<PAGE>
Filed pursuant to Rule 424(b)5
File No. 333-79493
PROSPECTUS SUPPLEMENT
(To Prospectus dated June 16, 1999)
$7,150,000,000
Medium-Term Notes, Series A
Subordinated Medium-Term Notes, Series B
---------------
WELLS FARGO MAY OFFER FROM TIME TO TIME MEDIUM-TERM NOTES, SERIES A, AND
SUBORDINATED MEDIUM-TERM NOTES, SERIES B. THE FINAL TERMS OF EACH NOTE OFFERED
WILL BE INCLUDED IN A PRICING SUPPLEMENT. THE NOTES OFFERED WILL SPECIFY
WHETHER THEY ARE SENIOR NOTES OR SUBORDINATED NOTES AND WILL HAVE THE
FOLLOWING GENERAL TERMS, UNLESS THE APPLICABLE PRICING SUPPLEMENT STATES
OTHERWISE:
. THE NOTES WILL MATURE IN 9 MONTHS . FIXED RATE INTEREST WILL BE PAID
OR MORE FROM THE DATE OF ISSUE. SEMI-ANNUALLY ON THE DATES STATED
IN THE APPLICABLE PRICING
SUPPLEMENT.
. THE NOTES WILL BEAR INTEREST AT . FLOATING RATE INTEREST WILL BE PAID
EITHER A FIXED OR A FLOATING RATE ON THE DATES STATED IN THE
OR WILL BE ZERO COUPON NOTES. APPLICABLE PRICING SUPPLEMENT.
FLOATING RATE INTEREST MAY BE BASED
ON:
. CD RATE . ZERO COUPON NOTES WILL NOT PAY
. CMT RATE INTEREST.
. COMMERCIAL PAPER RATE
. EURIBOR . THE NOTES WILL BE HELD IN GLOBAL
. FEDERAL FUNDS RATE FORM BY THE DEPOSITORY TRUST
. LIBOR COMPANY.
. PRIME RATE
. TREASURY RATE . THE NOTES MAY NOT BE REPAID AT THE
. ANY OTHER RATE SPECIFIED IN THE OPTION OF THE HOLDER BEFORE
APPLICABLE PRICING SUPPLEMENT. MATURITY.
. THE NOTES WILL BE DENOMINATED IN
U.S. DOLLARS AND HAVE MINIMUM
DENOMINATIONS OF $1,000.
---------------
<TABLE>
<CAPTION>
AGENTS' PROCEEDS,
PRICE TO DISCOUNTS AND BEFORE EXPENSES,
PUBLIC COMMISSIONS TO WELLS FARGO
-------------- ------------------------ -------------------------------
<S> <C> <C> <C>
Per Note................ 100% .125% - .750% 99.875% - 99.250%
Total................... $7,150,000,000 $8,937,500 - $53,625,000 $7,141,062,500 - $7,096,375,000
</TABLE>
The Securities and Exchange Commission and state securities regulators have
not approved or disapproved of these securities or determined if this
prospectus supplement or the accompanying prospectus are truthful and
complete. Any representation to the contrary is a criminal offense.
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.
Offers to purchase the notes are being solicited from time to time by the
agents listed below. The agents have agreed to use their reasonable efforts to
sell the notes. Wells Fargo also reserves the right to sell the notes directly
to investors on its own behalf or through affiliated entities. No commission
will be payable on sales made directly by Wells Fargo. There is no established
trading market for the notes and there can be no assurance that a secondary
market for the notes will develop.
---------------
MORGAN STANLEY DEAN WITTER DONALDSON, LUFKIN & JENRETTE
ABN AMRO INCORPORATED FIRST UNION CAPITAL MARKETS CORP.
BANC ONE CAPITAL MARKETS, INC. GOLDMAN, SACHS & CO.
BARCLAYS CAPITAL HSBC MARKETS
BEAR, STEARNS & CO. INC. LEHMAN BROTHERS
BNY CAPITAL MARKETS, INC. MELLON FINANCIAL MARKETS, INC.
CHASE SECURITIES INC. SALOMON SMITH BARNEY
CREDIT SUISSE FIRST BOSTON WESTLB PANMURE
September 2, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
About This Prospectus Supplement.. S-2
Description of Notes.............. S-3
United States Federal Taxation.... S-24
Plan of Distribution.............. S-30
Concerning the Trustees........... S-32
Legal Opinions.................... S-32
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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>
ABOUT THIS PROSPECTUS SUPPLEMENT
You should read this prospectus supplement along with the accompanying
prospectus and the applicable pricing supplement. These documents contain
information you should consider when making your investment decision. You
should rely only on the information contained or incorporated by reference in
this prospectus supplement, the accompanying prospectus and the applicable
pricing supplement. We have not, and the agents have not, authorized anyone
else to provide you with different or additional information. If anyone
provides you with different or inconsistent information, you should not rely on
it.
This prospectus supplement, the accompanying prospectus and the
applicable pricing supplement do not constitute an offer to sell or a
solicitation of an offer to buy any securities other than the notes. This
prospectus supplement, the accompanying prospectus and the applicable pricing
supplement do not constitute an offer to sell or a solicitation of an offer to
buy such notes in any circumstances in which such offer or solicitation is
unlawful.
Information in this prospectus supplement, the accompanying prospectus or
the applicable pricing supplement may change after the date on the front of the
applicable document. You should not interpret the delivery of this prospectus
supplement, accompanying prospectus, or the applicable pricing supplement or
the sale of the notes, as an indication that there has been no change in our
affairs since those dates.
S-2
<PAGE>
DESCRIPTION OF NOTES
The following description of the particular terms of the notes offered
under this prospectus supplement adds to, and to the extent inconsistent
therewith replaces, the description of the general terms and provisions of the
debt securities contained in the accompanying prospectus. The particular terms
of the notes sold under any pricing supplement will be described in that
pricing supplement. The terms and conditions stated in this section will apply
to each note unless the applicable pricing supplement indicates otherwise.
GENERAL
At our option, we may issue the notes as medium-term notes, series A
("senior notes"), which will constitute senior debt securities as described in
the accompanying prospectus, or as subordinated medium-term notes, series B
("subordinated notes"), which will constitute subordinated debt securities as
described in the accompanying prospectus. We will issue the senior notes under
a senior indenture, dated as of July 21, 1999, as amended or supplemented from
time to time, between us and Citibank, N.A., as senior trustee, and will issue
the subordinated notes under a subordinated indenture dated as of August 30,
1999, as amended or supplemented from time to time between us and The First
National Bank of Chicago, as subordinated trustee. In this prospectus
supplement, the senior indenture and the subordinated indenture are referred to
as the indentures, and the senior trustee and the subordinated trustee are
referred to as the trustees. The notes issued under either indenture will
constitute one series under that indenture. The notes will mature on a date
more than nine months from the date of issue, as stated in the applicable
pricing supplement.
The senior notes will be our senior unsecured obligations and will rank
equally with all of our other senior debt securities. The subordinated notes
will be our unsecured obligations and will rank equally with all of our other
subordinated debt securities and, together with such other subordinated debt
securities, will be subordinated to all of our existing and future Senior Debt,
as defined under "Description of Debt Securities--Subordination" in the
accompanying prospectus. Payment of principal of the subordinated notes may be
accelerated only in the case of certain events of bankruptcy, insolvency or
reorganization. There is no right of acceleration in the case of a default in
the performance of any covenant with respect to the subordinated notes,
including a default in the payment of interest or principal.
We may issue notes from time to time in an aggregate principal amount of
up to $7,150,000,000 or the equivalent of that amount in one or more foreign or
composite currencies. We may increase this amount from time to time without the
consent of the holders of the notes. However, the limit on the aggregate
principal amount of notes that we may issue is subject to reduction as a result
of the sale by us of other securities referred to in the accompanying
prospectus. For purposes of this prospectus supplement, the principal amount of
any original issue discount note means the issue price of that note, and the
principal amount of any note issued in a foreign currency or composite currency
means the U.S. dollar equivalent on the date of issue of the issue price of
that note. The issue price of a note is the price at which that note is issued,
expressed as a percentage of the aggregate principal amount of such note.
Unless the applicable pricing supplement states otherwise:
. we will pay interest on fixed rate notes semi-annually;
. we will issue the notes at 100% of their principal amount;
S-3
<PAGE>
. holders will not be able to elect to have the notes repaid before
maturity;
. we will issue the notes in U.S. dollars;
. we will issue the notes in fully registered form and in authorized
denominations, which will be $1,000 or any amount in excess of $1,000
which is an integral multiple of $1,000; and
. we will issue the notes as global securities registered in the name
of a nominee of The Depository Trust Company, or "DTC," as
depositary--such notes will be referred to in this prospectus
supplement as global notes.
The notes can be presented for payment of principal and interest, the
transfer of the notes can be registered and the notes can be exchanged at the
office or offices or agency maintained by us for this purpose. However, global
notes will be exchangeable only in the manner and to the extent described in
"--Book-Entry System" below. On the date of this prospectus supplement, the
agent for the payment, transfer and exchange of the notes, who will be
referred to in this prospectus supplement as the paying agent, is Norwest Bank
Minnesota, N.A. acting through its corporate trust office at Minneapolis,
Minnesota.
The applicable pricing supplement relating to each note will describe
the following terms:
. whether the note is a senior note or a subordinated note;
. if the note is being issued at a price other than 100% of its
principal amount, its issue price;
. the principal amount of the note;
. the date on which the note will be issued;
. the date on which the note will mature;
. whether the note is a fixed rate note or a floating rate note or a
zero coupon note;
. if the note is a fixed rate note, the annual rate at which the note
will bear interest and the Interest Payment Date or Dates and the
Regular Record Date or Dates, each as defined below, if different
from those set forth below;
. if the note is a floating rate note, the Base Rate for that note and,
if applicable, the Index Maturity, the Spread or Spread Multiplier,
the maximum interest rate, the minimum interest rate, the initial
interest rate, the Interest Payment Dates and the Interest Reset
Dates, each as defined below, with respect to that note;
. if the note is a floating rate note, the Regular Record Dates, the
Calculation Date and the Interest Determination Date, each as defined
below, with respect to that note, if different from those set forth
below;
. whether the note is an original issue discount note, and if so, any
additional provisions relating to this feature of the note;
. if the note may be redeemed or repaid, the provisions relating to
redemption of the note at our option or repayment of the note at the
holder's option;
S-4
<PAGE>
. if the note will be represented by a certificate issued in definitive
registered form, the provisions relating to this feature of the
certificated note; and
. any other terms of the note not inconsistent with the provisions of
the applicable indenture.
If we issue notes denominated in a currency other than U.S. dollars or
permit the payment of principal or interest on notes to be made in a currency
other than U.S. dollars or permit the payment of principal or interest on notes
denominated in a currency other than U.S. dollars to be made in U.S. dollars,
the applicable pricing supplement will also describe the following if
applicable:
. the currency in which purchasers will pay for the notes;
. the currency in which we will pay principal and any interest;
. the terms relating to the currency in which payments may be made and
the identity of the exchange rate agent;
. the method of electing the currency in which payments may be made;
. the authorized denominations of the notes;
. any special provisions relating to notes denominated in "euros";
. certain foreign currency risks to United States residents, including
information about the applicable current exchange controls, if any,
and historic exchange rate information on the applicable currency or
currency unit;
. necessary changes to the definition of Business Day contained in this
prospectus supplement;
. any necessary changes to the method of calculation of the accrued
interest factor;
. the tax consequences to U.S. holders, as defined below under "United
States Federal Taxation"; and
. any other terms of the notes not inconsistent with the applicable
indenture.
We may issue the notes as original issue discount notes. Original issue
discount notes are notes, including any zero coupon notes, issued at more than
a de minimis discount from the principal amount payable at the maturity date.
There may not be any periodic interest payments on original issue discount
notes. For those notes, interest normally accrues during the life of the note
and is paid at the maturity date or upon earlier redemption or repayment. Upon
an acceleration of the maturity of an original issue discount note, the amount
payable is determined in accordance with the terms of the note as described in
the applicable pricing supplement and is normally less than the amount payable
at the maturity date. Special considerations applicable to original issue
discount notes will be stated in the applicable pricing supplement.
INTEREST AND PRINCIPAL PAYMENTS
Unless otherwise specified in the applicable pricing supplement, payments
of principal and any premium and interest with respect to any note will be made
in U.S. dollars.
Except as provided in the next sentence, we will pay interest on a note
to the person or entity in whose name the note is registered at the close of
business on the applicable Regular Record Date.
S-5
<PAGE>
However, the interest payable upon maturity, redemption or repayment, whether
or not the date of maturity, redemption or repayment is an Interest Payment
Date, will be payable to the person or entity to whom principal is payable. An
"Interest Payment Date" for any note will be a date on which, under the terms
of that note, regularly scheduled interest will be payable. The "Regular Record
Date" for any Interest Payment Date will be as specified in this prospectus
supplement or in the applicable pricing supplement.
Unless the applicable pricing supplement states otherwise, we will pay
interest semi-annually on fixed rate notes on the Interest Payment Dates
specified in the applicable pricing supplement. Interest Payment Dates for
floating rate notes will be as specified in this prospectus supplement or in
the applicable pricing supplement. Unless the applicable pricing supplement
states otherwise, the Regular Record Date with respect to an Interest Payment
Date for floating rate notes and fixed rate notes will be the fifteenth
calendar day, whether or not a Business Day, immediately before that Interest
Payment Date. Unless the applicable pricing supplement states otherwise, the
initial interest payment on a note will be made on the first Interest Payment
Date following the first Regular Record Date falling after the date that note
is issued.
"Business Day" means:
. with respect to any note, any day other than a Saturday or Sunday
that is neither a legal holiday nor a day on which banking
institutions are authorized or required by law or regulation to close
in New York City or Minneapolis, Minnesota; and
. with respect to LIBOR Notes or EURIBOR Notes, as defined below, any
day that meets the above criteria and which is also a London Banking
Day.
"London Banking Day" means any day on which dealings in deposits in the
Index Currency, as defined below under "--Floating Rate Notes--LIBOR Notes,"
are transacted in the London interbank market.
Interest rates offered on notes may differ depending upon, among other
things, the aggregate principal amount of notes purchased in any single
transaction. Notes with similar variable terms but different interest rates, as
well as notes with different variable terms, may be offered concurrently to
different investors. Interest rates or formulas and other terms of notes are
subject to change from time to time, but no change will affect any note already
issued or as to which an offer to purchase has been accepted.
For global notes, we will pay principal and any premium and interest to
DTC or its nominee, as the holder of the global notes, by wire transfer of
immediately available funds. DTC will allocate payments relating to a global
note and pay beneficial owners or holders of the note in accordance with its
existing operating procedures.
For certificated notes, we will pay interest, other than interest payable
at maturity or on the date of redemption or repayment if we redeem or repay a
note before maturity, by check mailed to the address of the person or entity
entitled to such payment as shown on the security register. We will make
payment of principal and any premium and interest on a certificated note upon
maturity, redemption or repayment in immediately available funds against
presentation and surrender of such note. Notwithstanding the foregoing, a
holder of $50,000,000, or the equivalent, or more in aggregate principal amount
of certificated notes having the same Interest Payment Date will be entitled to
receive payments of interest by wire transfer of immediately available funds
upon written request to
S-6
<PAGE>
the paying agent, provided the request is received not later than 10 calendar
days before the applicable Interest Payment Date.
FIXED RATE NOTES
Each note bearing interest at a fixed rate, which we will refer to in
this prospectus supplement as a fixed rate note, will bear interest from the
date of issue at the annual rate stated on the face of that fixed rate note,
until the principal of that fixed rate note is paid or made available for
payment. Unless the applicable pricing supplement states otherwise, interest on
fixed rate notes will be computed on the basis of a 360-day year of twelve 30-
day months and will be payable semi-annually on the Interest Payment Dates
specified in the applicable pricing supplement and at maturity or upon any
earlier redemption or repayment.
If any Interest Payment Date for any fixed rate note falls on a day that
is not a Business Day, the interest payment will be made on the next day that
is a Business Day, and no interest on that payment will accrue for the period
from and after the Interest Payment Date. If the maturity date or date of
redemption or repayment of any fixed rate note falls on a day that is not a
Business Day, the payment of principal and any premium and interest will be
made on the next day that is a Business Day, and no interest on that payment
will accrue for the period from and after the maturity date or date of
redemption or repayment. Unless the applicable pricing supplement states
otherwise, interest payments for fixed rate notes will be the amount of
interest accrued from and including the date of issue or from and including the
last Interest Payment Date in respect of which interest has been paid, or
provided for, as the case may be, to, but excluding, the following Interest
Payment Date or the date of maturity or earlier redemption or repayment, as the
case may be.
FLOATING RATE NOTES
GENERAL
Each note bearing interest at a floating rate, which we will refer to in
this prospectus supplement as a floating rate note, will bear interest from the
date of issue until the principal of the note is paid or made available for
payment at a rate determined by reference to an interest rate basis or formula
("Base Rate"), which may be adjusted by a Spread and/or Spread Multiplier, each
as defined below. The applicable pricing supplement will designate one or more
of the following Base Rates as applicable to each floating rate note:
. the CD Rate ("CD Rate Note");
. the Commercial Paper Rate ("Commercial Paper Rate Note");
. EURIBOR ("EURIBOR Note")
. the Federal Funds Rate ("Federal Funds Rate Note");
. LIBOR ("LIBOR Note");
. the Prime Rate ("Prime Rate Note");
. the Treasury Rate ("Treasury Rate Note");
. the CMT Rate ("CMT Rate Note"); or
. any other Base Rate or interest rate formula as the applicable
pricing supplement may specify.
S-7
<PAGE>
Unless the applicable pricing supplement states otherwise, the interest
rate on each floating rate note will be calculated by reference to the
specified Base Rate for the specified Index Maturity,
. plus or minus the Spread, if any; and/or
. multiplied by the Spread Multiplier, if any.
For any floating rate note, "Index Maturity" means the period of maturity of
the instrument or obligation from which the Base Rate is calculated and will be
specified in the applicable pricing supplement. The "Spread" is the number of
basis points, or one one-hundredth of a percentage point, specified in the
applicable pricing supplement to be added to or subtracted from the Base Rate
for that floating rate note. For example, if a note bears interest at LIBOR
plus .01% and the calculation agent determines that LIBOR is 5.00% per year,
the note will bear interest at 5.01% per year until the next Interest Reset
Date. The "Spread Multiplier" is the percentage specified in the applicable
pricing supplement to be applied to the Base Rate for that floating rate note.
For example, if a note bears interest at 90% of LIBOR, and the calculation
agent determines that LIBOR is 5.00% per year, the note will bear interest at
4.50% per year until the next Interest Reset Date.
As specified in the applicable pricing supplement, a floating rate note
may also have either or both of the following features:
. a maximum numerical limitation, or ceiling, on the rate of interest
which may accrue during any interest period, which we refer to in
this prospectus supplement as the maximum interest rate; and
. a minimum numerical limitation, or floor, on the rate of interest
which may accrue during any interest period, which we refer to in
this prospectus supplement as the minimum interest rate.
In addition to any maximum interest rate that may be applicable to any floating
rate note under the above provisions, the interest rate on a floating rate note
will in no event be higher than the maximum rate permitted by New York law, as
the same may be modified by United States law of general application. Under
current New York law, the maximum rate of interest is 25% per annum on a simple
interest basis. This limit may not apply to notes in which $2,500,000 or more
has been invested.
Unless the applicable pricing supplement states otherwise, the
calculation agent for any issue of floating rate notes will be Norwest Bank
Minnesota, N.A. Upon the request of the holder of any floating rate note, the
calculation agent will provide the interest rate then in effect and, if
determined, the interest rate that will become effective on the next Interest
Reset Date with respect to that floating rate note.
CHANGE OF INTEREST RATE
The applicable pricing supplement will specify whether the rate of
interest on each floating rate note will be reset daily, weekly, monthly,
quarterly, semi-annually, annually or another specified basis (each period
being referred to as the "Interest Reset Period" for that note, and the first
day of
S-8
<PAGE>
each interest reset period being referred to as an "Interest Reset Date").
Unless the applicable pricing supplement states otherwise, the Interest Reset
Date will be:
. in the case of floating rate notes which reset daily, each Business
Day;
. in the case of floating rate notes, except for Treasury Rate Notes,
which reset weekly, the Wednesday of each week;
. in the case of Treasury Rate Notes which reset weekly, the Tuesday of
each week, except as provided below when the Treasury bill auction
does not occur on Monday;
. in the case of floating rate notes which reset monthly, the third
Wednesday of each month;
. in the case of floating rate notes which reset quarterly, the third
Wednesday of March, June, September and December of each year;
. in the case of floating rate notes which reset semi-annually, the
third Wednesday of two months of each year, as specified in the
applicable pricing supplement; or
. in the case of floating rate notes which reset annually, the third
Wednesday of one month of each year, as specified in the applicable
pricing supplement.
The interest rate in effect from the date of issue to the first Interest
Reset Date with respect to a floating rate note will be the initial interest
rate set forth in the applicable pricing supplement, which we refer to in this
prospectus supplement as the initial interest rate. If any Interest Reset Date
for any floating rate note would otherwise be a day that is not a Business Day,
that Interest Reset Date will be the following Business Day, except that in the
case of a EURIBOR or LIBOR Note, if that Business Day is in the next calendar
month, that Interest Reset Date will be the immediately preceding Business Day.
The interest rate in effect on any Interest Reset Date will be the
applicable rate as reset on that date. The interest rate applicable to any
other day is the interest rate applicable on the immediately preceding Interest
Reset Date, or, if none, the initial interest rate.
DATE INTEREST RATE DETERMINED
Unless the applicable pricing supplement states otherwise, the day the
calculation agent will refer to when determining the new interest rate at which
a floating rate will reset (the "Interest Determination Date") for any Interest
Reset Date will be:
. for CD Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate
Notes, CMT Rate Notes and Prime Rate Notes, the second Business Day
before that Interest Reset Date;
. for EURIBOR Notes or Euro LIBOR Notes, the second TARGET Settlement
Day before that Interest Reset Date;
. for LIBOR Notes (other than Euro LIBOR Notes), the second London
Banking Day before that Interest Reset Date, except that the Interest
Determination Date pertaining to an Interest Reset Date for a LIBOR
Note for which the Index Currency is pounds sterling will be the
Interest Reset Date; and
. for Treasury Rate Notes, the day of the week in which that Interest
Reset Date falls on which Treasury bills would normally be auctioned.
S-9
<PAGE>
Treasury bills are normally sold at auction on Monday of each week, unless that
day is a legal holiday, in which case the auction is normally held on the
following Tuesday, but the auction may be held on the preceding Friday. If, as
the result of a legal holiday, an auction is held on the preceding Friday, that
Friday will be the Interest Determination Date for the Interest Reset Date for
Treasury Rate Notes occurring in the next week. If an auction falls on a day
that is an Interest Reset Date for a Treasury Rate Note, that Interest Reset
Date will be the following Business Day.
"Euro LIBOR Notes" means LIBOR Notes for which the Index Currency is
euros.
"TARGET Settlement Day" means any day on which the Trans-European
Automated Real-time Gross Settlement Express Transfer System is open.
Unless the applicable pricing supplement states otherwise, the
"Calculation Date," where applicable, for an Interest Determination Date will
be the earlier of:
. the tenth calendar day after that Interest Determination Date, or, if
that day is not a Business Day, the following Business Day; or
. the Business Day before the applicable Interest Payment Date or
maturity, redemption or repayment date, as the case may be.
DATE INTEREST PAID
Except as provided below, unless the applicable pricing supplement states
otherwise, the Interest Payment Date for floating rate notes will be:
. in the case of floating rate notes with a daily, weekly or monthly
Interest Reset Period, the third Wednesday of each month or the third
Wednesday of March, June, September and December, as specified in the
applicable pricing supplement;
. in the case of floating rate notes with a quarterly Interest Reset
Period, the third Wednesday of March, June, September and December;
. in the case of floating rate notes with a semi-annual Interest Reset
Period, the third Wednesday of the two months specified in the
applicable pricing supplement;
. in the case of floating rate notes with an annual Interest Reset
Period, the third Wednesday of the month specified in the applicable
pricing supplement; and
. in the case of all floating rate notes, at maturity or earlier
redemption or repayment.
If any Interest Payment Date for any floating rate note would fall on a
day that is not a Business Day, other than an Interest Payment Date that is
also the date of maturity, redemption or repayment, that Interest Payment Date
will be the following day that is a Business Day, except that, in the case of a
EURIBOR or LIBOR Note, if that Business Day is in the next calendar month, that
Interest Payment Date will be the immediately preceding day that is a Business
Day. If the maturity date or any earlier redemption or repayment date of a
floating rate note would fall on a day that is not a Business Day, the payment
of principal and any premium and interest will be made on the following
Business Day, and no interest on that payment will accrue for the period from
and after the maturity, redemption or repayment date, as the case may be.
Unless the applicable pricing supplement states otherwise, interest
payments for floating rate notes will be the amount of interest accrued from
and including the date of issue or from and including the last date to which
interest has been paid, or provided for, as the case may be, to but
S-10
<PAGE>
excluding, the following Interest Payment Date or the date of maturity or
earlier redemption or repayment, as the case may be.
Accrued interest for a floating rate note will be calculated by
multiplying the principal amount of that floating rate note by an accrued
interest factor. The accrued interest factor will be the sum of the interest
factor calculated for each day in the period for which interest is being paid.
Unless the applicable pricing supplement states otherwise, the interest factor
for each day is computed by dividing the interest rate, expressed as a decimal,
applicable to that day
. by 360, in the case of CD Rate Notes, Commercial Paper Rate Notes,
Federal Funds Rate Notes, EURIBOR Notes, LIBOR Notes and Prime Rate
Notes, or
. by the actual number of days in the year, in the case of Treasury
Rate Notes and CMT Rate Notes.
Unless the applicable pricing supplement states otherwise, all
percentages resulting from any calculation with respect to floating rate notes
will be rounded, if necessary, to the nearest one-hundred thousandth of a
percentage point, with five one-millionths of a percentage point rounded
upwards. For example, 9.876545%, or .09876545, will be rounded to 9.87655%, or
.0987655, and 9.876544%, or .09876544, will be rounded to 9.87654%, or
.0987654. All dollar amounts used in or resulting from any such calculation
will be rounded to the nearest cent, with one-half cent being rounded upwards.
CD RATE NOTES
CD Rate Notes will bear interest at the interest rates, calculated with
reference to the CD Rate and the Spread and/or Spread Multiplier, if any, and
subject to the minimum interest rate and the maximum interest rate, if any,
specified in the CD Rate Notes and in the applicable pricing supplement.
Unless the applicable pricing supplement states otherwise, "CD Rate"
means, for any CD Interest Determination Date, the rate on that date for
negotiable certificates of deposit having the Index Maturity specified in the
applicable pricing supplement as published by the Board of Governors of the
Federal Reserve System in "Statistical Release H.15(519), Selected Interest
Rates" or any successor publication of the Board of Governors of the Federal
Reserve System, ("H.15(519)") under the heading "CDs (Secondary Market)." A "CD
Interest Determination Date" means an Interest Determination Date for a CD Rate
Note.
Unless the applicable pricing supplement states otherwise, the following
procedures will be followed if the CD Rate cannot be determined as described
above:
. If the above rate is not published in H.15(519) by 9:00 a.m., New
York City time, on the Calculation Date, the CD Rate will be the rate
on the applicable CD Interest Determination Date set forth in the
daily update of H.15(519), available through the world wide website
of the Board of Governors of the Federal Reserve System at
http://www.bog.frb.fed.us/releases/h15/update, or any successor site
or publication (the "H.15 Daily Update"), for the day in respect of
certificates of deposit having the Index Maturity specified in the
applicable pricing supplement under the caption "CDs (secondary
market)."
. If that rate is not yet published in either H.15(519) or the H.15
Daily Update by 3:00 p.m., New York City time, on the Calculation
Date, then the calculation agent will
S-11
<PAGE>
determine the CD Rate to be the arithmetic mean of the secondary
market offered rates as of 10:00 a.m., New York City time, on that CD
Interest Determination Date of three leading nonbank dealers in
negotiable U.S. dollar certificates of deposit in New York City,
which may include the agents or their affiliates, selected by the
calculation agent, after consultation with us, for negotiable
certificates of deposit of major United States money center banks of
the highest credit standing in the market for negotiable certificates
of deposit with a remaining maturity closest to the Index Maturity
specified in the applicable pricing supplement in an amount that is
representative for a single transaction in the market at that time.
. If the dealers selected by the calculation agent are not quoting as
described in the previous bullet point, the CD Rate in effect
immediately before that CD Interest Determination Date will not
change and will remain the CD Rate in effect on that CD Interest
Determination Date.
COMMERCIAL PAPER RATE NOTES
Commercial Paper Rate Notes will bear interest at the interest rates,
calculated with reference to the Commercial Paper Rate and the Spread and/or
Spread Multiplier, if any, and subject to the minimum interest rate and the
maximum interest rate, if any, specified in the Commercial Paper Rate Notes and
in the applicable pricing supplement.
Unless the applicable pricing supplement states otherwise, "Commercial
Paper Rate" means, for any Commercial Paper Interest Determination Date, the
Money Market Yield, calculated as described below, of the rate on that date for
commercial paper having the Index Maturity specified in the applicable pricing
supplement as published in H.15(519) under the heading "Commercial Paper--
Nonfinancial." A "Commercial Paper Interest Determination Date" means an
Interest Determination Date for a Commercial Paper Rate Note.
Unless the applicable pricing supplement states otherwise, the following
procedures will be followed if the Commercial Paper Rate cannot be determined
as described above:
. If the above rate is not published by 9:00 a.m., New York City time,
on the Calculation Date, then the Commercial Paper Rate will be the
Money Market Yield of the rate on the applicable Commercial Paper
Interest Determination Date for commercial paper having the Index
Maturity specified in the applicable pricing supplement as published
in the H.15 Daily Update under the heading "Commercial Paper--
Nonfinancial."
. If by 3:00 p.m., New York City time, on that Calculation Date that
rate is not yet published in either H.15(519) or the H.15 Daily
Update, then the calculation agent will determine the Commercial
Paper Rate to be the Money Market Yield of the arithmetic mean of the
offered rates as of 11:00 a.m., New York City time, on that
Commercial Paper Interest Determination Date of three leading dealers
of commercial paper in New York City, which may include the agents or
their affiliates, selected by the calculation agent, after
consultation with us, for commercial paper having the Index Maturity
specified in the applicable pricing supplement placed for an
industrial issuer whose bond rating is "AA," or the equivalent, from
a nationally recognized statistical rating agency.
. If the dealers selected by the calculation agent are not quoting as
described in the previous bullet point, the Commercial Paper Rate in
effect immediately before the
S-12
<PAGE>
Commercial Paper Interest Determination Date will not change and will
remain the Commercial Paper Rate in effect on that Commercial Paper
Interest Determination Date.
"Money Market Yield" will be a yield calculated in accordance with the
following formula:
Money Market Yield = D x 360 x 100
-------------
360 - (D x M)
where "D" refers to the applicable annual rate for commercial paper quoted on a
bank discount basis and expressed as a decimal and "M" refers to the actual
number of days in the interest period for which interest is being calculated.
EURIBOR NOTES
EURIBOR Notes will bear interest at the rates, calculated with reference
to EURIBOR, and the Spread and/or Spread Multiplier, if any, and subject to the
minimum interest rate and the maximum interest rate, if any, specified in the
EURIBOR Notes and in the applicable pricing supplement.
Unless the applicable pricing supplement states otherwise, "EURIBOR"
means, for any EURIBOR Interest Determination Date, the rate for deposits in
euros as sponsored, calculated and published jointly by the European Banking
Federation and ACI--The Financial Market Association, or any company
established by the joint sponsors for purposes of compiling and publishing
those rates, for the Index Maturity specified in the applicable pricing
supplement as that rate appears on the display on Bridge Telerate, Inc., or any
successor service, on page 248 or any other page as may replace page 248 on
that service, which is commonly referred to as "Telerate Page 248," as of
11:00 a.m. (Brussels time). A "EURIBOR Interest Determination Date" means an
Interest Determination Date for a EURIBOR Note.
Unless the applicable pricing supplement states otherwise, the following
procedures will be followed if the EURIBOR Rate cannot be determined as
described above:
. If the above rate does not appear, the calculation agent will request
the principal Euro-zone, as defined below, office of each of four
major banks in the Euro-zone interbank market, as selected by the
calculation agent, after consultation with us, to provide the
calculation agent with its offered rate for deposits in euros, at
approximately 11:00 a.m. (Brussels time) on the EURIBOR Interest
Determination Date, to prime banks in the Euro-zone interbank market
for the Index Maturity specified in the applicable pricing supplement
commencing on the applicable EURIBOR Interest Reset Date, and in a
principal amount not less than the equivalent of U.S. $1 million in
euro that is representative of a single transaction in euro, in that
market at that time. If at least two quotations are provided, EURIBOR
will be arithmetic mean of those quotations.
. If fewer than two quotations are provided, EURIBOR will be the
arithmetic mean of the rates quoted by four major banks in the Euro-
zone, as selected by the calculation agent, after consultation with
us, at approximately 11:00 a.m. (Brussels time), on the applicable
EURIBOR Interest Reset Date for loans in euro to leading European
banks for a period of time equivalent to the Index Maturity specified
in the applicable pricing supplement commencing on that EURIBOR
Interest Reset Date in a principal amount not less than the equivalent
of U.S. $1 million in euro.
S-13
<PAGE>
. If the banks selected by the calculation agent are not quoting as
described in the previous bullet point, EURIBOR in effect immediately
before such EURIBOR Interest Determination Date will not change and
will remain the EURIBOR in effect on that EURIBOR Interest
Determination Date.
"Euro-zone" means the region comprised of member states of the European
Union that adopt the single currency in accordance with the treaty establishing
the European Community, as amended by the treaty on European Union.
FEDERAL FUNDS RATE NOTES
Federal Funds Rate Notes will bear interest at the interest rates,
calculated with reference to the Federal Funds Rate and the Spread and/or
Spread Multiplier, if any, and subject to the minimum interest rate and the
maximum interest rate, if any, specified in the Federal Funds Rate Notes and in
the applicable pricing supplement.
Unless the applicable pricing supplement states otherwise, "Federal Funds
Rate" means, for any Federal Funds Interest Determination Date, the rate on
that day for federal funds as published in H.15(519) under the heading "Federal
Funds (Effective)" as displayed on Bridge Telerate, Inc. or any successor
service on page 120 or any other page as may replace the applicable page on
that service ("Telerate Page 120"). A "Federal Funds Interest Determination
Date" means an Interest Determination Date for a Federal Funds Rate Note.
Unless the applicable pricing supplement states otherwise, the following
procedures will be followed if the Federal Funds Rate cannot be determined as
described above:
. If the above rate is not published by 9:00 a.m., New York City time,
on the Calculation Date, the Federal Funds Rate will be the rate on
the applicable Federal Funds Interest Determination Date as published
in the H.15 Daily Update under the heading "Federal
Funds/(Effective)."
. If that rate is not yet published in either H.15(519) or H.15 Daily
Update by 3:00 p.m., New York City time, on the Calculation Date, the
calculation agent will determine the Federal Funds Rate to be the
arithmetic mean of the rates for the last transaction in overnight
U.S. dollar Federal Funds arranged by each of three leading brokers
of U.S. dollar Federal Funds transactions in New York City, which may
include the agents or their affiliates, selected by the calculation
agent, after consultation with us, before 9:00 a.m., New York City
time, on that Federal Funds Interest Determination Date.
. If the brokers selected by the calculation agent are not quoting as
described in the previous bullet point, the Federal Funds Rate in
effect immediately before that Federal Funds Interest Determination
Date will not change and will remain the Federal Funds Rate in effect
on that Federal Funds Interest Determination Date.
LIBOR NOTES
LIBOR Notes will bear interest at the interest rates, calculated with
reference to the London interbank offered rate, commonly referred to as
"LIBOR," and the Spread and/or Spread Multiplier, if any, and subject to the
minimum interest rate and the maximum interest rate, if any, specified in the
LIBOR Notes and in the applicable pricing supplement.
S-14
<PAGE>
Unless the applicable pricing supplement states otherwise, LIBOR for each
LIBOR Interest Determination Date will be determined by the calculation agent
by reference to the display on Bridge Telerate Inc., or any successor service,
on Page 3750, or any other page as may replace that page on that service, for
the purpose of displaying the London interbank rates of major banks for the
applicable Index Currency ("LIBOR Telerate"). A "LIBOR Interest Determination
Date" means an Interest Determination Date for a LIBOR Note. The "Index
Currency" means the currency specified in the applicable pricing supplement as
the currency for which LIBOR will be calculated, or, if the euro is substituted
for that currency, the Index Currency will be the euro. If no currency is
specified in the applicable pricing supplement, the Index Currency will be U.S.
dollars.
. As of the LIBOR Interest Determination Date, LIBOR will be the rate
for deposits in the Index Currency having the Index Maturity
specified in that pricing supplement, commencing on the second London
Banking Day immediately following that LIBOR Interest Determination
Date or, if pounds sterling is the Index Currency, commencing on that
LIBOR Interest Determination Date that appears on LIBOR Telerate as
of 11:00 a.m., London time, on that LIBOR Interest Determination
Date.
. If no rate appears, then the calculation agent will request the
principal London offices of each of four major reference banks in the
London interbank market, as selected by the calculation agent, after
consultation with us, to provide the calculation agent with its
offered quotation for deposits in the Index Currency for the period
of the Index Maturity specified in the applicable pricing supplement
commencing on the second London Banking Day immediately following the
LIBOR Interest Determination Date, to prime banks in the London
interbank market at approximately 11:00 a.m., London time, on that
LIBOR Interest Determination Date and in a principal amount that is
representative of a single transaction in that Index Currency in that
market at that time. If at least two quotations are provided, LIBOR
determined on that Interest Determination Date will be the arithmetic
mean of those quotations.
. If fewer than two quotations are provided, LIBOR will be determined
for the applicable Interest Reset Date as the arithmetic mean of the
rates quoted at approximately 11:00 a.m., London time, or some other
time specified in the applicable pricing supplement, in the
applicable principal financial center for the country of the Index
Currency on that Interest Reset Date, by three major banks in that
principal financial center selected by the calculation agent, after
consultation with us, for loans in the Index Currency to leading
European banks, having the Index Maturity specified in the applicable
pricing supplement and in a principal amount that is representative
of a single transaction in that Index Currency in that market at that
time.
. If the banks so selected by the calculation agent are not quoting as
described in the previous bullet point, LIBOR in effect immediately
before such LIBOR Interest Determination Date will not change and
will remain the LIBOR in effect on such LIBOR Interest Determination
Date.
If the applicable pricing supplement states that LIBOR for each LIBOR
Interest Determination Date will be determined by the calculation agent by
reference to the display on the Reuters Monitor Money Rates Service, on the
page specified in that pricing supplement, or any other page on any designated
successor service, for the purpose of displaying the London interbank rates of
S-15
<PAGE>
major banks for the applicable Index Currency ("LIBOR Reuters"), then the first
bullet point of the previous paragraph will be replaced with the following:
. As of the LIBOR Interest Determination Date, LIBOR will be the
arithmetic mean of the offered rates for deposits in the Index
Currency having the Index Maturity specified in that pricing
supplement, commencing on the second London Banking Day immediately
following that LIBOR Interest Determination Date, that appear on
LIBOR Reuters as of 11:00 a.m., London time, on that LIBOR Interest
Determination Date, if at least two offered rates appear on LIBOR
Reuters; provided, however, that if LIBOR Reuters by its terms
provides for only a single rate, that single offered rate will be
used.
If fewer than two rates appear or no rates appear, as applicable, then LIBOR
shall be calculated as described in the last three bullet points in the
previous paragraph.
PRIME RATE NOTES
Prime Rate Notes will bear interest at the interest rates, calculated
with reference to the Prime Rate and the Spread and/or Spread Multiplier, if
any, and subject to the minimum interest rate and the maximum interest rate, if
any, specified in the Prime Rate Notes and in the applicable pricing
supplement.
Unless the applicable pricing supplement states otherwise, "Prime Rate"
means, for any Prime Interest Determination Date, the rate on such date as
published in H.15(519) under the heading "Bank Prime Loan." A "Prime Interest
Determination Date" means an Interest Determination Date for a Prime Rate Note.
Unless the applicable pricing supplement states otherwise, the following
procedures will be followed if the Prime Rate cannot be determined as described
above:
. If the rate is not published before 9:00 a.m., New York City time, on
the Calculation Date, then the Prime Rate will be the rate on such
Prime Interest Determination Date as published in the H.15 Daily
Update, under the heading "Bank Prime Loan."
. If the rate is not published before 3:00 p.m., New York City time, on
the Calculation Date, in either H.15(519) or the H.15 Daily Update,
then the calculation agent will determine the Prime Rate to be the
arithmetic mean of the rates of interest publicly announced by each
bank that appears on the Reuters Screen US PRIME1 Page, as defined
below, as that bank's prime rate or base lending rate as in effect
for that Prime Interest Determination Date.
. If fewer than four rates appear on the Reuters Screen US PRIME1 Page
on that Prime Interest Determination Date, then the calculation agent
will determine the Prime Rate to be the arithmetic mean of the prime
rates or base lending rates quoted on the basis of the actual number
of days in the year divided by 360, as of the close of business on
that Prime Interest Determination Date by at least three major banks
in New York City, which may include affiliates of the agents,
selected by the calculation agent.
. If the banks selected are not quoting as described in the previous
bullet point, the Prime Rate in effect immediately before such Prime
Interest Determination Date will not change and will remain the Prime
Rate in effect on such Prime Interest Determination Date.
S-16
<PAGE>
"Reuters Screen US PRIME1 Page" means the display designated as page
"USPRIME1" on the Reuters Monitor Money Rates Service, or any successor service
or any other page as may replace the USPRIME1 page on that service for the
purpose of displaying prime rates or base lending rates of major United States
banks.
TREASURY RATE NOTES
Treasury Rate Notes will bear interest at the interest rates, calculated
with reference to the Treasury Rate and the Spread and/or Spread Multiplier, if
any, and subject to the minimum interest rate and the maximum interest rate, if
any, specified in the Treasury Rate Notes and in the applicable pricing
supplement.
Unless the applicable pricing supplement states otherwise, "Treasury
Rate" means, with respect to any Treasury Interest Determination Date, the rate
from the auction held on that date of direct obligations of the United States,
which are commonly referred to as "Treasury bills," having the Index Maturity
specified in the applicable pricing supplement under the caption "Investment
Rate" on the display on Bridge Telerate, Inc., or any successor service on:
. page 56, or any other page as may replace such page on such service
("Telerate Page 56");
. page 57, or any other page as may replace such page on such service,
("Telerate Page 57"); or,
. if not so published by 3:00 p.m., New York City time, on the related
Calculation Date, the Bond Equivalent Yield, as defined below, of the
rate for the Treasury bills as published in the H.15(519) Daily
Update, or such other recognized electronic source used for the
purpose of displaying such rate, under the heading "U.S. Government
Securities/Treasury Bills/Auction High."
A "Treasury Interest Determination Date" means an Interest Determination Date
relating to a Treasury Rate Note.
Unless the applicable pricing supplement states otherwise, the following
procedures will be followed if the Treasury Rate cannot be determined as
described above:
. If the above rate is not published by 3:00 p.m., New York City time,
on the Calculation Date, the Treasury Rate will be the Bond
Equivalent Yield of the auction rate of the applicable Treasury bills
on that Treasury Interest Determination Date as announced by the
United States Department of the Treasury.
. In the event that the auction rate of Treasury bills having the Index
Maturity specified in the applicable pricing supplement is not
published or announced as provided above by 3:00 p.m., New York City
time, on such Calculation Date, or if no auction is held on that
Treasury Interest Determination Date, then the calculation agent will
determine the Treasury Rate to be the Bond Equivalent Yield of the
rate on that Treasury Interest Determination Date of Treasury bills
having the Index Maturity specified in the applicable pricing
supplement as published in H.15(519) under the caption "U.S.
Government Securities/Treasury Bills/Secondary Market" or, if not yet
published by 3:00 p.m., New York City time, on the related
Calculation Date, the rate on such Treasury Interest Determination
Date of the applicable Treasury bills as published in the H.15 Daily
Update under the caption "U.S. Government Securities/Treasury
S-17
<PAGE>
Bills/Secondary Market." If that rate is not yet published in
H.15(519) or the H.15 Daily Update, then the Treasury Rate will be
calculated by the calculation agent and will be the Bond Equivalent
Yield of the arithmetic mean of the secondary market bid rates, as of
approximately 3:30 p.m., New York City time, on that Treasury
Interest Determination Date, of three primary United States
government securities dealers, which may include the agents or their
affiliates, selected by the calculation agent for the issue of
Treasury bills with a remaining maturity closest to the Index
Maturity specified in the applicable pricing supplement.
. If the dealers selected by the calculation agent are not quoting as
described in the previous bullet point, the Treasury Rate in effect
immediately before that Treasury Interest Determination Date will not
change and will remain the Treasury Rate in effect on such Treasury
Interest Determination Date.
"Bond Equivalent Yield" means a yield (expressed as a percentage)
calculated as follows:
Bond Equivalent Yield = D x N x 100
-------------
360 - (D x M)
where "D" refers to the applicable annual rate for the Treasury notes quoted
on a bank discount basis and expressed as a decimal, "N" refers to 365 or 366,
as the case may be, and "M" refers to the actual number of days in the
interest period for which interest is being calculated.
CMT RATE NOTES
CMT Rate Notes will bear interest at the interest rates, calculated with
reference to the CMT Rate and the Spread and/or Spread Multiplier, if any, and
subject to the minimum interest rate and the maximum interest rate, if any,
specified in the CMT Rate Notes and in the applicable pricing supplement.
Unless the applicable pricing supplement states otherwise, "CMT Rate"
means, for any CMT Interest Determination Date, the rate displayed on the
Designated CMT Telerate Page, as defined below, under the caption "Treasury
Constant Maturities . . . Federal Reserve Board Release H.15 . . . Mondays
Approximately 3:45 p.m.," under the column for the Designated CMT Maturity
Index, as defined below, for:
(i) if the Designated CMT Telerate Page is 7051, that CMT Interest
Determination Date; and
(ii) if the Designated CMT Telerate Page is 7052, the week or the
month, as applicable, ended immediately before the week in which the
related CMT Interest Determination Date occurs.
A "CMT Interest Determination Date" means an Interest Determination Date
for a CMT Rate Note.
Unless the applicable pricing supplement states otherwise, the following
procedures will be used if the CMT Rate cannot be determined as described
above:
. If that rate is no longer displayed on the relevant page, or if not
displayed by 3:00 p.m., New York City time, on the related
Calculation Date, then the CMT Rate will be the
S-18
<PAGE>
treasury constant maturity rate for the Designated CMT Maturity
Index, as defined below, as published in H.15(519).
. If that rate is no longer published, or if not published by 3:00
p.m., New York City time, on the related Calculation Date, then the
CMT Rate will be the treasury constant maturity rate for the
Designated CMT Maturity Index, or other United States Treasury rate
for the Designated CMT Maturity Index, for the CMT Interest
Determination Date with respect to that Interest Reset Date as may
then be published by either the Board of Governors of the Federal
Reserve System or the United States Department of the Treasury that
the calculation agent determines to be comparable to the rate
formerly displayed on the Designated CMT Telerate Page and published
in H.15(519).
. If the information described above is not provided by 3:00 p.m., New
York City time, on the related Calculation Date, then the calculation
agent will determine the CMT Rate to be a yield to maturity, based on
the arithmetic mean of the secondary market closing offer side prices
as of approximately 3:30 p.m., New York City time, on the CMT
Interest Determination Date reported, according to their written
records, by three leading primary United States government securities
dealers (each a "reference dealer") in New York City selected by the
calculation agent as described in the following sentence, which may
include the agents or their affiliates. The calculation agent will
select five reference dealers, after consultation with us, and will
eliminate the highest quotation, or, in the event of overlap, one of
the highest and the lowest quotation, or, in the event of overlap,
one of the lowest, for the most recently issued direct noncallable
fixed rate obligations of the United States, which are commonly
referred to as "Treasury notes," with an original maturity of
approximately the Designated CMT Maturity Index and a remaining term
to maturity of not less than such Designated CMT Maturity Index minus
one year.
. If the calculation agent cannot obtain three such Treasury notes
quotations, the calculation agent will determine the CMT Rate to be a
yield to maturity based on the arithmetic mean of the secondary
market offer side prices as of approximately 3:30 p.m., New York City
time, on the CMT Interest Determination Date of three reference
dealers in New York City, which may include the agents or their
affiliates, selected using the same method described above, for
Treasury notes with an original maturity of the number of years
closest to but not less than the Designated CMT Maturity Index and a
remaining term to maturity closest to the Designated CMT Maturity
Index and in an amount of at least $100,000,000. If two Treasury
notes with an original maturity as described above have remaining
terms to maturity equally close to the Designated CMT Maturity Index,
the calculation agent will obtain quotations for the Treasury note
with the shorter remaining term to maturity.
. If three or four, but not five, of the reference dealers are quoting
as described immediately above, then the CMT Rate will be based on
the arithmetic mean of the offer prices obtained and neither the
highest nor the lowest of the quotes will be eliminated.
. If fewer than three reference dealers selected by the calculation
agent are quoting as described above, the CMT Rate in effect
immediately before such CMT Interest Determination Date will not
change and will remain the CMT Rate in effect on such CMT Interest
Determination Date.
S-19
<PAGE>
"Designated CMT Telerate Page" means the display on Bridge Telerate,
Inc., or any successor service, on the page designated in the applicable
pricing supplement, or any other page as may replace such page on that service
for the purpose of displaying Treasury Constant Maturities as reported in
H.15(519). If no page is specified in the applicable pricing supplement, the
Designated CMT Telerate Page will be 7052, for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of
the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years)
specified in the applicable pricing supplement with respect to which the CMT
Rate will be calculated. If no maturity is specified in the applicable pricing
supplement, the Designated CMT Maturity Index will be two years.
DEFEASANCE
The notes will be subject to defeasance in the manner described under the
heading "Description of Debt Securities--Defeasance" in the accompanying
prospectus.
SETTLEMENT IN IMMEDIATELY AVAILABLE FUNDS
Settlement for the notes will be made by the agents in immediately
available funds. The notes will trade in the depositary's settlement system
until maturity. As a result, the depositary will require secondary trading
activity in the notes to be settled in immediately available funds.
BOOK-ENTRY SYSTEM
Upon issuance, all fixed rate notes that are global notes having the same
issue date, interest rate, if any, maturity date and other terms, if any, will
be represented by one or more global securities, and all floating rate notes
that are global notes having the same issue date, initial interest rate, Base
Rate, Interest Reset Period, Interest Payment Dates, Index Maturity, Spread
and/or Spread Multiplier, if any, minimum interest rate, if any, maximum
interest rate, if any, maturity date and other terms, if any, will be
represented by one or more global securities. Each global security representing
global notes will be deposited with, or on behalf of, DTC and registered in the
name of a nominee of DTC. Global notes will not be exchangeable for
certificated notes, except as described below. Certificated notes will not be
exchangeable for global notes and will not otherwise be issuable as global
notes.
Ownership of beneficial interests in a global note will be limited to DTC
participants and to persons or entities that may hold interests through
institutions that have accounts with DTC ("participants"). 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 such 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 holds the securities of its participants and facilitates the
clearance and settlement of securities transactions among its participants in
these securities through electronic book-entry changes in accounts of its
participants. This electronic book-entry system eliminates the need for
physical certificates. DTC's participants include:
. securities brokers and dealers, including the agents;
. banks;
S-20
<PAGE>
. 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.
Principal and interest payments on the global notes represented by a
global security will be made to DTC or its nominee, as the case may be, as the
sole registered owner and the sole holder of the global notes represented by
the global security for all purposes under the applicable indenture.
Accordingly, we, the applicable trustee and the 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 global note represented by a
global security;
. any other aspect of the relationship between DTC and its participants
or the relationship between such participants and the owners of
beneficial interests in a global note held through such participants;
or
. the maintenance, supervision or review of any of DTC's records
relating to such 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 applicable agent or
agents 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.
A global note can only be transferred:
. as a whole by DTC to one of its nominees;
. as a whole by a nominee of DTC to DTC or another nominee of DTC; or
. as a whole by DTC or a nominee of DTC to a successor of DTC or a
nominee of such successor.
Global notes represented by a global security can be exchanged for
certificated notes in registered form only if:
. DTC notifies us that it is unwilling or unable to continue as
depositary for such global note and we do not appoint a successor
depositary within 90 days after receiving such 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 so registered as a clearing agency;
S-21
<PAGE>
. we in our sole discretion determine that such global note will be
exchangeable for certificated notes in registered form and notify the
applicable trustee of our decision; or
. an event of default with respect to the notes represented by such
global note has occurred and is continuing.
A global note that can be exchanged under the previous sentence will be
exchanged for certificated notes that are issued in authorized denominations in
registered form for the same aggregate amount. These certificated notes will be
registered in the names of the owners of the beneficial interests in such
global note as directed by DTC.
Except as provided above, owners of beneficial interests in such global
note will not be entitled to receive physical delivery of notes in certificated
form and will not be considered the holders of the notes for any purpose under
the applicable indenture, and no global notes represented by a global security
will be exchangeable. Accordingly, each person or entity owning a beneficial
interest in a global note must rely on the procedures of DTC, and if the person
or entity is not a participant, on the procedures of the participant through
which the person or entity owns its interest, to exercise any rights of a
holder under the applicable indenture or that global note. 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
applicable indenture, then DTC would authorize the participants holding the
relevant beneficial interests to take such action and those participants would
authorize the beneficial owners owning through such participants to take such
action or would otherwise act upon the instructions of beneficial owners owning
through them.
DTC has provided the following information to us. DTC 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 Exchange Act.
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
S-22
<PAGE>
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 for
whom DTC acquires services to:
. impress upon them the importance of such services being Year 2000
compliant; and
. 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.
S-23
<PAGE>
UNITED STATES FEDERAL TAXATION
The following summary discusses the principal U.S. federal income tax
consequences of owning and disposing of the notes. This summary is based on
current federal tax authorities, including the Internal Revenue Code of 1986,
as amended (the "Code"), Treasury Regulations, which we refer to in this
prospectus supplement as the "OID Regulations," concerning the treatment of
debt instruments issued with original issue discount ("OID") and other
regulations issued under the Code, judicial authority and administrative
rulings and practice. Any changes to these tax authorities may be applied
retroactively and may adversely affect the tax consequences to holders.
This summary applies only to holders that:
. purchase the notes in the original offering at the "issue price," as
defined below under "--Tax Consequences to U.S. Holders--Notes Issued
with OID"; and
. hold the notes as "capital assets" as that term is defined in the
Code.
It does not discuss all of the tax consequences that may be relevant to a
holder in light of the holder's particular circumstances or to holders subject
to special rules, such as certain financial institutions, tax-exempt
organizations, regulated investment companies, insurance companies, dealers in
securities or foreign currencies, persons holding notes as a hedge against
currency risks or as a position in a "straddle," or persons whose functional
currency is not the United States dollar. The applicable pricing supplement
may contain additional tax considerations applicable to particular notes,
including any indexed notes and notes denominated in a currency other than
U.S. dollars. PERSONS CONSIDERING THE PURCHASE OF NOTES SHOULD CONSULT THEIR
TAX ADVISORS REGARDING THE FEDERAL INCOME TAX CONSEQUENCES IN THEIR PARTICULAR
SITUATIONS, AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY
STATE, LOCAL OR FOREIGN TAXING JURISDICTION.
As used in this prospectus, the term U.S. holder means a beneficial
owner of a note that is, for U.S. federal income tax purposes:
. a citizen or resident of the United States;
. a domestic corporation, partnership or other entity;
. an estate whose income is subject to U.S. federal income tax
regardless of its source; or
. a trust if a U.S. court is able to exercise primary supervision over
the administration of the trust and one or more U.S. persons have the
authority to control the trust 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).
The term non-U.S. holder means a beneficial owner of a note that is not
a U.S. holder.
S-24
<PAGE>
TAX CONSEQUENCES TO U.S. HOLDERS
PAYMENTS OF INTEREST
Interest paid on a note, to the extent treated as "qualified stated
interest," as defined below, will generally be taxable to a U.S. holder as
ordinary interest income at the time it accrues or is received in accordance
with the holder's method of accounting. Special rules govern the treatment of
interest paid with respect to notes with special features such as floating rate
notes or indexed notes.
NOTES ISSUED WITH OID
Unless the applicable pricing supplement states otherwise, we will not
issue the notes with OID. For federal income tax purposes, OID is the excess of
the stated redemption price at maturity of a note over its issue price.
However, OID is assumed to be zero if such excess is less than a de minimis
amount, generally, 1/4 of 1% of the note's stated redemption price at maturity
multiplied by the number of complete years to maturity. The "issue price" of
each note, as used in this summary, equals the first price at which a
substantial amount of such notes has been sold to the public, ignoring sales to
bond houses, brokers, or similar persons or organizations acting as
underwriters, placement agents, or wholesalers. The "stated redemption price at
maturity" of a note will equal the sum of all payments required under the note
other than payments of "qualified stated interest." "Qualified stated interest"
is stated interest unconditionally payable in cash or property, other than debt
instruments of the issuer, at least annually during the entire term of the note
at a single fixed rate or certain variable rates of interest and that takes
into account the interval between stated interest payments.
A U.S. holder of a note issued with OID will be required to include any
qualified stated interest payments in income in accordance with the holder's
method of accounting. A U.S. holder of such a note that matures more than one
year from its date of issuance will be required to include OID in income as it
accrues in accordance with a constant yield method, before the receipt of cash
payments attributable to such income and regardless of that holder's regular
tax accounting method. Under the constant yield method, a holder of such a note
generally will be required to include in income increasingly greater amounts of
OID.
A "short-term OID note," a note with a term of one year or less, will be
treated as having been issued with OID because none of the interest will be
treated as qualified stated interest. In general, a cash method U.S. holder of
a short-term OID note is not required to accrue OID currently unless it elects
to do so. In general, an accrual method U.S. holder of a short-term OID note is
required to include in income the OID currently as it accrues. Accrual method
U.S. holders, and cash method U.S. holders who elect to include OID in income
currently, must recognize such OID income on a straight-line basis unless the
holder elects to accrue the OID under a constant yield method. For cash method
U.S. holders who do not include OID in income currently, any gain realized on
the sale, exchange or retirement of a short-term OID note will be ordinary
income to the extent of the accrued OID. In addition, such cash method U.S.
holders will be required to defer deductions for certain interest paid on
indebtedness related to purchasing or carrying short-term OID notes until such
OID is included in such holder's income.
Certain of the notes may be redeemed at our option or repaid at the
holder's option before maturity. Notes containing either feature may be subject
to rules that differ from the general rules discussed herein. Purchasers of
notes with such features should carefully examine the applicable
S-25
<PAGE>
pricing supplement with respect to such features since the tax consequences
with respect to OID will depend on the particular terms of the note.
VARIABLE RATE NOTES
A "variable rate note" is a note that has an issue price that does not
exceed the total noncontingent principal payments by more than the lesser of:
. the product of
. the total noncontingent principal payments,
. the number of complete years to maturity, and
. .015; or
. 15 percent of the total noncontingent principal payments,
and does not provide for any stated interest other than stated interest
compounded or paid at least annually at a variable rate meeting a number of
technical criteria. The rules for determining whether a variable rate meets
these requirements are extremely complex. However, CD Rate Notes, Commercial
Paper Rate Notes, EURIBOR Notes, Federal Funds Rate Notes, LIBOR Notes, Prime
Rate Notes, Treasury Rate Notes, and CMT Rate Notes generally will be treated
as meeting the requirements, thereby qualifying as variable rate notes. If a
floating rate note is not a variable rate note, the applicable pricing
supplement will disclose the tax consequences with respect to the note.
If a note qualifies as a variable rate note, the OID Regulations specify
rules for determining the amount of qualified stated interest and the amount
and accrual of any OID. In general, the stated interest on a variable rate note
is treated as qualified stated interest. The amount and accrual of any OID
generally is determined by assuming the variable rate note bears interest at a
fixed rate equal to the variable rate in effect on the date the note was
issued.
SALE, EXCHANGE OR RETIREMENT OF THE NOTES
Upon the sale, exchange or retirement of a note, a U.S. holder generally
will recognize taxable gain or loss equal to the difference between the amount
realized on the sale, exchange or retirement and the holder's adjusted tax
basis in the note. For these purposes, the amount realized does not include any
amount attributable to accrued interest, or in the case of a note issued with
OID, qualified stated interest, on the note, which will be taxable as such
unless previously taken into account. A U.S. holder's adjusted tax basis in a
note generally will equal the cost of the note to such holder, increased by the
amount of any OID previously included in income by the holder and reduced by
any payments that do not constitute qualified stated interest, such as
principal payments.
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 the note has been held for more than one year at the time of such sale,
exchange or retirement. Net long-term capital gain recognized by individual
taxpayers is generally taxed at a lower rate, currently a maximum U.S. federal
rate of 20 percent, than ordinary income for certain noncorporate taxpayers.
S-26
<PAGE>
U.S. TAX CONSEQUENCES TO FOREIGN HOLDERS
The following is a general discussion of the U.S. federal income tax
consequences of the ownership and disposition of the notes by a beneficial
owner that is not a U. S. holder, 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 (including OID) 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 holder and stating, among
other things, that the holder is not a U.S. holder. 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 holder provides such a form to the
organization or institution, and (ii) the organization or
institution, under penalty 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 holder is not a bank receiving interest under Code Section
881(c)(3)(A).
. The interest is not contingent interest under Code Section
871(h)(4)(A).
. The holder does not actually or constructively own 10% or more of the
voting power of our stock.
. The 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.
S-27
<PAGE>
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.
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 penalty 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 U. S. person, will not be subject to IRS reporting
requirements and U.S. backup withholding, provided that neither we nor our
paying agent has actual knowledge that the holder is a U.S. 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.
. If the proceeds are paid to or through a non-U.S. office of a broker
that is not a U.S. person or a "U.S. related person," as defined
below, they will not be subject to backup withholding or information
reporting.
S-28
<PAGE>
. If the proceeds are paid to or through a non-U.S. office of a broker
that is either a U.S. 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 U.S. person or U.S. related person, absent
actual knowledge that the payee is a U.S. 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 U. S. 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, if any),
provided that certain required information is furnished. The information
reporting requirements may apply regardless of whether withholding required.
Copies of the information returns reporting such interest and withholding also
may be made available to the tax authorities in the country in which a non-U.S.
holder is a resident under the provisions of an applicable income 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 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.
S-29
<PAGE>
PLAN OF DISTRIBUTION
We are offering the notes on a continuing basis through Morgan Stanley &
Co. Incorporated, ABN AMRO Incorporated, Banc One Capital Markets, Inc.,
Barclays Capital Inc., Bear, Stearns & Co. Inc., BNY Capital Markets, Inc.,
Chase Securities Inc., Credit Suisse First Boston Corporation, Donaldson,
Lufkin & Jenrette Securities Corporation, First Union Capital Markets Corp.,
Goldman, Sachs & Co., HSBC Securities (USA) Inc., Lehman Brothers Inc., Mellon
Financial Markets, Inc., Salomon Smith Barney Inc., and WestLB Panmure
Securities Inc., which we refer to individually as an "agent" and together as
the "agents," who have agreed to use their reasonable efforts to solicit
purchases of the notes. We will have the sole right to accept offers to
purchase the notes, and we may reject any offer in whole or in part. Each agent
may reject, in whole or in part, any offer it solicited to purchase notes.
Unless otherwise specified in the applicable pricing supplement and except as
set forth below, we will pay an agent, in connection with sales of these notes
resulting from a solicitation that that agent made or an offer to purchase that
that agent received, a commission ranging from .125% to .750% of the principal
amount of the notes to be sold, depending upon the maturity of the notes. We
and the agent will agree upon commissions for notes with a maturity of 30 years
or greater at the time of sale.
We may also sell the notes to an agent as principal for its own account
at discounts to be agreed upon at the time of sale. That agent may resell the
notes to investors and other purchasers at a fixed offering price or at
prevailing market prices, or prices related thereto at the time of resale or
otherwise, as that agent determines and as we will specify in the applicable
pricing supplement. Unless the applicable pricing supplement states otherwise,
any notes sold to agents as principals will be purchased at a price equal to
100% of the principal amount less a discount that will equal the applicable
commission on an agency sale of notes of the same maturity. An agent may offer
the notes it has purchased as principal to other dealers. The agent may sell
the notes to any dealer at a discount and, unless otherwise specified in the
applicable pricing supplement, the discount allowed to any other dealer will
not be in excess of the discount that agent will receive from us. After the
initial public offering of notes that an agent is to resell on a fixed public
offering price basis, the agent may change the public offering price and
discount.
We may arrange for notes to be sold through agents or may sell notes
directly to investors on our own behalf or through affiliated entities, such as
NISI (as defined below). No commissions will be paid on notes sold directly by
us. We may accept offers to purchase notes through additional agents and may
appoint additional agents to solicit offers to purchase notes. Any other agents
will be named in the applicable pricing supplement.
One of our wholly-owned subsidiaries, Norwest Investment Services Inc.,
or NISI, may help place some of the notes. 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 notes can be purchased from us. NISI will forward any orders for such
notes to us for acceptance. We will pay NISI a commission at the same rate as
the commissions we pay to the agents.
Each of the agents may be deemed to be an "underwriter" within the
meaning of the Securities Act of 1933. We and the agents have agreed to
indemnify each other against certain liabilities, including liabilities under
the Securities Act, or to contribute to payments made in respect of those
liabilities. We have also agreed to reimburse the agents for specified
expenses.
S-30
<PAGE>
We estimate that we will spend approximately $650,000 for printing,
rating agency, trustee and legal fees and other expenses allocable to the
offering.
Unless otherwise provided in the applicable pricing supplement, we do not
intend to apply for the listing of the notes on a national securities exchange,
but have been advised by the agents that they intend to make a market for the
notes, as applicable laws and regulations permit. The agents are not obligated
to do so, however, and the agents may discontinue making a market at any time
without notice. No assurance can be given as to the liquidity of any trading
market for these notes.
The agents or their affiliates may be customers of, engage in
transactions with and perform investment and/or commercial banking services for
us in the ordinary course of business.
When an agent acts as principal for its own account, to facilitate the
offering of the notes, the agent may engage in transactions that stabilize,
maintain or otherwise affect the price of the notes. Specifically, the agent
may overallot in connection with any offering of the notes, creating a short
position in the notes for its own accounts. In addition, to cover
overallotments or to stabilize the price of the notes, the agent may bid for,
and purchase, the notes in the open market. Finally, in any offering of the
notes through a syndicate of underwriters, the underwriting syndicate may
reclaim selling concessions allowed to an underwriter or a dealer for
distributing the notes in the offering if the syndicate repurchases previously
distributed notes in transactions to cover syndicate short positions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the notes above independent market levels. The
agents are not required to engage in these activities, and may end any of these
activities at any time.
S-31
<PAGE>
CONCERNING THE TRUSTEES
From time to time, we and certain of our subsidiaries maintain deposit
accounts and conduct other banking transactions, including lending
transactions, with the trustees in the ordinary course of business. In
addition, each of Citibank, N.A. and The First National Bank of Chicago is an
affiliate of an agent for the offering.
LEGAL OPINIONS
The validity of the notes will be passed upon for us by Stanley S.
Stroup, who is our Executive Vice President and General Counsel, or another of
our lawyers, and for the agents by Gibson, Dunn & Crutcher LLP. 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. 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. The opinions of Mr. Stroup and Gibson, Dunn & Crutcher LLP will
be conditioned upon, and subject to certain assumptions regarding, future
action that we and the applicable trustee are required to take in connection
with the issuance and sale of any particular note, the specific terms of the
notes and other matters which may affect the validity of the notes but which
cannot be ascertained on the date of such opinions.
S-32
<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
13
<PAGE>
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
14
<PAGE>
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)
15
<PAGE>
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.
16
<PAGE>
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
17
<PAGE>
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;
18
<PAGE>
. 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;
19
<PAGE>
. 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.
20
<PAGE>
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
21
<PAGE>
. 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.
22
<PAGE>
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.
23
<PAGE>
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
24
<PAGE>
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
25
<PAGE>
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
26
<PAGE>
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:
27
<PAGE>
. 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.
28
<PAGE>
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:
29
<PAGE>
. $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
30
<PAGE>
. 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
31
<PAGE>
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.
32
<PAGE>
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.
33
<PAGE>
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
34
<PAGE>
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
35
<PAGE>
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
36
<PAGE>
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.
37
<PAGE>
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;
38
<PAGE>
. 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
39
<PAGE>
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
40
<PAGE>
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
41
<PAGE>
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
42
<PAGE>
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.
43
<PAGE>
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;
44
<PAGE>
. 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.
45
<PAGE>
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
<PAGE>
[LOGO OF WELLS FARGO STAGECOACH]
