1993.
IAN M. ROLLAND Mr. Rolland retired in June 1998 as chief executive officer
of Lincoln National Corporation, an insurance holding company in Fort Wayne,
Indiana, where he continued as chairman of the board until December 1998. He
had been chief executive officer of Lincoln National Corporation since 1977.
Mr. Rolland also serves as a director of Bright Horizons Family Solutions,
Inc., Lincoln National Corporation, NIPSCO Industries, Inc. and Tokheim
Corporation. He became a director of the former Norwest in 1993.
JUDITH M. RUNSTAD Ms. Runstad is of counsel to Foster Pepper & Shefelman
PLLC, a law firm in Seattle, Washington, and was a partner of the firm from
1979 to 1998. She specializes in real estate development, land use and
environmental law. She is also a director of SAFECO Corporation. Ms. Runstad
became a director of the former Wells Fargo in May 1998.
SUSAN G. SWENSON Ms. Swenson has been president and chief executive officer
of Cellular One, a cellular telecommunications company in South San Francisco,
California, since 1994. From 1979 to 1994, she held various operating positions
within Pacific Telesis Group, including president of PacTel Cellular for two
and a half years and general manager of Pacific Bell's second largest operating
area for one year. She is also a director of General Magic, Inc. and Working
Assets Funding Service. Ms. Swenson became a director of the former Wells Fargo
in 1994.
DANIEL M. TELLEP Until his retirement at the end of 1996, Mr. Tellep served
during 1996 as chairman of the board and during 1995 as chairman of the board
and chief executive officer of Lockheed Martin Corporation, an aerospace
manufacturer created by merger in 1995 and based in Bethesda, Maryland. He had
been chairman and chief executive officer of Lockheed Corporation from 1989
until the merger. He is also a director of Edison International and Southern
California Edison Company. Mr. Tellep had been a director of First Interstate
Bancorp from 1991 until 1996, when he joined the board of the former Wells
Fargo.
CHANG-LIN TIEN Mr. Tien holds the NEC Distinguished Professor of Engineering
chair at the University of California, Berkeley, where he was chancellor from
1990 to 1997. He is also a director of AirTouch Communications, Inc., Chevron
Corporation and Raychem Corporation. Mr. Tien became a director of the former
Wells Fargo in 1990.
MICHAEL W. WRIGHT Mr. Wright has been chairman, president and chief
executive officer of SUPERVALU INC., a food distributor and retailer in
Minneapolis, Minnesota, since 1982. He also serves as a director of Cargill
Incorporated, Honeywell, Inc., S. C. Johnson & Son, Musicland Stores
Corporation, and SUPERVALU INC. Mr. Wright became a director of the former
Norwest in 1991.
JOHN A. YOUNG Mr. Young retired in 1992 as president, chief executive
officer and a director of Hewlett-Packard Company, a manufacturer of computers
and peripheral equipment based in Palo Alto, California. He had held these
positions since 1978. He is a director of Affymetrix Corp., Chevron
Corporation, International Integration, Inc., Lucent Technologies, Novell, Inc.
and SmithKline Beecham PLC. Mr. Young became a director of the former Wells
Fargo in 1977.
The business address of each director is 420 Montgomery Street, San
Francisco, California 94163.
S-13
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of Wells Fargo and its
consolidated subsidiaries as of March 31, 1999 and December 31, 1998. You
should read this table in conjunction with our consolidated financial
statements and accompanying notes incorporated by reference into this
prospectus supplement and the accompanying prospectus. All amounts are stated
in millions of dollars.
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998(1)
----------- ------------
(UNAUDITED) (AUDITED)
<S> <C> <C>
Deposits............................................. $132,340 $ 136,788
Commercial paper, federal funds purchased, securities
sold under agreements to repurchase and other short-
term borrowings(2).................................. 17,270 15,897
Long-term debt:
Unsecured notes and debentures, parent company(2)... 8,810 6,010
Other subsidiaries.................................. 11,553 13,699
-------- ---------
Total long-term debt(2).............................. 20,363 19,709
-------- ---------
Guaranteed preferred beneficial interest in our
subordinated debentures............................. 785 785
-------- ---------
TOTAL DEBT........................................... 170,758 173,179
PREFERRED STOCK...................................... 459 463
COMMON STOCKHOLDERS' EQUITY:
Common stock, $1 2/3 par value--4,000,000,000 shares
authorized, issued 1,666,095,285 shares in 1999 and
1,661,392,590 shares in 1998........................ 2,777 2,769
Additional paid-in capital........................... 8,733 8,673
Retained earnings.................................... 9,525 9,045
Cumulative other comprehensive income................ 307 463
Notes receivable from ESOP........................... (3) (3)
Treasury stock--13,478,919 and 17,334,787 common
shares in 1999 and 1998, respectively............... (522) (651)
-------- ---------
TOTAL COMMON STOCKHOLDERS' EQUITY.................... 20,817 20,296
-------- ---------
TOTAL CAPITALIZATION(3).............................. $192,034 $ 193,938
======== =========
</TABLE>
- --------
(1) At December 31, 1998, the most recent practicable date for which such data
is available, our commitments, including those of our consolidated
subsidiaries, consisted of future minimum payments under capital leases and
noncancelable operating leases, net of sublease rentals, aggregating $2.2
billion, commitments to extend credit in the contractual amount of $71.5
billion, and standby letters of credit in the contractual amount of $3.3
billion. Included in standby letters of credit are those that back
financial instruments (financial guarantees). At December 31, 1998,
financial guarantees totaled $2.2 billion. Commercial and similar letters
of credit were $0.7 billion at December 31, 1998. Commitments to extend
credit and standby and other letters of credit do not necessarily represent
future cash requirements of us and our consolidated subsidiaries and are
subject to various conditions. We and our consolidated subsidiaries also
use derivative financial instruments in managing overall interest rate
risk. These instruments may require periodic cash settlements depending on
specified interest rate levels. As these instruments primarily hedge
certain assets and liabilities of us and our consolidated subsidiaries,
there has been offsetting of unrealized appreciation or depreciation in the
fair value of assets and liabilities hedged. We and our consolidated
subsidiaries are defendants in various matters of litigation generally
incidental to our business. Although it is difficult to predict the outcome
of these cases, we believe, based on discussions with counsel, that any
ultimate liability will not have a material adverse effect on the financial
position of us and our consolidated subsidiaries taken as a whole. See
notes 5, 6, and 21 to our December 31, 1998 consolidated financial
statements, which are incorporated by reference into this prospectus
supplement and the accompanying prospectus, for more detailed information.
(2) The proposed issuance of notes described in this prospectus supplement
will increase long-term debt by $1.5 billion and may decrease commercial
paper, federal funds purchased, securities sold under agreements to
repurchase and other short-term borrowings by up to $1.5 billion.
(3) Other than as disclosed in this prospectus supplement, the accompanying
prospectus or the documents they incorporate by reference, since March 31,
1999, there has been no material change in the capitalization of us and our
consolidated subsidiaries.
S-14
<PAGE>
SELECTED FINANCIAL INFORMATION
The following tables set forth certain selected historical consolidated
financial information for Wells Fargo and its consolidated subsidiaries. The
Merger involving the former Norwest and the former Wells Fargo was accounted
for using the pooling of interests method of accounting. Accordingly, the
selected financial information presents the combined results of the former
Norwest and the former Wells Fargo as if the Merger had been in effect for all
periods presented. The summary balance sheet and income statement information
and related ratio analysis for each of the years in the three-year period ended
December 31, 1998 are derived from our audited consolidated financial
statements for the periods shown. The summary balance sheet and income
statement information and related ratio analysis for the quarter ended March
31, 1999 are derived from our unaudited consolidated financial statements. In
the opinion of our management, all financial information derived from the
unaudited consolidated financial statements reflects all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation
of that information. Results for the quarter ended March 31, 1999 are not
necessarily indicative of the results that may be expected for any other
interim period or for the year as a whole. You should read the following tables
in conjunction with our consolidated financial statements and accompanying
notes incorporated by reference in this prospectus supplement and the
accompanying prospectus.
SUMMARY BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, ----------------------------
1999 1998 1997 1996
-------- -------- -------- --------
ASSETS (IN MILLIONS)
<S> <C> <C> <C> <C>
Cash and due from banks............... $ 11,364 $ 12,731 $ 13,081 $ 16,593
Federal funds sold and securities
purchased under resale agreements.... 869 1,517 1,049 1,464
Securities available for sale......... 35,801 31,997 27,872 29,752
Net loans and loans held for sale..... 122,294 129,952 117,449 112,878
Mortgage servicing rights............. 3,627 3,080 3,048 2,892
Goodwill and core deposit
intangibles.......................... 9,184 9,174 9,799 10,283
Other................................. 18,291 14,024 13,387 14,771
-------- -------- -------- --------
TOTAL ASSETS.......................... $201,430 $202,475 $185,685 $188,633
======== ======== ======== ========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
<S> <C> <C> <C> <C>
Deposits:
Noninterest-bearing................. $ 42,322 $ 46,732 $ 40,206 $ 43,369
Interest-bearing.................... 90,018 90,056 87,450 88,582
-------- -------- -------- --------
Total deposits........................ 132,340 136,788 127,656 131,951
Short-term borrowings................. 17,270 15,897 13,381 10,003
Accrued expenses and other
liabilities.......................... 9,396 8,537 6,236 7,336
Long-term debt........................ 20,363 19,709 17,335 18,142
Guaranteed preferred beneficial
interests in our subordinated
debentures........................... 785 785 1,299 1,150
-------- -------- -------- --------
Total liabilities..................... 180,154 181,716 165,907 168,582
-------- -------- -------- --------
<CAPTION>
STOCKHOLDERS' EQUITY
<S> <C> <C> <C> <C>
Total preferred stock................. 459 463 463 789
Common stock.......................... 2,777 2,769 2,718 2,149
Additional paid-in capital............ 8,733 8,673 8,126 10,170
Retained earnings..................... 9,525 9,045 8,292 6,871
Cumulative other comprehensive
income............................... 307 463 464 316
Notes receivable from ESOP............ (3) (3) (10) (11)
Treasury stock........................ (522) (651) (275) (233)
-------- -------- -------- --------
Total common stockholders' equity..... 20,817 20,296 19,315 19,262
-------- -------- -------- --------
Total stockholders' equity............ 21,276 20,759 19,778 20,051
-------- -------- -------- --------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY............................... $201,430 $202,475 $185,685 $188,633
======== ======== ======== ========
</TABLE>
S-15
<PAGE>
SUMMARY INCOME STATEMENT INFORMATION
<TABLE>
<CAPTION>
QUARTER
ENDED YEARS ENDED DECEMBER 31,
MARCH 31, -------------------------
1999 1998 1997 1996
--------- ------- ------- -------
(IN MILLIONS, EXCEPT RATIOS)
<S> <C> <C> <C> <C>
Interest income.......................... $3,488 $14,055 $13,602 $12,841
Interest expense......................... 1,222 5,065 4,954 4,619
------ ------- ------- -------
Net interest income...................... 2,266 8,990 8,648 8,222
Provision for loan losses................ 270 1,545 1,140 500
------ ------- ------- -------
Net interest income after provision for
loan losses............................. 1,996 7,445 7,508 7,722
Noninterest income....................... 1,727 6,427 5,675 4,769
Noninterest expense...................... 2,342 10,579 8,990 8,724
------ ------- ------- -------
Income before income tax expense......... 1,381 3,293 4,193 3,767
Income tax expense....................... 497 1,343 1,694 1,539
------ ------- ------- -------
Net income............................... $ 884 $ 1,950 $ 2,499 $ 2,228
====== ======= ======= =======
Net income applicable to common stock.... $ 875 $ 1,915 $ 2,456 $ 2,143
====== ======= ======= =======
PROFITABILITY RATIOS
Net income to average total assets
(ROA)................................... 1.80% 1.04% 1.37% 1.31%
Net income applicable to common stock to
average common stockholders' equity
(ROE)................................... 17.33% 9.86% 12.81% 12.73%
NET INCOME AND RATIOS EXCLUDING GOODWILL
AND NONQUALIFYING CORE DEPOSIT
INTANGIBLE AMORTIZATION AND BALANCES
("CASH" OR "TANGIBLE") (a)
Net income applicable to common stock.... $1,008 $ 2,465 $ 3,031 $ 2,616
ROA...................................... 2.17% 1.39% 1.78% 1.66%
ROE...................................... 34.38% 23.15% 30.49% 28.55%
OTHER PERIOD-END RATIOS
Allowance for credit losses as a percent
of period-end loans..................... 2.92% 2.90% 2.88% 2.89%
Nonaccrual and restructured loans as a
percent of period-end loans............. 0.7 0.7 0.7 0.8
Tier 1 capital to risk-adjusted assets... 8.23 8.08 8.16 7.96
Total capital to risk-adjusted assets.... 10.97 10.90 11.20 11.11
Leverage ratio........................... 6.74 6.58 6.72 6.36
</TABLE>
- --------
(a) Nonqualifying core deposit intangible (CDI) amortization and average
balance excluded from these calculations are net of applicable taxes. The
after-tax amounts for the amortization and average balance of nonqualifying
CDI were $29 million and $863 million, respectively, for the quarter ended
March 31, 1999, and $129 million and $906 million, respectively, for the
year ended December 31, 1998. Goodwill amortization and average balance
(which are not tax effected) were $104 million and $7,734 million,
respectively, for the quarter ended March 31, 1999, and $421 million and
$7,865 million, respectively, for the year ended December 31, 1998.
S-16
<PAGE>
DESCRIPTION OF THE NOTES
This description of the terms of the notes adds information to the
description of the general terms and provisions of the senior debt securities
in the accompanying prospectus. If this summary differs in any way from the
summary in the accompanying prospectus, you should rely on the description of
notes in this prospectus supplement.
GENERAL
The notes will initially be limited to a total principal amount of
$1,500,000,000, will be our unsecured senior obligations and will mature at
100% of their principal amount on July 15, 2004, which we will refer to in this
prospectus supplement as the "Maturity Date." We cannot redeem the notes before
the Maturity Date. There is no sinking fund for the notes.
The notes will bear interest from July 28, 1999 or from the most recent
Interest Payment Date on which we paid or provided for interest on the notes,
at the rate per annum shown on the cover of this prospectus supplement. We will
pay interest on each note on January 15 and July 15 of each year. We will refer
to each of these dates as an "Interest Payment Date." The first Interest
Payment Date will be January 15, 2000. We will pay interest on a note to the
person in whose name that note was registered at the close of business on the
preceding January 1 or July 1, as the case may be. We will not pay any
additional amounts on the notes to compensate any beneficial owner for any
United States tax withheld from payments of principal or interest on the notes.
In the event that an Interest Payment Date is not a business day, we will
pay interest on the next day that is a business day, with the same force and
effect as if made on the Interest Payment Date, and without any interest or
other payment with respect to the delay. For purposes of this prospectus
supplement, a business day is a day other than a Saturday, a Sunday or any
other day on which banking institutions in Minneapolis, Minnesota, New York,
New York or London, England or the offices of the trustee or any paying agent
for the notes are authorized or required by law or executive order to remain
closed.
We may, without the consent of the holders of the notes, issue additional
notes having the same ranking and the same interest rate, Maturity Date and
other terms as the notes. Any additional notes, together with the notes offered
by this prospectus supplement, will constitute a single series of notes under
the indenture. No additional notes may be issued if an event of default under
the indenture has occurred and is continuing with respect to the notes.
The notes are subject to defeasance in the manner described under the
heading "Description of Debt Securities--Defeasance" in the accompanying
prospectus.
BOOK-ENTRY, DELIVERY AND FORM
The notes will be issued as fully-registered global notes which will be
deposited on July 28, 1999 with, or on behalf of, The Depository Trust Company,
New York, New York, which we refer to as "DTC," and registered, at the request
of DTC, in the name of Cede & Co. Beneficial interests in the global notes will
be represented through book-entry accounts of financial institutions acting on
behalf of beneficial owners as participants in DTC. Investors may elect to hold
their interests in the global notes through either DTC (in the United States)
or (in Europe) through Cedelbank or through Morgan Guaranty Trust Company of
New York, Brussels Office, as operator of the Euroclear System, or "Euroclear."
Investors may hold their interests in the notes directly if they are
participants of such systems, or indirectly through organizations that are
participants in these systems. Cedelbank and Euroclear will hold interests on
behalf of their participants through customers' securities accounts in
Cedelbank's and Euroclear's names on the books of their respective
depositaries, which in turn will hold these interests in customers' securities
accounts in the depositaries' names on the books of DTC. Citibank, N.A. will
act as depositary for Cedelbank and The Chase Manhattan Bank, N.A. will act as
depositary for Euroclear. We will refer to Citibank and The Chase Manhattan
Bank in these capacities as the "U.S. Depositaries." Beneficial interests in
the global notes will be held in denominations of $1,000 and multiples of
$1,000. Except as set forth below, the global notes may be transferred, in
whole and not in part, only to another nominee of DTC or to a successor of DTC
or its nominee.
S-17
<PAGE>
Notes represented by a global note can be exchanged for definitive notes in
registered form only if:
. DTC notifies us that it is unwilling or unable to continue as depositary
for that global note and we do not appoint a successor depositary within
90 days after receiving that notice;
. at any time DTC ceases to be a clearing agency registered under the
Securities Exchange Act of 1934 and we do not appoint a successor
depositary within 90 days after becoming aware that DTC has ceased to be
registered as a clearing agency;
. we in our sole discretion determine that that global note will be
exchangeable for definitive notes in registered form and notify the
trustee of our decision; or
. an event of default with respect to the notes represented by that global
note has occurred and is continuing.
A global note that can be exchanged as described in the preceding sentence will
be exchanged for definitive notes issued in denominations of $1,000 and
multiples of $1,000 in registered form for the same aggregate amount. The
definitive notes will be registered in the names of the owners of the
beneficial interests in the global note as directed by DTC.
We will make principal and interest payments on all notes represented by a
global note to DTC or its nominee, as the case may be, as the sole registered
owner and the sole holder of the notes represented by global notes for all
purposes under the indenture. Accordingly, we, the trustee and any paying agent
will have no responsibility or liability for:
. any aspect of DTC's records relating to, or payments made on account of,
beneficial ownership interests in a note represented by a global note;
. any other aspect of the relationship between DTC and its participants or
the relationship between those participants and the owners of beneficial
interests in a global note held through those participants; or
. the maintenance, supervision or review of any of DTC's records relating
to those beneficial ownership interests.
DTC has advised us that, upon receipt of any payment of principal of or
interest on a global note, DTC 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 note as shown on DTC's records. The underwriters will
initially designate the accounts to be credited. Payments by participants to
owners of beneficial interests in a global note will be governed by standing
instructions and customary practices, as is the case with securities held for
customer accounts registered in "street name," and will be the sole
responsibility of those participants.
DTC
So long as DTC or its nominee is the registered owner of a global note, DTC
or its nominee, as the case may be, will be considered the sole owner and
holder of the notes represented by that global note for all purposes of the
notes. Owners of beneficial interests in the notes will not be entitled to have
notes registered in their names. Accordingly, each person owning a beneficial
interest in a global note must rely on the procedures of DTC and, if that
person is not a DTC participant, on the procedures of the participant through
which that person owns its interest, to exercise any rights of a holder of
notes. The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of the securities in certificated form. These
laws may impair the ability to transfer beneficial interests in a global note.
We understand that, under existing industry practices, if we request holders
to take any action, or if an owner of a beneficial interest in a global note
desires to take any action which a holder is entitled to take under the
indenture, then DTC would authorize the participants holding the relevant
beneficial interests to take that action and those participants would authorize
the beneficial owners owning through such participants to take that action or
would otherwise act upon the instructions of beneficial owners owning through
them.
S-18
<PAGE>
Beneficial interests in a global note will be shown on, and transfers of
those ownership interests will be effected only through, records maintained by
DTC and its participants for that global note. The conveyance of notices and
other communications by DTC to its participants and by its participants to
owners of beneficial interests in the notes will be governed by arrangements
among them, subject to any statutory or regulatory requirements in effect.
DTC has advised us that it is a limited-purpose trust company organized
under the laws of the State of New York, a "banking organization" within the
meaning of the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code and a "clearing agency" registered under the Securities Exchange Act of
1934.
DTC holds the securities of its participants and facilitates the clearance
and settlement of securities transactions among its participants in such
securities through electronic book-entry changes in accounts of its
participants. The electronic book-entry system eliminates the need for physical
certificates. DTC's participants include securities brokers and dealers,
including the underwriters, banks, trust companies, clearing corporations and
certain other organizations, some of which, and/or their representatives, own
DTC. Banks, brokers, dealers, trust companies and others that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly, also have access to DTC's book-entry system.
DTC has also advised us that DTC management is aware that some computer
applications, systems and the like for processing data that depend on calendar
dates, including dates before, on and after January 1, 2000, may encounter
"Year 2000 problems." DTC has informed its participants and other members of
the financial community that it has developed and is implementing a program so
that its computer systems, as they relate to the timely payment of
distributions, including principal and income payments, to securityholders,
book-entry deliveries, and settlement of trades within DTC, continue to
function appropriately. This program includes a technical assessment and a
remediation plan, each of which is complete. Additionally, DTC's plan includes
a testing phase, which is expected to be completed within appropriate time
frames. However, DTC's ability to perform properly its services also depends
upon other parties, including but not limited to issuers, issuers' agents,
third-party vendors from whom DTC licenses software and hardware and third-
party vendors on whom DTC relies for information or the provision of services,
including telecommunication and electrical utility service providers, among
others. DTC has informed its participants and other members of the financial
community that it is contacting, and will continue to contact, third-party
vendors from whom DTC acquires services to impress upon them the importance of
such services being Year 2000 compliant; and to determine the extent of their
efforts for Year 2000 remediation, and, as appropriate, testing, of their
services. In addition, DTC is in the process of developing contingency plans it
deems appropriate.
DTC has advised us that the above information with respect to DTC's Year
2000 efforts has been provided to its participants and other members of the
financial community for informational purposes only and is not intended to
serve as a representation, warranty or contract modification of any kind.
CEDELBANK
Cedelbank has advised us that it is incorporated under the laws of
Luxembourg as a professional depositary. Cedelbank holds securities for its
participating organizations, or "Cedelbank Participants," and facilitates the
clearance and settlement of securities transactions between Cedelbank
Participants through electronic book-entry changes in accounts of Cedelbank
Participants, thereby eliminating the need for physical movement of
certificates. Cedelbank provides to Cedelbank Participants, among other things,
services for safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing.
Cedelbank interfaces with domestic markets in several countries. As a
professional depositary, Cedelbank is subject to regulation by the Luxembourg
Monetary Institute. Cedelbank Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations and may include the underwriters. Indirect access to Cedelbank is
also available to others, such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Cedelbank
Participant either directly or indirectly.
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Distributions with respect to notes held beneficially through Cedelbank will
be credited to cash accounts of Cedelbank Participants in accordance with its
rules and procedures, to the extent received by the U.S. Depositary for
Cedelbank.
EUROCLEAR
Euroclear has advised us that it was created in 1968 to hold securities for
participants of Euroclear, or "Euroclear Participants," and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Euroclear performs various other services, including
securities lending and borrowing and interfaces with domestic markets in
several countries. Euroclear is operated by the Brussels, Belgium office of
Morgan Guaranty Trust Company of New York, or the "Euroclear Operator," under
contract with Euroclear Clearance Systems S.C., a Belgian cooperative
corporation, or the "Cooperative." All operations are conducted by the
Euroclear Operator, and all Euroclear securities clearance accounts and
Euroclear cash accounts are accounts with the Euroclear Operator, not the
Cooperative. The Cooperative establishes policy for Euroclear on behalf of
Euroclear Participants. Euroclear Participants include banks, including central
banks, securities brokers and dealers and other professional financial
intermediaries and may include the underwriters. Indirect access to Euroclear
is also available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian
Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian
law, which we will refer to in this prospectus supplement as the "Terms and
Conditions." The Terms and Conditions govern transfers of securities and cash
within Euroclear, withdrawals of securities and cash from Euroclear, and
receipts of payments with respect to securities in Euroclear. All securities in
Euroclear are held on a fungible basis without attribution of specific
certificates to specific securities clearance accounts. The Euroclear Operator
acts under the Terms and Conditions only on behalf of Euroclear Participants,
and has no record of or relationship with persons holding through Euroclear
Participants.
Distributions with respect to notes held beneficially through Euroclear will
be credited to the cash accounts of Euroclear Participants in accordance with
the Terms and Conditions, to the extent received by the U.S. Depositary for
Euroclear.
GLOBAL CLEARANCE AND SETTLEMENT PROCEDURES
Initial settlement for the notes will be made in immediately available
funds. Secondary market trading between DTC participants will occur in the
ordinary way in accordance with DTC rules and will be settled in immediately
available funds using DTC's Same-Day Funds Settlement System. Secondary market
trading between Cedelbank Participants and/or Euroclear Participants will occur
in the ordinary way in accordance with the applicable rules and operating
procedures of Cedelbank and Euroclear and will be settled using the procedures
applicable to conventional eurobonds in immediately available funds.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedelbank
Participants or Euroclear Participants, on the other, will be effected in DTC
in accordance with DTC rules on behalf of the relevant European international
clearing system by its U.S. Depositary; however, such cross-market transactions
will require delivery of instructions to the relevant
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European international clearing system by the counterparty in such system in
accordance with its rules and procedures and within its established deadlines
(European time). The relevant European international clearing system will, if
the transaction meets its settlement requirements, deliver instructions to its
U.S. Depositary to take action to effect final settlement on its behalf by
delivering or receiving notes in DTC, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
DTC. Cedelbank Participants and Euroclear Participants may not deliver
instructions directly to their respective U.S. Depositaries.
Because of time-zone differences, credits of notes received in Cedelbank or
Euroclear as a result of a transaction with a DTC participant will be made
during subsequent securities settlement processing and dated the business day
following the DTC settlement date. Such credits or any transactions in such
notes settled during such processing will be reported to the relevant
Euroclear Participants or Cedelbank Participants on such business day. Cash
received in Cedelbank or Euroclear as a result of sales of notes by or through
a Cedelbank Participant or a Euroclear Participant to a DTC participant will
be received with value on the DTC settlement date but will be available in the
relevant Cedelbank or Euroclear cash account only as of the business day
following settlement in DTC.
Although DTC, Cedelbank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of notes among participants of
DTC, Cedelbank and Euroclear, they are under no obligation to perform or
continue to perform such procedures and such procedures may be discontinued at
any time.
TRUSTEE, PAYING AGENT, AUTHENTICATING AGENT AND REGISTRAR
Citibank, N.A. will act as trustee for the notes, which will be issued
under an indenture dated as of July 21, 1999, as amended or supplemented from
time to time, between us and the trustee. The indenture is a senior indenture
as described in the accompanying prospectus. You should read the accompanying
prospectus for a general discussion of the terms and provisions of the
indenture. From time to time, we and some of our subsidiaries maintain deposit
accounts and conduct other banking transactions, including lending
transactions, with the trustee in the ordinary course of business. In
addition, the trustee is an affiliate of one of the underwriters of the
offering.
Until the notes are paid, we will maintain an authenticating agent, paying
agent and security registrar for the notes. Initially, Norwest Bank Minnesota,
N.A. will serve in each of these capacities. In addition, Citibank, N.A. will
serve as authenticating agent and paying agent in London. We have agreed that
as long as the notes are listed on the London Stock Exchange and its rules so
require, we will appoint and maintain an authenticating agent and paying agent
in London.
NOTICES
Any notices required to be given to the holders of the notes will be given
to DTC and, if the notes are listed on the London Stock Exchange and the rules
of the London Stock Exchange so require, by publication in a leading English
language daily newspaper of general circulation in London. We expect that
publication will be made in London in the Financial Times. Any notice required
to be published will be deemed to have been given on the date of the
publication or, if published more than once, on the date of the first
publication.
PRESCRIPTION
Claims in respect of the notes will become void unless presentation for
payment is made within a period of 10 years in the case of principal, and five
years in the case of interest, from the due date.
GOVERNING LAW
The indenture and the notes are governed by and will be construed in
accordance with New York law.
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CERTAIN U.S. FEDERAL TAX CONSIDERATIONS
In the opinion of Faegre & Benson LLP, our special tax counsel, the
following discussion summarizes certain of the U.S. federal tax consequences of
the purchase, beneficial ownership and disposition of notes.
This summary is based on the Internal Revenue Code of 1986, or the "Code,"
regulations issued under the Code, judicial authority and administrative
rulings and practice, all of which are subject to change. Any such change may
be applied retroactively and may adversely affect the federal tax consequences
described in this prospectus supplement. This summary addresses only tax
consequences to investors that purchase the notes at initial issuance, and own
the notes as capital assets and not as part of a "straddle" or a "conversion
transaction" for federal income tax purposes, or as part of some other
integrated investment. This summary does not discuss all of the tax
consequences that may be relevant to particular investors or to investors
subject to special treatment under the federal income tax laws (such as
insurance companies, financial institutions, tax-exempt organizations,
retirement plans, regulated investment companies, securities dealers or
expatriates). We will not seek a ruling from the Internal Revenue Service, or
the IRS, with respect to any matters discussed in this section, and we cannot
assure you that the IRS will not challenge one or more of the tax consequences
described below. When we use the term "holder" in this section, we are
referring to a beneficial holder of the notes and not the record holder.
PERSONS CONSIDERING THE PURCHASE OF THE NOTES SHOULD CONSULT THEIR OWN TAX
ADVISORS CONCERNING THE APPLICATION OF U.S. FEDERAL TAX LAWS TO THEIR
PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES OF THE PURCHASE, BENEFICIAL
OWNERSHIP AND DISPOSITION OF THE NOTES ARISING UNDER THE LAWS OF ANY OTHER
TAXING JURISDICTION.
FEDERAL INCOME TAX CONSEQUENCES TO U.S. HOLDERS
The following is a general discussion of certain U.S. federal income tax
consequences of the purchase, beneficial ownership and disposition of the notes
by a holder that is a United States person, or a "U.S. Holder." For purposes of
this discussion, a United States person means:
. a citizen or resident of the United States;
. a corporation, partnership or other business entity created or organized
in or under the laws of the United States or any State or political
subdivision thereof or therein (including the District of Columbia);
. an estate whose income is subject to U.S. federal income taxation
regardless of its source; or
. a trust with respect to which a court within the United States is able
to exercise primary supervision over its administration, and one or more
United States persons have the authority to control all of its
substantial decisions, or certain electing trusts that were in existence
on August 19, 1996, and were treated as domestic trusts on that date.
An individual may, subject to certain exceptions, be deemed to be a resident of
the United States by reason of being present in the United States for at least
31 days in the calendar year and for an aggregate of at least 183 days during a
three-year period ending in the current calendar year (counting for such
purposes all of the days present in the current year, one-third of the days
present in the immediately preceding year and one-sixth of the days present in
the second preceding year).
TREATMENT OF INTEREST
Stated interest on the notes will be taxable to a U.S. Holder as ordinary
income as the interest accrues or is paid (in accordance with the U.S. Holder's
method of tax accounting).
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TREATMENT OF DISPOSITIONS OF NOTES
Upon the sale, exchange, retirement or other taxable disposition of a note,
a U.S. Holder will recognize gain or loss equal to the difference between the
amount received on such disposition (other than amounts received in respect of
accrued and unpaid interest, which will be taxable as such) and the U.S.
Holder's tax basis in the note. A U.S. Holder's tax basis in a note will be, in
general, the cost of the note to the U.S. Holder. Gain or loss realized on the
sale, exchange or retirement of a note generally will be capital gain or loss,
and will be long-term capital gain or loss if, at the time of such sale,
exchange or retirement, the note had been held for more than one year. Long-
term capital gain recognized by an individual U.S. Holder is generally subject
to a maximum U.S. federal rate of 20%.
FEDERAL TAX CONSEQUENCES TO NON-U.S. HOLDERS
The following is a general discussion of the U.S. federal income and estate
tax consequences of the purchase, beneficial ownership and disposition of the
notes by a holder that is not a United States person, or a "Non-U.S. Holder."
For purposes of the following discussion, any interest income and any gain
realized on the sale, exchange or other disposition of the notes will be
considered "U.S. trade or business income" if such interest income or gain is
(i) effectively connected with the conduct of a trade or business in the United
States, or (ii) in the case of a treaty resident, attributable to a permanent
establishment (or in the case of an individual, to a fixed base) in the United
States.
TREATMENT OF INTEREST
A Non-U.S. Holder will not be subject to U.S. federal income or withholding
tax in respect of interest income on the notes if each of the following
requirements is satisfied:
. The interest is not U.S. trade or business income.
. The Non-U.S. Holder provides to us or our paying agent an appropriate
statement on an IRS Form W-8 (or suitable successor form, such as an IRS
Form W-8BEN), together with all appropriate attachments, signed under
penalties of perjury, identifying the Non-U.S. Holder and stating, among
other things, that the Non-U.S. Holder is not a United States person. If
a note is held through a securities clearing organization, bank or
another financial institution that holds customers' securities in the
ordinary course of its trade or business, (i) the Non-U.S. Holder
provides such a form to the organization or institution, and (ii) the
organization or institution, under penalties of perjury, certifies to us
that it has received such a form from the beneficial owner or another
intermediary and furnishes us or our paying agent with a copy.
. The Non-U.S. Holder does not actually or constructively own 10% or more
of the voting power of our stock.
. The Non-U.S. Holder is not a "controlled foreign corporation" that is
actually or constructively related to us.
To the extent these conditions are not met, a 30% withholding tax will apply
to interest income on the notes, unless one of the following two exceptions is
satisfied. The first exception is that an applicable income tax treaty reduces
or eliminates such tax, and a Non-U.S. Holder claiming the benefit of that
treaty provides to us or our paying agent a properly executed IRS Form 1001 (or
suitable successor or substitute form). The second exception is that the
interest is U.S. trade or business income and the Non-U.S. Holder provides an
appropriate statement to that effect on an IRS Form 4224 (or suitable successor
or substitute form, such as an IRS Form W-8ECI). In the case of the second
exception, such Non-U.S. Holder generally will be subject to U.S. federal
income tax with respect to all income from the notes in the same manner as U.S.
Holders, as described above. Additionally, in such event, Non-U.S. Holders that
are corporations could be subject to a branch profits tax on such income.
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TREATMENT OF DISPOSITIONS OF NOTES
Generally, a Non-U.S. Holder will not be subject to federal income tax on
gain realized upon the sale, exchange, retirement or other disposition of a
note unless
. such holder is an individual present in the United States for 183 days
or more in the taxable year of the sale, exchange, retirement or other
disposition and certain other conditions are met, or
. the gain is U.S. trade or business income.
TREATMENT OF NOTES FOR U.S. FEDERAL ESTATE TAX PURPOSES
A note held, or treated as held, by an individual who is a Non-U.S. Holder
at the time of his or her death will not be subject to U.S. federal estate tax,
provided the Non-U.S. Holder does not at the time of death actually or
constructively own 10% or more of the combined voting power of all classes of
our stock and payments of interest on such notes would not have been considered
U.S. trade or business income.
U.S. INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING TAX
When required, we will report to the holders of the notes and the IRS
amounts paid on or with respect to the notes and the amount of any tax withheld
from such payments.
Certain non-corporate U.S. Holders may be subject to backup withholding at a
rate of 31% on payments made on or with respect to the notes. In general,
backup withholding will apply to a U.S. Holder only if the U.S. Holder:
. fails to furnish its Taxpayer Identification Number, or TIN, which for
an individual would be his or her Social Security Number;
. furnishes an incorrect TIN;
. is notified by the IRS that it has failed to properly report payments
of interest and dividends; or
. under certain circumstances, fails to certify, under penalties of
perjury, that it has furnished a correct TIN and has not been notified
by the IRS that it is subject to backup withholding for failure to
report interest and dividend payments.
A U.S. Holder will be eligible for an exemption from withholding by providing a
properly completed IRS Form W-9 to us or our paying agent.
A Non-U.S. Holder that provides an IRS Form W-8 (or suitable successor or
substitute form), together with all appropriate attachments, signed under
penalties of perjury, identifying the Non-U.S. Holder and stating that the Non-
U.S. Holder is not a United States person, will not be subject to IRS reporting
requirements and U.S. backup withholding, provided that neither us nor our
paying agent has actual knowledge that the holder is a United States person or
otherwise does not satisfy the requirements for an exemption.
Information reporting and backup withholding requirements with respect to
the payment of the proceeds from the disposition of a note by a Non-U.S. Holder
are as follows:
. If the proceeds are paid to or through the U.S. office of a broker, they
generally will be subject to information reporting and backup
withholding at a rate of 31%. However, no such reporting and withholding
is required if: (i) the holder either certifies as to its status as a
Non-U.S. Holder under penalties of perjury on an IRS Form W-8 or
suitable substitute or successor form (as described above) or otherwise
establishes an exemption, and (ii) the broker does not have actual
knowledge to the contrary.
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. If the proceeds are paid to or through a foreign office of a broker that
is not a United States person or a "U.S. related person," as defined
below, they will not be subject to backup withholding or information
reporting.
. If the proceeds are paid to or through a foreign office of a broker that
is either a United States person or a "U.S. related person," they
generally will be subject to information reporting. However, no such
reporting is required if (i) the holder certifies as to its status as a
Non-U.S. Holder under penalties of perjury or the broker has certain
documentary evidence in its files as to the Non-U.S. Holder's foreign
status, and (ii) the broker has no actual knowledge to the contrary.
Backup withholding will not apply to payments made through foreign
offices of a United States person or U.S. related person, absent actual
knowledge that the payee is a United States person.
For purposes of this paragraph, a "U.S. related person" is:
. a "controlled foreign corporation" for U.S. federal income tax purposes;
. a foreign person 50% or more of whose gross income during a specified
three-year period is effectively connected with the conduct of a U.S.
trade or business; or
. for payments made after December 31, 2000, a foreign partnership if one
or more of its partners are United States persons who, in the aggregate,
hold more than 50% of the income or capital interest of the partnership
or if the partnership is engaged in the conduct of a U.S. trade or
business.
Backup withholding is not an additional tax and may be refunded or credited
against the holder's U.S. federal income tax liability, provided that certain
required information is furnished. The information reporting requirements may
apply regardless of whether withholding is required. Copies of the information
returns reporting such interest and withholding may be made available to the
tax authorities in foreign countries under the provisions of a tax treaty or
agreement.
The Treasury Department recently promulgated final regulations regarding the
withholding and information reporting rules discussed above. In general, these
regulations do not significantly alter the substantive withholding and
information reporting requirements but rather unify current certification
procedures and forms and clarify reliance standards. These regulations are
generally effective for payments made after December 31, 2000, subject to
certain transition rules. You should consult your own tax advisor to determine
the application of these regulations to your particular circumstances.
THE FEDERAL TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR
SITUATION. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE
TAX CONSEQUENCES TO THEM OF THE BENEFICIAL OWNERSHIP AND DISPOSITION OF THE
NOTES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX
LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
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UNDERWRITING
Under the terms and subject to the conditions contained in an underwriting
agreement dated July 21, 1999, we have agreed to sell to the underwriters named
below, for whom Credit Suisse First Boston Corporation and Salomon Smith Barney
Inc. are acting as representatives, the following respective principal amounts
of the notes:
<TABLE>
<CAPTION>
Principal
Underwriter Amount
----------- --------------
<S> <C>
Credit Suisse First Boston Corporation....................... $ 525,000,000
Salomon Smith Barney Inc..................................... 525,000,000
Banc One Capital Markets, Inc. .............................. 60,000,000
Bear, Stearns & Co. Inc. .................................... 60,000,000
Chase Securities Inc. ....................................... 60,000,000
Goldman, Sachs & Co. ........................................ 60,000,000
Lehman Brothers Inc. ........................................ 60,000,000
Morgan Stanley & Co. Incorporated............................ 60,000,000
ABN AMRO Incorporated........................................ 15,000,000
Barclays Bank PLC............................................ 15,000,000
BNY Capital Markets, Inc. ................................... 15,000,000
First Union Capital Markets Corp. ........................... 15,000,000
Midland Bank plc............................................. 15,000,000
Mellon Financial Markets, Inc. .............................. 15,000,000
--------------
Total.................................................. $1,500,000,000
==============
</TABLE>
The underwriting agreement provides that the underwriters are obligated to
purchase all of the notes if any are purchased. The underwriting agreement
provides that if an underwriter defaults, the purchase commitment of non-
defaulting underwriters may be increased or the offering of notes may be
terminated. The underwriting agreement may be terminated by the underwriters
prior to the issuance of the notes in certain circumstances.
The underwriters propose to offer the notes initially at the public offering
price on the cover page of this prospectus supplement and to selling group
members at that price less a concession of .25% of the principal amount per
note. The underwriters and selling group members may allow a discount of .125%
of such principal amount per note on sales to other broker/dealers. After the
initial public offering, the public offering price and concession and discount
to broker/dealers may be changed by the representatives.
We estimate that our out-of-pocket expenses for this offering will be
approximately $250,000.
We have agreed to indemnify the underwriters against liabilities under the
Securities Act of 1933 or contribute to payments which the underwriters may be
required to make in that respect.
The representatives, on behalf of the underwriters, may engage in over-
allotment, stabilizing transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M under the Securities Exchange Act
of 1934. Over-allotment involves syndicate sales in excess of the offering
size, which creates a syndicate short position. Stabilizing transactions permit
bids to purchase the underlying security so long as the stabilizing bids do not
exceed a specified maximum. Syndicate covering transactions involve purchases
of the notes in the open market after the distribution has been completed in
order to cover syndicate short positions. Penalty bids permit the
representatives to reclaim a selling concession from a syndicate member when
the notes originally sold by that syndicate member are purchased in a syndicate
covering transaction to cover syndicate short positions. These stabilizing
transactions, syndicate covering transactions and penalty bids may cause the
price of the notes to be higher than it would otherwise be in the absence of
these transactions. These transactions may be effected on the London Stock
Exchange or otherwise and, if commenced, may be discontinued at any time.
The notes are offered for sale in those jurisdictions where it is legal to
offer them.
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Each underwriter has represented and agreed that:
. it and each of its affiliates has not offered or sold, and, prior to
admission of the notes to listing in accordance with Part IV of the
Financial Services Act 1986, will not offer or sell any notes to persons
in the United Kingdom, except to those persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments
(as principal or agent) for the purpose of their businesses or otherwise
in circumstances which have not resulted and will not result in an offer
to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995;
. it and each of its affiliates has complied and will comply with all
applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the notes in, from or otherwise
involving the United Kingdom; and
. it and each of its affiliates has only issued or passed on and will only
issue or pass on in the United Kingdom any document received by it in
connection with the issue of the notes to a person who is of a kind
described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1996 or is a person to
whom the document may otherwise lawfully be issued or passed on.
The notes are a new issue of securities with no established trading market.
Although we intend to cause the notes to be listed on the London Stock
Exchange, we cannot guarantee that our application will be approved. We do not
intend to apply for listing of the notes on any United States securities
exchange. The representatives have advised us that, following completion of the
offering of the notes, they intend to make a market in the notes, as permitted
by applicable law. They are not obligated, however, to make a market in the
notes, and may discontinue any market-making activities at any time without
notice, in their sole discretion. Accordingly, we cannot assure you as to the
development or liquidity of any market for the notes.
Each underwriter has agreed that it will, to the best of its knowledge and
belief, comply with all applicable securities laws and regulations in force in
any jurisdiction in which it purchases, offers, sells or delivers notes or
possesses or distributes this prospectus supplement or the accompanying
prospectus and will obtain any required consent, approval or permission for its
purchase, offer, sale or delivery of notes under the laws and regulations in
force in any jurisdiction to which it is subject or in which it makes
purchases, offers, sales or deliveries. Neither we nor any other underwriter
shall have any responsibility for another underwriter's compliance with
applicable securities laws.
We expect that delivery of the notes will be made against payment therefor
on or about the closing date specified on the cover page of this prospectus
supplement, which will be on the fifth business day following the date the
notes are priced. Under Rule 15c6-1 of the Securities Exchange Act of 1934,
trades in the secondary market generally are required to settle in three
business days after the date the securities are priced, unless the parties to
any such trade expressly agree otherwise. Accordingly, purchasers who wish to
trade notes on the date of pricing or on any of the next four succeeding
business days will be required, by virtue of the fact that the notes will
settle in T+5, to specify an alternative settlement cycle at the time of any
such trade to prevent a failed settlement; such purchasers should also consult
their own advisors in this regard.
Purchasers of the notes may be required to pay stamp taxes and other charges
in accordance with the laws and practices of the country of purchase in
addition to the price to public set forth on the cover page of this prospectus
supplement.
Some of the underwriters and their affiliates have, from time to time,
performed banking, financial advisory and investment banking services for us
and our subsidiaries, for which they have received customary fees and expenses.
S-27
<PAGE>
LEGAL MATTERS
Stanley S. Stroup, who is our Executive Vice President and General Counsel,
or another of our lawyers, will issue an opinion about the legality of the
notes. Mr. Stroup owns, or has the right to acquire, a number of shares of our
common stock which represents less than 0.1% of the total outstanding common
stock. Faegre & Benson LLP, our special tax counsel, will issue an opinion
relating to certain U.S. federal tax consequences relating to the notes.
Certain legal matters will be passed upon for the underwriters by Gibson, Dunn
& Crutcher LLP, San Francisco, California. Gibson, Dunn & Crutcher LLP
represents us and certain of our subsidiaries in other legal matters. Mr.
Stroup may rely on Gibson, Dunn & Crutcher LLP as to matters of New York law.
GENERAL INFORMATION
We are incorporated under the laws of the State of Delaware, the United
States. Our registered office is at The Corporation Service Company, 1013
Centre Road, Wilmington, Delaware 19805, U.S.A. Our principal executive office
is 420 Montgomery Street, San Francisco, California, 94163, U.S.A.
Copies of the following documents will be available for inspection at the
offices of Linklaters, One Silk Street, London EC24 8HQ, during usual business
hours on any weekday (public holidays excepted) for 14 days after the date of
the London Stock Exchange listing particulars:
(i) our Certificate of Incorporation and By-laws;
(ii) our published audited consolidated financial statements contained in
our Annual Report on Form 10-K for the three years ended December
31, 1998;
(iii) our published unaudited consolidated financial statements contained
in our Quarterly Report on Form l0-Q for the three-month periods
ended March 31, 1998 and March 31, 1999;
(iv) the underwriting agreement; and
(v) the indenture for the notes.
The consolidated financial statements of Wells Fargo and its subsidiaries
for each of the three financial years ended December 31, 1998 were audited,
without qualification, by KPMG LLP, Three Embarcadero Center, Suite 2000, San
Francisco, California 94111, U.S.A., independent certified public accountants,
in accordance with auditing standards generally accepted in the United States.
Other than as disclosed or contemplated in this prospectus supplement and
the accompanying prospectus, including the documents incorporated by reference
herein and therein, there has been no significant change in the financial or
trading position of us and our consolidated subsidiaries taken as a whole since
March 31, 1999, or material adverse change in the financial position or
prospects of us and our subsidiaries taken as a whole since December 31, 1998.
Copies of our latest annual consolidated financial statements and our latest
interim consolidated financial statements may be obtained, and copies of the
indenture will be available for inspection, at the specified offices of our
paying agent in London during normal business hours, so long as any of the
notes are outstanding.
We and our consolidated subsidiaries are defendants in various matters of
litigation generally incidental to our business. Although it is difficult to
predict the outcome of these cases, we believe, based on discussions with
counsel, that any ultimate liability will not have a material adverse effect on
the financial position of us and our consolidated subsidiaries taken as a
whole.
The notes have been assigned Euroclear and Cedelbank Common Code 010031257,
International Security Identification Number US949746AA96 and CUSIP No.
949746AA9.
S-28
<PAGE>
PROSPECTUS
WELLS FARGO & COMPANY
420 Montgomery Street
San Francisco, California 94163
1-800-411-4932
$10,150,000,000
Debt Securities
Preferred Stock
Depositary Shares
Securities Warrants
------------
We may also issue common stock upon conversion, exchange or exercise of any
of the securities listed above. We will provide the specific terms of these
securities in supplements to this prospectus. You should read this prospectus
and the applicable supplement carefully before you invest.
------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
------------
These securities are our unsecured obligations and are not savings accounts,
deposits or other obligations of any of our bank or nonbank subsidiaries and
are not insured by the Federal Deposit Insurance Corporation, the Bank
Insurance Fund or any other governmental agency.
------------
This prospectus is dated June 16, 1999.
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with
the Securities and Exchange Commission using a "shelf" registration process.
Under this shelf process, we may sell debt securities, preferred stock,
depositary shares and securities warrants in one or more offerings up to a
total dollar amount of $10,150,000,000. We may sell these securities either
separately or in units. We may also issue common stock upon conversion,
exchange or exercise of any of the securities mentioned above.
This prospectus provides you with a general description of the securities
we may offer. Each time we sell securities, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering. Such prospectus supplement may also add, update or change information
contained in this prospectus. You should read this prospectus and the
applicable prospectus supplement together with the additional information
described under the heading "Where You Can Find More Information."
The registration statement that contains this prospectus, including the
exhibits to the registration statement, contains additional information about
us and the securities offered under this prospectus. That registration
statement can be read at the Securities and Exchange Commission, or SEC, web
site or at the SEC offices mentioned under the heading "Where You Can Find More
Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and
copy any document we file with the SEC at its public reference facilities at
450 Fifth Street, N.W., Washington, D.C. 20549, 7 World Trade Center,
Suite 1300, New York, New York 10048 and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. You can also obtain copies of
the documents at prescribed rates by writing to the Public Reference Section of
the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC
at 1-800-SEC-0330 for further information on the operation of the public
reference facilities. Our SEC filings are also available at the offices of the
New York Stock Exchange and Chicago Stock Exchange. For further information on
obtaining copies of our public filings at the New York Stock Exchange, you
should call (212) 656-5060, and for further information on obtaining copies of
our public filings at the Chicago Stock Exchange, you should call (312) 663-
2423.
We "incorporate by reference" into this prospectus the information we
file with the SEC, which means that we can disclose important information to
you by referring you to those documents. The information incorporated by
reference is an important part of this prospectus. Some information contained
in this prospectus updates the information incorporated by reference, and
information that we file subsequently with the SEC will automatically update
this prospectus. In other words, in the case of a conflict or inconsistency
between information set forth in this prospectus and information incorporated
by reference into this prospectus, you should rely on the information contained
in the document that was filed later. We incorporate by reference the documents
listed below and any filings we make with the SEC under Sections 13(a), 13(c),
14, or 15(d) of the Securities Exchange
2
<PAGE>
Act of 1934 after the initial filing of the registration statement that
contains this prospectus and prior to the time that we sell all the securities
offered by this prospectus:
. Annual Report on Form 10-K for the year ended December 31, 1998,
including information specifically incorporated by reference into our
Form 10-K from our 1998 Annual Report to Stockholders and our
definitive Notice and Proxy Statement for our 1999 Annual Meeting of
Stockholders;
. Quarterly Report on Form 10-Q for the quarter ended March 31, 1999;
. Current Reports on Form 8-K filed January 29, 1999, April 21, 1999
and April 28, 1999;
. the description of our preferred share purchase rights contained in
the Registration Statement on Form 8-A dated October 21, 1998; and
. the description of our common stock contained in the Current Report
on Form 8-K filed October 14, 1997.
You may request a copy of these filings, other than an exhibit to a
filing unless that exhibit is specifically incorporated by reference into that
filing, at no cost, by writing to or telephoning us at the following address:
Laurel A. Holschuh
Corporate Secretary
Wells Fargo & Company
Norwest Center, 17th Floor
Sixth and Marquette
Minneapolis, Minnesota 55479
Phone: (612) 667-8655
You should rely only on the information incorporated by reference or
presented in this prospectus or the applicable prospectus supplement. Neither
we, nor any underwriters or agents, have authorized anyone else to provide you
with different information. We may only use this prospectus to sell securities
if it is accompanied by a prospectus supplement. We are only offering these
securities in states where the offer is permitted. You should not assume that
the information in this prospectus or the applicable prospectus supplement is
accurate as of any date other than the dates on the front of those documents.
3
<PAGE>
THE COMPANY
Wells Fargo & Company, formerly Norwest Corporation, is a diversified
financial services company registered under the Bank Holding Company Act of
1956.
We provide retail, commercial and corporate banking services through our
banks located in Arizona, California, Colorado, Idaho, Illinois, Indiana, Iowa,
Minnesota, Montana, Nebraska, Nevada, New Mexico, North Dakota, Ohio, Oregon,
South Dakota, Texas, Utah, Washington, Wisconsin and Wyoming. We provide
additional financial services through subsidiaries engaged in wholesale
banking, 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 processing and venture capital investment.
Our significant subsidiaries are Norwest Bank Minnesota, N.A. and its
consolidated subsidiaries and WFC Holdings Corporation and its consolidated
subsidiaries, including its principal subsidiary, Wells Fargo Bank, N.A.
On November 2, 1998, we changed our name to Wells Fargo & Company
following the merger of the former Wells Fargo & Company into one of our
wholly-owned subsidiaries. At March 31, 1999, we had $201 billion in assets,
seventh largest among U.S. bank holding companies.
We are a separate and distinct legal entity from our banking and other
subsidiaries. Our principal source of funds to pay dividends on our common and
preferred stock and debt service on our debt is dividends from our
subsidiaries. Various federal and state statutes and regulations limit the
amount of dividends that our banking and other subsidiaries may pay to us
without regulatory approval.
When we refer to "our company," "we," "our" and "us" in this prospectus
under the headings "The Company" and "Ratios of Earnings to Fixed Charges and
to Fixed Charges and Preferred Stock Dividends," we mean Wells Fargo & Company
and its subsidiaries unless the context indicates otherwise. When such terms
are used elsewhere in this prospectus, we refer only to Wells Fargo & Company
unless the context indicates otherwise.
4
<PAGE>
USE OF PROCEEDS
Unless the applicable prospectus supplement states otherwise, the net
proceeds from the sale of the offered securities will be added to our general
funds and will be available for general corporate purposes, including:
. investments in or advances to our existing or future subsidiaries;
. repayment of obligations that have matured; and
. reducing our outstanding commercial paper and other debt.
Until the net proceeds have been used, they will be invested in short-term
marketable securities.
5
<PAGE>
RATIOS OF EARNINGS TO FIXED CHARGES AND TO FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
QUARTER ENDED
FISCAL YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------- -------------
1994 1995 1996 1997 1998 1998 1999
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges:
Excluding interest on
deposits..................... 3.32x 2.73 2.98 3.10 2.56 3.22 3.58
Including interest on
deposits..................... 1.92x 1.80 1.78 1.81 1.63 1.88 2.10
Ratio of Earnings to Fixed
Charges and
Preferred Stock Dividends:
Excluding interest on
deposits..................... 3.02x 2.55 2.77 2.99 2.49 3.12 3.49
Including interest on
deposits..................... 1.85x 1.74 1.73 1.79 1.61 1.85 2.08
</TABLE>
. The ratio of earnings to fixed charges is calculated as follows:
(income before income taxes) + (fixed charges) - (capitalized interest)
-----------------------------------------------------------------------
(fixed charges)
. The ratio of earnings to fixed charges and preferred stock dividends is
calculated as follows:
(income before income taxes) + (fixed charges) - (capitalized interest)
- -------------------------------------------------------------------------------
(fixed charges) + (pretax earnings required to cover preferred stock dividends)
. Pretax earnings required to cover preferred stock dividends are calculated
as follows:
preferred stock dividends
-----------------------------------
1 - (our effective income tax rate)
. 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 we believe is representative of
the interest factor.
. Fixed charges, including interest on deposits, consist of all of the items
listed immediately above plus interest on deposits.
We have included these computations in compliance with SEC regulations.
However, we believe that the fixed charge ratios are not meaningful measures
for our business due to two factors. First, even if our net income did not
change, our ratios would decline if the proportion of our income that is tax-
exempt increased. Conversely, our ratios would increase if the proportion of
our income that is tax-exempt decreased. Second, even if our net income did not
change, our ratios would decline if our interest income and interest expense
increased by the same amount due to an increase in the level of interest rates.
Conversely, our ratios would increase if our interest income and interest
expense decreased by the same amount due to a decrease in the level of interest
rates.
6
<PAGE>
DESCRIPTION OF DEBT SECURITIES
This section describes the general terms and provisions of our debt
securities, which could be senior debt securities or subordinated debt
securities. The prospectus supplement will describe the specific terms of the
debt securities offered through that prospectus supplement and any general
terms outlined in this section that will not apply to those debt securities.
The senior debt securities will be issued under a senior indenture
between us and the senior trustee named in the applicable prospectus supplement
and the subordinated debt securities will be issued under a subordinated
indenture between us and the subordinated trustee named in the applicable
prospectus supplement.
We have summarized the material terms and provisions of the indentures in
this section. We have also filed the form of each of the indentures as exhibits
to the registration statement. You should read the applicable indenture for
additional information before you buy any debt securities. The summary that
follows includes references to section numbers of the indentures so that you
can more easily locate these provisions.
GENERAL
The debt securities will be our direct unsecured obligations. Neither of
the indentures limits the amount of debt securities that we may issue. Both
indentures permit us to issue debt securities from time to time and debt
securities issued under an indenture will be issued as part of a series that
has been established by us under such indenture. (Section 301)
The senior debt securities will be unsecured and will rank equally with
all of our other Senior Debt, as defined under "--Subordination" below. The
subordinated debt securities will be unsecured and will rank equally with all
of our other subordinated debt and, together with such other subordinated debt,
will be subordinated to all of our existing and future Senior Debt. See "--
Subordination" below.
The debt securities are our unsecured senior or subordinated debt
securities, as the case may be, but our assets consist primarily of equity in
our subsidiaries. As a result, our ability to make payments on our debt
securities depends on our receipt of dividends, loan payments and other funds
from our subsidiaries. In addition, if any of our subsidiaries becomes
insolvent, the direct creditors of that subsidiary will have a prior claim on
its assets. Our rights and the rights of our creditors, including your rights
as an owner of our debt securities, will be subject to that prior claim, unless
we are also a direct creditor of that subsidiary. This subordination of
creditors of a parent company to prior claims of creditors of its subsidiaries
is commonly referred to as structural subordination.
A prospectus supplement relating to a series of debt securities being
offered will include specific terms relating to the offering. (Section 301)
These terms will include some or all of the following:
. the title and type of the debt securities;
. any limit on the total principal amount of the debt securities of
that series;
. the price at which the debt securities will be issued;
. the date or dates on which the principal of and any premium on the
debt securities will be payable;
7
<PAGE>
. the maturity date or dates of the debt securities or the method by
which those dates can be determined;
. if the debt securities will bear interest:
. the interest rate on the debt securities or the method by which
the interest rate may be determined;
. the date from which interest will accrue;
. the record and interest payment dates for the debt securities;
. the first interest payment date; and
. any circumstances under which we may defer interest payments;
. the place or places where:
. we can make payments on the debt securities;
. the debt securities can be surrendered for registration of
transfer or exchange; and
. notices and demands can be given to us relating to the debt
securities and under the applicable indenture;
. any optional redemption provisions that would permit us or the
holders of debt securities to elect redemption of the debt securities
before their final maturity;
. any sinking fund provisions that would obligate us to redeem the debt
securities before their final maturity;
. whether the subordinated debt securities will be convertible into
shares of common stock, shares of preferred stock or depositary
shares and, if so, the terms and conditions of any such conversion,
and, if convertible into shares of preferred stock or depositary
shares, the terms of such preferred stock or depositary shares;
. if the debt securities will be issued in bearer form, the terms and
provisions contained in the bearer securities and in the applicable
indenture specifically relating to the bearer securities;
. the currency or currencies in which the debt securities will be
denominated and payable, if other than U.S. dollars and, if a
composite currency, any special provisions relating thereto;
. any circumstances under which the debt securities may be paid in a
currency other than the currency in which the debt securities are
denominated and any provisions relating thereto;
. whether the provisions described below under the heading "--
Defeasance" apply to the debt securities;
. any events of default which will apply to the debt securities in
addition to those contained in the applicable indenture;
. any additions or changes to the covenants contained in the applicable
indenture and the ability, if any, of the holders to waive our
compliance with those additional or changed covenants;
8
<PAGE>
. whether all or part of the debt securities will be issued in whole or
in part as temporary or permanent global securities and, if so, the
depositary for those global securities and a description of any book-
entry procedures relating to the global securities--a "global
security" is a debt security that we issue in accordance with the
applicable indenture to represent all or part of a series of debt
securities;
. if we issue temporary global securities, any special provisions
dealing with the payment of interest and any terms relating to the
ability to exchange interests in a temporary global security for
interests in a permanent global security or for definitive debt
securities;
. the identity of the security registrar and paying agent for the debt
securities if other than the applicable trustee;
. any special tax implications of the debt securities;
. any special provisions relating to the payment of any additional
amounts on the debt securities;
. the terms of any securities being offered together with or separately
from the debt securities; and
. any other terms of the debt securities.
When we use the term "holder" in this prospectus with respect to a registered
debt security, we mean the person in whose name such debt security is
registered in the security register. (Section 101)
PAYMENT; EXCHANGE; TRANSFER
We will designate a place of payment where you can receive payment of
the principal of and any premium and interest on the debt securities. Even
though we will designate a place of payment, we may elect to pay any interest
on the debt securities by mailing a check to the person listed as the owner of
the debt securities in the security register or by wire transfer to an account
designated by that person in writing not less than ten days before the date of
the interest payment. Unless we state otherwise in the applicable prospectus
supplement, we will pay interest on a debt security:
. on an interest payment date, to the person in whose name that debt
security is registered at the close of business on the record date
relating to that interest payment date; and
. on the date of maturity or earlier redemption or repayment, to the
person who surrenders the debt security at the office of our
appointed paying agent. (Sections 307, 1002)
Any money that we pay to a paying agent for the purpose of making
payments on the debt securities and that remain unclaimed two years after the
payments were due will, at our request, be returned to us and after that time
any holder of a debt security can only look to us for the payments on the debt
security. (Section 1003)
Any debt securities of a series can be exchanged for other debt
securities of that series so long as the other debt securities are denominated
in authorized denominations and have the same aggregate principal amount and
same terms as the debt securities that were surrendered for exchange. The debt
securities may be presented for registration of transfer, duly endorsed or
accompanied by a
9
<PAGE>
satisfactory written instrument of transfer, at the office or agency maintained
by us for that purpose in a place of payment. There will be no service charge
for any registration of transfer or exchange of the debt securities, but we may
require you to pay any tax or other governmental charge payable in connection
with a transfer or exchange of the debt securities. (Sections 305, 1002) If the
applicable prospectus supplement refers to any office or agency, in addition to
the security registrar, initially designated by us where you can surrender the
debt securities for registration of transfer or exchange, we may at any time
rescind the designation of any such office or agency or approve a change in the
location. However, we will be required to maintain an office or agency in each
place of payment for that series. (Section 1002)
DENOMINATIONS
Unless we state otherwise in the applicable prospectus supplement, the
debt securities will be issued only in registered form, without coupons, in
denominations of $1,000 each or multiples of $1,000.
BEARER DEBT SECURITIES
If we ever issue bearer debt securities, the applicable prospectus
supplement will describe all of the special terms and provisions of debt
securities in bearer form, and the extent to which those special terms and
provisions are different from the terms and provisions which are described in
this prospectus, which generally apply to debt securities in registered form,
and will summarize provisions of the applicable indenture that relate
specifically to bearer debt securities.
ORIGINAL ISSUE DISCOUNT
Debt securities may be issued under the indentures as original issue
discount securities and sold at a substantial discount below their stated
principal amount. If a debt security is an original issue discount security,
that means that an amount less than the principal amount of the debt security
will be due and payable upon a declaration of acceleration of the maturity of
the debt security under the applicable indenture. (Section 101) The applicable
prospectus supplement will describe the federal income tax consequences and
other special factors you should consider before purchasing any original issue
discount securities.
COVENANTS CONTAINED IN INDENTURES
Except as otherwise set forth in the next sentence, the senior indenture:
. prohibits us and our subsidiaries from selling, pledging, assigning
or otherwise disposing of shares of capital stock, or securities
convertible into capital stock, of any Principal Subsidiary Bank or
of any subsidiary owning, directly or indirectly, any capital stock
of a Principal Subsidiary Bank; and
. prohibits any Principal Subsidiary Bank from issuing any shares of
its capital stock or securities convertible into its capital stock.
This restriction does not apply to:
. sales, pledges, assignments or other dispositions or issuances of
directors' qualifying shares;
10
<PAGE>
. sales, pledges, assignments or other dispositions or issuances, so
long as, after giving effect to the disposition and to the issuance
of any shares issuable upon conversion or exchange of securities
convertible or exchangeable into capital stock, we would own directly
or through one or more of our subsidiaries not less than 80% of the
shares of each class of capital stock of the applicable Principal
Subsidiary Bank;
. sales, pledges, assignments or other dispositions or issuances made
in compliance with an order or direction of a court or regulatory
authority of competent jurisdiction; or
. sales of capital stock by any Principal Subsidiary Bank to its
stockholders so long as before the sale we own directly or indirectly
shares of the same class and the sale does not reduce the percentage
of the shares of that class of capital stock owned by us. (Section
1005 of the senior indenture)
When we use the term "subsidiary" in this section, we mean any
corporation of which we own more than 50% of the outstanding shares of voting
stock, except for directors' qualifying shares, directly or through one or more
of our other subsidiaries. Voting stock is stock that is entitled in the
ordinary course to vote for the election of a majority of the directors of a
corporation and does not include stock that is entitled to so vote only as a
result of the happening of certain events.
When we use the term "Principal Subsidiary Bank" above, we mean any
commercial bank or trust company organized in the United States under Federal
or state law of which we own at least a majority of the shares of voting stock
directly or through one or more of our subsidiaries if such commercial bank or
trust company has total assets, as set forth in its most recent statement of
condition, equal to more than 10% of our total consolidated assets, as set
forth in our most recent financial statements filed with the SEC under the
Exchange Act. (Section 101 of the senior indenture) As of the date hereof, our
Principal Subsidiary Banks are Norwest Bank Minnesota, National Association,
and Wells Fargo Bank, National Association.
The subordinated indenture does not contain the restriction described
above.
Neither of the indentures contains restrictions on our ability to:
. incur, assume or become liable for any type of debt or other
obligation;
. create liens on our property for any purpose; or
. pay dividends or make distributions on our capital stock or
repurchase or redeem our capital stock.
The indentures do not require the maintenance of any financial ratios or
specified levels of net worth or liquidity. In addition, the indentures do not
contain any provisions which would require us to repurchase or redeem or modify
the terms of any of the debt securities upon a change of control or other event
involving us which may adversely affect the creditworthiness of the debt
securities.
CONSOLIDATION, MERGER OR SALE
Each of the indentures generally permits a consolidation or merger
between us and another entity. They also permit the sale or transfer by us of
all or substantially all of our property and assets. These transactions are
permitted if:
. the resulting or acquiring entity, if other than us, is organized and
existing under the laws of a domestic jurisdiction and assumes all of
our responsibilities and liabilities
11
<PAGE>
under the applicable indenture, including the payment of all amounts
due on the debt securities and performance of the covenants in the
applicable indenture; and
. immediately after the transaction, and giving effect to the
transaction, no event of default under the applicable indenture
exists. (Section 801)
If we consolidate or merge with or into any other entity or sell or lease
all or substantially all of our assets according to the terms and conditions of
the indentures, the resulting or acquiring entity will be substituted for us in
the indentures with the same effect as if it had been an original party to the
indentures. As a result, such successor entity may exercise our rights and
powers under the indentures, in our name and, except in the case of a lease of
all or substantially all of our properties, we will be released from all our
liabilities and obligations under the indentures and under the debt securities.
(Section 802)
MODIFICATION AND WAIVER
Under each of the indentures, certain of our rights and obligations and
certain of the rights of holders of the debt securities may be modified or
amended with the consent of the holders of at least a majority of the aggregate
principal amount of the outstanding debt securities of all series of debt
securities affected by the modification or amendment, acting as one class.
However, the following modifications and amendments will not be effective
against any holder without its consent:
. a change in the stated maturity date of any payment of principal or
interest;
. a reduction in payments due on the debt securities;
. a change in the place of payment or currency in which any payment on
the debt securities is payable;
. a limitation of a holder's right to sue us for the enforcement of
payments due on the debt securities;
. a reduction in the percentage of outstanding debt securities required
to consent to a modification or amendment of the applicable indenture
or required to consent to a waiver of compliance with certain
provisions of the applicable indenture or certain defaults under the
applicable indenture;
. a reduction in the requirements contained in the applicable indenture
for quorum or voting;
. a limitation of a holder's right, if any, to repayment of debt
securities at the holder's option;
. in the case of subordinated debt securities convertible into common
stock, a limitation of any right to convert the subordinated debt
securities; and
. a modification of any of the foregoing requirements contained in the
applicable indenture. (Section 902)
Under each of the indentures, the holders of at least a majority of the
aggregate principal amount of the outstanding debt securities of all series of
debt securities affected by a particular covenant or condition, acting as one
class, may, on behalf of all holders of such series of debt
12
<PAGE>
securities, waive compliance by us with any covenant or condition contained in
the applicable indenture unless we specify that such covenant or condition
cannot be so waived at the time we establish the series. The senior indenture
provides that compliance with the covenant relating to Principal Subsidiary
Banks described above under "--Covenants Contained in Indentures" can be waived
in this manner. (Section 1008 of the senior indenture, Section 1005 of the
subordinated indenture)
In addition, under each of the indentures, the holders of a majority in
aggregate principal amount of the outstanding debt securities of any series of
debt securities may, on behalf of all holders of that series, waive any past
default under the applicable indenture, except:
. a default in the payment of the principal of or any premium or
interest on any debt securities of that series; or
. a default under any provision of the applicable indenture which
itself cannot be modified or amended without the consent of the
holders of each outstanding debt security of that series. (Section
513)
EVENTS OF DEFAULT
Unless otherwise specified in the applicable prospectus supplement, an
"event of default," when used in the senior indenture with respect to any
series of senior debt securities, means any of the following:
. failure to pay interest on any senior debt security of that series
for 30 days after the payment is due;
. failure to pay the principal of or any premium on any senior debt
security of that series when due;
. failure to deposit any sinking fund payment on senior debt securities
of that series when due;
. failure to perform any of the covenants regarding capital stock of
Principal Subsidiary Banks described above under "--Covenants
Contained in Indentures";
. failure to perform any other covenant in the senior indenture that
applies to senior debt securities of that series for 90 days after we
have received written notice of the failure to perform in the manner
specified in the senior indenture;
. certain events in bankruptcy, insolvency or reorganization; or
. any other event of default that may be specified for the senior debt
securities of that series when that series is created. (Section 501
of the senior indenture)
Unless otherwise specified in the applicable prospectus supplement, an
"event of default," when used in the subordinated indenture with respect to any
series of subordinated debt securities, means any of the following:
. certain events in bankruptcy, insolvency or reorganization; or
. any other event of default that may be specified for the subordinated
debt securities of that series when that series is created. (Section
501 of the subordinated indenture)
If an event of default for any series of debt securities occurs and
continues, the trustee or the holders of at least 25% in aggregate principal
amount of the outstanding debt securities of the series
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may declare the entire principal of all the debt securities of that series to
be due and payable immediately. If such a declaration occurs, the holders of a
majority of the aggregate principal amount of the outstanding debt securities
of that series can, subject to conditions, rescind the declaration. (Sections
502, 513) Unless we state otherwise in the applicable prospectus supplement,
the holders of subordinated debt securities will not have the right to
accelerate the payment of principal of the subordinated debt securities as a
result of our failure to perform any covenant or agreement contained in the
subordinated debt securities or the subordinated indenture.
The prospectus supplement relating to a series of debt securities which
are original issue discount securities will describe the particular provisions
that relate to the acceleration of maturity of a portion of the principal
amount of the series when an event of default occurs and continues.
Each of the indentures requires us to file an officers' certificate with
the applicable trustee each year that states, to the knowledge of the
certifying officer, no defaults exist under the terms of the applicable
indenture. (Section 1007 of the senior indenture, Section 1004 of the
subordinated indenture). The trustee may withhold notice to the holders of debt
securities of any default, except defaults in the payment of principal,
premium, interest or any sinking fund installment, if it considers the
withholding of notice to be in the best interests of the holders. For purposes
of this paragraph, "default" means any event which is, or after notice or lapse
of time or both would become, an event of default under the applicable
indenture with respect to the debt securities of the applicable series.
(Section 602)
Other than its duties in the case of a default, a trustee is not
obligated to exercise any of its rights or powers under the applicable
indenture at the request, order or direction of any holders, unless the holders
offer that trustee reasonable indemnification. (Sections 601, 603) If
reasonable indemnification is provided, then, subject to other rights of the
trustee, the holders of a majority in principal amount of the outstanding debt
securities of any series may, with respect to the debt securities of that
series, direct the time, method and place of:
. conducting any proceeding for any remedy available to the trustee; or
. exercising any trust or power conferred upon the trustee. (Sections
512, 603)
The holder of a debt security of any series will have the right to begin
any proceeding with respect to the applicable indenture or for any remedy only
if:
. the holder has previously given the trustee written notice of a
continuing event of default with respect to that series;
. the holders of at least 25% in aggregate principal amount of the
outstanding debt securities of that series have made a written
request of, and offered reasonable indemnification to, the trustee to
begin such proceeding;
. the trustee has not started such proceeding within 60 days after
receiving the request; and
. the trustee has not received directions inconsistent with such
request from the holders of a majority in aggregate principal amount
of the outstanding debt securities of that series during those 60
days. (Section 507)
However, the holder of any senior debt security will have an absolute right to
receive payment of principal of and any premium and interest on the senior debt
security when due and to institute suit to enforce this payment, and the holder
of any subordinated debt security will have, subject to the
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subordination provisions discussed below under "--Subordination," the absolute
right to receive payment of principal of and any premium and interest on the
subordinated debt security when due in accordance with the subordinated
indenture and to institute suit to enforce the payment. (Section 508)
DEFEASANCE
DEFEASANCE AND DISCHARGE. At the time that we establish a series of debt
securities under the applicable indenture, we can provide that the debt
securities of that series are subject to the defeasance and discharge
provisions of that indenture. If we so provide, we will be discharged from our
obligations on the debt securities of that series if:
. we deposit with the applicable trustee, in trust, sufficient money
or, if the debt securities of that series are denominated and payable
in U.S. dollars only, Eligible Instruments, to pay the principal, any
interest, any premium and any other sums due on the debt securities
of that series, such as sinking fund payments, on the dates the
payments are due under the applicable indenture and the terms of the
debt securities;
. we deliver to the applicable trustee an opinion of counsel that
states that the holders of the debt securities of that series will
not recognize income, gain or loss for federal income tax purposes as
a result of the deposit 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 no deposit had been made; and
. if the debt securities of that series are listed on any domestic or
foreign securities exchange, the debt securities will not be delisted
as a result of the deposit. (Section 403)
When we use the term "Eligible Instruments" in this section, we mean
monetary assets, money market instruments and securities that are payable in
dollars only and essentially risk free as to collection of principal and
interest, including:
. direct obligations of the United States backed by the full faith and
credit of the United States; or
. any obligation of a person controlled or supervised by and acting as
an agency or instrumentality of the United States if the timely
payment of the obligation is unconditionally guaranteed as a full
faith and credit obligation by the United States. (Section 101)
In the event that we deposit money and/or Eligible Instruments in trust
and discharge our obligations under a series of debt securities as described
above, then:
. the applicable indenture, including, in the case of subordinated debt
securities, the subordination provisions contained in the
subordinated indenture, will no longer apply to the debt securities
of that series; however, certain obligations to compensate, reimburse
and indemnify the trustee, to register the transfer and exchange of
debt securities, to replace lost, stolen or mutilated debt
securities, to maintain paying agencies and the trust funds and to
pay additional amounts, if any, required as a result of U.S.
withholding taxes imposed on payments to non-U.S. persons will
continue to apply; and
. holders of debt securities of that series can only look to the trust
fund for payment of principal, any premium and any interest on the
debt securities of that series. (Section 403)
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DEFEASANCE OF CERTAIN COVENANTS AND CERTAIN EVENTS OF DEFAULT. At the
time that we establish a series of debt securities under the applicable
indenture, we can provide that the debt securities of that series are subject
to the covenant defeasance provisions of that indenture. If we so provide and
we make the deposit and deliver the opinion of counsel described above in this
section under the heading "--Defeasance and Discharge" we will not have to
comply with the following restrictive covenants contained in the applicable
indenture:
. Restrictions Upon Sale or Issuance of Capital Stock of Certain
Subsidiary Banks (Section 1005 of the senior indenture) discussed
above under "--Covenants Contained in Indentures"; and
. any other covenant we designate when we establish the series of debt
securities.
In the event of a covenant defeasance, our obligations under the applicable
indenture and the debt securities, other than with respect to the covenants
specifically referred to above, will remain in effect. (Section 1501 of the
senior indenture, Section 1701 of the subordinated indenture)
If we exercise our option not to comply with the covenants listed above
and the debt securities of the series become immediately due and payable
because an event of default has occurred, other than as a result of an event of
default specifically referred to above, the amount of money and/or Eligible
Instruments on deposit with the applicable trustee will be sufficient to pay
the principal, any interest, any premium and any other sums, due on the debt
securities of that series, such as sinking fund payments, on the date the
payments are due under the applicable indenture and the terms of the debt
securities, but may not be sufficient to pay amounts due at the time of
acceleration. However, we would remain liable for the balance of the payments.
(Section 1501 of the senior indenture, Section 1701 of the subordinated
indenture)
SUBORDINATION
The subordinated debt securities will be subordinate to all of our
existing and future Senior Debt, as defined below. Our Senior Debt includes the
senior debt securities and means
. any of our indebtedness for borrowed or purchased money, whether or
not evidenced by bonds, debentures, notes or other written
instruments,
. our obligations under letters of credit,
. any of our indebtedness or other obligations with respect to
commodity contracts, interest rate and currency swap agreements, cap,
floor and collar agreements, currency spot and forward contracts, and
other similar agreements or arrangements designed to protect against
fluctuations in currency exchange or interest rates, and
. any guarantees, endorsements (other than by endorsement of negotiable
instruments for collection in the ordinary course of business) or
other similar contingent obligations in respect of obligations of
others of a type described above, whether or not such obligation is
classified as a liability on a balance sheet prepared in accordance
with generally accepted accounting principles,
whether outstanding on the date of execution of the subordinated indenture or
thereafter incurred, other than obligations expressly on a parity with or
junior to the subordinated debt securities. As of March 31, 1999, we had
approximately $18.3 billion of Senior Debt outstanding.
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If certain events in bankruptcy, insolvency or reorganization occur, we
will first pay all Senior Debt, including any interest accrued after the events
occur, in full before we make any payment or distribution, whether in cash,
securities or other property, on account of the principal of or interest on the
subordinated debt securities. In such an event, we will pay or deliver directly
to the holders of Senior Debt any payment or distribution otherwise payable or
deliverable to holders of the subordinated debt securities. We will make the
payments to the holders of Senior Debt according to priorities existing among
those holders until we have paid all Senior Debt, including accrued interest,
in full. Notwithstanding the subordination provisions discussed in this
paragraph, we may make payments or distributions on the subordinated debt
securities so long as:
. the payments or distributions consist of securities issued by us or
another company in connection with a plan or reorganization or
readjustment; and
. payment on those securities is subordinate to outstanding Senior Debt
and any securities issued with respect to senior Debt under such plan
of reorganization or readjustment at least to the same extent
provided in the subordination provisions of the subordinated debt
securities. (Section 1801 of the subordinated indenture)
If such events in bankruptcy, insolvency or reorganization occur after we
have paid in full all amounts owed on Senior Debt:
. the holders of subordinated debt securities,
. together with the holders of any of our other obligations ranking
equal with those subordinated debt securities,
will be entitled to receive from our remaining assets any principal, premium or
interest due at that time on the subordinated debt securities and such other
obligations before we make any payment or other distribution on account of any
of our capital stock or obligations ranking junior to those subordinated debt
securities.
If we violate the subordinated indenture by making a payment or
distribution to holders of the subordinated debt securities before we have paid
all the Senior Debt in full, then such holders of the subordinated debt
securities will be deemed to have received the payments or distributions in
trust for the benefit of, and will have to pay or transfer the payments or
distributions to, the holders of the Senior Debt outstanding at the time. The
payment or transfer to the holders of the Senior Debt will be made according to
the priorities existing among those holders. Notwithstanding the subordination
provisions discussed in this paragraph, holders of subordinated debt securities
will not be required to pay, or transfer payments or distributions to, holders
of Senior Debt so long as:
. the payments or distributions consist of securities issued by us or
another company in connection with a plan of reorganization or
readjustment; and
. payment on those securities is subordinate to outstanding Senior Debt
and any securities issued with respect to Senior Debt under such plan
of reorganization or readjustment at least to the same extent
provided in the subordination provisions of those subordinated debt
securities. (Section 1801 of the subordinated indenture)
Because of the subordination, if we become insolvent, holders of Senior
Debt may receive more, ratably, and holders of the subordinated debt securities
having a claim pursuant to those securities may receive less, ratably, than our
other creditors. This type of subordination will not
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prevent an event of default from occurring under the subordinated indenture in
connection with the subordinated debt securities.
We may modify or amend the subordinated indenture as provided under "--
Modification and Waiver" above. However, the modification or amendment may not,
without the consent of the holders of all Senior Debt outstanding, modify any
of the provisions of the applicable indenture relating to the subordination of
the subordinated debt securities in a manner that would adversely affect the
holders of Senior Debt. (Section 902 of the subordinated indenture)
CONVERSION AND EXCHANGE
If any offered debt securities are convertible into preferred stock,
depositary shares or common stock at the option of the holders or exchangeable
for preferred stock, depositary shares or common stock at our option, the
prospectus supplement relating to those debt securities will include the terms
and conditions governing any conversions and exchanges.
DESCRIPTION OF PREFERRED STOCK
This section describes the general terms and provisions of our preferred
stock and preference stock that may be offered by this prospectus. Unless we
specifically note otherwise, we will generally refer to our preferred stock and
preference stock collectively in this prospectus as preferred stock. The
prospectus supplement will describe the specific terms of the series of the
preferred stock offered through that prospectus supplement and any general
terms outlined in this section that will not apply to that series of preferred
stock.
We have summarized the material terms and provisions of the preferred
stock in this section. We have also filed our restated certificate of
incorporation, as amended, and the form of certificate of designations of
powers, preferences and rights of preferred stock, which we will refer to as
the "certificate of designation," as exhibits to the registration statement.
You should read our restated certificate of incorporation and the certificate
of designations relating to the applicable series of the preferred stock for
additional information before you buy any preferred stock.
GENERAL
Pursuant to our restated certificate of incorporation, as amended, our
board of directors has the authority, without further stockholder action, to
issue a maximum of 24,000,000 shares of preferred stock, consisting of a
maximum of 20,000,000 shares of preferred stock and a maximum of 4,000,000
shares of preference stock, including shares issued or reserved for issuance.
As of March 31, 1999 we had issued 6,617,480 shares of preferred stock, of
which 6,592,480 shares were outstanding and 25,000 shares were held by one of
our subsidiaries. As of March 31, 1999, there were no shares of preference
stock outstanding. The board of directors has the authority to determine or fix
the following terms with respect to shares of any series of preferred stock:
. the number of shares and designation or title of the shares;
. dividend rights;
. whether and upon what terms the shares will be redeemable;
. the rights of the holders upon our dissolution or upon the
distribution of our assets;
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. whether and upon what terms the shares will have a purchase,
retirement or sinking fund;
. whether and upon what terms the shares will be convertible;
. the voting rights, if any, which will apply; provided, however, that
holders of preference stock will not be entitled to more than 1 vote
per share; and
. any other preferences, rights, limitations or restrictions of the
series.
If we purchase, redeem or convert shares of preferred stock, we will retire
and cancel them and restore them to the status of authorized but unissued
shares of preferred stock or preference stock, as the case may be. Those
shares will not be part of any particular series of preferred stock and may be
reissued by us.
As described under "Description of Depositary Shares" below, we may
elect to offer depositary shares represented by depositary receipts. If we so
elect, each depositary share will represent a fractional interest, to be
specified in the applicable prospectus supplement, in a share of preferred
stock. If we issue depositary shares representing interests in preferred
stock, those shares of preferred stock will be deposited with a depositary.
Under regulations of the Federal Reserve Board, our preferred stock is a
voting security at all times for purposes of the Bank Holding Company Act
because the holders of our preferred stock are entitled to vote for the
election of directors if we do not pay preferred stock dividends. Any holder
of more than 25% of a class of our voting securities, or less than 25% if the
holder otherwise exercises a "controlling influence" over us, would be
regulated as a bank holding company under the Bank Holding Company Act. In
addition, an existing bank holding company would need to obtain the Federal
Reserve Board's approval before acquiring 5% or more of any class of our
voting securities. Separately, under the Change in Bank Control Act of 1978,
any "person," including an individual or company other than a bank holding
company, may need to obtain the Federal Reserve Board's approval before
acquiring 10% or more of any class of our voting securities. All series of our
preferred stock are considered a single "class of voting shares" under the
Bank Holding Company Act because they generally vote together on all matters
as described below under "--Voting Rights."
The preferred stock will have the dividend, liquidation, redemption,
voting and conversion rights described in this section unless the applicable
prospectus supplement provides otherwise. You should read the prospectus
supplement relating to the particular series of the preferred stock it offers
for specific terms, including:
. the title, stated value and liquidation preference of the preferred
stock and the number of shares offered;
. the initial public offering price at which we will issue the
preferred stock;
. the dividend rate or rates, or method of calculation of dividends,
the dividend periods, the dates on which dividends will be payable
and whether the dividends will be cumulative or noncumulative and, if
cumulative, the dates from which the dividends will start to
cumulate;
. any redemption or sinking fund provisions;
. any conversion provisions;
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. whether we have elected to offer depositary shares as described under
"Description of Depositary Shares" below; and
. any additional dividend, liquidation, redemption, sinking fund and
other rights, preferences, privileges, limitations and restrictions.
When we issue shares of preferred stock, they will be fully paid and
nonassessable. This means you will have paid the full purchase price for your
shares of preferred stock and you will not be assessed any additional amount
for your stock. Unless the applicable prospectus supplement specifies
otherwise:
. each series of preferred stock will rank equally in all respects with
the outstanding shares of preferred stock and each other series of
preferred stock offered under this prospectus;
. each series of preferred stock will rank senior to our series C
junior participating preferred stock described below under the
heading "Description of Common Stock--Rights Agreement";
. the preferred stock will have no preemptive rights to subscribe for
any additional securities which we may issue in the future, which
means that the holders of shares of preferred stock will have no
right, as holders of shares of preferred stock, to buy any portion of
those issued securities; and
. Norwest Bank Minnesota, N.A. will be the transfer agent and registrar
for the preferred stock and any depositary shares.
DIVIDENDS
The holders of the preferred stock of each series will be entitled to
receive cash dividends, if declared by our board of directors or its duly
authorized committee, out of our assets that we can legally use to pay
dividends. The applicable prospectus supplement relating to a particular series
of preferred stock will describe the dividend rates and dates on which
dividends will be payable. The rates may be fixed or variable or both. If the
dividend rate is variable, the applicable prospectus supplement will describe
the formula used to determine the dividend rate for each dividend period. We
will pay dividends to the holders of record as they appear on our stock books
on the record dates fixed by our board of directors or its duly authorized
committee.
We are incorporated in Delaware, and are governed by the Delaware General
Corporation Law. Delaware law allows a corporation to pay dividends only out of
surplus, as determined under Delaware law, or, if there is no surplus, out of
net profits for the fiscal year in which the dividend was declared and for the
preceding fiscal year. However, under Delaware law, we cannot pay dividends out
of net profits if, after we pay the dividend, our capital would be less than
the capital represented by the outstanding stock of all classes having a
preference upon the distribution of our assets.
The applicable prospectus supplement will also state whether the
dividends on any series of the preferred stock are cumulative or noncumulative.
If our board of directors does not declare a dividend payable on a dividend
payment date on any noncumulative series of preferred stock, then the holders
of that series will not be entitled to receive a dividend for that dividend
period and we will not be obligated to pay the dividend for that dividend
period even if our board declares a dividend on that series payable in the
future.
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Our board will not declare and pay a dividend on any of our stock
ranking, as to dividends, equal with or junior to the preferred stock unless
full dividends on the preferred stock have been declared and paid, or declared
and sufficient money is set aside for payment. Until full dividends are paid,
or declared and payment is set aside, on all preferred stock ranking equal as
to dividends, then:
. we will declare any dividends pro rata among the shares of preferred
stock of each series offered under this prospectus and any other
series of preferred stock ranking equal to such series of preferred
stock offered under this prospectus as to dividends, which means that
the dividends we declare per share on each series of such preferred
stock will bear the same relationship to each other that the full
accrued dividends per share on each such series of the preferred
stock bear to each other;
. other than the above-described pro rata dividends, we will not
declare or pay any dividends or declare or make any distributions
upon any security ranking junior to or equal with the preferred stock
offered under this prospectus as to dividends or upon liquidation,
except dividends or distributions paid for with securities ranking
junior to the preferred stock as to dividends and upon liquidation;
and
. we will not redeem, purchase or otherwise acquire, or set aside money
for a sinking fund for, any securities ranking junior to or equal
with the preferred stock offered under this prospectus as to
dividends or upon liquidation, except by conversion into or exchange
for stock junior to the preferred stock as to dividends and upon
liquidation.
We will not owe any interest, or any money in lieu of interest, on any dividend
payment(s) on any series of the preferred stock which may be past due.
REDEMPTION
We may redeem all or part of a series of the preferred stock and that
series may be subject to mandatory redemption under a sinking fund or
otherwise, as described in the applicable prospectus supplement. Redeemed
shares of preferred stock will become authorized but unissued shares of
preferred stock or preference stock, as the case may be, that we may issue in
the future.
If a series of the preferred stock is subject to mandatory redemption,
the applicable prospectus supplement will specify the number of shares that we
will redeem each year and the redemption price. If shares of preferred stock
are redeemed, we will pay all accrued and unpaid dividends on those shares to,
but excluding, the redemption date. The prospectus supplement will also specify
whether the redemption price will be paid in cash or other property. If we are
only permitted to pay the redemption price for a series of preferred stock from
the proceeds of a capital stock issuance, and the proceeds from the issuance
are insufficient or no such issuance has occurred, then the terms of that
series may provide that the preferred stock will automatically and mandatorily
be converted into that capital stock.
If fewer than all of the outstanding shares of any series of the
preferred stock are to be redeemed, our board of directors will determine the
number of shares to be redeemed. We will redeem the shares pro rata from the
holders of record in proportion to the number of shares held by them, with
adjustments to avoid redemption of fractional shares.
Even though the terms of a series of preferred stock may permit
redemption of all or a part of the preferred stock, if any dividends, including
accumulated dividends, on that series are past due:
. we will not redeem any preferred stock of that series unless we
simultaneously redeem all outstanding preferred stock of that series;
and
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. we will not purchase or otherwise acquire any preferred stock of that
series.
The prohibition discussed in the prior sentence will not prohibit us from
purchasing or acquiring preferred stock of that series under a purchase or
exchange offer if we make the offer on the same terms to all holders of that
series.
Unless the applicable prospectus supplement specifies otherwise, we will
give notice of a redemption by mailing a notice to each record holder of the
shares to be redeemed, between 30 to 60 days prior to the date fixed for
redemption, unless we issue depositary shares representing interests in shares
of preferred stock, in which case we will send a notice to the depositary
between 40 to 70 days prior to the date fixed for redemption. We will mail the
notices to the holders' addresses as they appear on our stock records. Each
notice will state:
. the redemption date;
. the number of shares and the series of the preferred stock to be
redeemed;
. the redemption price;
. the place or places where holders can surrender the certificates for
the preferred stock for payment of the redemption price;
. that dividends on the shares to be redeemed will cease to accrue on
the redemption date; and
. the date when the holders' conversion rights, if any, will terminate.
If we redeem fewer than all shares of any series of the preferred stock held by
any holder, we will also specify the number of shares to be redeemed from the
holder in the notice.
If we have given notice of the redemption and have provided the funds for
the payment of the redemption price, then beginning on the redemption date:
. the dividends on the preferred stock called for redemption will no
longer accrue;
. those shares will no longer be considered outstanding; and
. the holders will no longer have any rights as stockholders except to
receive the redemption price.
When the holder properly surrenders the redeemed shares, the redemption price
will be paid out of the funds provided by us. If we redeem fewer than all of
the shares represented by any certificate, we will issue a new certificate
representing the unredeemed shares without cost to the holder.
If a redemption described above is deemed to be a "tender offer" within
the meaning of Rule 14e-1 under the Exchange Act, we will comply with all
applicable provisions of the Exchange Act.
CONVERSION OR EXCHANGE
The applicable prospectus supplement relating to a series of convertible
preferred stock will describe the terms on which shares of that series are
convertible into shares of common stock or a different series of preferred
stock or exchangeable for debt securities.
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RIGHTS UPON LIQUIDATION
Unless the applicable prospectus states otherwise, if we voluntarily or
involuntarily liquidate, dissolve or wind up our business, the holders of
shares of each series of the preferred stock offered under this prospectus and
any preferred stock ranking equal to the preferred stock offered under this
prospectus will be entitled to receive:
. liquidation distributions in the amount stated in the applicable
prospectus supplement; and
. all accrued and unpaid dividends, whether or not earned or declared.
We will pay these amounts to the holders of shares of each series of the
preferred stock, and all amounts owing on any preferred stock ranking equally
with such series of preferred stock as to distributions upon liquidation, out
of our assets available for distribution to stockholders before any
distribution is made to holders of any securities ranking junior to the series
of preferred stock upon liquidation.
The sale of all or substantially all of our property and assets, our
merger into or consolidation with any other corporation or the merger of any
other corporation into us will not be considered a dissolution, liquidation or
winding up of our business.
We will make pro rata distributions to the holders of a series of
preferred stock and any other shares of our stock ranking equal to that series
of preferred stock as to distributions upon dissolution, liquidation or winding
up of our business if
. we voluntarily or involuntarily liquidate, dissolve or wind up our
business, and
. we do not have enough assets available for distribution to the
holders of such series of preferred stock and any other shares of our
stock ranking equal with such series as to any such distribution to
pay all amounts to which the holders are entitled.
This means the distributions we pay to the holders of all shares ranking equal
as to distributions upon dissolution, liquidation or winding up of our business
will bear the same relationship to each other that the full distributable
amounts for which those holders are respectively entitled upon dissolution,
liquidation or winding up of our business bear to each other.
After we pay the full amount of the liquidation distribution to which the
holders of a series of the preferred stock are entitled, those holders will
have no right or claim to any of our remaining assets.
VOTING RIGHTS
Except as described in this section or in the applicable prospectus
supplement, or except as expressly required by applicable law, the holders of
the preferred stock will not be entitled to vote. If the holders of a series of
preferred stock are entitled to vote and the applicable prospectus supplement
does not state otherwise, then each share of preferred stock will have one
vote; provided, however, that under no circumstances will the holders of
preference stock have more than one vote per share. As more fully described
under "Description of Depositary Shares" below, if we issue depositary shares
representing fractional interests in a share of preferred stock, the holders of
each depositary share will be entitled to a fraction of a vote.
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For any series of preferred stock having one vote per share, the voting
power of the series, on matters on which holders of that series and holders of
any other series of preferred stock are entitled to vote as a single class,
will solely depend on the total number of shares in that series and not the
aggregate liquidation preference or initial offering price.
If we have not paid dividends on any series of preferred stock offered
under this prospectus for more than 540 days, the holders of that series,
together with the holders of outstanding shares of all other series of
preferred stock ranking equally to that series as to distribution upon
liquidation and having similar voting rights which are then exercisable, will
be entitled to vote for the election of two additional directors at the next
annual meeting of our stockholders. If the holders of a series of preferred
stock are entitled to elect two additional directors, then each share of
preferred stock will have one vote. In such case, the size of our board of
directors will increase by two directors. After we pay the full amount of
dividends to which the holders of the series of preferred stock are entitled,
those holders will no longer have a vote for the election of two additional
directors.
Unless we receive the consent of the holders of an outstanding series of
preferred stock and the outstanding shares of all other series of preferred
stock which
. rank equal with that series either as to dividends or the
distribution of assets upon liquidation, dissolution or winding up of
our business, and
. have voting rights that are exercisable and that are similar to those
of that series, we will not:
. authorize, create or issue, or increase the authorized or issued
amount of, any class or series of stock ranking prior to that
outstanding preferred stock with respect to payment of dividends
or the distribution of assets upon liquidation, dissolution or
winding up of our business; or
. amend, alter or repeal, whether by merger, consolidation or
otherwise, the provisions of our restated certificate of
incorporation, as amended, or of the resolutions contained in a
certificate of designation creating that series of the preferred
stock in a way that materially and adversely affects any right,
preference, privilege or voting power of that outstanding
preferred stock.
This consent must be given by the holders of at least two-thirds of all
outstanding preferred stock described in the preceding sentence, voting
together as a single class. However, we will not be required to obtain this
consent with respect to any amendment, alteration or repeal affecting the
rights, preferences, privileges or voting powers of preferred stock of the type
described above, if we only:
. increase the amount of the authorized preferred stock;
. create and issue another series of preferred stock; or
. increase the amount of authorized shares of any series of preferred
stock;
so long as that preferred stock in each case ranks equal with or junior to the
shares of preferred stock offered under this prospectus with respect to the
payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up of our business.
The holders of our tracking preferred stock, ESOP preferred stock, 1995
ESOP preferred stock, 1996 ESOP preferred stock, 1997 ESOP preferred stock,
1998 ESOP preferred stock, 1999
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ESOP preferred stock, series B preferred stock and series H preferred stock
described below under "--Outstanding Preferred Stock" have voting rights
similar to those described in this section.
OUTSTANDING PREFERRED STOCK
Unless we specify otherwise in the applicable prospectus supplement, the
preferred stock offered by this prospectus will rank equally in all respects
with our outstanding preferred stock. Our common stock, including the common
stock that may be issued upon conversion of preferred stock or in exchange for,
or upon conversion of, debt securities or upon exercise of securities warrants,
will be subject to any prior rights of the preferred stock then outstanding.
Therefore, the rights of the outstanding preferred stock described below and
any preferred stock that may be issued after the date hereof, may limit the
rights of the holders of the common stock. At March 31, 1999, we had
outstanding:
. 980,000 shares of cumulative tracking preferred stock, which we refer
to as our tracking preferred stock, of which 25,000 shares are held
by one of our subsidiaries;
. 9,661 shares of ESOP cumulative convertible preferred stock, which we
refer to as our ESOP preferred stock;
. 20,016 shares of 1995 ESOP cumulative convertible preferred stock,
which we refer to as our 1995 ESOP preferred stock;
. 21,466 shares of 1996 ESOP cumulative convertible preferred stock,
which we refer to as our 1996 ESOP preferred stock;
. 18,810 shares of 1997 ESOP cumulative convertible preferred stock,
which we refer to as our 1997 ESOP preferred stock;
. 8,740 shares of 1998 ESOP cumulative convertible preferred stock,
which we refer to as our 1998 ESOP preferred stock;
. 58,787 shares of 1999 ESOP cumulative convertible preferred stock,
which we refer to as our 1999 ESOP preferred stock;
. 1,500,000 shares of adjustable rate cumulative preferred stock,
series B, which we refer to as our series B preferred stock; and
. 4,000,000 shares of fixed/adjustable rate noncumulative preferred
stock, series H, which we refer to as our series H 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 our entire beneficial ownership interest in the
Class A preferred limited liability company interests, which we refer to as the
"Class A Preferred Securities," of Residential Home Mortgage, L.L.C.
The tracking preferred stock provides for per share cumulative annual
cash dividends in an amount equal to the product of the Dividend Rate, as
defined in the certificate of designations for the tracking preferred stock,
and $200.00. These dividends are 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
additional cash distributions that are based upon the results of operations of
Residential Home Mortgage, 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
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distributed or distributions paid to the holders of tracking preferred stock as
assignees of our interest in the Class A Preferred Securities of Residential
Home Mortgage will reduce dollar for dollar, respectively, the dividends and
distributions to which the holders of the tracking preferred stock would
otherwise be entitled under the terms of the certificate of designations for
the tracking preferred stock.
The tracking preferred stock is subject to redemption, in whole or in
part, at our option, at a per share price equal to the greater of:
. $200.00 per share, plus accrued and unpaid dividends thereon to the
date fixed for redemption; and
. the Fair Market Value of a Per Share Tracking Interest in Residential
Home Mortgage, as defined in the certificate of designations for the
tracking preferred stock.
Subject to 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 our interest in Class A
Preferred Securities of Residential Home Mortgage will reduce dollar for dollar
the amount of redemption payments to which the holders of tracking preferred
stock would otherwise be entitled under the terms of the certificate of
designations for the tracking preferred stock.
In the event of our voluntary or involuntary liquidation, dissolution or
winding up of our business, the holders of tracking preferred stock are
entitled to receive out of our assets available for distribution to
stockholders, before any distribution of assets is made to the holders of
common stock, a per share amount equal to the greater of:
. $200.00 per share, plus accrued and unpaid dividends to the date of
final distribution, and
. the Fair Market Value of a Per Share Tracking Interest in Residential
Home Mortgage, as defined in the certificate of designations for our
tracking preferred stock.
Any liquidation payments received by a holder of tracking preferred stock as an
assignee of our interest in Class A Preferred Securities of Residential Home
Mortgage 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 our tracking preferred stock, provided that
no reduction shall result from a payment made prior to December 31, 1999 in
connection with the voluntary dissolution of Residential Home Mortgage.
Except as required by law, the holders of tracking preferred stock are
not entitled to vote, except under the limited circumstances described above
under "--Voting Rights". The tracking preferred stock does not have preemptive
rights and is not subject to any sinking fund, and we are not otherwise
obligated to repurchase or redeem the tracking preferred stock.
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 annual rate of 9% 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
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Savings Trust, or any successor to that plan, which we refer to as the Savings
Investment Plan in this prospectus. The ESOP preferred stock is subject to
redemption, in whole or in part, at our option, at a price equal to the higher
of:
. $1,000.00 per share, plus accrued and unpaid dividends thereon to the
date fixed for redemption; and
. the Fair Market Value per share of ESOP preferred stock, as that term
is used in the certificate of designations for the ESOP preferred
stock, on the date fixed for redemption.
The ESOP preferred stock is mandatorily convertible, without any further
action on our part or on the part of the holder, into common stock at the then-
applicable Conversion Price, as defined in the certificate of designations for
the ESOP preferred stock, when:
. the ESOP preferred stock is released from the unallocated reserve of
the Savings Investment Plan in accordance with the terms of that
Plan; or
. when record ownership of the shares of ESOP preferred stock is
transferred to any person other than a successor trustee under the
Savings Investment Plan.
In addition, a holder of ESOP preferred stock is entitled, at any time before
the date fixed for redemption, to convert shares of ESOP preferred stock held
by that holder into shares of common stock at the then-applicable Conversion
Price.
In the event of our voluntary or involuntary liquidation, dissolution or
winding up of our business, the holders of ESOP preferred stock are entitled to
receive out of our assets available for distribution to stockholders, before
any distribution of assets is made to holders of 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 above under
"--Voting Rights". The ESOP preferred stock does not have preemptive rights and
is not subject to any sinking fund and we are not otherwise obligated 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 annual rate of 10% 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 Savings Investment
Plan. The 1995 ESOP preferred stock is subject to redemption, in whole or in
part, at our option, at a price equal to the higher of:
. $1,000.00 per share, plus accrued and unpaid dividends thereon to the
date fixed for redemption; and
. the Fair Market Value per share of 1995 ESOP preferred stock, as that
term is used in the certificate of designations for the 1995 ESOP
preferred stock, on the date fixed for redemption.
The 1995 ESOP preferred stock is mandatorily convertible, without any
further action on our part or on the part of the holder, into common stock at
the then-applicable Conversion Price, as that term is used in the certificate
of designations for our 1995 ESOP preferred stock, when:
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. the 1995 ESOP preferred stock is released from the unallocated
reserve of the Savings Investment Plan in accordance with the terms
of that Plan; or
. when a record ownership of the shares of 1995 ESOP preferred stock is
transferred to any person other than a successor trustee under the
Savings Investment Plan.
In addition, a holder of 1995 ESOP preferred stock is entitled, at any time
before the date fixed for redemption, to convert shares of 1995 ESOP preferred
stock held by that holder into shares of common stock at the then-applicable
Conversion Price.
In the event of our voluntary or involuntary liquidation, dissolution or
winding up of our business, the holders of 1995 ESOP preferred stock are
entitled to receive out of our assets available for distribution to
stockholders, before any distribution of assets is made to holders of 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 above
under "--Voting Rights". The 1995 ESOP preferred stock does not have preemptive
rights and is not subject to any sinking fund and we are not otherwise
obligated to repurchase or redeem the 1995 ESOP preferred stock.
1996 ESOP 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 annual rate of $85.00, $90.00 or $95.00
based on the Current Market Price, as that term is used in the certificate of
designations for the 1996 ESOP preferred stock, of one share of 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 Savings Investment
Plan. The 1996 ESOP preferred stock is subject to redemption, in whole or in
part, at our option, at a price equal to the higher of:
. $1,000.00 per share, plus accrued and unpaid dividends thereon to the
date fixed for redemption; and
. the Fair Market Value per share of 1996 ESOP preferred stock, as that
term is used in the certificate of designations for the 1996 ESOP
preferred stock, on the date fixed for redemption.
The 1996 ESOP preferred stock is mandatorily convertible, without any
further action on our part or on the part of the holder, into common stock at
the applicable Conversion Price, as that term is used in the certificate of
designations for the 1996 ESOP preferred stock, when:
. the 1996 ESOP preferred stock is released from the unallocated
reserve of the Savings Investment Plan in accordance with the terms
of that Plan; or
. when record ownership of the shares of 1996 ESOP preferred stock is
transferred to any person other than a successor trustee under the
Savings Investment Plan.
In addition, a holder of 1996 ESOP preferred stock is entitled, at any time
before the date fixed for redemption, to convert shares of 1996 ESOP preferred
stock held by that holder into shares of common stock at the then-applicable
Conversion Price.
In the event of our voluntary or involuntary liquidation, dissolution or
winding up of our business, the holders of 1996 ESOP preferred stock are
entitled to receive out of our assets available for distribution to
stockholders, before any distribution of assets is made to holders of common
stock, $1,000.00 per share, plus accrued and unpaid dividends.
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Except as required by law, the holders of 1996 ESOP preferred stock are
not entitled to vote, except under the limited circumstances described above
under "--Voting Rights". The 1996 ESOP preferred stock does not have preemptive
rights and is not subject to any sinking fund and we are not otherwise
obligated to repurchase or redeem the 1996 ESOP preferred stock.
1997 ESOP PREFERRED STOCK. The 1997 ESOP preferred stock has a stated
value of $1,000.00 per share. The 1997 ESOP preferred stock provides for
cumulative quarterly dividends at the annual rate of $95.00, $100.00 or $105.00
based on the Current Market Price, as that term is used in the certificate of
designations for the 1997 ESOP preferred stock, of one share of common stock as
of a fixed trading date. All outstanding shares of 1997 ESOP preferred stock
are held of record by a trustee acting on behalf of the Savings Investment
Plan. The 1997 ESOP preferred stock is subject to redemption, in whole or in
part, at our option, at a price equal to the higher of:
. $1,000.00 per share, plus accrued and unpaid dividends thereon to the
date fixed for redemption; and
. the Fair Market Value per share of 1997 ESOP preferred stock, as that
term is used in the certificate of designations for the 1997 ESOP
preferred stock, on the date fixed for redemption.
The 1997 ESOP preferred stock is mandatorily convertible, without any
further action on our part or on the part of the holder, into common stock at
the applicable Conversion Price, as that term is used in the certificate of
designations for the 1997 ESOP preferred stock, when:
. the 1997 ESOP preferred stock is released from the unallocated
reserve of the Savings Investment Plan in accordance with the terms
of that Plan; or
. when record ownership of the shares of 1997 ESOP preferred stock is
transferred to any person other than a successor trustee under the
Savings Investment Plan.
In addition, a holder of 1997 ESOP preferred stock is entitled, at any time
before the date fixed for redemption, to convert shares of 1997 ESOP preferred
stock held by that holder into shares of common stock at the then-applicable
Conversion Price.
In the event of our voluntary or involuntary liquidation, dissolution or
winding up of our business, the holders of 1997 ESOP preferred stock are
entitled to receive out of our assets available for distribution to
stockholders, before any distribution of assets is made to holders of common
stock, $1,000.00 per share, plus accrued and unpaid dividends.
Except as required by law, the holders of 1997 ESOP preferred stock are
not entitled to vote, except under the limited circumstances described above
under "--Voting Rights". The 1997 ESOP preferred stock does not have preemptive
rights and is not subject to any sinking fund and we are not otherwise
obligated to repurchase or redeem the 1997 ESOP preferred stock.
1998 ESOP PREFERRED STOCK. The 1998 ESOP preferred stock has a stated
value of $1,000.00 per share. The 1998 ESOP preferred stock provides for
cumulative quarterly dividends at the annual rate of $107.50, $112.50 or
$117.50 based on the Current Market Price, as that term is used in the
certificate of designations for the 1998 ESOP preferred stock, of one share of
common stock as of a fixed trading date. All outstanding shares of 1998 ESOP
preferred stock are held of record by a trustee acting on behalf of the Savings
Investment Plan. The 1998 ESOP preferred stock is subject to redemption, in
whole or in part, at our option, at a price equal to the higher of:
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. $1,000.00 per share, plus accrued and unpaid dividends thereon to the
date fixed for redemption; and
. the Fair Market Value per share of 1998 ESOP preferred stock, as that
term is used in the certificate of designations for the 1998 ESOP
preferred stock, on the date fixed for redemption.
The 1998 ESOP preferred stock is mandatorily convertible, without any
further action on our part or on the part of the holder, into common stock at
the applicable Conversion Price, as that term is used in the certificate of
designations for the 1998 ESOP preferred stock, when:
. the 1998 ESOP preferred stock is released from the unallocated
reserve of the Savings Investment Plan in accordance with the terms
of that Plan; or
. when record ownership of the shares of 1998 ESOP preferred stock is
transferred to any person other than a successor trustee under the
Savings Investment Plan.
In addition, a holder of 1998 ESOP preferred stock is entitled, at any time
before the date fixed for redemption, to convert shares of 1998 ESOP preferred
stock held by that holder into shares of common stock at the then-applicable
Conversion Price.
In the event of our voluntary or involuntary liquidation, dissolution or
winding up of our business, the holders of 1998 ESOP preferred stock are
entitled to receive out of our assets available for distribution to
stockholders, before any distribution of assets is made to holders of common
stock, $1,000.00 per share, plus accrued and unpaid dividends.
Except as required by law, the holders of 1998 ESOP preferred stock are
not entitled to vote, except under the limited circumstances described above
under "--Voting Rights". The 1998 ESOP preferred stock does not have preemptive
rights and is not subject to any sinking fund and we are not otherwise
obligated to repurchase or redeem the 1998 ESOP preferred stock.
1999 ESOP PREFERRED STOCK. The 1999 ESOP preferred stock has a stated
value of $1,000.00 per share. The 1999 ESOP preferred stock provides for
cumulative quarterly dividends at the annual rate of $103.00, $108.00 or
$113.00 based on the Current Market Price, as that term is used in the
certificate of designations for the 1999 ESOP preferred stock, of one share of
common stock as of a fixed trading date. All outstanding shares of 1999 ESOP
preferred stock are held of record by a trustee acting on behalf of the Savings
Investment Plan. The 1999 ESOP preferred stock is subject to redemption, in
whole or in part, at our option, at a price equal to the higher of:
. $1,000.00 per share, plus accrued and unpaid dividends thereon to the
date fixed for redemption; and
. the Fair Market Value per share of 1999 ESOP preferred stock, as that
term is used in the certificate of designations for the 1999 ESOP
preferred stock, on the date fixed for redemption.
The 1999 ESOP preferred stock is mandatorily convertible, without any
further action on our part or on the holder, into common stock at the
applicable Conversion Price, as that term is used in the certificate of
designations for the 1999 ESOP preferred stock, when:
. the 1999 ESOP preferred stock is released from the unallocated
reserve of the Savings Investment Plan in accordance with the terms
of that Plan; or
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. when record ownership of the shares of 1999 ESOP preferred stock is
transferred to any person other than a successor trustee under the
Savings Investment Plan.
In addition, a holder of 1999 ESOP preferred stock is entitled, at any time
before the date fixed for redemption, to convert shares of 1999 ESOP preferred
stock held by that holder into shares of common stock at the then-applicable
Conversion Price.
In the event of our voluntary or involuntary liquidation, dissolution or
winding up of our business, the holders of 1999 ESOP preferred stock are
entitled to receive out of our assets available for distribution to
stockholders, before any distribution of assets is made to holders of common
stock, $1,000.00 per share, plus accrued and unpaid dividends.
Except as required by law, the holders of 1999 ESOP preferred stock are
not entitled to vote, except under the limited circumstances described above
under "--Voting Rights". The 1999 ESOP preferred stock does not have preemptive
rights and is not subject to any sinking fund and we are not otherwise
obligated to repurchase or redeem the 1999 ESOP preferred stock.
SERIES B PREFERRED STOCK. The series B preferred stock provides for
quarterly cumulative dividends. Each quarterly dividend payment equals $50.00
multiplied by the dividend rate for that dividend period, divided by four. The
dividend rate for a given dividend payment is equal to 76% of the highest of:
. the three-month Treasury Bill Rate;
. the Ten Year Constant Maturity Rate; or
. the Twenty Year Constant Maturity Rate, as each term is used in the
certificate of designations for the series B preferred stock.
In no event, however, will the dividend rate be less than 5.5% on an
annual basis or greater than 10.5% on an annual basis. The series B preferred
stock is subject to redemption, in whole or in part, at our option, at a per
share price equal to $50.00, plus accrued and unpaid dividends thereon to the
date fixed for redemption.
In the event of our voluntary or involuntary liquidation, dissolution or
winding up of our business, the holders of series B preferred stock are
entitled to receive out of our assets available for distribution to
stockholders, before any distribution of assets is made to the holders of
common stock, a per share amount equal to $50.00, plus accrued and unpaid
dividends to the date of final distribution.
Except as required by law, the holders of series B preferred stock are
not entitled to vote, except under the limited circumstances described above
under "--Voting Rights". Holders of series B preferred stock have no rights to
convert their shares into or exchange their shares for any other shares of our
capital stock. The series B preferred stock does not have preemptive rights and
is not subject to any sinking fund, and we are not otherwise obligated to
repurchase or redeem the series B preferred stock. Our outstanding shares of
series B preferred stock are listed on the New York Stock Exchange under the
symbol "WFCPRB".
SERIES H PREFERRED STOCK. The series H preferred stock provides for
quarterly noncumulative dividends. The dividend rate for each quarter through
October 1, 2001 will be based upon an annual rate of 6.59%, and any quarterly
dividend will equal the amount obtained by multiplying $50.00 by the quarterly
dividend rate. The quarterly dividend rate through October 1, 2001 equals
1.6475%, or
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6.59% divided by four. After October 1, 2001, the dividend rate for each
quarter will be based upon an annual rate equal to .44% plus the highest of:
. the Treasury Bill Rate;
. the Ten Year Constant Maturity Rate; or
. the Thirty Year Constant Maturity Rate, as each term is used in the
certificate of designations for the series H preferred stock.
We may be required to adjust this rate, however, in the case of amendments to
the Internal Revenue Code of 1986. In no event will the annual dividend rate
after October 1, 2001 be less than 7% or greater than 13%. Any quarterly
dividend paid after October 1, 2001 will equal the amount obtained by
multiplying $50.00 by the quarterly dividend rate, or the annual dividend rate
divided by four.
Except as set forth below, we may not redeem the series H preferred stock
before October 1, 2001. At any time after October 1, 2001, we may redeem the
series H preferred stock, in whole or in part, at our option, at a per share
price equal to $50.00, plus accrued and unpaid dividends to the date fixed for
redemption. Notwithstanding the foregoing, we may redeem all, but not less than
all, of the outstanding shares of series H preferred stock at any time at our
option if the percentage of dividends received deduction as specified in
Section 243(a)(1) of the Internal Revenue Code of 1986 or any successor
provision is equal to or less than 40% and as a result the dividends payable on
the series H preferred stock will be adjusted upward as specified in the
certificate of designations for the series H preferred stock. In this event,
the per share redemption price will initially equal $51.50, plus accrued and
unpaid dividends from the immediately preceding dividend payment date, whether
or not earned or declared, and the redemption price will decrease each twelve-
month period thereafter by $.50 but not below $50.00 plus accrued and unpaid
dividends from the immediately preceding dividend payment date, whether or not
earned or declared.
In the event of our voluntary or involuntary liquidation, dissolution or
winding up of our business, the holders of series H preferred stock are
entitled to receive out of our assets available for distribution to
stockholders, before any distribution of assets is made to the holders of
common stock, a per share amount equal to $50.00, plus an amount equal to all
dividends, whether or not earned or declared, from the immediately preceding
dividend payment date to the date of final distribution. Holders of series H
preferred stock will not be entitled to receive payment for unpaid dividends
for any periods before the immediately preceding dividend payment date.
Except as required by law, the holders of series H preferred stock are
not entitled to vote, except under the limited circumstances described above
under "--Voting Rights". Holders of series H preferred stock have no rights to
convert their shares into or exchange their shares for any other shares of our
capital stock. The series H preferred stock does not have preemptive rights and
is not subject to any sinking fund and we are not otherwise obligated to
repurchase or redeem the series H preferred stock.
DESCRIPTION OF DEPOSITARY SHARES
This section describes the general terms and provisions of the depositary
shares. The prospectus supplement will describe the specific terms of the
depositary shares offered through that prospectus supplement and any general
terms outlined in this section that will not apply to those depositary shares.
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We have summarized the material terms and provisions of the deposit
agreement, the depositary shares and the depositary receipts in this section.
We have also filed the form of deposit agreement, including the form of
depositary receipt, as an exhibit to the registration statement. You should
read the forms of deposit agreement and depositary receipt relating to a series
of preferred stock for additional information before you buy any depositary
shares that represent preferred stock of that series.
GENERAL
We may offer fractional interests in preferred stock, rather than full
shares of preferred stock. If we do, we will provide for the issuance by a
depositary to the public of receipts for depositary shares, each of which will
represent a fractional interest in a share of a particular series of preferred
stock.
The shares of any series of preferred stock underlying the depositary
shares will be deposited under a separate deposit agreement between us and a
bank or trust company having its principal office in the United States and
having a combined capital and surplus of at least $50 million, which we refer
to in this prospectus as the depositary. We will name the depositary in the
applicable prospectus supplement. Subject to the terms of the deposit
agreement, each owner of a depositary share will have a fractional interest in
all the rights and preferences of the preferred stock underlying the depositary
share. Those rights include any dividend, voting, redemption, conversion and
liquidation rights.
The depositary shares will be evidenced by depositary receipts issued
under the deposit agreement. If you purchase fractional interests in shares of
the related series of preferred stock, you will receive depositary receipts as
described in the applicable prospectus supplement. While the final depositary
receipts are being prepared, we may order the depositary to issue temporary
depositary receipts substantially identical to the final depositary receipts
although not in final form. The holders of the temporary depositary receipts
will be entitled to the same rights as if they held the depositary receipts in
final form. Holders of the temporary depositary receipts can exchange them for
the final depositary receipts at our expense.
Unless we specify otherwise in the applicable prospectus supplement, you
will not be entitled to receive the whole shares of preferred stock underlying
the depositary shares.
DIVIDENDS AND OTHER DISTRIBUTIONS
The depositary will distribute all cash dividends or other cash
distributions received with respect to the preferred stock to the record
holders of depositary shares representing the shares of preferred stock in
proportion to the numbers of depositary shares owned by the holders on the
relevant record date. The depositary will not distribute amounts less than one
cent. The depositary will distribute any balance with the next sum received for
distribution to record holders of depositary shares.
If there is a distribution other than in cash, the depositary will
distribute property to the holders of depositary shares, unless the depositary
determines that it is not feasible to make the distribution. If this occurs,
the depositary may, with our approval, sell the property and distribute the net
proceeds from the sale to the holders of depositary shares.
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The deposit agreement will also contain provisions relating to how any
subscription or similar rights offered by us to holders of the preferred stock
will be made available to the holders of depositary shares.
CONVERSION AND EXCHANGE
If any series of preferred stock underlying the depositary shares is
subject to conversion or exchange, the applicable prospectus supplement will
describe the rights or obligations of each record holder of depositary receipts
to convert or exchange the depositary shares.
REDEMPTION OF DEPOSITARY SHARES
If the series of the preferred stock underlying the depositary shares is
subject to redemption, all or a part of the depositary shares will be redeemed
from the redemption proceeds of that series of the preferred stock held by the
depositary. The depositary will mail notice of redemption between 30 to 60 days
prior to the date fixed for redemption to the record holders of the depositary
shares to be redeemed at their addresses appearing in the depositary's records.
The redemption price per depositary share will bear the same relationship to
the redemption price per share of preferred stock that the depositary share
bears to the underlying preferred stock. Whenever we redeem preferred stock
held by the depositary, the depositary will redeem, as of the same redemption
date, the number of depositary shares representing the preferred stock
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
determined by the depositary.
After the date fixed for redemption, the depositary shares called for
redemption will no longer be outstanding. When the depositary shares are no
longer outstanding, all rights of the holders will cease, except the right to
receive money or other property that the holders of the depositary shares were
entitled to receive upon the redemption. Payments will be made when holders
surrender their depositary receipts to the depositary.
VOTING THE PREFERRED STOCK
When the depositary receives notice of any meeting at which the holders
of the preferred stock may vote, the depositary will mail information about the
meeting contained in the notice, and any accompanying proxy materials, to the
record holders of the depositary shares relating to the preferred stock. Each
record holder of such depositary shares on the record date, which will be the
same date as the record date for the preferred stock, will be entitled to
instruct the depositary as to how the preferred stock underlying the holder's
depositary shares should be voted.
The depositary will try, if practical, to vote the number of shares of
preferred stock underlying the depositary shares according to the instructions
received. We will agree to take all action requested by and deemed necessary by
the depositary in order to enable the depositary to vote the preferred stock in
that manner. The depositary will not vote any preferred stock for which it does
not receive specific instructions from the holders of the depositary shares
relating to such preferred stock.
TAXATION
Owners of depositary shares will be treated for federal income tax
purposes as if they were owners of the preferred stock represented by the
depositary shares. Accordingly, for federal income
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tax purposes they will have the income and deductions to which they would be
entitled if they were holders of the preferred stock. In addition:
. no gain or loss will be recognized for federal income tax purposes
upon the withdrawal of preferred stock in exchange for depositary
shares as provided in the deposit agreement;
. the tax basis of each share of preferred stock to an exchanging owner
of depositary shares will, upon the exchange, be the same as the
aggregate tax basis of the depositary shares exchanged for such
preferred stock; and
. the holding period for the preferred stock, in the hands of an
exchanging owner of depositary shares who held the depositary shares
as a capital asset at the time of the exchange, will include the
period that the owner held the depositary shares.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of depositary receipt evidencing the depositary shares and any
provision of the deposit agreement may be amended by agreement between us and
the depositary at any time. However, any amendment that materially and
adversely alters the rights of the existing holders of depositary shares will
not be effective unless approved by the record holders of at least a majority
of the depositary shares then-outstanding. A deposit agreement may be
terminated by us or the depositary only if:
. all outstanding depositary shares relating to the deposit agreement
have been redeemed; or
. there has been a final distribution on the preferred stock of the
relevant series in connection with our liquidation, dissolution or
winding up of our business and the distribution has been distributed
to the holders of the related depositary shares.
CHARGES OF DEPOSITARY
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. We will pay
associated charges of the depositary for the initial deposit of the preferred
stock and any redemption of the preferred stock. Holders of depositary shares
will pay transfer and other taxes and governmental charges and any other
charges that are stated to be their responsibility in the deposit agreement.
MISCELLANEOUS
We will forward to the depositary, for distribution to the holders of
depositary shares, all reports and communications that we must furnish to the
holders of the preferred stock.
Neither the depositary nor we will be liable if the depositary is
prevented or delayed by law or any circumstance beyond its control in
performing its obligations under the deposit agreement. Our obligations and the
depositary's obligations under the deposit agreement will be limited to
performance in good faith of duties set forth in the deposit agreement. Neither
the depositary nor we will be obligated to prosecute or defend any legal
proceeding connected with any depositary shares or preferred stock unless
satisfactory indemnity is furnished to us and/or the depositary. We and the
depositary may rely upon written advice of counsel or accountants, or
information provided by
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persons presenting preferred stock 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 notice to us. We may
also remove the depositary at any time. Resignations or removals will take
effect when a successor depositary is appointed and it accepts the appointment.
The 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 million.
DESCRIPTION OF COMMON STOCK
This section describes the general terms and provisions of the shares of
our common stock. The prospectus supplement will describe the specific terms of
the common stock offered through that prospectus supplement and any general
terms outlined in this section that will not apply to that common stock.
We have summarized the material terms and provisions of the common stock
in this section. We have also filed our restated certificate of incorporation,
as amended, our bylaws and the certificate of designation relating to our
series C junior participating preferred stock, referred to in this prospectus
as our series C preferred stock, as exhibits to the registration statement. You
should read our restated certificate of incorporation, as amended, and our
bylaws and the certificate of designation relating to the series C preferred
stock for additional information before you buy any securities which may be
exercised or exchangeable for or converted into common stock.
GENERAL
SHARES OUTSTANDING. As of March 31, 1999, our authorized common stock was
4,000,000,000 shares. From these authorized shares, we had issued 1,666,095,285
shares, of which 1,652,616,366 shares were outstanding and 13,478,919 shares
were held as treasury shares.
DIVIDENDS. Holders of common stock may receive dividends when declared by
our board of directors out of our funds that we can legally use to pay
dividends. We may pay dividends in cash, stock or other property. In certain
cases, holders of common stock may not receive dividends until we have
satisfied our obligations to any holders of outstanding preferred stock. Other
restrictions on our ability to pay dividends are described below under "--
Dividend Restrictions" and above under "Description of Preferred Stock--
Outstanding Preferred Stock."
VOTING RIGHTS. Holders of common stock have the exclusive power to vote
on all matters presented to our stockholders unless Delaware law or the
certificate of designation for an outstanding series of preferred stock gives
the holders of that preferred stock the right to vote on certain matters. Each
holder of common stock is entitled to one vote per share. Holders of common
stock have no cumulative voting rights for the election of directors. This
means a holder of a single share of common stock cannot cast more than one vote
for each position to be filled on our board of directors.
OTHER RIGHTS. If we voluntarily or involuntarily liquidate, dissolve or
wind up our business, holders of common stock will receive pro rata, according
to shares held by them, any of our
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remaining assets available for distribution to stockholders after we have
provided for payment of all debts and other liabilities, including any
liquidation preference for outstanding shares of preferred stock. When we issue
securities in the future, holders of common stock have no preemptive rights.
This means the holders of common stock have no right, as holders of common
stock, to buy any portion of those issued securities. Each share of common
stock includes a right to purchase series C preferred stock if certain
conditions occur. The conditions under which a holder may exercise that
purchase right are discussed below under the heading "--Rights Agreement".
LISTING. Our outstanding shares of common stock are listed on the New
York Stock Exchange and Chicago Stock Exchange under the symbol "WFC." Norwest
Bank Minnesota, N.A. serves as the transfer agent and registrar for the common
stock.
FULLY PAID. The outstanding shares of common stock are fully paid and
nonassessable. This means the full purchase price for the outstanding shares of
common stock has been paid and the holders of such shares will not be assessed
any additional amounts for such shares. Any additional common stock that we may
issue in the future upon the conversion or exercise of other securities offered
under this prospectus will also be fully paid and nonassessable.
RESTRICTIONS ON PAYMENT OF DIVIDENDS
We are incorporated in Delaware and are governed by the Delaware General
Corporation Law. Delaware law allows a corporation to pay dividends only out of
surplus, as determined under Delaware law, or, if there is no surplus, out of
net profits for the fiscal year in which the dividend was declared and for the
preceding fiscal year. However, under Delaware law, we cannot pay dividends out
of net profits if, after we pay the dividend, our capital would be less than
the capital represented by the outstanding stock of all classes having a
preference upon the distribution of our assets.
ANTI-TAKEOVER PROVISIONS CONTAINED IN THE CERTIFICATE OF INCORPORATION AND
BYLAWS
Certain provisions of our restated certificate of incorporation, as
amended, may make it less likely that our management would be changed or
someone would acquire voting control of our company without our board's
consent. These provisions may delay, deter or prevent tender offers or takeover
attempts that stockholders may believe are in their best interests, including
tender offers or attempts that might allow stockholders to receive premiums
over the market price of their common stock.
PREFERRED STOCK. Our board of directors can at any time, under our
restated certificate of incorporation, as amended, and without stockholder
approval, issue one or more new series of preferred stock. In some cases, the
issuance of preferred stock without stockholder approval could discourage or
make more difficult attempts to take control of our company through a merger,
tender offer, proxy contest or otherwise. Preferred stock with special voting
rights or other features issued to persons favoring our management could stop a
takeover by preventing the person trying to take control of our company from
acquiring enough voting shares necessary to take control.
NOMINATION PROCEDURES. In addition to our board of directors,
stockholders can nominate candidates for our board of directors. However, a
stockholder must follow the advance notice procedures described in Section 16
of our bylaws. In general, a stockholder must submit a written notice of the
nomination to our corporate secretary at least 30 but not more than 60 days
before a scheduled meeting of our stockholders.
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PROPOSAL PROCEDURES. Stockholders can propose that business other than
nominations to our board of directors be considered at an annual meeting of
stockholders only if a stockholder follows the advance notice procedures
described in our bylaws. In general, a stockholder must submit a written notice
of the proposal and the stockholder's interest in the proposal to our corporate
secretary at least 90 but not more than 120 days before the date set for the
annual meeting of our stockholders.
AMENDMENT OF BYLAWS. Under our bylaws, our board of directors can adopt,
amend or repeal the bylaws, subject to limitations under the Delaware General
Corporation Law. Our stockholders also have the power to change or repeal our
bylaws.
RIGHTS AGREEMENT
Each share of our common stock, including those that may be issued upon
the conversion or exercise of other securities offered under this prospectus,
carries with it one preferred share purchase right, referred to in this
prospectus as a "Right." If the Rights become exercisable, each Right entitles
the registered holder to purchase one one-thousandth of a share of the series C
preferred stock, subject to a proportionate decrease in the fractional number
of shares of series C preferred stock that may be purchased if a stock split,
stock dividend or similar transaction occurs with respect to the common stock
and a proportionate increase in the event of a reverse stock split. Until a
Right is exercised, the holder of the Right has no right to vote or receive
dividends or any other rights as a stockholder as a result of holding the
Right. The description and terms of the Rights are described in the Rights
Agreement, dated as of October 21, 1998, between us and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent, that has been filed with the SEC as an
exhibit to the registration statement.
The Rights trade automatically with shares of common stock. A holder of
common stock may exercise the Rights only under the circumstances described
below. The Rights will generally cause substantial dilution to a person or
group that attempts to acquire us on terms not approved by our board of
directors. The Rights should not interfere with any merger or other business
combination that our board of directors approves since we may redeem the Rights
before a person or group acquires 15% or more of the outstanding shares of our
common stock. The Rights may, but are not intended to, deter takeover proposals
that may be in the interests of our stockholders.
Shares of series C preferred stock will rank junior to all other series
of our preferred stock, including the preferred stock offered under this
prospectus, if our board, in creating such preferred stock, provides that they
will rank senior to our series C preferred stock. If our stockholders purchase
series C preferred stock, we cannot repurchase that stock from stockholders who
do not want to resell it. Subject to the rights of our senior securities, a
holder of the series C preferred stock will be entitled, for each share owned,
to:
. a quarterly dividend payment equal to the greater of
. $10.00 per share, or
. 1,000 times the aggregate of all dividends declared per share of
common stock,
before any amounts are distributed to holders of common stock or any
other capital stock ranking junior to the series C preferred stock
either as to dividends or upon our liquidation, dissolution or
winding up of our business, so that if the dividend is not paid on
the series C preferred stock in one or more quarters, no dividend may
be paid on common stock or such other junior capital stock until all
previously unpaid dividends on series C preferred stock have been
paid;
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. a liquidation payment equal to the greater of
. $1,000 per share plus all accrued and unpaid dividends, or
. 1,000 times the payment made per share of common stock, if we
liquidate our company,
before any amounts are distributed to holders of common stock or any
other capital stock ranking junior to the series C preferred stock
either as to dividends or upon our liquidation, dissolution or
winding up of our business;
. receive 1,000 times the amount received per share of common stock in
the event of any merger, consolidation, statutory share exchange or
other similar transaction; and
. 1,000 votes per share and will vote together with the common stock
unless applicable law requires otherwise.
These rights of the series C preferred stock are protected by customary
antidilution provisions which automatically increase dividend, liquidation,
merger and voting rights in proportion to increases in common stock resulting
from stock dividends, stock splits and similar transactions. These rights are
proportionately decreased in the event of decreases in common stock resulting
from reverse stock splits and similar transactions.
The purchase price for each one one-thousandth of a share of series C
preferred stock is $160. We must adjust the purchase price if certain events
occur, such as:
. if we pay stock dividends on the series C preferred stock or split
the series C preferred stock;
. if we declare a reverse stock split on the series C preferred stock;
or
. if we issue any shares of capital stock in a reclassification of the
series C preferred stock to holders of series C preferred stock.
We are not required to adjust the purchase price, however, until cumulative
adjustments equal or exceed 1% of the purchase price.
Holders may exercise their Rights only following a distribution date. A
distribution date will occur on the earlier of:
. 10 days after a public announcement that a person or group acquired
15% or more of the outstanding shares of common stock; or
. 10 business days after a person or group makes or announces an offer
to purchase common stock, which, if successful, would result in the
acquisition of 15% or more of the outstanding shares of common stock.
The Rights have additional features that will be triggered upon the
occurrence of specified events, including:
. if a person or group acquires 15% or more of the outstanding shares
of common stock, holders of the Rights, other than such person or
group whose Rights will have become void, may purchase our common
stock, instead of our Series C preferred stock, at 50% of the market
value of the purchased common stock;
. if a person or group acquires 15% or more of the outstanding shares
of common stock, our board of directors may, at any time before the
person or group acquires 50% or
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more of the outstanding shares of common stock, exchange all or part
of the Rights, other than Rights held or previously held by the 15%
or greater stockholder, for common stock or equivalent securities at
an exchange ratio per Right equal to the exercise price of a Right
divided by the current per share market price of the common stock,
subject to adjustment; and
. if our company is involved in certain business combinations or the
sale of 50% or more of our assets or earning power after a person or
group acquires 15% or more of our outstanding common stock, the
holders of the Rights, other than such person or group whose Rights
will have become void, may purchase common stock of the acquiror or
an affiliated company at 50% of market value.
Any time before a person or group acquires 15% or more of the
outstanding shares of common stock, our board of directors may redeem all of
the Rights at a price of $.01 per Right, subject to adjustment for stock
dividends, stock splits and similar transactions. Our board of directors in
its sole discretion may establish the effective time, basis and conditions of
the redemption. Immediately upon redemption of the Rights, the holder can no
longer exercise the Rights and can only receive the redemption price described
above.
The Rights will expire on November 23, 2008, unless we redeem or
exchange them before then or extend the expiration date. Our board of
directors may amend the terms of the Rights without the consent of the holders
of the Rights at any time before the distribution date in any manner our board
deems desirable, including reducing certain thresholds described above to the
greater of:
. the sum of .001% and the largest percentage of outstanding common
stock that we know a person or group owns; or
. 10%.
Our board of directors may amend the terms of the Rights without the consent
of the holders of the Rights after the distribution date only if the amendment
does not adversely affect the interests of the holders of the Rights.
DESCRIPTION OF SECURITIES WARRANTS
This section describes the general terms and provisions of the
securities warrants. The prospectus supplement will describe the specific
terms of the securities warrants offered through that prospectus supplement
and any general terms outlined in this section that will not apply to those
securities warrants.
We may issue warrants for the purchase of debt securities, preferred
stock, depositary shares or common stock. Securities warrants may be issued
alone or together with debt securities, preferred stock or depositary shares
offered by any prospectus supplement and may be attached to or separate from
those securities. Each series of securities warrants will be issued under a
separate securities warrant agreement between us and a bank or trust company,
as securities warrant agent, which will be described in the applicable
prospectus supplement. The securities warrant agent will act solely as our
agent in connection with the securities warrants and will not act as an agent
or trustee for any holders of securities warrants.
We have summarized the material terms and provisions of the securities
warrant agreements and securities warrants in this section. We have also filed
the forms of securities warrant agreements
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and the certificates representing the securities warrants as exhibits to the
registration statement. You should read the applicable forms of securities
warrant agreement and securities warrant certificate for additional information
before you buy any securities warrants.
GENERAL
If we offer securities warrants, the applicable prospectus supplement
will describe their terms. If securities warrants for the purchase of debt
securities are offered, the applicable prospectus supplement will describe the
terms of those securities warrants, including the following if applicable:
. the offering price;
. the currencies in which the securities warrants are being offered;
. the designation, aggregate principal amount, currencies,
denominations and terms of the series of the debt securities that can
be purchased if a holder exercises the securities warrants;
. the designation and terms of any series of debt securities, preferred
stock or depositary shares with which the securities warrants are
being offered and the number of securities warrants offered with each
debt security, share of preferred stock or depositary share;
. the date on and after which the holder of the securities warrants can
transfer them separately from the related series of debt securities,
preferred stock or depositary shares;
. the principal amount of the series of debt securities that can be
purchased if a holder exercises the securities warrant and the price
at which and currencies in which the principal amount may be
purchased upon exercise;
. the date on which the right to exercise the securities warrants
begins and the date on which the right expires;
. whether the securities warrants will be in registered or bearer form;
. United States federal income tax consequences; and
. any other terms of the securities warrants.
Unless we state otherwise in the applicable prospectus supplement, the
securities warrants for the purchase of debt securities will be in registered
form only.
If securities warrants for the purchase of preferred stock, depositary
shares or common stock are offered, the applicable prospectus supplement will
describe the terms of those securities warrants, including the following where
applicable:
. the offering price;
. the total number of shares that can be purchased if a holder of the
securities warrants exercises them and, in the case of securities
warrants for preferred stock or depositary shares, the designation,
total number and terms of the series of preferred stock that can be
purchased upon exercise or that are underlying the depositary shares
that can be purchased upon exercise;
. the designation and terms of the series of debt securities, preferred
stock or depositary shares with which the securities warrants are
being offered and the number of securities
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warrants being offered with each debt security, share of preferred
stock or depositary share;
. the date on and after which the holder of the securities warrants can
transfer them separately from the related series of debt securities,
preferred stock or depositary shares;
. the number of shares of preferred stock, depositary shares or shares
of common stock that can be purchased if a holder exercises the
securities warrant and the price at which the preferred stock,
depositary shares or common stock may be purchased upon each
exercise;
. the date on which the right to exercise the securities warrants
begins and the date on which the right expires;
. United States federal income tax consequences; and
. any other terms of the securities warrants.
Securities warrants for the purchase of preferred stock, depositary shares or
common stock will be in registered form only.
A holder of securities warrant certificates may exchange them for new
certificates of different denominations, present them for registration of
transfer, and exercise them at the corporate trust office of the securities
warrant agent or any other office indicated in the applicable prospectus
supplement.
Until any securities warrants to purchase debt securities are exercised,
the holder of such securities warrants will not have any of the rights of
holders of the debt securities that can be purchased upon exercise, including
any right to receive payments of principal, premium or interest on the
underlying debt securities or to enforce covenants in the applicable
indenture. Until any securities warrants to purchase preferred stock,
depositary shares or common stock are exercised, holders of such securities
warrants will not have any rights of holders of the underlying preferred
stock, depositary shares or common stock, including any right to receive
dividends or to exercise any voting rights.
EXERCISE OF SECURITIES WARRANTS
Each holder of a securities warrant is entitled to purchase the
principal amount of debt securities or number of shares of preferred stock,
depositary shares or shares of common stock, as the case may be, at the
exercise price described in the applicable prospectus supplement. After the
close of business on the day when the right to exercise terminates, or a later
date if we extend the time for exercise, unexercised securities warrants will
become void.
A holder of securities warrants may exercise them by following the
general procedure outlined below:
. delivering to the securities warrant agent the payment required by
the applicable prospectus supplement to purchase the underlying
security;
. properly completing and signing the reverse side of the securities
warrant certificate representing the securities warrants; and
. delivering the securities warrant certificate representing the
securities warrants to the securities warrant agent, or other office
indicated in the applicable prospectus
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supplement, within five business days of the securities warrant agent
receiving payment of the exercise price.
If you comply with the procedures described above, your securities
warrants will be considered to have been exercised when the securities warrant
agent receives payment of the exercise price. After you have completed those
procedures, we will, as soon as practicable, issue and deliver to you the debt
securities, preferred stock, depositary shares or common stock that you
purchased upon exercise. If you exercise fewer than all of the securities
warrants represented by a securities warrant certificate, the securities
warrant agent will issue to you a new securities warrant certificate for the
unexercised amount of securities warrants. Holders of securities warrants will
be required to pay any tax or governmental charge that may be imposed in
connection with transferring the underlying securities in connection with the
exercise of the securities warrants.
AMENDMENTS AND SUPPLEMENTS TO SECURITIES WARRANT AGREEMENTS
We may amend or supplement a securities warrant agreement without the
consent of the holders of the applicable securities warrants if the changes
are not inconsistent with the provisions of the securities warrants and do not
materially adversely affect the interests of the holders of the securities
warrants. We, along with the securities warrant agent, may also modify or
amend a securities warrant agreement and the terms of the securities warrants
if a majority of the then--outstanding unexercised securities warrants
affected by the modification or amendment consent. However, no modification or
amendment that accelerates the expiration date, increases the exercise price,
reduces the majority consent requirement for any such modification or
amendment, or otherwise materially adversely affects the rights of the holders
of the securities warrants may be made without the consent of each holder
affected by the modification or amendment.
COMMON STOCK WARRANT ADJUSTMENTS
Unless the applicable prospectus supplement states otherwise, the
exercise price of, and the number of shares of common stock covered by, a
warrant for common stock will be adjusted in the manner set forth in the
applicable prospectus supplement if certain events occur, including:
. if we issue capital stock as a dividend or distribution on the common
stock;
. if we subdivide, reclassify or combine the common stock;
. if we issue rights or warrants to all holders of common stock
entitling them, for a period expiring 45 days after the date fixed
for determining the stockholders entitled to receive such rights or
warrants, to purchase common stock at less than the current market
price, as defined in the warrant agreement for such series of common
stock warrants; or
. if we distribute to all holders of common stock evidences of our
indebtedness or our assets, excluding certain cash dividends and
distributions, or if we distribute to all holders of common stock
rights or warrants, excluding those referred to in the bullet point
above.
Except as stated above, the exercise price and number of shares of
common stock covered by a common stock warrant will not be adjusted if we
issue common stock or any securities convertible into or exchangeable for
common stock, or securities carrying the right to purchase common stock or
securities convertible into or exchangeable for common stock.
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Holders of common stock warrants may have additional rights under the
following circumstances:
. a reclassification or change of the common stock;
. a consolidation or merger involving our company; or
. a sale or conveyance to another corporation of all or substantially
all of our property and assets.
If one of the above transactions occurs and holders of our common stock are
entitled to receive stock, securities, other property or assets, including
cash, with respect to or in exchange for common stock, the holders of the
common stock warrants then outstanding will be entitled to receive upon
exercise of their common stock warrants the kind and amount of shares of stock
and other securities or property that they would have received upon the
reclassification, change, consolidation, merger, sale or conveyance if they had
exercised their common stock warrants immediately before the transaction.
PLAN OF DISTRIBUTION
We may sell the securities offered under this prospectus through agents,
through underwriters or dealers or directly to one or more purchasers. We may
also offer the securities in exchange for our outstanding indebtedness.
Underwriters, dealers and agents that participate in the distribution of
the securities offered under this prospectus may be underwriters as defined in
the Securities Act of 1933 and any discounts or commissions received by them
from us and any profit on the resale of the offered securities by them may be
treated as underwriting discounts and commissions under the Securities Act. Any
underwriters or agents will be identified and their compensation, including
underwriting discount, will be described in the applicable prospectus
supplement. The prospectus supplement will also describe other terms of the
offering, including the initial public offering price, any discounts or
concessions allowed or reallowed or paid to dealers and any securities
exchanges on which the offered securities may be listed.
The distribution of the securities offered under this prospectus may
occur 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 the prevailing market prices or at negotiated prices.
If the securities offered under this prospectus are issued in exchange
for our outstanding securities, the applicable prospectus supplement will set
forth the terms of the exchange, the identity of and the terms of sale of the
securities offered under this prospectus by the selling security holders.
If the applicable prospectus supplement indicates, we will authorize
dealers or our agents to solicit offers by institutions to purchase offered
securities from us under contracts that provide for payment and delivery on a
future date. We must approve all institutions, but they may include, among
others:
. commercial and savings banks;
. insurance companies;
. pension funds;
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. investment companies; and
. educational and charitable institutions.
The institutional purchaser's obligations under the contract are only subject
to the condition that the purchase of the offered securities at the time of
delivery is allowed by the laws that govern the purchaser. The dealers and our
agents will not be responsible for the validity or performance of the
contracts.
One of our wholly-owned subsidiaries, Norwest Investment Services Inc.,
or NISI, may help place some of the securities offered under this prospectus.
If this occurs, the placement will comply with Rule 2720 of the Conduct Rules
of the National Association of Securities Dealers, Inc. and will be made under
an agreement between us and NISI. This agreement will authorize NISI to contact
its existing customers, which are financial institutions and sophisticated
investors, to inform them that the securities offered by this prospectus can be
purchased from us. NISI will forward any orders for such securities to us for
acceptance. We will pay NISI a commission at the same rate as the commissions
we pay to the other agents that are offering securities under the same
prospectus supplement.
We may have agreements with the underwriters, dealers and agents,
including NISI, to indemnify them against certain civil liabilities, including
liabilities under the Securities Act, or to contribute with respect to payments
which the underwriters, dealers or agents may be required to make as a result
of those certain civil liabilities.
If we offer bearer debt securities under this prospectus, each
underwriter, dealer and agent that participates in the distribution of any
original issuance of bearer debt securities will agree not to offer, sell or
deliver bearer debt securities to a United States citizen or to any person
within the United States, unless federal law permits otherwise.
When we issue the securities offered by this prospectus, except for
shares of common stock, they may be new securities without an established
trading market. If we sell a security offered by this prospectus to an
underwriter for public offering and sale, the underwriter may make a market for
that security, but the underwriter will not be obligated to do so and could
discontinue any market making without notice at any time. Therefore, we cannot
give any assurances to you concerning the liquidity of any security offered by
this prospectus.
Underwriters and agents and their affiliates may be customers of, engage
in transactions with, or perform services for us or our subsidiaries in the
ordinary course of their businesses.
LEGAL OPINIONS
Stanley S. Stroup, who is our Executive Vice President and General
Counsel, or another of our lawyers, will issue an opinion about the legality of
the securities offered by this prospectus. Mr. Stroup owns, or has the right to
acquire, a number of shares of our common stock which represents less than 0.1%
of the total outstanding common stock. Certain legal matters will be passed
upon for any underwriters or agents by Gibson, Dunn & Crutcher LLP, San
Francisco, California. Gibson, Dunn & Crutcher LLP represents us and certain of
our subsidiaries in other legal matters.
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EXPERTS
KPMG LLP, independent auditors, have audited our consolidated financial
statements included in our Annual Report on Form 10-K for the year ended
December 31, 1998, as set forth in their report, which is incorporated in this
prospectus by reference. Our consolidated financial statements are, and
consolidated financial statements included in subsequent filings with the SEC
will be, incorporated by reference in this prospectus in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing, to the extent consolidated financial statements included in such
subsequent filings are covered by consents executed by such firm and filed with
the SEC.
46
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PRINCIPAL EXECUTIVE OFFICE OF WELLS FARGO & COMPANY
420 Montgomery Street
San Francisco, California 94163
TRUSTEE
Citibank, N.A.
111 Wall Street, 5th Floor
New York, New York 10043
REGISTRAR, AUTHENTICATING AGENT AND PAYING AGENT
Norwest Bank Minnesota, N.A.
Norwest Center
Sixth and Marquette
Minneapolis, Minnesota 55479-1019
LONDON AUTHENTICATING AGENT AND PAYING AGENT
Citibank, N.A.
5 Carmelite Street
London EC4Y 0PA
LEGAL ADVISORS
To Wells Fargo as to United States Law Special United States Tax Counsel to
Wells Fargo
Stanley S. Stroup
Executive Vice President and General Faegre & Benson LLP
Counsel 2200 Norwest Center
Wells Fargo & Company 90 South Seventh Street
420 Montgomery Street Minneapolis, Minnesota 55402
San Francisco, California 94163
To the Underwriters as to United To the London Listing Agent as to
States Law English Law
Gibson, Dunn & Crutcher LLP Linklaters
One Montgomery Street One Silk Street
Telesis Tower London EC248HQ
San Francisco, California 94104
AUDITORS OF WELLS FARGO
KPMG LLP
Three Embarcadero Center, Suite 2000
San Francisco, California 94111
LONDON LISTING AGENT
Credit Suisse First Boston (Europe) Limited
One Cabot Square
London E14 4QJ
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[LOGO OF WELLS FARGO STAGECOACH]
