<PAGE> 1
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED APRIL 4, 1995)
$500,000,000
[LOGO]
MEDIUM-TERM NOTES, SERIES A
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
---------------------------
H. F. Ahmanson & Company ("Ahmanson") may offer from time to time its
Medium-Term Notes, Series A (the "Notes"), having an aggregate initial offering
price not to exceed $500,000,000, subject to reduction under certain
circumstances as a result of the sale of other Debt Securities of Ahmanson under
the Prospectus to which this Prospectus Supplement relates. The Notes will be
offered at varying maturities of nine months or more from their dates of issue,
which maturity date may be subject to extension at the option of Ahmanson or the
Holder thereof, and may be subject to redemption at the option of Ahmanson or
repayment at the option of the Holder, in each case, in whole or in part, prior
to the maturity date (as further defined below, "Stated Maturity") thereof as
set forth in a Pricing Supplement to this Prospectus Supplement (a "Pricing
Supplement"). Each Note will be denominated in United States dollars. The Notes
may be issued as "Amortizing Notes," "Original Issue Discount Notes,"
"Extendible Notes" or "Renewable Notes." See "Description of Notes."
(Continued on next page)
---------------------------
THE NOTES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY
SAVINGS BANK OR NON-BANK SUBSIDIARY OF AHMANSON AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, BANK INSURANCE FUND, SAVINGS ASSOCIATION
INSURANCE FUND OR ANY OTHER GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THE PROSPECTUS, THIS
PROSPECTUS SUPPLEMENT OR ANY PRICING SUPPLEMENT HERETO. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
PRICE TO AGENTS' COMMISSION OR PROCEEDS TO
PUBLIC(1) DISCOUNT(2) AHMANSON(2)(3)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note.................. 100% .125% - .750% 99.250% - 99.875%
- --------------------------------------------------------------------------------------------------
Total..................... $500,000,000 $625,000 - $3,750,000 $499,375,000 -- $496,250,000
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
</TABLE>
(1) Unless otherwise specified in the Pricing Supplement relating thereto, each
Note will be issued at 100% of the principal amount thereof.
(2) For sales made on an agency basis, Ahmanson will pay Lehman Brothers, Lehman
Brothers Inc. (including its affiliate, Lehman Government Securities Inc.),
Bear, Stearns & Co. Inc., CS First Boston Corporation, or Merrill Lynch &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated (each an "Agent,"
and collectively, with such agents as may be named from time to time, the
"Agents") a commission, in the form of a discount ranging from .125% to
.750%, of the principal amount of any Note, depending on its Stated
Maturity, sold through such Agent, except that the commission payable by
Ahmanson to the Agents with respect to Notes with maturities of greater than
thirty years will be negotiated at the time Ahmanson issues such Notes. Any
Agent, acting as principal, may also purchase Notes at a discount for resale
to one or more investors or one or more broker-dealers (acting as principal
for purposes of resale) at varying prices related to prevailing market
prices at the time of resale, as determined by such Agent, or, if so agreed,
at a fixed public offering price. Ahmanson has agreed to reimburse the
Agents for certain expenses. Ahmanson has agreed to indemnify the Agents
against certain liabilities, including liabilities under the applicable
Federal and state securities laws.
(3) Before deducting offering expenses payable by Ahmanson estimated at
$700,000.
-------------------------------
The Notes are being offered on a continuing basis by Ahmanson through the
Agents, each of which has agreed to use its reasonable efforts to solicit offers
to purchase the Notes. Ahmanson has reserved the right to sell Notes directly to
investors on its own behalf, and on such sales no commissions will be paid. The
Notes will not be listed on any securities exchange, unless otherwise specified
in the Prospectus Supplement, and there can be no assurance that the Notes will
be sold or that there will be a secondary market for the Notes. Ahmanson
reserves the right to withdraw, cancel or modify the offer made hereby without
notice. Ahmanson or the Agent that solicits an offer to purchase Notes may
reject such offer to purchase Notes in whole or in part. See "Supplemental Plan
of Distribution."
---------------------------
LEHMAN BROTHERS
BEAR, STEARNS & CO. INC.
CS FIRST BOSTON
MERRILL LYNCH & CO.
The Date of this Prospectus Supplement is April 4, 1995.
<PAGE> 2
(Continued from previous page)
Unless otherwise specified in the applicable Pricing Supplement, Notes will
be issued only in denominations of $1,000 or any amount in excess thereof which
is an integral multiple of $1,000. Unless otherwise specified in the applicable
Pricing Supplement, each Note will be registered and will be issued either in
(i) book-entry form and represented by a global certificate (a "Global
Security") registered in the name of a nominee of The Depository Trust Company,
as Depositary (the "Depositary") (each such Note represented by a Global
Security being referred to herein as a "Book-Entry Note"), or (ii) if specified
in the applicable Pricing Supplement, in certificated form and represented by
certificates issued in definitive form ("Certificated Notes") and registered in
the name of each Holder. Interests in Book-Entry Notes will be shown on, and
transfers thereof will be effected only through, records maintained by the
Depositary (with respect to beneficial interests of participants) and its
participants. Owners of beneficial interests in Book-Entry Notes will be
entitled to physical delivery of Certificated Notes only under the limited
circumstances described herein and will not be considered the Holders thereof.
See "Description of Notes -- Book-Entry System."
The interest rate or interest rate formula, if any, issue price, Stated
Maturity, interest payment dates, principal amount, redemption or repayment
provisions, if any, and other terms for each Note will be established by
Ahmanson at the date of issuance of such Note and will be set forth in the
applicable Pricing Supplement. Unless otherwise specified in the applicable
Pricing Supplement, each Note will bear interest at a fixed rate (a "Fixed Rate
Note"), which may be zero in the case of certain Notes issued at a price
representing a discount from the principal amount payable at Stated Maturity, or
at a variable rate determined by reference to an interest rate formula (a
"Floating Rate Note"), which may be adjusted by adding or subtracting the Spread
and/or multiplying the Spread Multiplier. The interest rate formula for the
Notes will be the Commercial Paper Rate, Federal Funds Rate, CD Rate, LIBOR,
Prime Rate, Treasury Rate, CMT Rate, 11th District Cost of Funds Rate (each as
defined below) or such other interest rate basis or formula (a "Base Rate") as
may be designated in an accompanying Pricing Supplement. Interest rates and
interest rate formulas are subject to change by Ahmanson, but, except as
otherwise set forth herein, no such change will affect the interest rate on, or
interest rate formula for, any Note theretofore issued or which Ahmanson has
agreed to sell. See "Description of Notes."
Unless otherwise specified in the applicable Pricing Supplement, interest
on each Fixed Rate Note other than an Amortizing Note will accrue from its
Original Issue Date (as defined below), or the last date to which interest has
been paid or duly provided for, and will be payable semiannually on each June 15
and December 15 and at Maturity. Interest on Floating Rate Notes will be payable
on such dates indicated in the applicable Pricing Supplement.
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IN CONNECTION WITH THIS OFFERING, THE AGENTS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
DESCRIPTION OF NOTES
The following summaries of certain provisions of the Notes and the
Indenture hereby supplement the description of the general terms and conditions
of the Debt Securities set forth under the heading "Description of Debt
Securities" in the Prospectus, to which description reference is hereby made.
Such summaries do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all the provisions of the Notes and
the Indenture. Capitalized terms set forth below that are not otherwise defined
herein shall have the meanings specified in the Indenture and/or the Notes.
Unless otherwise specified in the applicable Pricing Supplement, the Notes will
have the terms described below.
GENERAL
The Notes will be issued under an Indenture, dated as of April 4, 1995 (the
"Indenture"), between Ahmanson and Citibank, N.A., as trustee (the "Trustee").
The Notes constitute a single series of Senior Debt Securities for purposes of
the Indenture and are limited to an aggregate initial offering price of
$500,000,000, subject to reduction under certain circumstances as a result of
the sale of other Debt Securities of Ahmanson under the accompanying Prospectus.
Ahmanson may from time to time sell additional series of Debt Securities,
including additional series of medium-term notes. For a description of the
rights attaching to different series of Debt Securities (including the Notes)
under the Indenture, see "Description of Debt Securities" in the Prospectus.
The Notes and the Indenture do not limit the aggregate principal amount of
other indebtedness or securities which may be issued by Ahmanson. The Notes will
be unsecured and will rank pari passu with all other unsecured and
unsubordinated indebtedness of Ahmanson, provided that such other unsecured and
unsubordinated indebtedness may contain covenants, events of default and other
provisions which are different from or which are not contained in the Notes.
The Notes will be offered on a continuing basis and each Note will mature
nine months or more from its date of issue, as selected by the initial purchaser
and agreed to by Ahmanson, which maturity date may be subject to extension at
the option of Ahmanson or the Holder thereof (see "Extendible Notes" and
"Renewable Notes" below), or redemption at the option of Ahmanson or repayment
at the option of the Holder prior to Stated Maturity (see "Redemption at the
Option of Ahmanson" and "Repayment at the Option of the Holder" below). Each
Note will be either (i) a Fixed Rate Note, which may bear interest at a rate of
zero in the case of a Note issued at an Issue Price (as defined below)
representing a discount from the principal amount payable at Stated Maturity (a
"Zero Coupon Note"), or (ii) a Floating Rate Note which will bear interest at a
rate determined by reference to the interest rate basis or combination of
interest rate bases specified in the applicable Pricing Supplement, which may be
adjusted by a Spread and/or Spread Multiplier (each as defined below).
Each Note will be issued initially as either a Book-Entry Note or a
Certificated Note only in fully registered form without coupons. Except as set
forth below under "Book-Entry System," Book-Entry Notes will not be exchangeable
for Certificated Notes. Unless otherwise specified in the applicable Pricing
Supplement, Notes will be issuable in U.S. dollars in denominations of $1,000
and integral multiples of $1,000 in excess thereof.
Interest rates offered by Ahmanson with respect to the Notes may differ
depending, among other things, upon the aggregate principal amount of Notes
purchased in any single transaction. Interest rates, interest rate formulae and
other variable terms of the Notes are subject to change by Ahmanson from time to
time, but no
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such change will affect any Note already issued or as to which an offer to
purchase has been accepted by Ahmanson.
As used herein, "Business Day" means, unless otherwise specified in the
applicable Pricing Supplement, any Monday, Tuesday, Wednesday, Thursday or
Friday that in The City of New York is not a day on which banking institutions
are authorized or required by law, regulation or executive order to close and,
with respect to Notes as to which LIBOR (as defined below) is an applicable Base
Rate (as defined below), is also a London Business Day. As used herein, "London
Business Day" means any day on which dealings in deposits in U.S. dollars are
transacted in the London interbank market.
"Index Maturity" means, with respect to a Floating Rate Note, the period to
maturity of the instrument or obligation on which the interest rate formula is
based, as specified in the applicable Pricing Supplement.
The Pricing Supplement relating to each Note will describe the following
terms, as applicable: (i) the aggregate principal amount of the Notes; (ii) the
price (expressed as a percentage of the aggregate principal amount thereof) at
which such Note will be issued (the "Issue Price"); (iii) the date on which such
Note will be issued (the "Original Issue Date"); (iv) the date on which such
Note will mature (the "Stated Maturity") and whether the Stated Maturity may be
extended by Ahmanson, and if so, the Extension Periods and the Final Maturity
Date (each as defined below); (v) whether such Note is a Fixed Rate Note or a
Floating Rate Note; (vi) whether such Note is an Amortizing Note (as defined
below), and if so, the basis or formula for the amortization of principal and
the payment dates for periodic principal payments; (vii) if such Note is a Fixed
Rate Note, the rate per annum at which such Note will bear interest, if any, the
Interest Payment Date or Dates, if any, and, if so specified in the applicable
Pricing Supplement, that such rate may be changed by Ahmanson prior to the
Stated Maturity and, if so, the basis or formula for such change, if any; (viii)
if such Note is a Floating Rate Note, the Base Rate, the Initial Interest Rate,
if available, the Interest Reset Date or Dates, the Calculation Date or Dates,
the Maximum Interest Rate, if any, the Minimum Interest Rate, if any, the
Spread, if any, the Spread Multiplier, if any (all as defined below), the
Interest Payment Date or Dates, the Index Maturity, and any other terms relating
to the particular method of calculating the interest rate for such Note and, if
so specified in the applicable Pricing Supplement, that any such Spread and/or
Spread Multiplier may be changed by Ahmanson prior to the Stated Maturity and,
if so, the basis or formula for such change, if any; (ix) whether such Note is
an Original Issue Discount Note (as defined below), and if so, the yield to
maturity; (x) the regular record date or dates (a "Regular Record Date") if
other than as set forth below with respect to Fixed Rate Notes and Floating Rate
Notes; (xi) whether such Note may be redeemed at the option of Ahmanson, or
repaid at the option of the Holder, on or after a specified date prior to the
Stated Maturity and, if so, the provisions relating to such redemption or
repayment; (xii) certain specified United States Federal income tax
considerations relevant to the purchase, ownership and disposition of such Note,
if applicable; and (xiii) any other term of such Note not inconsistent with the
provisions of the Indenture.
PAYMENT OF INTEREST AND PRINCIPAL
Book-Entry Notes
Payments of interest, if any, and principal (and premium, if any) to
Beneficial Owners (as defined below under "Book-Entry System") of Book-Entry
Notes are expected to be made in accordance with the Depositary's and its
participants' procedures in effect from time to time as described below under
"Book-Entry System."
Certificated Notes
Unless otherwise specified in the applicable Pricing Supplement, payments
of interest, if any, and, in the case of Amortizing Notes, principal with
respect to any Certificated Note (other than interest and principal payable at
Maturity) will be made by mailing a check to the Holder at the address of such
Holder appearing on the security register for the Notes on the applicable
Regular Record Date. Notwithstanding the foregoing, at the option of Ahmanson,
all payments of interest and, in the case of Amortizing Notes, principal on the
Notes may be made by wire transfer of immediately available funds to an account
at a bank located within the
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United States as designated by each Holder not less than 15 calendar days prior
to the applicable Interest Payment Date. A Holder of $10 million or more in
aggregate principal amount of Notes of like tenor and terms with the same
Interest Payment Date may demand payment by wire transfer but only if
appropriate payment instructions have been received in writing by the Paying
Agent, not less than 15 calendar days prior to the applicable Interest Payment
Date. In the event that payment is so made in accordance with instructions of
the Holder, such wire transfer shall be deemed to constitute full and complete
payment of such interest and principal on the Notes. Payment of the principal of
(and premium, if any) and interest due, if any, with respect to any Certificated
Note at Maturity will be made in immediately available funds upon surrender of
such Note at the principal office of the Paying Agent in The City of New York,
New York accompanied by wire transfer instructions, provided that the
Certificated Note is presented to the Paying Agent in time for the Paying Agent
to make such payments in such funds in accordance with its normal procedures.
Original Issue Discount Notes
Unless otherwise specified in the applicable Pricing Supplement, if the
principal of any Original Issue Discount Note is declared to be due and payable
immediately as described in the Prospectus under "Description of Debt
Securities -- Events of Default," the amount of principal due and payable with
respect to such Note shall be the Amortized Face Amount of such Note as of the
date of such declaration. The "Amortized Face Amount" of an Original Issue
Discount Note that does not bear stated interest shall be an amount equal to the
sum of (i) the principal amount of such Note multiplied by the Issue Price
(expressed, for this purpose, as a percentage of the principal amount of the
Note) set forth in the applicable Pricing Supplement plus (ii) the portion of
the difference between the dollar amount determined pursuant to the preceding
clause (i) and the principal amount of such Note that has accrued at the yield
to maturity set forth in the Pricing Supplement (computed in accordance with
generally accepted financial practices) to such date of declaration, but in no
event shall the Amortized Face Amount of an Original Issue Discount Note exceed
its principal amount.
INTEREST AND INTEREST RATES
Each Note other than certain Original Issue Discount Notes will bear
interest from its Original Issue Date or from the most recent Interest Payment
Date to which interest on such Note has been paid or duly provided for at a
fixed rate or rates per annum, or at a rate or rates per annum determined
pursuant to a Base Rate or Rates stated therein and in the applicable Pricing
Supplement that may be adjusted by a Spread and/or Spread Multiplier, until the
principal thereof is paid or made available for payment. Interest will be
payable on each Interest Payment Date and at Maturity. "Maturity" means the date
on which the principal of a Note becomes due and payable in full in accordance
with its terms and the terms of the Indenture, whether at Stated Maturity (as
defined above) or earlier by declaration of acceleration, call for redemption,
repayment or otherwise. Interest (other than defaulted interest which may be
paid on a special record date) will be payable to the Holder at the close of
business on the Regular Record Date next preceding such Interest Payment Date;
provided, however, that interest payable at Maturity will be payable to the
person to whom principal shall be payable. The first payment of interest on any
Note originally issued between a Regular Record Date for such Note and the
succeeding Interest Payment Date will be made on the Interest Payment Date
following the next succeeding Regular Record Date for such Note to the Holder on
such next Regular Record Date.
Interest rates, Base Rates, Spreads and Spread Multipliers are subject to
change by Ahmanson from time to time but no such change will affect any Note
theretofore issued or which Ahmanson has agreed to sell. The Interest Payment
Dates and the Regular Record Dates for each Fixed Rate Note shall be as
described below under "Fixed Rate Notes." The Interest Payment Dates for each
Floating Rate Note shall be as described below under "Floating Rate Notes" and
in the applicable Pricing Supplement, and the Regular Record Dates for a
Floating Rate Note will be the fifteenth day (whether or not a Business Day)
next preceding each Interest Payment Date.
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FIXED RATE NOTES
Each Fixed Rate Note will bear interest from its Original Issue Date at the
annual rate or rates stated thereon and in the applicable Pricing Supplement.
Payments of interest on any Fixed Rate Note with respect to any Interest Payment
Date will include interest accrued from and including the Original Issue Date,
or the next preceding Interest Payment Date, to but excluding the applicable
Interest Payment Date or the date of Maturity. Fixed Rate Notes may bear one or
more annual rates of interest during the periods or under the circumstances
specified therein and in the applicable Pricing Supplement. Unless otherwise
specified in the applicable Pricing Supplement, interest on the Fixed Rate Notes
will be computed on the basis of a 360-day year of twelve 30-day months.
Unless otherwise specified in an applicable Pricing Supplement, the
Interest Payment Dates for the Fixed Rate Notes other than Amortizing Notes will
be June 15 and December 15 of each year, and the Regular Record Dates will be
May 31 and November 30 (whether or not a Business Day) of each year. Unless
otherwise specified in the applicable Pricing Supplement, the Regular Record
Dates with respect to Fixed Rate Amortizing Notes will be the 15th day (whether
or not a Business Day) next preceding each Interest Payment Date. Unless
otherwise specified in the applicable Pricing Supplement, payments of principal
and interest on Fixed Rate Amortizing Notes will be made either quarterly on
each March 15, June 15, September 15 and December 15 or semiannually on each
June 15 and December 15, as set forth in the applicable Pricing Supplement, and
at Maturity. If the Interest Payment Date or Maturity for any Fixed Rate Note
falls on a day that is not a Business Day, payment of principal, premium, if
any, and interest with respect to such Note will be made on the next succeeding
Business Day with the same force and effect as if made on the due date, and no
interest shall be payable on the date of payment for the period from and after
the due date.
Unless otherwise specified in the applicable Pricing Supplement, payments
with respect to Fixed Rate Amortizing Notes will be applied first to interest
due and payable thereon and then to the reduction of the unpaid principal amount
thereof. A table setting forth repayment information in respect of each Fixed
Rate Amortizing Note will be set forth in such Note, included in the applicable
Pricing Supplement and provided to the original purchaser thereof and will be
available, upon request, to subsequent Holders.
FLOATING RATE NOTES
Each Floating Rate Note will bear interest at a rate determined by
reference to one or more interest rate bases (each a "Base Rate"), which may be
adjusted by adding to or subtracting from the Base Rate a fixed percentage per
annum (the "Spread") and/or by multiplying the Base Rate by a fixed interest
factor (the "Spread Multiplier"). The applicable Pricing Supplement will
designate one or more of the following Base Rates as applicable to each Floating
Rate Note: (a) the Commercial Paper Rate (a "Commercial Paper Rate Note"), (b)
the Federal Funds Rate (a "Federal Funds Rate Note"), (c) the CD Rate (a "CD
Rate Note"), (d) LIBOR (a "LIBOR Note"), (e) the Prime Rate (a "Prime Rate
Note"), (f) the Treasury Rate (a "Treasury Rate Note"), (g) the CMT Rate (a "CMT
Rate Note"), (h) the 11th District Cost of Funds Rate (an "11th District Cost of
Funds Rate Note"), or (i) such other Base Rate or interest rate formula as is
set forth in such Pricing Supplement and in such Floating Rate Note.
Each Floating Rate Note will bear interest from its Original Issue Date to
the first Interest Reset Date (as defined below) for such Note at the Initial
Interest Rate (the "Initial Interest Rate") set forth on the face thereof and in
the applicable Pricing Supplement. Thereafter, the interest rate on each
Floating Rate Note for each Reset Period (as defined below) will be equal to the
interest rate calculated by reference to the Base Rate or Rates specified on the
face thereof and in the applicable Pricing Supplement plus or minus the Spread,
if any, and/or times the Spread Multiplier, if any. The Spread and/or Spread
Multiplier for a Floating Rate Note may be subject to adjustment during a Reset
Period under circumstances specified therein and in the applicable Pricing
Supplement.
Ahmanson will appoint, and enter into an agreement with, an agent (a
"Calculation Agent") to calculate interest rates on Floating Rate Notes. Unless
otherwise specified in the applicable Pricing Supplement, the Calculation Agent
for each Floating Rate will be the Trustee. All determinations to be made by the
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Calculation Agent shall be at its sole discretion and shall, in the absence of
manifest error, be conclusive for all purposes and binding on the Holders of
Notes.
The interest rate on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semiannually or annually (such type or period being the
"Reset Period" for such Note, and the first day of each Reset Period being an
"Interest Reset Date"), as specified on the face thereof and in the applicable
Pricing Supplement. Unless otherwise specified in the applicable Pricing
Supplement, the Interest Reset Dates will be, in the case of Floating Rate Notes
that reset daily, each Business Day; in the case of Floating Rate Notes (other
than Treasury Rate Notes) that reset weekly, Wednesday of each week; in the case
of Treasury Rate Notes that reset weekly, Tuesday of each week, except as
provided below; in the case of Floating Rate Notes that reset monthly, the third
Wednesday of each month (with the exception of monthly reset 11th District Cost
of Funds Rate Notes, which will reset on the first calendar day of the month);
in the case of Floating Rate Notes that reset quarterly, the third Wednesday of
each March, June, September and December; in the case of Floating Rate Notes
that reset semiannually, the third Wednesday of each of two months of each year
specified on the face thereof and in the applicable Pricing Supplement; and, in
the case of Floating Rate Notes that reset annually, the third Wednesday of the
month of each year specified on the face thereof and in the applicable Pricing
Supplement; provided, however, that the interest rate in effect from the date of
issue to the first Interest Reset Date will be the Initial Interest Rate
specified on the face of the Floating Rate Note and in the applicable Pricing
Supplement. If an Interest Reset Date for a Floating Rate Note would otherwise
be a day that is not a Business Day, the Interest Reset Date for such Floating
Rate Note shall be postponed to the next day that is a Business Day, except
that, in the case of a LIBOR Note, if such Business Day is in the next
succeeding calendar month, such Interest Reset Date shall be the immediately
preceding Business Day.
The interest rate for each Reset Period will be the rate determined by the
Calculation Agent on the Calculation Date (as defined below) pertaining to the
Interest Determination Date pertaining to the Interest Reset Date for such Reset
Period. Unless otherwise specified in the applicable Pricing Supplement, the
"Interest Determination Date" pertaining to an Interest Reset Date for (a) a
Commercial Paper Rate Note (the "Commercial Paper Interest Determination Date"),
(b) a Federal Funds Rate Note (the "Federal Funds Interest Determination Date"),
(c) a CD Rate Note (the "CD Interest Determination Date"), (d) a Prime Rate Note
(the "Prime Interest Determination Date"), or (e) a CMT Rate Note (the "CMT
Interest Determination Date") will be the second Business Day prior to such
Interest Reset Date. Unless otherwise specified in the applicable Pricing
Supplement, the Interest Determination Date pertaining to an Interest Reset Date
for an 11th District Cost of Funds Rate Note (the "11th District Interest
Determination Date") will be the last business day of the month immediately
preceding such Interest Reset Date on which the Federal Home Loan Bank of San
Francisco (the "FHLB of San Francisco") publishes the Index (as defined below).
Unless otherwise specified in the applicable Pricing Supplement, the Interest
Determination Date pertaining to an Interest Reset Date for a LIBOR Note (the
"LIBOR Interest Determination Date") will be the second London Business Day
immediately preceding each Interest Reset Date. Unless otherwise specified in
the applicable Pricing Supplement, the Interest Determination Date pertaining to
an Interest Reset Date for a Treasury Rate Note (the "Treasury Interest
Determination Date") will be the day of the week in which such Interest Reset
Date falls on which Treasury bills would normally be auctioned. Treasury bills
are usually sold at auction on Monday of each week, unless that day is a legal
holiday, in which case the auction is usually held on the following Tuesday,
except that such auction may be held on the preceding Friday. If, as a result of
a legal holiday, an auction is so held on the preceding Friday, such Friday will
be the Treasury Interest Determination Date pertaining to the Reset Period
commencing in the next succeeding week. If an auction date shall fall on any
Interest Reset Date for a Treasury Rate Note, then such Interest Reset Date
shall instead be the first Business Day immediately following such auction date.
Unless otherwise specified in the applicable Pricing Supplement, the
"Calculation Date" pertaining to any Interest Determination Date shall be the
earlier of (i) the tenth calendar day after the Interest Determination Date or,
if such day is not a Business Day, the next succeeding Business Day, or (ii) the
Business Day preceding the applicable Interest Payment Date or Maturity, as the
case may be.
Except as provided below or in the applicable Pricing Supplement, interest
on Floating Rate Notes, including Floating Rate Amortizing Notes, will be
payable, (i) in the case of Floating Rate Notes that reset
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daily, weekly or monthly, on the third Wednesday of each month or on the third
Wednesday of March, June, September and December of each year, as specified on
the face thereof and in the applicable Pricing Supplement; (ii) in the case of
Floating Rate Notes, including Floating Rate Amortizing Notes, that reset
quarterly, on the third Wednesday of March, June, September and December of each
year; (iii) in the case of Floating Rate Notes, including Floating Rate
Amortizing Notes, that reset semiannually, on the third Wednesday of each of two
months of each year specified on the face thereof and in the applicable Pricing
Supplement; and (iv) in the case of Floating Rate Notes, including Floating Rate
Amortizing Notes, that reset annually, on the third Wednesday of one month of
each year specified on the face thereof and in the applicable Pricing Supplement
(each such day being an "Interest Payment Date") and, in each case, at Maturity.
If any Interest Payment Date, other than Maturity, for any Floating Rate Note
would otherwise be a day that is not a Business Day, such Interest Payment Date
shall be postponed to the next day that is a Business Day, except that in the
case of a LIBOR Note, if such Business Day is in the next succeeding calendar
month, such Interest Payment Date shall be the immediately preceding Business
Day. If the Maturity for any Floating Rate Note falls on a day that is not a
Business Day, payment of principal, premium, if any, and interest with respect
to such Note will be made on the next succeeding Business Day with the same
force and effect as if made on the due date, and no interest shall be payable on
the date of payment for the period from and after the due date.
Unless otherwise specified in the applicable Pricing Supplement, payments
with respect to Floating Rate Amortizing Notes will be applied first to interest
due and payable thereon and then to the reduction of the unpaid principal amount
thereof. A table setting forth repayment information in respect of each Floating
Rate Amortizing Note will be set forth in such Note, included in the applicable
Pricing Supplement and provided to the original purchaser thereof and will be
available, upon request, to subsequent Holders.
Each payment of interest on a Floating Rate Note will include interest
accrued from and including the Original Issue Date, or the next preceding
Interest Payment Date to which interest has been paid or duly provided for, up
to but not including the applicable Interest Payment Date or the date of
Maturity; provided, however, that if the Interest Reset Dates with respect to
any such Note are daily or weekly, interest payable on any Interest Payment
Date, other than interest payable on any date on which principal for such Note
is payable, will include interest accrued from the Original Issue Date of the
Note, or from and including the last Interest Payment Date as the case may be,
to and including the Regular Record Date immediately preceding the applicable
Interest Payment Date except that at the date of Maturity the interest payments
will include accrued interest from and including the Original Issue Date, or
from and including the last day in respect of which interest has been paid or
duly provided for, as the case may be, to, but excluding, the Date of Maturity.
Accrued interest from the Original Issue Date, or from the last date to which
interest has been paid or duly provided for, is calculated by multiplying the
face amount of a Note by an accrued interest factor computed by adding the
interest factor calculated for each day from the Original Issue Date, or from
the last date to which interest has been paid or duly provided for, to but
excluding the date for which accrued interest is being calculated. Unless
otherwise specified in the applicable Pricing Supplement, the interest factor
for each such day is computed by dividing the interest rate applicable to such
date by 360, in the case of Commercial Paper Rate Notes, Federal Funds Rate
Notes, CD Rate Notes, Prime Rate Notes, 11th District Cost of Funds Rate Notes
and LIBOR Notes, or by the actual number of days in the year, in the case of
Treasury Rate Notes or CMT Rate Notes.
All percentages resulting from any calculation on Floating Rate Notes will
be rounded, upward if necessary, to the nearest one hundred-thousandth of a
percentage point, with five one-millionths of one percentage point being rounded
upward (e.g., 9.876545% or .09876545, being rounded to 9.87655% or .0987655,
respectively), and all dollar amounts used in or resulting from such calculation
on Floating Rate Notes will be rounded to the nearest cent (with one-half cent
being rounded upwards).
The Calculation Agent will, upon the request of the Holder of any Floating
Rate Note, provide the interest rate then in effect.
Any Floating Rate Note may have either or both of the following: (i) a
maximum numerical interest rate limitation, or ceiling, on the rate of interest
that may accrue during any Reset Period (the "Maximum Interest
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Rate") and (ii) a minimum numerical interest rate limitation, or floor, on the
rate of interest that may accrue during any Reset Period (the "Minimum Interest
Rate"). The interest rate on any Note will in no event be higher than the
maximum rate permitted by New York law or other applicable law. Under present
New York law, the maximum rate of interest is 25% per annum on a simple interest
basis. This limit may not apply to Notes in which $2,500,000 or more has been
invested, including Notes purchased by an Agent or Agents in such aggregate
principal amount or more for resale to investors.
Commercial Paper Rate Notes
Each Commercial Paper Rate Note will bear interest at the rate (calculated
with reference to the Commercial Paper Rate and the Spread and/or Spread
Multiplier, if any) specified in such Commercial Paper Rate Note and in the
applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement,
"Commercial Paper Rate" means, with respect to any Commercial Paper Interest
Determination Date, the Money Market Yield (calculated as described below) of
the rate on such date for commercial paper having the Index Maturity designated
in the applicable Pricing Supplement as such rate is 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
("H.15(519)") under the heading "Commercial Paper." In the event that such rate
is not published by 9:00 A.M., New York City time, on the Calculation Date
pertaining to such Commercial Paper Interest Determination Date, then the
Commercial Paper Rate shall be the Money Market Yield of the rate on such
Commercial Paper Interest Determination Date for commercial paper having the
Index Maturity designated in the applicable Pricing Supplement as published by
the Federal Reserve Bank of New York in its daily statistical release "Composite
3:30 P.M. Quotations for U.S. Government Securities" ("Composite Quotations")
under the heading "Commercial Paper." If by 3:00 P.M., New York City time, on
such Calculation Date such rate is not yet published in Composite Quotations,
then the Commercial Paper Rate for such Commercial Paper Interest Determination
Date shall be calculated by the Calculation Agent and shall be the Money Market
Yield of the arithmetic mean of the offered rates as of 11:00 A.M., New York
City time, on such Commercial Paper Interest Determination Date of three leading
dealers of commercial paper in The City of New York (which may include one or
more of the Agents or their affiliates) selected by the Calculation Agent for
commercial paper having the Index Maturity designated in the applicable Pricing
Supplement placed for an industrial issuer whose bond rating is "AA," or the
equivalent, from a nationally recognized securities rating organization;
provided, however, that if the dealers selected as aforesaid by the Calculation
Agent are not quoting as mentioned in this sentence, the Commercial Paper Rate
with respect to such Commercial Paper Interest Determination Date will be the
Commercial Paper Rate in effect on such Commercial Paper Interest Determination
Date.
"Money Market Yield" means a yield (expressed as a percentage rounded
upward, if necessary, to the next highest one hundred thousandth of a percentage
point) calculated in accordance with the following formula:
<TABLE>
<S> <C> <C>
D X 360
Money Market Yield = --------------- X 100
360 - (D X M)
</TABLE>
where "D" refers to the per annum rate for the commercial paper, quoted on a
bank discount basis and expressed as a decimal; and "M" refers to the actual
number of days in the interest period for which interest is being calculated.
Federal Funds Rate Notes
Each Federal Funds Rate Note will bear interest at the interest rate
(calculated with reference to the Federal Funds Rate Note and the Spread and/or
Spread Multiplier, if any) specified in such Federal Funds Rate Note and in the
applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to any Federal Funds Interest Determination
Date, the rate on such date for Federal Funds as
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<PAGE> 10
published in H.15(519) under the heading "Federal Funds (Effective)" or, if not
so published by 9:00 A.M., New York City time, on the Calculation Date
pertaining to such Federal Funds Interest Determination Date, the Federal Funds
Rate will be the rate on such Federal Funds Interest Determination Date as
published in Composite Quotations under the heading "Federal Funds/Effective
Rate." If such rate is not published in either H.15(519) or the Composite
Quotations by 3:00 P.M., New York City time, on the Calculation Date pertaining
to such Federal Funds Interest Determination Date, then the Federal Funds Rate
for such Federal Funds Interest Determination Date will be calculated by the
Calculation Agent and will be the arithmetic mean of the rates as of 9:00 A.M.,
New York City time, on such Federal Funds Interest Determination Date for the
last transaction in overnight Federal funds arranged by three leading brokers of
Federal funds transactions in The City of New York (which may include one or
more of the Agents or their affiliates) selected by the Calculation Agent;
provided, however, that if the brokers selected as aforesaid by the Calculation
Agent are not quoting as mentioned in this sentence, the Federal Funds Rate with
respect to such Federal Funds Interest Determination Date will be the Federal
Funds Rate in effect on such Federal Funds Interest Determination Date.
CD Rate Notes
Each CD Rate Note will bear interest at the interest rate (calculated with
reference to the CD Rate and the Spread and/or Spread Multiplier, if any),
specified in such CD Rate Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "CD Rate"
means, with respect to any CD Interest Determination Date, the rate on such date
for negotiable certificates of deposit having the Index Maturity designated in
the applicable Pricing Supplement as published in H.15(519) under the heading
"CDs (Secondary Market)" or, if not so published by 11:00 A.M., New York City
time, on the Calculation Date pertaining to such CD Interest Determination Date,
the CD Rate will be the rate on such CD Interest Determination Date for
negotiable certificates of deposit having the Index Maturity designated in the
applicable Pricing Supplement as published in Composite Quotations under the
heading "Certificates of Deposit." If such rate is not published by 3:00 P.M.,
New York City time, on the Calculation Date pertaining to such CD Interest
Determination Date, then the CD Rate for such CD Interest Determination Date
will be calculated by the Calculation Agent and will be the arithmetic mean of
the secondary market offered rates as of 10:00 A.M., New York City time, on such
CD Interest Determination Date of three leading nonbank dealers in negotiable
U.S. dollar certificates of deposit in The City of New York selected by the
Calculation Agent (which may include one or more of the Agents or their
affiliates) for negotiable certificates of deposit of major United States money
center banks (in the market for negotiable certificates of deposit) with a
remaining maturity closest to the Index Maturity designated in the applicable
Pricing Supplement in a denomination of $5,000,000; provided, however, that if
the dealers selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the CD Rate with respect to such CD Interest
Determination Date will be the CD Rate in effect on such CD Interest
Determination Date.
11th District Cost of Funds Rate Notes
Each 11th District Cost of Funds Rate Note will bear interest at the
interest rate (calculated with reference to the 11th District Cost of Funds Rate
and the Spread and/or Spread Multiplier, if any) specified in such 11th District
Cost of Funds Rate Note and in the Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "11th
District Cost of Funds Rate" means, with respect to any 11th District Interest
Determination Date, the rate equal to the monthly weighted average cost of funds
for the calendar month preceding such 11th District Interest Determination Date
as set forth under the caption "11th District" on Telerate Page 7058 (as defined
below) as of 3:00 P.M., San Francisco time, on such 11th District Interest
Determination Date. If such rate does not appear on Telerate Page 7058 on any
related 11th District Interest Determination Date, the 11th District Cost of
Funds Rate for such 11th District Interest Determination Date shall be the
monthly weighted average cost of funds paid by member institutions of the
Eleventh Federal Home Loan Bank District that was most recently announced (the
"Index") by the FHLB of San Francisco as such cost of funds for the calendar
month preceding the date
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of such announcement. If the FHLB of San Francisco fails to announce such rate
for the calendar month next preceding such 11th District Interest Determination
Date, then the 11th District Cost of Funds Rate for such 11th District Interest
Determination Date will be the 11th District Cost of Funds Rate then in effect
on such 11th District Interest Determination Date. "Telerate Page 7058" means
the display on the Dow Jones Telerate Service on such page (or such other page
as may replace such page on that service for the purpose of displaying the
Eleventh District Cost of Funds Rate) for the purpose of displaying the monthly
average cost of funds paid by member institutions of the Eleventh Federal Home
Loan Bank District.
LIBOR Notes
Each LIBOR Note will bear interest at the interest rate (calculated with
reference to LIBOR and the Spread and/or Spread Multiplier, if any) specified in
such LIBOR Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "LIBOR"
means, with respect to any LIBOR Interest Determination Date, the rate
determined in accordance with the following provisions:
(i) With respect to any LIBOR Interest Determination Date, LIBOR will
be either: (a) if "LIBOR Reuters" is specified in the Note and the
applicable Pricing Supplement, the arithmetic mean of the offered rates
(unless the specified Designated LIBOR Page (as defined below) by its terms
provides only for a single rate, in which case such single rate shall be
used) for deposits in U.S. dollars having the Index Maturity designated in
the Note and the applicable Pricing Supplement, commencing on the second
London Business Day immediately following such LIBOR Interest Determination
Date, which appear on the Designated LIBOR Page specified in the Note and
the applicable Pricing Supplement as of 11:00 A.M., London time, on such
LIBOR Interest Determination Date, if at least two such offered rates
appear (unless, as aforesaid, only a single rate is required) on such
Designated LIBOR Page, or (b) if "LIBOR Telerate" is specified in the Note
and the applicable Pricing Supplement, the rate for deposits in U.S.
dollars having the Index Maturity designated in the Note and the applicable
Pricing Supplement, commencing on the second London Business Day
immediately following such LIBOR Interest Determination Date, which appears
on the Designated LIBOR Page specified in the Note and the applicable
Pricing Supplement as of 11:00 A.M. London time on that LIBOR Interest
Determination Date. Notwithstanding the foregoing, if fewer than two
offered rates appear on the Designated LIBOR Page with respect to LIBOR
Reuters (unless the specified Designated LIBOR Page with respect to LIBOR
Reuters by its terms provides only for a single rate, in which case such
single rate shall be used), or if no rate appears on the Designated LIBOR
Page with respect to LIBOR Telerate, whichever may be applicable, LIBOR in
respect of the related LIBOR Interest Determination Date will be determined
as if the parties had specified the rate described in clause (ii) below.
(ii) With respect to any LIBOR Interest Determination Date on which
fewer than two offered rates appear on the Designated LIBOR Page with
respect to LIBOR Reuters (unless the Designated LIBOR Page by its terms
provides only for a single rate, in which case such single rate shall be
used), or if no rate appears on the Designated LIBOR Page with respect to
LIBOR Telerate, as the case may be, the Calculation Agent will request the
principal London office of each of four major United States based banks in
the London interbank market, as selected by the Calculation Agent, to
provide the Calculation Agent with its offered rate quotation for deposits
in U.S. dollars for the period of the Index Maturity designated in the Note
and the applicable Pricing Supplement, commencing on the second London
Business Day immediately following such LIBOR Interest Determination Date,
to prime banks in the London interbank market as of 11:00 A.M., London
time, on such LIBOR Interest Determination Date and in a principal amount
that is representative for a single transaction in U.S. dollars in such
market at such time. If at least two such quotations are provided, LIBOR
determined on such LIBOR Interest Determination Date will be the arithmetic
mean of such quotations. If fewer than two quotations are provided, LIBOR
determined on such LIBOR Interest Determination Date will be the arithmetic
mean of the rates quoted as of 11:00 A.M. in The City of New York on such
LIBOR Interest Determination Date by three major banks in The City of New
York selected by the Calculation Agent for loans in U.S. dollars to leading
European banks, having the Index Maturity designated in the Note and the
applicable
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<PAGE> 12
Pricing Supplement commencing on the second London Business Day immediately
following such LIBOR Interest Determination Date and in a principal amount
that is representative for a single transaction in U.S. dollars in such
market at such time; provided, however, that if the banks so selected by
the Calculation Agent are not quoting as mentioned in this sentence, LIBOR
determined on such LIBOR Interest Determination Date will be LIBOR in
effect on such LIBOR Interest Determination Date.
"Designated LIBOR Page" means either (a) the display on the Reuters Monitor
Money Rates Service for the purpose of displaying the London interbank rates of
major banks for U.S. dollars (if "LIBOR Reuters" is designated in the Note and
the applicable Pricing Supplement), or (b) the display on the Dow Jones Telerate
Service for the purpose of displaying the London interbank rates of major banks
for U.S. dollars (if "LIBOR Telerate" is designated in the Note and the
applicable Pricing Supplement). If neither LIBOR Reuters nor LIBOR Telerate is
specified in the Note and applicable Pricing Supplement, LIBOR will be
determined as if LIBOR Telerate Page 3750 had been chosen.
Prime Rate Notes
Each Prime Rate Note will bear interest at the interest rate (calculated
with reference to the Prime Rate and the Spread and/or Spread Multiplier, if
any) specified in such Prime Rate Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Prime Interest Determination Date, the rate set
forth in H.15(519) for such date opposite the caption "Bank Prime Loan," or, if
not so published by 9:00 A.M., New York City time, on the Calculation Date
pertaining to such Prime Interest Determination Date, the Prime Rate will be
calculated by the Calculation Agent and will be the arithmetic mean of the rates
of interest publicly announced by each bank named on the Reuters Screen NYMF
Page (as defined below) as such bank's prime rate or base lending rate as in
effect for such Prime Interest Determination Date, or, if fewer than four such
rates but more than one such rate appear on the Reuters Screen NYMF Page for
such Prime Interest Determination Date, the rate shall be the arithmetic mean of
the prime rates quoted on the basis of the actual number of days in the year
divided by 360 as of the close of business on such Prime Interest Determination
Date by at least two of the three major money center banks in The City of New
York selected by the Calculation Agent from which quotations are requested. If
fewer than two quotations are quoted as aforesaid, the Prime Rate for such Prime
Interest Determination Date shall be calculated by the Calculation Agent and
shall be the arithmetic mean of the prime rates quoted in The City of New York
on such date by the appropriate number of substitute banks or trust companies
organized and doing business under the laws of the United States, or any state
thereof, having total equity capital of at least U.S. $500 million and being
subject to supervision or examination by a Federal or state authority, selected
by the Calculation Agent to quote such rate or rates; provided, however, that if
the Prime Rate is not published in H.15(519) and the banks or trust companies
selected as aforesaid are not quoting as mentioned in this sentence, the Prime
Rate with respect to such Prime Interest Determination Date will be the interest
rate otherwise in effect on such Prime Interest Determination Date. "Reuters
Screen NYMF Page" means the display designated as page "NYMF" on the Reuters
Monitor Money Rates Service (or such other page as may replace page NYMF on that
service for the purpose of displaying prime rates or base lending rates of major
United States banks).
Treasury Rate Notes
Each Treasury Rate Note will bear interest at the interest rate (calculated
with reference to the Treasury Rate and the Spread and/or Spread Multiplier, if
any) specified in such Treasury Rate Note and in the applicable Pricing
Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Treasury Interest Determination Date, the rate
applicable to the most recent auction of direct obligations of the United States
(herein called "Treasury bills") having the Index Maturity specified in the Note
and the applicable Pricing Supplement, as such rate is set forth in H.15(519)
under the heading "U.S. Government
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<PAGE> 13
Securities/Treasury Bills/Auction Average (Investment)" or, if not so made
available by 3:00 P.M., New York City time, on the Calculation Date pertaining
to such Treasury Interest Determination Date, the auction average rate
(expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) as otherwise announced by the United
States Department of the Treasury. In the event that the results of the auction
of Treasury bills having the specified Index Maturity are not published or
reported as provided above by 3:00 P.M., New York City time, on such Calculation
Date or if no such auction is held in a particular week, then the Treasury Rate
shall be calculated by the Calculation Agent and shall be a yield to maturity
(expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) of the arithmetic mean of the
secondary market bid rates, as of approximately 3:30 P.M., New York City time,
on such Treasury Interest Determination Date, of three leading primary United
States government securities dealers (which may include one or more of the
Agents or their affiliates) selected by the Calculation Agent for the issue of
Treasury bills with a remaining maturity closest to the applicable Index
Maturity; provided, however, that if the dealers selected as aforesaid by the
Calculation Agent are not quoting as mentioned above, the Treasury Rate with
respect to such Treasury Interest Determination Date shall be the Treasury Rate
in effect on such date.
CMT Rate Notes
Each CMT Rate Note will bear interest at the interest rate (calculated with
reference to the CMT Rate and the Spread and/or Spread Multiplier, if any)
specified in the CMT Rate Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "CMT Rate"
means, with respect to 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 7055, the rate on such CMT Interest Determination Date and (ii) if the
Designated CMT Telerate Page is 7052, the week, or the month, as applicable,
ended immediately preceding the week in which the applicable CMT Interest
Determination Date occurs. If such rate is no longer displayed on the relevant
page, or if not displayed by 3:00 P.M., New York City time, on the Calculation
Date pertaining to such CMT Interest Determination Date, then the CMT Rate for
such CMT Interest Determination Date will be such treasury constant maturity
rate for the Designated CMT Maturity Index as published in the relevant
H.15(519). If such rate is no longer published, or if not published by 3:00
P.M., New York City time, on the Calculation Date pertaining to such CMT
Interest Determination Date, then the CMT Rate for such CMT Interest
Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index (or other United States Treasury rate for the
Designated CMT Maturity Index) for the CMT Interest Determination Date with
respect to such Interest Reset Date as may then be published by either the Board
of Governors of the Federal Reserve System or the United States Department of
the Treasury that the Calculation Agent determines to be comparable to the rate
formerly displayed on the Designated CMT Telerate Page and published in the
relevant H.15(519). If such information is not provided by 3:00 P.M., New York
City time, on the Calculation Date pertaining to such CMT Interest Determination
Date, then the CMT Rate for the CMT Interest Determination Date will be
calculated by the Calculation Agent and will be a yield to maturity, based on
the arithmetic mean of the secondary market closing offer side prices as of
approximately 3:30 P.M., New York City time, on the CMT Interest Determination
Date reported, according to their written records, by three leading primary
United States government securities dealers (each, a "Reference Dealer") in The
City of New York (which may include one or more of the Agents or their
affiliates) selected by the Calculation Agent (from five such Reference Dealers
selected by the Calculation Agent and eliminating the highest quotation (or, in
the event of equality, one of the highest) and the lowest quotation (or, in the
event of equality, one of the lowest)), for the most recently issued direct
noncallable fixed rate obligations of the United States ("Treasury Notes") with
an original maturity of approximately the Designated CMT Maturity Index and a
remaining term to maturity of not less than such Designated CMT Maturity Index
minus one year. If the Calculation Agent cannot obtain three such Treasury Note
quotations, the CMT Rate for such CMT Interest Determination Date will be
calculated by the Calculation Agent and will be a yield to maturity based on the
arithmetic mean of the
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secondary market closing 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 The City of New York (from five such Reference Dealers selected by
the Calculation Agent and eliminating the highest quotation (or, in the event of
equality, one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for Treasury Notes with an original maturity of
the number of years that is the next highest to the Designated CMT Maturity
Index and a remaining term to maturity closest to the Designated CMT Maturity
Index and in an amount of at least $100,000,000. If three or four (and not five)
of such Reference Dealers are quoting as described above, then the CMT Rate will
be based on the arithmetic mean of the offer prices obtained and neither the
highest nor the lowest of such quotes will be eliminated; provided, however,
that if fewer than three Reference Dealers selected by the Calculation Agent are
quoting as described herein, the CMT Rate will be the CMT Rate in effect on such
CMT Interest Determination Date. If two Treasury Notes with an original maturity
as described in the second preceding sentence have remaining terms to maturity
equally close to the Designated CMT Maturity Index, the quotes for the Treasury
Note with the shorter remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page specified 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 published in H.15(519)), for the purpose of
displaying Treasury Constant Maturities as published in H.15(519). If no such
page is specified in the applicable Pricing Supplement, the Designated CMT
Telerate Page shall be 7052, for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of
the Treasury Notes (either two, three, five, ten or thirty years) specified in
the applicable Pricing Supplement with respect to which the CMT Rate will be
calculated. If no such maturity is specified in the applicable Pricing
Supplement, the Designated CMT Maturity Index shall be two years.
ORIGINAL ISSUE DISCOUNT NOTES
Ahmanson may from time to time offer Original Issue Discount Notes. The
applicable Pricing Supplement to certain Original Issue Discount Notes may
provide that the Holders of such Notes will not receive periodic payments of
interest. For the purpose of determining whether Holders of the requisite
principal amount of Notes outstanding under the Indenture have made a demand or
given a notice or waiver or taken any other action, the outstanding principal
amount of Original Issue Discount Notes shall be deemed to be the amount of the
principal that would be due and payable upon declaration of acceleration of the
Stated Maturity thereof as of the date of such determination.
Notwithstanding anything in this Prospectus Supplement to the contrary,
unless otherwise specified in the applicable Pricing Supplement, if a Note is an
Original Issue Discount Note, the amount payable on such Note in the event of
Maturity prior to the Stated Maturity shall be the Amortized Face Amount (as
defined above under "Payment of Interest and Principal") of such Note as of such
Maturity.
"Original Issue Discount Note" means a Note, including a Zero Coupon Note,
which is issued at a price lower than the principal amount thereof and which
provides that upon redemption or acceleration of the Maturity thereof an amount
less than the principal amount thereof shall become due and payable. In the
event of redemption or acceleration of the Maturity of an Original Issue
Discount Note, the amount payable to the Holder of such Note upon redemption or
acceleration will be determined in accordance with the terms of the Note, but
will be an amount less than the amount payable at Stated Maturity of such Note.
In addition, a Note issued at a discount may, for United States Federal income
tax purposes, be considered an original issue discount note, regardless of the
amount payable upon redemption or acceleration of Maturity of such Note. See
"Certain United States Federal Income Tax Considerations -- Original Issue
Discount."
INTEREST RATE RESET
If Ahmanson has the option with respect to any Note to reset the interest
rate, in the case of a Fixed Rate Note, or to reset the Spread and/or Spread
Multiplier, in the case of a Floating Rate Note, the Pricing Supplement relating
to such Note will indicate such option, and, if so, (i) the date or dates on
which such
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interest rate or such Spread and/or Spread Multiplier, as the case may be, may
be reset (each an "Optional Reset Date") and (ii) the basis or formula, if any,
for such resetting.
Ahmanson may exercise such option with respect to a Note by notifying the
Paying Agent of such exercise at least 45 but not more than 60 days prior to an
Optional Reset Date for such Date for such Note. Not later than 40 days prior to
such Optional Reset Date, the Paying Agent will mail to the Holder of such Note
a notice (the "Reset Notice"), first class, postage prepaid, setting forth (i)
the election of Ahmanson to reset the interest rate, in the case of a Fixed Rate
Note, or the Spread and/or Spread Multiplier, in the case of a Floating Rate
Note, (ii) such new interest rate or such new Spread and/or Spread Multiplier,
as the case may be, and (iii) the provisions, if any, for redemption during the
period from such Optional Reset Date to the next Optional Reset Date or, if
there is no such next Optional Reset Date, to the Stated Maturity Date of such
Note (each period a "Subsequent Interest Period"), including the date or dates
on which or the period or periods during which and the price or prices at which
such redemption may occur during such Subsequent Interest Period.
Notwithstanding the foregoing, not later than 20 days prior to an Optional
Reset Date for a Note, Ahmanson may, at its option, revoke the interest rate, in
the case of a Fixed Rate Note, or the Spread and/or Spread Multiplier, in the
case of a Floating Rate Note, in either case provided for in the Reset Notice
and establish a higher interest rate, in the case of a Fixed Rate Note, or a
higher Spread and/or Spread Multiplier, in the case of a Floating Rate Note, for
the Subsequent Interest Period commencing on such Optional Reset Date by mailing
or causing the Paying Agent to mail notice of such higher interest rate or
higher Spread and/or Spread Multiplier, as the case may be, first class, postage
prepaid, to the Holder of such Note. Such notice shall be irrevocable. All Notes
with respect to which the interest rate or Spread and/or Spread Multiplier is
reset on an Optional Reset Date will bear such higher interest rate, in the case
of a Fixed Rate Note, or higher Spread and/or Spread Multiplier, in the case of
a Floating Rate Note.
If Ahmanson elects to reset the interest rate or the Spread and/or Spread
Multiplier of a Note, the Holder of such Note will have the option to elect
repayment of such Note by Ahmanson on any Optional Reset Date at a price equal
to the principal amount thereof plus any accrued interest to such Optional Reset
Date. In order for a Note to be so repaid on an Optional Reset Date on which the
interest rate is reset, the Holder thereof must follow the procedures set forth
below under "Repayment at the Option of the Holder" for optional repayment,
except that the period for delivery of such Note or notification to the Paying
Agent shall be at least 25 but not more than 35 days prior to such Optional
Reset Date and except that a Holder who has tendered a Note for repayment
pursuant to a Reset Notice may, by written notice to the Paying Agent, revoke
any such tender for repayment until 5:00 P.M. New York City time on the tenth
day, whether or not a Business Day, prior to such Optional Reset Date. Holders
who do not elect repayment of their Notes by Ahmanson on any Optional Reset Date
may be treated as having exchanged such Notes for "new" Notes in a taxable
transaction. See "Certain United States Federal Income Tax
Considerations -- Interest Rate Reset."
EXTENDIBLE NOTES
Ahmanson may from time to time offer Notes whose interest rate or interest
rate formula may be adjusted on specified dates and which may be subject to
repayment at certain times at the option of the Holder or to redemption at
certain times at the option of Ahmanson ("Extendible Notes"). The applicable
Pricing Supplement will indicate whether Ahmanson has the option to extend the
maturity of such Note for one or more periods up to but not beyond a date set
forth in such Pricing Supplement. If Ahmanson has such option with respect to
any such Notes, the procedures relating thereto will be as set forth in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
Extendible Notes will be repayable in whole or in part on the day immediately
following the end of the initial interest period, as specified in the applicable
Pricing Supplement, and on the day immediately following the end of each
Extension Period, at the option of the Holder, at 100% of the principal amount
to be repaid, in each case plus accrued interest, if any, to the repayment date.
The applicable Pricing Supplement will specify the procedures that must be
followed in order to effect such a repayment. An "Extension Period" will be a
period of one or more whole calendar
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periods (e.g., weeks, months, or years) commencing on the day following the last
day of the initial interest period or any subsequent Extension Period.
RENEWABLE NOTES
The applicable Pricing Supplement will indicate whether a Note (other than
an Amortizing Note) will mature unless the term of all or any portion of any
such Note is renewed in accordance with the procedures described in such Pricing
Supplement.
COMBINATION OF PROVISIONS
If so specified in the applicable Pricing Supplement, any Note may be
subject to all of the provisions, or any combination of the provisions,
described above under "Interest Rate Reset," "Extendible Notes" and "Renewable
Notes."
REDEMPTION AT THE OPTION OF AHMANSON
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will not be subject to any sinking fund. The Notes will be redeemable at the
option of Ahmanson prior to the Stated Maturity only if an Initial Redemption
Date is specified in the applicable Pricing Supplement ("Initial Redemption
Date"). If so specified, the Notes will be subject to redemption at the option
of Ahmanson on any date on and after the applicable Initial Redemption Date in
whole or from time to time in part in increments of $1,000 or the minimum
denomination specified in such Pricing Supplement (provided that any remaining
principal amount thereof shall be at least $1,000 or such minimum denomination),
at the applicable Redemption Price (as defined below) on notice given not more
than 60 nor less than 30 days prior to the date of redemption and in accordance
with the provisions of the Indenture. "Redemption Price," with respect to a
Note, means an amount equal to the sum of (i) the Initial Redemption Percentage
specified in such Pricing Supplement (as adjusted by the Annual Redemption
Percentage Reduction, if applicable (as specified in such Pricing Supplement))
multiplied by the unpaid principal amount or the portion to be redeemed plus
(ii) accrued interest to the date of redemption. The Initial Redemption
Percentage, if any, applicable to a Note shall decline at each anniversary of
the Initial Redemption Date by an amount equal to the applicable Annual
Redemption Percentage Reduction, if any, until the Redemption Price is equal to
100% of the unpaid principal amount thereof or the portion thereof to be
redeemed.
REPAYMENT AT THE OPTION OF THE HOLDER
If so specified in the applicable Pricing Supplement, the Notes will be
repayable by Ahmanson in whole or in part at the option of the Holders thereof
on their respective optional repayment dates ("Optional Repayment Dates")
specified in such Pricing Supplement. If no Optional Repayment Date is specified
with respect to a Note, such Note will not be repayable at the option of the
Holder thereof prior to the Stated Maturity. Any repayment in part will be
increments of $1,000 or the minimum denomination specified in the applicable
Pricing Supplement (provided that any remaining principal amount thereof shall
be at least $1,000 or such minimum denomination). Unless otherwise specified in
the applicable Pricing Supplement, the repayment price for any Note to be repaid
means an amount equal to the sum of (i) 100% of the unpaid principal amount
thereof or the portion thereof plus (ii) accrued interest to the date of
repayment. For any Note to be repaid, such Note must be received, together with
the form thereon entitled "Option to Elect Repayment" duly completed, by the
Trustee at its Corporate Trust Office (or such other address of which Ahmanson
shall from time to time notify the Holders) not more than 60 nor less than 30
days prior to the date of repayment. Exercise of such repayment option by the
Holder will be irrevocable.
If applicable, Ahmanson will comply with the requirements of Rule 14e-1
under the Securities Exchange Act of 1934, as amended, and any other securities
laws or regulations in connection with any such repayment.
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REPURCHASE
Ahmanson may at any time purchase Notes at any price or prices in the open
market or otherwise. Notes so purchased by Ahmanson may be held or resold or, at
the discretion of Ahmanson, may be surrendered to the Trustee for cancellation.
If an issue of Notes and any applicable Pricing Supplement provide for mandatory
sinking fund payments with respect to such Notes, the Indenture provides that in
lieu of making all or any part of any mandatory sinking fund payment in cash,
Ahmanson may deliver to the Trustee Notes previously purchased or otherwise
acquired by Ahmanson (to the extent not previously credited).
AMORTIZING NOTES
Ahmanson may from time to time offer Notes for which payments of principal
and interest are made in installments over the life of the Note ("Amortizing
Notes"). Interest on each Amortizing Note will be computed as set forth in the
applicable Note and Pricing Supplement. Unless otherwise provided in such Note
or Pricing Supplement, payments with respect to Amortizing Notes will be applied
first to interest due and payable thereon and then to the reduction of the
unpaid principal amount thereof. A table setting forth repayment information
with respect to each Amortizing Note will be provided to the original purchaser
of such Note and will be available upon request to the subsequent Holders
thereof.
OTHER PROVISIONS
Any provisions with respect to the determination of an interest rate basis,
the specifications of interest rate basis, calculation of the interest rate
applicable to, or the principal payable at Maturity on, any Note, its Interest
Payment Dates or any other matter relating thereto may be modified by the terms
as specified under "Other Provisions" on the face of such Note, or in an
addendum relating thereto if so specified on the face thereof, and in the
applicable Pricing Supplement.
DEFEASANCE
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will be subject to defeasance and discharge as described under "Description of
Debt Securities -- Defeasance" in the Prospectus.
FORM, REGISTRATION, TRANSFER AND EXCHANGE
Certificated Notes will be exchangeable for other Certificated Notes of any
authorized denominations and of a like aggregate principal amount and tenor.
Certificated Notes may be presented to the Trustee for registration of
transfer or exchange at Citibank, N.A., 111 Wall Street, 5th Floor, New York,
New York 10043 (the "Corporate Trust Office"). Certificated Notes may be
presented for exchange and transfer in the manner, at the places and subject to
the restrictions set forth in the Indenture and the Notes. No service charge
will be made for any transfer or exchange of Certificated Notes, but Ahmanson
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
Certificated Notes may be presented for exchange as provided above, and may
be presented for registration of transfer (duly endorsed or accompanied by a
duly executed written instrument of transfer), at the office of the Trustee or
any transfer agent designated by Ahmanson for such purpose with respect to the
Notes, without service charge and upon payment of any taxes and other
governmental charges as described in the Indenture. Such transfer or exchange
will be effected upon the Trustee or such transfer agent, as the case may be,
being satisfied with the documents of title and identity of the person making
the request. Ahmanson may at any time rescind the designation of any transfer
agent except that Ahmanson will be required to maintain a transfer agent in The
City of New York for the Notes. With respect to registration of transfer and
exchange of Book-Entry Notes, see "Book-Entry System" below.
The Trustee will initially act as paying agent pursuant to the Indenture
("Paying Agent"). Ahmanson may at any time designate additional Paying Agents or
rescind the designation of any Paying Agent.
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BOOK-ENTRY SYSTEM
The Depositary will act as securities depositary for the Book-Entry Notes.
The Book-Entry Notes will be issued as fully registered securities registered in
the name of Cede & Co. (the Depositary's partnership nominee). One fully
registered Global Security will be issued for each issue of the Notes, each in
the aggregate principal amount of such issue, and will be deposited with the
Depositary. If, however, the aggregate principal amount of any issue exceeds
$200 million, one Global Security will be issued with respect to each $200
million of principal amount and an additional Global Security will be issued
with respect to any remaining principal amount of such issue.
The Depositary is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended. The Depositary holds securities that its
participants ("Participants") deposit with the Depositary. The Depositary also
facilitates the settlement among Participants of securities transactions, such
as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
("Direct Participants") include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. The Depositary
is owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc. Access to the Depositary's system is also available
to others such as securities brokers and dealers, banks and trust companies that
clear through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants"). The rules applicable to
the Depositary and its Participants are on file with the Securities and Exchange
Commission.
Purchases of Book-Entry Notes under the Depositary's system must be made by
or through Direct Participants, which will receive a credit for the Book-Entry
Notes on the Depositary's records. The ownership interest of each actual
purchaser of each Book-Entry Note ("Beneficial Owner") is in turn to be recorded
on the Direct and Indirect Participants' records. Beneficial Owners will not
receive written confirmation from the Depositary of their purchase, but
Beneficial Owners are expected to receive written confirmations providing
details of the transactions, as well as periodic statements of their holdings,
from the Direct or Indirect Participant through which the Beneficial Owner
entered into the transaction. Transfers of ownership interests in the Book-Entry
Notes are to be accomplished by entries made on the books of Participants acting
on behalf of the Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in Book-Entry Notes, except
in the event that use of the book-entry system for one or more Book-Entry Notes
is discontinued.
To facilitate subsequent transfers, all Global Securities deposited by
Participants with the Depositary are registered in the name of the Depositary's
partnership nominee, Cede & Co. The deposit of Global Securities with the
Depositary and their registration in the name of Cede & Co. effect no change in
beneficial ownership. The Depositary has no knowledge of the actual Beneficial
Owners of the Book-Entry Notes; the Depositary's records reflect only the
identity of the Direct Participants to whose accounts such Book-Entry Notes are
credited, which may or may not be the Beneficial Owners. The Participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by the Depositary to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Book-Entry Notes within an issue are being redeemed, the Depositary's current
practice is to determine by lot the amount of the interest of each Direct
Participant in such issue to be redeemed.
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Neither the Depositary nor Cede & Co. will consent or vote with respect to
Book-Entry Notes. Under its usual procedures, the Depositary will mail an
"Omnibus Proxy" to Ahmanson as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Book-Entry Notes are credited on the record
date (identified in a listing attached to the Omnibus Proxy).
Principal and interest payments on the Book-Entry Notes will be made to the
Depositary. The Depositary's practice is to credit Direct Participants' accounts
on the payable date in accordance with their respective holdings shown on the
Depositary's records unless the Depositary has reason to believe that it will
not receive payment on the payable date. Payments by Participants to Beneficial
Owners will be governed by standing instructions and customary practices, as in
the case of securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such Participant
and not of the Depositary, or Ahmanson, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of principal and
interest to the Depositary is the responsibility of Ahmanson, disbursement of
such payments to Direct Participants shall be the responsibility of the
Depositary and disbursement of such payments to the Beneficial Owners shall be
the responsibility of Direct and Indirect Participants.
A Beneficial Owner shall give notice to elect to have its Book-Entry Notes
purchased or tendered, through its Participant, to the Paying Agent, and shall
effect delivery of such Book-Entry Notes by causing the Direct Participant to
transfer the Participant's interest in the Book-Entry Notes, on the Depositary's
records, to the Paying Agent. The requirement for physical delivery of
Book-Entry Notes in connection with a demand for purchase or a mandatory
purchase will be deemed satisfied when the ownership rights in the Book-Entry
Notes are transferred by a Direct Participant on the Depositary's records.
The Depositary may discontinue providing its services as securities
depositary with respect to the Book-Entry Notes at any time by giving reasonable
notice to Ahmanson or the Agents. Under such circumstances, in the event that a
successor securities depository is not obtained, Certificated Notes will be
printed and delivered in exchange for the Book-Entry Notes represented by the
Global Securities held by the Depositary.
Ahmanson may decide to discontinue use of the system of book-entry
transfers through the Depositary (or a successor securities depository). In that
event, Certificated Notes will be printed and delivered in exchange for the
Book-Entry Notes represented by the Global Securities held by the Depositary.
The information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that Ahmanson
believes to be reliable, but Ahmanson takes no responsibility for the accuracy
thereof.
Neither Ahmanson, the Trustee, any Paying Agent nor the registrar for the
Notes will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in a
Global Security or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
CERTAIN UNITED STATES FEDERAL
INCOME TAX CONSIDERATIONS
In the opinion of Gibson, Dunn & Crutcher, counsel to Ahmanson, the
following accurately summarizes the material United States federal income tax
considerations relevant to the purchase, ownership and disposition of Notes. It
deals only with Notes held as capital assets by initial purchasers, and not with
special classes of holders, such as dealers in securities or currencies, banks,
tax-exempt organizations, life insurance companies, persons that hold Notes that
are a hedge or that are hedged against currency risks or that are part of a
straddle or conversion transaction or persons whose functional currency is not
the U.S. dollar. Moreover, the summary deals only with Notes that are due to
mature 30 years or less from the date on which they are issued. The United
States federal income tax considerations relevant to ownership of Notes that are
due to mature more than 30 years from their date of issue will be discussed in
an applicable Prospectus Supplement. The summary is based on the Internal
Revenue Code of 1986, as amended (the "Code"), its legislative
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history, existing and proposed regulations thereunder, published rulings and
court decisions, all as currently in effect and all subject to change at any
time, perhaps with retroactive effect.
PROSPECTIVE PURCHASERS OF NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS
CONCERNING THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES, AS WELL AS ALL
APPLICABLE STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF THE PURCHASE,
OWNERSHIP AND DISPOSITION OF NOTES.
UNITED STATES HOLDERS
Payments of Interest
Interest on a Note, other than interest on a "Discount Note" that is not
"qualified stated interest" (each as defined below under "Original Issue
Discount -- General"), will be taxable to a United States Holder as ordinary
income at the time it is received or accrued, depending on the holder's method
of accounting for tax purposes. A United States Holder is a beneficial owner who
or that is (i) a citizen or resident of the United States, (ii) a domestic
corporation or (iii) otherwise subject to United States federal income taxation
on a net income basis in respect of the Note.
ORIGINAL ISSUE DISCOUNT
General
A Note, other than a Note with a term of one year or less (a "short-term
Note"), will be treated as issued with original issue discount (a "Discount
Note") if the excess of the Note's "stated redemption price at maturity" over
its issue price is more than a "de minimis amount" (as defined below).
Generally, the issue price of a Note will be the first price at which a
substantial amount of Notes included in the issue of which the Note is a part is
sold to other than bond houses, brokers, or similar persons or organizations
acting in the capacity of underwriters, placement agents, or wholesalers. The
stated redemption price at maturity of a Note is the total of all payments
provided by the Note that are not payments of "qualified stated interest." A
qualified stated interest payment is generally any one of a series of stated
interest payments on a Note that are unconditionally payable at least annually
at a single fixed rate (with certain exceptions for lower rates paid during some
periods) applied to the outstanding principal amount of the Note. Special rules
for certain variable rate notes are described below under "Original Issue
Discount -- Variable Rate Notes."
In general, if the excess of a Note's stated redemption price at maturity
over its issue price is less than 1/4 of 1 percent of the Note's stated
redemption price at maturity multiplied by the number of complete years to its
maturity (the "de minimis amount"), then such excess, if any, constitutes "de
minimis original issue discount" and the Note is not a Discount Note. Unless the
election described below under "Election to Treat All Interest as Original Issue
Discount" is made, a United States Holder of a Note with de minimis original
issue discount must include such de minimis original issue discount in income as
stated principal payments on the Note are made. The includible amount with
respect to each such payment will equal the product of the total amount of the
Note's de minimis original issue discount and a fraction, the numerator of which
is the amount of the principal payment made and the denominator of which is the
stated principal amount of the Note.
United States Holders of Discount Notes having a maturity of more than one
year from their date of issue must include original issue discount ("OID") in
income calculated on a constant-yield method before the receipt of cash
attributable to such income, and generally will have to include in income
increasingly greater amounts of OID over the life of the Note. The amount of OID
includible in income by a United States Holder of a Discount Note is the sum of
the daily portions of OID with respect to the Discount Note for each day during
the taxable year or portion of the taxable year on which the United States
Holder holds such Discount Note ("accrued OID"). The daily portion is determined
by allocating to each day in any "accrual period" a pro rata portion of the OID
allocable to that accrual period. Accrual periods with respect to a Note may be
of any length selected by the United States Holder and may vary in length over
the term of the Note as long as (i) no accrual period is longer than one year
and (ii) each scheduled payment of interest or principal on the Note occurs on
either the final or first day of an accrual period. The amount of OID allocable
to an accrual
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period equals the excess of (a) the product of the Discount Note's adjusted
issue price at the beginning of the accrual period and such Note's yield to
maturity (determined on the basis of compounding at the close of each accrual
period and properly adjusted for the length of the accrual period) over (b) the
sum of the payments of qualified stated interest on the Note allocable to the
accrual period. The "adjusted issue price" of a Discount Note at the beginning
of any accrual period is the issue price of the Note increased by (x) the amount
of accrued OID for each prior accrual period and decreased by (y) the amount of
any payments previously made on the Note that were not qualified stated interest
payments. For purposes of determining the amount of OID allocable to an accrual
period, if an interval between payments of qualified stated interest on the Note
contains more than one accrual period, the amount of qualified stated interest
payable at the end of the interval (including any qualified stated interest that
is payable on the first day of the accrual period immediately following the
interval) is allocated pro rata on the basis of relative lengths to each accrual
period in the interval, and the adjusted issue price at the beginning of each
accrual period in the interval must be increased by the amount of any qualified
stated interest that has accrued prior to the first day of the accrual period
but that is not payable until the end of the interval. The amount of OID
allocable to an initial short accrual period may be computed using any
reasonable method if all other accrual periods other than a final short accrual
period are of equal length. The amount of OID allocable to the final accrual
period is the difference between (x) the amount payable at the maturity of the
Note (other than any payment of qualified stated interest) and (y) the Note's
adjusted issue price as of the beginning of the final accrual period.
Acquisition Premium
A United States Holder that purchases a Note for an amount less than or
equal to the sum of all amounts payable on the Note after the purchase date
other than payments of qualified stated interest but in excess of its adjusted
issue price (any such excess being "acquisition premium") and that does not make
the election described below under "Election to Treat All Interest as Original
Issue Discount" is permitted to reduce the daily portions of OID by a fraction,
the numerator of which is the excess of the United States Holder's adjusted
basis in the Note immediately after its purchase over the adjusted issue price
of the Note, and the denominator of which is the excess of the sum of all
amounts payable on the Note after the purchase date, other than payments of
qualified stated interest, over the Note's adjusted issue price.
Market Discount
A Note, other than a short-term Note, will be treated as purchased at a
market discount (a "Market Discount Note") if (i) the amount for which a United
States Holder purchased the Note is less than the Note's issue price (as
determined above under "Original Issue Discount -- General") and (ii) the Note's
stated redemption price at maturity or, in the case of a Discount Note, the
Note's "revised issue price", exceeds the amount for which the United States
Holder purchased the Note by at least 1/4 of 1 percent of such Note's stated
redemption price at maturity or revised issue price, respectively, multiplied by
the number of complete years to the Note's maturity. If such excess is not
sufficient to cause the Note to be a Market Discount Note, then such excess
constitutes "de minimis market discount." The Code provides that, for these
purposes, the "revised issue price" of a Note generally equals its issue price,
increased by the amount of any OID that has accrued on the Note.
Any gain recognized on the maturity or disposition of a Market Discount
Note will be treated as ordinary income to the extent that such gain does not
exceed the accrued market discount on such Note. Alternatively, a United States
Holder of a Market Discount Note may elect to include market discount in income
currently over the life of the Note. Such an election shall apply to all debt
instruments with market discount acquired by the electing United States Holder
on or after the first day of the first taxable year to which the election
applies. This election may not be revoked without the consent of the Service.
Market discount on a Market Discount Note will accrue on a straight-line
basis unless the United States Holder elects to accrue such market discount on a
constant-yield method. Such an election shall apply only to the Note with
respect to which it is made and may not be revoked. A United States Holder of a
Market Discount Note that does not elect to include market discount in income
currently generally will be required to
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defer deductions for interest on borrowings allocable to such Note in an amount
not exceeding the accrued market discount on such Note until the maturity or
disposition of such Note.
Pre-Issuance Accrued Interest
If (i) a portion of the initial purchase price of a Note is attributable to
pre-issuance accrued interest, (ii) the first stated interest payment on the
Note is to be made within one year of the Note's issue date and (iii) the
payment will equal or exceed the amount of pre-issuance accrued interest, then
the United States Holder may elect to decrease the issue price of the Note by
the amount of pre-issuance accrued interest. In that event, a portion of the
first stated interest payment will be treated as a return of the excluded
pre-issuance accrued interest and not as an amount payable on the Note.
Notes Subject to Contingencies Including Optional Redemption
In general, if a Note provides for an alternative payment schedule or
schedules applicable upon the occurrence of a contingency or contingencies and
the timing and amounts of the payments that comprise each payment schedule are
known as of the issue date, the yield and maturity of the Note are determined by
assuming that the payments will be made according to the Note's stated payment
schedule. If, however, based on all the facts and circumstances as of the issue
date, it is more likely than not that the Note's stated payment schedule will
not occur, then, in general, the yield and maturity of the Note are computed
based on the payment schedule most likely to occur.
Notwithstanding the general rules for determining yield and maturity in the
case of Notes subject to contingencies, if Ahmanson has an unconditional option
or options to redeem a Note, or the Holder has an unconditional option or
options to cause a Note to be repurchased, prior to the Note's stated maturity,
then (i) in the case of an option or options of Ahmanson, Ahmanson will be
deemed to exercise or not exercise an option or combination of options in the
manner that minimizes the yield on the Note, (ii) in the case of an option or
options of the Holder, the Holder will be deemed to exercise or not exercise an
option or combination of options in the manner that maximizes the yield on the
Note and (iii) in the case of options of both Ahmanson and the Holder, the rules
will be applied to the options in the order that they may be exercised. For
purposes of those calculations, the yield on the Note is determined by using any
date on which the Note may be redeemed or repurchased as the maturity date and
the amount payable on such date in accordance with the terms of the Note as the
principal amount payable at maturity.
If a contingency (including the exercise of an option) actually occurs or
does not occur contrary to an assumption made according to the above rules (a
"change in circumstances") then, except to the extent that a portion of the Note
is repaid as a result of a change in circumstances and solely for purposes of
the accrual of OID, the yield and maturity of the Note are redetermined by
treating the Note as reissued on the date of the change in circumstances for an
amount equal to the Note's adjusted issue price on that date.
Election to Treat All Interest as Original Issue Discount
A United States Holder may elect to include in gross income all interest
that accrues on a Note using the constant-yield method described above under the
heading "Original Issue Discount -- General," with the modifications described
below. For purposes of this election, interest includes stated interest,
acquisition discount, OID, de minimis original issue discount, market discount,
de minimis market discount and unstated interest, as adjusted by any amortizable
bond premium (described below under "Notes Purchased at a Premium") or
acquisition premium.
In applying the constant-yield method to a Note with respect to which this
election has been made, the issue price of the Note will equal the electing
United States Holder's adjusted basis in the Note immediately after its
acquisition, the issue date of the Note will be the date of its acquisition by
the electing United States Holder and no payments on the Note will be treated as
payments of qualified stated interest. This election will generally apply only
to the Note with respect to which it is made and may not be revoked without the
consent of the Service. If this election is made with respect to a Note with
amortizable bond premium, then the electing United States Holder will be deemed
to have elected to apply amortizable bond premium against
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interest with respect to all debt instruments with amortizable bond premium
(other than debt instruments the interest on which is excludible from gross
income) held by the electing United States Holder as of the beginning of the
taxable year in which the Note with respect to which the election is made is
acquired or thereafter acquired. The deemed election with respect to amortizable
bond premium may not be revoked without the consent of the Service.
If the election to apply the constant-yield method to all interest on a
Note is made with respect to a Market Discount Note, the electing United States
Holder will be treated as having made the election discussed above under
"Original Issue Discount -- Market Discount" to include market discount in
income currently over the life of all debt instruments held or thereafter
acquired by such United States Holder.
VARIABLE RATE NOTES
A "Variable Rate Note" is a Note that: (i) has an issue price that does not
exceed the total noncontingent principal payments by more than the lesser of (1)
the product of (x) the total noncontingent principal payments, (y) the number of
complete years to maturity from the issue date and (z) .015, or (2) 15 percent
of the total noncontingent principal payments, and (ii) provides for stated
interest compounded or paid at least annually at (1) one or more "qualified
floating rates", (2) a single fixed rate and one or more qualified floating
rates, (3) a single "objective rate" or (4) a single fixed rate and a single
objective rate that is a "qualified inverse floating rate."
A qualified floating rate or objective rate in effect at any time during
the term of the instrument must be set at a "current value" of that rate. A
"current value" of a rate is the value of the rate on any day that is no earlier
than three months prior to the first day on which that value is in effect and no
later than one year following that first day.
A variable rate is a "qualified floating rate" if (i) variations in the
value of the rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the Note
is denominated or (ii) it is equal to the product of such a rate and either (a)
a fixed multiple that is greater than zero but not more than 1.35, or (b) a
fixed multiple greater than zero but not more than 1.35, increased or decreased
by a fixed rate. A rate is not a qualified floating rate, however, if the rate
is subject to certain restrictions (including caps, floors, governors or other
similar restrictions) unless such restrictions are fixed throughout the term of
the Note or are not reasonably expected to significantly affect the yield on the
Note.
An "objective rate" is a rate, other than a qualified floating rate, that
is determined using a single, fixed formula and that is based on (i) one or more
qualified floating rates, (ii) one or more rates each of which would be a
qualified floating rate for a debt instrument denominated in a currency other
than the currency in which the debt instrument is denominated, (iii) the yield
or changes in the price of one or more actively traded items of personal
property other than stock or debt of the issuer or a related party, or (iv) a
combination of objective rates. A variable rate is not an objective rate,
however, if it is reasonably expected that the average value of the rate during
the first half of the Note's term will be either significantly less than or
significantly greater than the average value of the rate during the final half
of the Note's term. An objective rate is a "qualified inverse floating rate" if
(i) the rate is equal to a fixed rate minus a qualified floating rate, and (ii)
the variations in the rate can reasonably be expected to inversely reflect
contemporaneous variations in the cost of newly borrowed funds. Under these
rules, Commercial Paper Rate Notes, Prime Rate Notes, LIBOR Notes, Treasury Rate
Notes, CD Rate Notes, Federal Funds Rate Notes, CMT Rate Notes and 11th District
Cost of Funds Rate Notes will generally be treated as Variable Rate Notes.
In general, if a Variable Rate Note provides for stated interest at a
single qualified floating rate or objective rate, all stated interest on the
Note is qualified stated interest and the amount of OID, if any, is determined
by using, in the case of a qualified floating rate or qualified inverse floating
rate, the value as of the issue date of the qualified floating rate or qualified
inverse floating rate, or, in the case of any other objective rate, a fixed rate
that reflects the yield reasonably expected for the Note.
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If a Variable Rate Note does not provide for stated interest at a single
qualified floating rate or objective rate, or at a single fixed rate (other than
at a single fixed rate for an initial period), the amount of interest and OID
accruals on the Note are generally determined by (i) determining a fixed rate
substitute for each variable rate provided under the Variable Rate Note
(generally, the value of each variable rate as of the issue date or, in the case
of an objective rate that is not a qualified inverse floating rate, a rate that
reflects the reasonably expected yield on the Note), (ii) constructing the
equivalent fixed rate debt instrument (using the fixed rate substitute described
above), (iii) determining the amount of qualified stated interest and OID with
respect to the equivalent fixed rate debt instrument, and (iv) making the
appropriate adjustments for actual variable rates during the applicable accrual
period.
If a Variable Rate Note provides for stated interest either at one or more
qualified floating rates or at a qualified inverse floating rate, and in
addition provides for stated interest at a single fixed rate (other than at a
single fixed rate for an initial period), the amount of interest and OID
accruals are determined as in the immediately preceding paragraph with the
modification that the Variable Rate Note is treated, for purposes of the first
three steps of the determination, as if it provided for a qualified floating
rate (or a qualified inverse floating rate, as the case may be) rather than the
fixed rate. The qualified floating rate (or qualified inverse floating rate)
replacing the fixed rate must be such that the fair market value of the Variable
Rate Note as of the issue date would be approximately the same as the fair
market value of an otherwise identical debt instrument that provides for the
qualified floating rate (or qualified inverse floating rate) rather than the
fixed rate.
Short-Term Notes
In general, an individual or other cash basis United States Holder of a
short-term Note is not required to accrue OID (as specially defined below for
the purposes of this paragraph) for United States federal income tax purposes
unless it elects to do so (but may be required to include any stated interest in
income as the interest is received). Accrual basis United States Holders and
certain other United States Holders, including banks, regulated investment
companies, dealers in securities, common trust funds, United States Holders who
hold Notes as part of certain identified hedging transactions, certain pass-thru
entities and cash basis United States Holders who so elect, are required to
accrue OID on short-term Notes on either a straight-line basis or under the
constant-yield method (based on daily compounding), at the irrevocable election
of the United States Holder. In the case of a United States Holder not required
and not electing to include OID in income currently, any gain realized on the
sale or retirement of the short-term Note will be ordinary income to the extent
of the OID accrued on a straight-line basis (unless an election is made to
accrue the OID under the constant-yield method) through the date of sale or
retirement. United States Holders who are not required and do not elect to
accrue OID on short-term Notes will be required to defer deductions for interest
on borrowings allocable to short-term Notes in an amount not exceeding the
deferred income until the deferred income is realized.
For purposes of determining the amount of OID subject to these rules, all
interest payments on a short-term Note, including stated interest, are included
in the short-term Note's stated redemption price at maturity.
NOTES PURCHASED AT A PREMIUM
A United States Holder that purchases a Note for an amount in excess of its
principal amount may elect to treat such excess as "amortizable bond premium,"
in which case the amount required to be included in the United States Holder's
income each year with respect to interest on the Note will be reduced by the
amount of amortizable bond premium allocable (based on the Note's yield to
maturity) to such year. Any election to amortize bond premium shall apply to all
bonds (other than bonds the interest on which is excludible from gross income)
held by the United States Holder at the beginning of the first taxable year to
which the election applies or thereafter acquired by the United States Holder,
and is irrevocable without the consent of the Service. See also "Original Issue
Discount -- Election to Treat All Interest as Original Issue Discount."
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<PAGE> 25
PURCHASE, SALE AND RETIREMENT OF THE NOTES
A United States Holder's tax basis in a Note will generally be its issue
price, increased by the amount of any OID or market discount included in the
United States Holder's income with respect to the Note and the amount, if any,
of income attributable to de minimis original issue discount and de minimis
market discount included in the United States Holder's income with respect to
the Note, and reduced by (i) the amount of any payments that are not qualified
stated interest payments, and (ii) the amount of any amortizable bond premium
applied to reduce interest on the Note.
A United States Holder will generally recognize gain or loss on the sale or
retirement of a Note equal to the difference between the amount realized on the
sale or retirement and the tax basis of the Note. Except to the extent described
above under "Original Issue Discount -- Short-Term Notes" or "Original Issue
Discount -- Market Discount" or attributable to accrued but unpaid interest,
gain or loss recognized on the sale or retirement of a Note will be capital gain
or loss and will be long-term capital gain or loss if the Note was held for more
than one year.
RENEWABLE NOTES AND EXTENDIBLE NOTES
The applicable Pricing Supplement will contain a discussion of any special
United States federal income tax rules with respect to any Renewable or
Extendible Notes.
AMORTIZING NOTES
The applicable Pricing Supplement will contain a discussion of special
United States federal income tax rules applicable to Notes, such as Amortizing
Notes, that provide for partial principal payments prior to Stated Maturity.
INTEREST RATE RESET
The applicable Pricing Supplement will contain a discussion of special
United States Federal income tax rules with respect to (i) Notes that provide
Ahmanson with an option to reset the interest rate, in the case of a Fixed Rate
Note, or to reset the Spread and/or Spread Multiplier, in the case of a Floating
Rate Note, and (ii) Holders with an option to elect repayment of such Notes if
Ahmanson elects to reset the interest rate or the Spread and/or Spread
Multiplier of such Notes. Holders should be aware that if such options are
provided in Notes, Holders that do not elect repayment of their Notes by
Ahmanson on any Optional Reset Date may be treated as having exchanged their
Notes for "new" Notes in a transaction in which gain or loss is recognized for
United States Federal income tax purposes.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
holder who or that is (i) a nonresident alien individual of the United States or
(ii) a foreign corporation, partnership or estate or trust, in either case not
subject to United States Federal income tax on a net income basis in respect of
a Note.
Under present United States federal income and estate tax law and subject
to the discussion of backup withholding below:
(i) payments of principal, premium (if any) and interest (including
OID) by Ahmanson or any of its paying agents to any holder of a Note who or
which is a United States Alien Holder generally will not be subject to
United States federal withholding tax if, in the case of interest or OID,
(a) the beneficial owner of the Note does not actually or constructively
own 10% or more of the total combined voting power of all classes of stock
of Ahmanson entitled to vote, (b) the beneficial owner of the Note is not a
controlled foreign corporation that is related to Ahmanson through stock
ownership, (c) the interest on the Note is not contingent interest to which
Section 871(h)(4)(A) of the Code is applicable, and (d) either (A) the
beneficial owner of the Note certifies to Ahmanson or its agent, under
penalties of perjury, that it is not a United States Holder and provides
its name and address or (B) a securities clearing organization, bank or
other financial institution that holds customers' securities in the
ordinary
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course of its trade or business (a "financial institution") and holds the
Note certifies to Ahmanson or its agent under penalties of perjury that
such statement has been received from the beneficial owner by it or by a
financial institution between it and the beneficial owner and furnishes
Ahmanson with a copy thereof;
(ii) Payments of interest or OID which do not qualify for the
exemption from United States Federal withholding tax described in clause
(i) generally will be subject to withholding of United States Federal
income tax at a 30 percent rate or such lower rate as may be specified by
an applicable income tax treaty;
(iii) a United States Alien Holder of a Note generally will not be
subject to United States federal withholding tax on any gain realized on
the sale or exchange of a Note; and
(iv) a Note held by an individual who at death is not a citizen or
resident for United States Federal estate tax purposes of the United States
will not be includible in the individual's gross estate for purposes of the
United States federal estate tax as a result of the individual's death if
the individual did not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of Ahmanson entitled to
vote, the income on the Note would not have been effectively connected with
a United States trade or business of the individual at the individual's
death and in the case of a Note on which all or a portion of the interest
payments are contingent interest to which Section 871(h)(4)(A) is
applicable, only to the extent that the value of such Note is not allocable
to such interest.
BACKUP WITHHOLDING AND INFORMATION REPORTING
United States Holders
In general, information reporting requirements will apply to payments of
principal, any premium and interest on a Note and the proceeds of the sale of a
Note before maturity within the United States to, and to the accrual of OID on a
Discount Note with respect to, non-corporate United States Holders, and "backup
withholding" at a rate of 31% will apply to such payments and to payments of OID
if the United States Holder fails to provide an accurate taxpayer identification
number or to report all interest and dividends required to be shown on its
federal income tax returns.
United States Alien Holders
Information reporting and backup withholding will not apply to payments of
principal, premium (if any) and interest (including OID) made by Ahmanson or a
paying agent to a United States Alien Holder on a Note if the certification
described in clause (i)(d) under "United States Alien Holders" above is
received, provided that the payor does not have actual knowledge that the holder
is a United States person.
Payments of the proceeds from the sale by a United States Alien Holder of a
Note made to or through a foreign office of a broker will not be subject to
information reporting or backup withholding, except that if the broker is a
United States person, a controlled foreign corporation for United States tax
purposes or a foreign person 50% or more of whose gross income is effectively
connected with a United States trade or business for a specified three-year
period, information reporting may apply to such payments. Payments of the
proceeds from the sale of a Note to or through the United States office of a
broker is subject to information reporting and backup withholding unless the
holder or beneficial owner certifies as to its non-United States status or
otherwise establishes an exemption from information reporting and backup
withholding.
SUPPLEMENTAL PLAN OF DISTRIBUTION
The Notes are offered on a continuing basis by Ahmanson through the Agents,
each of which has agreed to use its reasonable efforts to solicit purchases of
the Notes. For sales of Notes made on an agency basis, Ahmanson will pay each
Agent a commission of from 0.125% to 0.750% of the principal amount of each
Note, depending upon its Stated Maturity, sold through such Agent, except that
the commission payable by Ahmanson to the Agents with respect to Notes with
maturities of greater than thirty years will be negotiated at the time Ahmanson
issues such Notes. Ahmanson will have the sole right to accept offers to
purchase
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Notes and may reject any such offer in whole or in part. Each Agent will have
the right, in its discretion reasonably exercised, to reject in whole or in part
any offer to purchase Notes received by such Agent. Ahmanson also may sell Notes
to any Agent, acting as principal, at a discount to be agreed upon at the time
of sale, for resale to one or more investors or to one or more broker-dealers
(acting as principal for purposes of resale) at varying prices related to
prevailing market prices at the time of resale, as determined by such Agent, or,
if so agreed, at a fixed public offering price. Unless otherwise indicated in
the applicable Pricing Supplement, if any Note is resold by an Agent to any
broker-dealer at a discount, such discount will not be in excess of the discount
or commission received by such Agent from Ahmanson. In addition, unless
otherwise indicated in the applicable Pricing Supplement, any Note purchased by
an Agent as principal will be purchased at 100% of the principal amount thereof
less a percentage equal to the commission applicable to an agency sale of a Note
having an identical Stated Maturity. After the initial public offering of the
Notes, the public offering price (in the case of Notes to be resold on a fixed
public offering price basis), the concession and the discount may be changed.
Ahmanson also reserves the right to sell the Notes directly to investors on its
own behalf in those jurisdictions where it is authorized to do so or as
otherwise provided in the applicable Pricing Supplement. In such circumstances,
Ahmanson will have the sole right to accept offers to purchase Notes and may
reject any proposed purchase of Notes in whole or in part. In the case of sales
made directly by Ahmanson, no commission will be payable.
The Agents and any dealers to whom the Agents may sell Notes may be deemed
to be "underwriters" within the meaning of the Securities Act of 1933, as
amended (the "Act"). Ahmanson has agreed to indemnify each Agent against certain
liabilities, including liabilities under the Act, or to contribute to payments
each Agent may be required to make in respect thereof. Ahmanson has agreed to
reimburse the Agents for certain of the Agents' expenses, including, but not
limited to, the fees and expenses of counsel to the Agents.
Ahmanson has been advised by each Agent that it may from time to time
purchase and sell Notes in the secondary market, but is not obligated to do so.
There can be no assurance that there will be a secondary market for the Notes or
liquidity in the secondary market if one develops. From time to time, each Agent
may make a market in the Notes.
VALIDITY OF NOTES
The validity of the Notes will be passed upon for Ahmanson by Gibson, Dunn
& Crutcher, Los Angeles, California, and for the Agents by Sullivan & Cromwell,
Los Angeles, California. The opinions of Gibson, Dunn & Crutcher and Sullivan &
Cromwell will be conditioned upon, and subject to certain assumptions regarding,
future action required to be taken by Ahmanson and the Trustee in connection
with the issuance and sale of any particular Note, the specific terms of Notes
and other matters which may affect the validity of the Notes but which cannot be
ascertained on the date of such opinions. Arthur W. Schmutz, a director of
Ahmanson, is a retired former partner of Gibson, Dunn & Crutcher. From time to
time Sullivan & Cromwell have performed certain legal services for Ahmanson.
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DEBT SECURITIES
------------------------
H. F. Ahmanson & Company, a Delaware corporation ("Ahmanson" and,
collectively with its subsidiaries, the "Company"), may offer, from time to
time, in one or more series, its unsecured debt securities (the "Debt
Securities"), having such prices and terms as are determined in light of market
conditions at the time of sale. The Prospectus Supplement accompanying this
Prospectus sets forth, with respect to the particular series of Debt Securities
for which this Prospectus and the Prospectus Supplement are being delivered, the
specific aggregate principal amount, denominations (which may be in United
States dollars, in any other currency or in composite currencies), maturity,
rate (which may be fixed or variable) and time of payment of any interest,
purchase price, any terms for redemption or other special terms and the names of
the underwriters, if any. The Debt Securities may be unsecured Debt Securities
(the "Senior Debt Securities") or unsecured and subordinated Debt Securities
(the "Subordinated Debt Securities"). The Senior Debt Securities, when issued,
will rank on a parity with all other unsecured Senior Indebtedness (as defined
herein) of Ahmanson, and the Subordinated Debt Securities, when issued, will be
subordinate in right of payment to all obligations of Ahmanson to its other
creditors, except obligations ranking on a parity with or junior to the
Subordinated Debt Securities.
Offers to purchase the Debt Securities may be solicited from time to time
by such persons as are named in any related supplement to a Prospectus
Supplement (a "Pricing Supplement"), as agents (the "Agents"), on behalf of the
Company. Debt Securities may also be sold to underwriters, which may include the
Agents and others, acting as principals for their own accounts or for public
offering pursuant to offering terms fixed at the time of sale. In addition, the
Company has reserved the right to sell the Debt Securities directly through
other agents or to investors on its own behalf. See "Plan of Distribution."
THE DEBT SECURITIES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS
OF ANY SAVINGS BANK OR NON-BANK SUBSIDIARY OF THE COMPANY AND ARE NOT INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, BANK INSURANCE FUND, SAVINGS
ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENT AGENCY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
Prior to issuance there will have been no market for the Debt Securities,
and there can be no assurance that a secondary market for any such Debt
Securities will develop. This Prospectus may not be used to consummate sales of
any Debt Securities unless accompanied by a Prospectus Supplement.
------------------------
The date of this Prospectus is April 4, 1995.
<PAGE> 29
AVAILABLE INFORMATION
Ahmanson has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (together with all amendments
and exhibits thereto, the "Registration Statement") under the Securities Act of
1933, as amended. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is made to the Registration Statement.
Ahmanson is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports and other information with the Commission. Reports, proxy statements and
other information concerning Ahmanson may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Commission's regional offices at
Seven World Trade Center, Suite 1300, New York, New York 10048 and Room 1400,
Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661. Copies of
that material may be obtained by mail from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. In addition, reports, proxy statements and other information concerning
Ahmanson may be inspected at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York, and the Pacific Stock Exchange, 115 Sansome
Street, 2nd Floor, San Francisco, California 94104.
DOCUMENTS INCORPORATED BY REFERENCE
Ahmanson's Annual Report on Form 10-K for the year ended December 31, 1994
and all documents filed with the Commission by Ahmanson pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act (which include Ahmanson's Annual
Reports on Form 10-K and Quarterly Reports on Form 10-Q) subsequent to the date
of this Prospectus and prior to the termination of the offering of the Debt
Securities made hereby shall be deemed to be incorporated by reference into this
Prospectus. Any statement contained in a document deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein, in the
Prospectus Supplement or in any other subsequently filed document that is also
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
Any person, including any beneficial owner, receiving a copy of this
Prospectus may obtain without charge, upon request, a copy of any of the
documents incorporated by reference herein, except for the exhibits to such
documents (unless such exhibits are specifically incorporated by reference in
such documents). Written requests should be mailed to: H. F. Ahmanson & Company,
4900 Rivergrade Road, Irwindale, California 91706, Attention: Investor
Relations. Telephone requests may be directed to (818) 814-7986.
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<PAGE> 30
H. F. AHMANSON & COMPANY
Ahmanson is one of the largest residential real estate-oriented financial
services companies in the United States, owning subsidiaries principally engaged
in the savings bank business and related financial service activities. Ahmanson
was originally organized in 1928 in California and changed its state of
incorporation from California to Delaware in 1985. Ahmanson's executive offices
are located at 4900 Rivergrade Road, Irwindale, California 91706, and its
telephone number is (818) 960-6311.
Approximately 97% of Ahmanson's consolidated revenues in 1994 were derived
from the operations of Home Savings of America, FSB, a federally chartered
savings bank ("Home Savings"), which is wholly owned by Ahmanson and conducts
the majority of its business in California. Home Savings represented over 99% of
Ahmanson's consolidated assets at December 31, 1994. Home Savings is currently
the largest savings institution in the United States. Home Savings is regulated
by the Director (the "OTS Director") of the Office of Thrift Supervision (the
"OTS") and the Federal Deposit Insurance Corporation (the "FDIC") which, through
the Savings Association Insurance Fund (the "SAIF") and the Bank Insurance Fund
("BIF"), insures the deposit accounts of savings institutions, such as Home
Savings. Home Savings is a member of the Federal Home Loan Bank (the "FHLB") of
San Francisco, which is one of the twelve regional banks for federally insured
depository institutions comprising the Federal Home Loan Bank System. Home
Savings is further subject to certain regulations of the Board of Governors of
the Federal Reserve System (the "Federal Reserve Board") governing reserves
required to be maintained against certain deposits and other matters.
Ahmanson's principal business is attracting funds from the general public
and institutions and originating and investing in residential real estate
mortgage loans, mortgage-backed securities ("MBSs") and investment securities.
MBSs include securities issued or guaranteed by government-sponsored
enterprises, such as the Federal National Mortgage Association, the Federal Home
Loan Mortgage Corporation and the Government National Mortgage Association,
mortgage pass-through securities issued by other entities (including Home
Savings) and collateralized mortgage obligations. Ahmanson's primary sources of
revenue are interest earned on mortgage loans and MBSs, income from investment
securities, gains on sales of loans and MBSs, fees earned in connection with
loans and deposits, and income earned on its portfolio of loans and MBSs
serviced for investors. Its principal expense is interest incurred on
interest-bearing liabilities, including deposits and borrowings.
Ahmanson's principal sources of funds are cash dividends paid to it by Home
Savings and its other subsidiaries, investment income and borrowings. There are
significant restrictions on the ability of Home Savings to pay dividends to
Ahmanson. Savings institution subsidiaries of savings and loan holding
companies, such as Home Savings, must notify the OTS Director of their intent to
declare dividends at least 30 days before declaration. The OTS Director has the
authority to preclude those institutions from declaring a dividend.
OTS regulations impose limitations upon certain "capital distributions" by
savings institutions, including dividends. The regulations establish a
three-tiered system of regulation, with the greatest flexibility being afforded
to institutions that meet or exceed the OTS's fully phased-in capital
requirements. An association meets the fully phased-in capital requirements if
it meets the statutory and regulatory standards to be applicable on July 1,
1996, after taking into account any applicable individual minimum capital
requirement.
An institution that has capital immediately prior to, and on a pro forma
basis after giving effect to, a proposed capital distribution that is at least
equal to its fully phased-in capital requirements is considered a Tier 1
institution ("Tier 1 Institution"). An institution that has capital immediately
prior to, and on a pro forma basis after giving effect to, a proposed capital
distribution that is at least equal to its minimum regulatory capital
requirement but less than its fully phased-in capital requirement is considered
a Tier 2 institution ("Tier 2 Institution"). An institution that does not meet
its minimum regulatory capital requirement immediately prior to, or on a pro
forma basis after giving effect to, a proposed capital distribution is
considered a Tier 3 institution ("Tier 3 Institution"). At December 31, 1994,
Home Savings qualified as a Tier 1 Institution. The OTS retains discretion to
treat a Tier 1 institution as a Tier 2 or Tier 3 Institution if the
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<PAGE> 31
OTS determines that the institution is in need of more than normal supervision
and has provided the institution with notice to that effect.
A Tier 1 Institution may, without the approval of but with prior notice to
the OTS, make capital distributions during a calendar year up to the greater of
(1) 100% of its net income to date during the calendar year plus the amount that
would reduce the institution's "surplus capital ratio" (the excess over its
fully phased-in risk-based capital requirement) to one-half of its surplus
capital ratio at the beginning of the calendar year or (2) 75% of the
institution's net income over the most recent four-quarter period (the greater
of (1) and (2) is referred to as the "safe harbor amount"). Any additional
capital distributions would require prior regulatory approval. The OTS retains
discretion to subject Tier 1 Institutions to the more stringent capital
distribution rules applicable to institutions with less capital if the OTS
determines that the institution is in need of more than normal supervision and
has provided the institution with notice to that effect. The OTS also retains
the authority to prohibit any capital distribution otherwise authorized under
the regulations if the OTS determines that the capital distribution would
constitute an unsafe or unsound practice.
The OTS has proposed to amend its regulation on capital distributions to
eliminate the three-tiered system. Under the OTS's proposal, savings
institutions that are owned by a holding company, such as Home Savings, would
still have to provide at least 30 days' advance notice of the declaration of a
dividend. However, Home Savings would not be required to obtain advance approval
from the OTS in order to make a distribution in excess of the safe harbor
amount, unless such distribution would cause Home Savings to fail to meet the
OTS's "Prompt Corrective Action" capital standards. The OTS would retain the
authority to prohibit any capital distribution upon a determination that the
making of such distribution would constitute an unsafe or unsound practice, and
would use the safe harbor amount as a "rule of thumb" in making such a
determination. Ahmanson does not anticipate that adoption of the proposed
regulation would have a material impact on its results of operations.
Ahmanson and Home Savings have agreed with federal regulators that Home
Savings will not pay dividends in any one year that exceed the sum of (i) 50% of
the lesser of Home Savings' net income or net operating income in such year and
(ii) the amounts that could have been, but were not, paid as dividends in prior
years pursuant to such agreement, previous similar agreements and applicable
regulations and statutes. Ahmanson has also agreed with federal regulators to
cause Home Savings' regulatory capital to be maintained at the greater of (i) 3%
of Home Savings' total liabilities, with certain adjustments, and (ii) the level
required by regulation, and to cause sufficient equity capital to be contributed
to Home Savings if necessary to effect compliance with such agreement. In no
event may dividends from Home Savings to Ahmanson reduce Home Savings'
regulatory capital below such level.
The OTS has adopted regulations (the "Capital Regulations") that establish
three capital requirements--a "core capital requirement," a "tangible capital
requirement" and a "risk-based capital requirement." The capital standards
contained in the Capital Regulations generally must be no less stringent than
the capital standards applicable to national banks. The Capital Regulations
require savings institutions to maintain "core" capital of at least 3% of
adjusted total assets, "tangible" capital of at least 1.5% of adjusted total
assets, and "risk-based" capital of at least 8% of risk-weighted assets. The OTS
has also adopted separate "Prompt Corrective Action" regulations that call for
the OTS to enforce certain restrictions on savings institutions that are
classified as undercapitalized (i.e., that maintain core capital of less than 4%
of adjusted total assets, risk-based capital of less than 8% of risk-weighted
assets, or core capital of less than 4% of risk-weighted assets). The OTS may
establish, on a case-by-case basis, individual minimum capital requirements for
a savings institution that vary from the requirements that would otherwise apply
under the Capital Regulations. The OTS has not established such individual
minimum capital requirements for Home Savings. At December 31, 1994, Home
Savings was in compliance with the Capital Regulations and was not classified as
undercapitalized for purposes of the Prompt Corrective Action regulations.
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<PAGE> 32
Home Savings' deposits are insured by the FDIC through the SAIF and the BIF
to the fullest extent permitted by law. The Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA") directed the FDIC to establish by
January 1, 1994 a risk-based system for setting deposit insurance assessments
for FDIC insured institutions such as Home Savings under which an institution's
insurance assessments vary depending on the level of capital the institution
holds and the degree to which it is the subject of supervisory concern to the
FDIC. Under the FDIC's system, the assessment rate for both BIF deposits and
SAIF deposits varies from 0.23% of covered deposits for well-capitalized
institutions that are deemed to have no more than a few minor weaknesses, to
0.31% of covered deposits for less than adequately capitalized institutions that
pose substantial supervisory concern. The FDIC has proposed a change in the BIF
assessment rates, but not the SAIF assessment rates, based on the condition of
the BIF and the SAIF. The change, if adopted, would reduce the lower assessment
rate for BIF deposits to 0.04% of covered deposits. The Department of the
Treasury has been reported as studying, in part due to concerns about the
effects of the disparity between BIF assessment rates and SAIF assessment rates
which would result from the FDIC's proposal, a one time special assessment of
0.80% of SAIF deposits to recapitalize the SAIF. The FDIC has also requested
comments on whether the base to which the assessment rate is applied should be
re-defined. Although the FDIC has indicated that any change in the assessment
base would be accompanied by a corresponding change in the assessment rate
designed to result in the FDIC collecting the same aggregate amount of
assessments, a change in the assessment base could alter the amount of the
assessments paid by individual institutions. Ahmanson paid $90.9 million and
$8.9 million in deposit insurance premiums to SAIF and BIF, respectively, in
1994 compared to $70.1 million and $13.1 million, respectively, in 1993.
Under current law, the SAIF has three major obligations: beginning in 1995,
to fund losses associated with the failure of institutions with SAIF-insured
deposits; to increase its reserves to 1.25% of insured deposits over a
reasonable period of time; and to make interest payments on debt incurred to
provide funds to the former Federal Savings and Loan Insurance Corporation
("FICO debt"). The reserves of the SAIF are currently lower than the reserves of
the BIF, and the BIF does not have an obligation to pay interest on FICO debt.
Therefore, as is currently being proposed by the FDIC, premiums assessed on
deposits insured by the SAIF may be higher than premiums on deposits insured by
the BIF. Such a premium structure could provide institutions whose deposits are
exclusively or primarily BIF-insured (such as almost all commercial banks)
certain competitive advantages over institutions whose deposits are primarily
SAIF-insured (such as Home Savings). Such a competitive disadvantage could have
an adverse effect on Ahmanson's results of operations. In order to mitigate the
effects of such a competitive disadvantage, Ahmanson has filed applications to
organize state-chartered savings banks, deposits at which would be exclusively
or primarily BIF-insured. Ahmanson cannot predict whether the FDIC, the OTS or
Congress would attempt to prevent or restrict Ahmanson's use of such savings
banks for this purpose. If Ahmanson is permitted to organize and operate such
savings banks, operating multiple institutions could introduce inefficiencies
and additional expenses and the benefits of increasing BIF-insured deposits and
decreasing SAIF-insured deposits would only be realized over time.
The OTS is required to prescribe by regulation or guideline minimum
acceptable operational and managerial standards for asset quality, earnings and
stock valuation for savings institutions. Any savings institution that fails to
meet these standards may be required to submit a plan for corrective action
within 30 days. If a savings institution fails to submit or implement an
acceptable plan, the OTS must order it to correct the safety and soundness
deficiency and may require the institution to take any action that the OTS
determines will best carry out the purpose of prompt corrective action.
The OTS, the FDIC, the Federal Reserve Board and the Office of the
Comptroller of the Currency have jointly published a proposed regulation
prescribing the required safety and soundness standards for regulated financial
institutions. Among other things, the proposed regulation would set out asset
quality standards which specify that the ratio of a depository institution's
classified assets to the sum of (a) its total capital and (b) any allowances for
loan losses not included in total capital should not exceed 100%. Minimum
earnings standards would require that institutions be able to demonstrate pro
forma compliance with capital requirements if net earnings or losses over the
preceding four quarters continue over the next four quarters. If these standards
had been in effect at December 31, 1994, Home Savings would have been in
compliance.
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Under recently enacted legislation, effective June 1, 1997, commercial
banks will be able to open branch offices outside of their home state, although
the extent of their ability to branch into a new state will depend on the law of
that state. Federal savings associations such as Home Savings are already able
to branch nationwide, and Home Savings currently operates branch offices in six
states. The effectiveness of the recent legislation will reduce Home Savings'
competitive advantage over commercial banks in this regard, and could increase
competition in the markets in which Home Savings operates.
USE OF PROCEEDS
Unless otherwise disclosed in the accompanying Prospectus Supplement, the
net proceeds from the sale of the Debt Securities will be used to make a capital
contribution to Home Savings, to finance future acquisitions and/or for other
general corporate purposes.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for Ahmanson is computed by dividing
earnings by fixed charges. Earnings consist primarily of income before income
taxes and fixed charges. Fixed charges represent interest expense and the
proportion of rental expense deemed representative of the interest factor.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Including interest on deposits............................ 1.23 --(1) 1.14 1.14 1.07
Excluding interest on customer accounts................... 1.77 --(1) 1.81 1.64 1.29
</TABLE>
- ---------------
(1) For the year ended December 31, 1993, fixed charges exceeded earnings by
$258.0 million.
DESCRIPTION OF DEBT SECURITIES
The Senior Debt Securities will be issued under an Indenture (the "Senior
Indenture"), between Ahmanson and a trustee, that will be filed as an exhibit to
or incorporated by reference in the Registration Statement of which this
Prospectus is a part. The Subordinated Debt Securities will be issued under an
Indenture (the "Subordinated Indenture" and collectively with the Senior
Indenture, the "Indenture"), between Ahmanson and a trustee (collectively with
the trustee under the Senior Indenture, the "Trustee"), that will be filed as an
exhibit to or incorporated by reference in the Registration Statement of which
this Prospectus is a part. The following summaries of certain provisions of the
Indenture do not purport to be complete and are subject to, and are qualified in
their entirety by reference to, all of the provisions of the Indenture,
including the definitions therein of certain terms capitalized in this
Prospectus. Wherever particular sections, articles or defined terms of the
Indenture are referred to herein or in a Prospectus Supplement, such sections,
articles or defined terms are incorporated herein or therein by reference.
Unless specific reference is set forth below to the Senior Indenture or the
Subordinated Indenture, the provisions described below are substantially
identical in each such indenture.
The Debt Securities may be issued from time to time in one or more series.
The particular terms of each series of Debt Securities offered by any Prospectus
Supplement or Prospectus Supplements will be described in such Prospectus
Supplement or Prospectus Supplements relating to such series.
GENERAL
The Indenture does not limit the aggregate amount of Debt Securities that
may be issued thereunder, and Debt Securities may be issued from time to time in
separate series up to the aggregate amount from time to time authorized by
Ahmanson for each series. The Senior Debt Securities will be unsecured and will
rank on a parity with other unsecured Senior Indebtedness of Ahmanson. The
Subordinated Debt Securities will be unsecured and will rank on a parity with
other subordinated debt of Ahmanson and, together with such other
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<PAGE> 34
subordinated debt, will be subordinate and junior in right of payment to the
prior payment in full of the Senior Indebtedness of Ahmanson, as described below
under "Subordination."
The applicable Prospectus Supplement or Prospectus Supplements will
describe, to the extent applicable, each of the following terms of the series of
Debt Securities ("Offered Debt Securities") in respect of which this Prospectus
is being delivered: (1) the title of such Debt Securities; (2) any limit on the
aggregate principal amount of such Debt Securities; (3) whether any of such Debt
Securities are to be issuable in registered, bearer or global form and, if such
Securities are to be registered in temporary or permanent global form, the
identity of the depositary for such Global Security, and the terms and
conditions, if any, upon which (i) any interest thereon payable on an Interest
Payment Date prior to the issuance of a permanent Global Security or definitive
bearer Debt Securities will be credited to the accounts of the persons entitled
thereto on such Interest Payment Date and (ii) interests in such Offered Debt
Securities in global form may be exchanged, in whole or in part, for the
individual Debt Securities represented thereby; (4) the person to whom any
interest on any Offered Debt Security of the series will be payable if other
than the person in whose name such Debt Security is registered on the Regular
Record Date; (5) the date or dates on which the Offered Debt Securities will
mature; (6) the price (expressed as a percentage of the aggregate principal
amount thereof) at which such Debt Securities will be issued, and the rate or
rates (which may be fixed or variable) at which such Debt Securities will bear
interest, if any; (7) the date or dates from which any such interest will
accrue, the Interest Payment Dates on which any such interest on the Offered
Debt Securities will be payable and the Regular Record Date for any interest
payable on any Interest Payment Date; (8) each office or agency where the
principal of, premium (if any) and interest on the Offered Debt Securities will
be payable; (9) the period or periods within which, the events upon the
occurrence of which, and the price or prices at which, the Offered Debt
Securities may, pursuant to any optional or mandatory provisions, be redeemed or
purchased, in whole or in part, by Ahmanson and any terms and conditions
relevant thereto; (10) the denominations in which any registered Offered Debt
Securities will be issuable, if other than denominations of $1,000 and any
integral multiple thereof, and the denomination or denominations in which any
Offered Debt Securities that are bearer Debt Securities will be issuable, if
other than the denomination of $5,000; (11) the currency or currencies,
including composite currencies, of payment of principal of, and any premium and
interest on, the Offered Debt Securities if other than United States dollars;
(12) any index or formula used to determine the amount of payments of principal
of and any premium and interest on the Offered Debt Securities; (13) if other
than the principal amount thereof, the portion of the principal amount of the
Offered Debt Securities of the series that will be payable upon declaration of
the acceleration of the maturity thereof; (14) the applicability of the
provisions described under "Restrictive Covenants"; (15) any Events of Default
with respect to the Debt Securities of such series, if not otherwise set forth
under "Events of Default"; (16) the applicability of the provisions described
under "Defeasance"; (17) whether the Offered Debt Securities are subordinate to
any other unsecured indebtedness of Ahmanson; (18) whether the Offered Debt
Securities are being issued in exchange for outstanding debt securities with one
or more persons for resale; and (19) any other terms of the Offered Debt
Securities not inconsistent with the provisions of the Indenture.
Debt Securities may be issued at a discount from their principal amount.
Certain federal income tax considerations and other special considerations
applicable to any such Original Issue Discount Securities may be described in
the applicable Prospectus Supplement.
If the purchase price of any of the Debt Securities is denominated in a
foreign currency or currencies or a foreign currency unit or units or if the
principal of and any premium and interest on any series of Debt Securities is
payable in a foreign currency or currencies or a foreign currency unit or units,
the restrictions, elections, general tax considerations, specific terms and
other information with respect to such issue of Debt Securities and such foreign
currency or currencies or foreign currency unit or units will be set forth in
the applicable Prospectus Supplement.
FORM, EXCHANGE, REGISTRATION, TRANSFER AND PAYMENT
Debt Securities of a series may be issuable in definitive form solely as
registered Debt Securities, solely as bearer Debt Securities, or as both
registered and bearer Debt Securities. Unless otherwise indicated in the
Prospectus Supplement, bearer Debt Securities other than bearer Debt Securities
issued as temporary or
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<PAGE> 35
permanent Global Securities will have interest coupons attached. The Indenture
also provides that bearer or registered Debt Securities of a series may be
issuable as permanent Global Securities. (Section 201)
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal, premium (if any) and interest on Debt Securities issued in
registered form will be payable, and the exchange of and the transfer of such
Debt Securities will be registrable, at the office or agency of Ahmanson
maintained for such purpose and at any other office or agency maintained for
such purpose. (Sections 301, 305 and 1002) Unless otherwise indicated in the
Prospectus Supplement relating thereto, payment of any installment of interest
on Registered Debt Securities will be made to the person in whose name such
Registered Debt Security is registered at the close of business on the Regular
Record Date for such interest. No bearer Debt Security or coupon appertaining
thereto will be mailed or delivered to any location in the United States, except
as otherwise described in the applicable Prospectus Supplement. (Section 303)
Unless otherwise indicated in the applicable Prospectus Supplement, registered
Debt Securities will be issued in denominations of $1,000 or integral multiples
thereof. (Section 302) No service charge will be made for any registration of
transfer or exchange of the Debt Securities, but Ahmanson may require payment of
a sum sufficient to cover any tax or other governmental charge imposed in
connection therewith. (Section 305)
Registered Debt Securities of any series will be exchangeable for other
registered Debt Securities of the same series of authorized denominations and of
a like aggregate principal amount, tenor and terms. In addition, if Debt
Securities of any series are issuable as both registered and bearer Debt
Securities, at the option of the Holder upon request confirmed in writing, and
subject to the terms of the applicable Indenture, bearer Debt Securities (with
all unmatured coupons, except as provided below, and all matured coupons in
default) of such series will be exchangeable into registered Debt Securities of
the same series of any authorized denominations and of a like aggregate
principal amount, tenor and terms. Bearer Debt Securities surrendered in
exchange for registered Debt Securities between the close of business on a
Regular Record Date or a Special Record Date and the relevant date for payment
of interest shall be surrendered without the coupon relating to such date for
payment of interest, and interest will not be payable in respect of the
registered Debt Security issued in exchange for such bearer Debt Security, but
will be payable only to the Holder of such coupon when due in accordance with
the terms of the applicable Indenture. Bearer Debt Securities will not be issued
in exchange for registered Debt Securities. (Section 305) Each bearer Debt
Security, other than a temporary Global Security issued in bearer form, and each
interest coupon will bear the following legend or any other legend required by
the Internal Revenue Code as then in effect: "Any United States Person who holds
this obligation will be subject to limitations under the United States Federal
income tax laws including the limitations provided in Sections 165(j) and
1287(a) of the Internal Revenue Code."
If the applicable Prospectus Supplement refers to any transfer agent
initially designated by Ahmanson with respect to any series of Debt Securities,
Ahmanson may at any time rescind the designation of any such transfer agent or
approve a change in the location through which any transfer agent acts, except
that, if Debt Securities of a series are issuable solely in registered form,
Ahmanson will be required to maintain a transfer agent in each Place of Payment
for such series and, if Debt Securities of a series are issuable in bearer form,
Ahmanson will be required to maintain a transfer agent in a Place of Payment for
such series located outside the United States. Ahmanson may at any time
designate additional transfer agents with respect to any series of Debt
Securities. (Section 1002)
Ahmanson will not be required (1) to issue, register the transfer of or
exchange Debt Securities of any particular series to be redeemed or exchanged
for a period of fifteen days preceding the first publication of the relevant
notice of redemption or, if registered Debt Securities are outstanding and there
is no publication, the mailing of the relevant notice of redemption or exchange,
(2) to register the transfer of or exchange any registered Debt Securities so
selected for redemption in whole or in part, except the unredeemed or
unexchanged portion of any registered Debt Security being redeemed in part or
(3) to exchange any bearer Debt Security so selected for redemption except that
such bearer Debt Security may be exchanged for a registered Debt Security of
like tenor and terms of that series; provided, however, that such registered
Debt Security shall be surrendered for redemption or exchange. (Section 305)
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<PAGE> 36
All moneys paid by Ahmanson to a Paying Agent for the payment of principal
or any premium or interest on any Debt Security that remain unclaimed for two
years after such principal, premium or interest has become due and payable may
be repaid to Ahmanson, and thereafter the Holder of such Debt Security or any
coupon appertaining thereto may look only to Ahmanson for payment thereof.
(Section 1003)
BOOK-ENTRY DEBT SECURITIES
The Debt Securities of a series may be issued in the form of one or more
Global Securities that will be deposited with a Depositary or its nominee
identified in the applicable Prospectus Supplement. In such a case, one or more
Global Securities will be issued in a denomination or aggregate denominations
equal to the portion of the aggregate principal amount of outstanding Debt
Securities of the series to be represented by such Global Security or
Securities. Unless and until it is exchanged in whole or in part for Debt
Securities in registered form, a Global Security may not be registered for
transfer or exchange except as a whole by the Depositary for such Global
Security to a nominee of such Depositary and except in such circumstances as may
be described in the applicable Prospectus Supplement. (Sections 202 and 305)
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Global Security
will be described in the applicable Prospectus Supplement. Ahmanson expects that
the following provisions will apply to depositary arrangements.
Unless otherwise specified in the applicable Prospectus Supplement, Debt
Securities that are to be represented by a Global Security to be deposited with
or on behalf of a Depositary will be represented by a Global Security registered
in the name of such Depositary or its nominee. Upon the issuance of such Global
Security, and the deposit of such Global Security with or on behalf of the
Depositary for such Global Security, the Depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts of
the Debt Securities represented by such Global Security to the accounts of
institutions that have accounts with such Depositary or its nominee
("participants"). The accounts to be credited will be designated by the
underwriters or agents of such Debt Securities or by Ahmanson, if such Debt
Securities are offered and sold directly by Ahmanson. Ownership of beneficial
interests in such Global Security will be limited to participants or Persons
that may hold Interests through participants. Ownership of beneficial interests
by participants in such Global Security will be shown on, and the transfer of
that ownership interest will be effected only through, records maintained by the
Depositary or its nominee for such Global Security. Ownership of beneficial
interests in such Global Security by Persons that hold through a participant
will be shown on, and the transfer of that ownership interest within such
participant will be effected only through, records maintained by such
participant. The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in certificated form. The
foregoing limitations and such laws may impair the ability to transfer
beneficial interests in such Global Securities.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or Holder of the Securities
represented by such Global Security for all purposes under the Indenture. Unless
otherwise specified in the applicable Prospectus Supplement, owners of
beneficial interests in such Global Security will not be entitled to have Debt
Securities of the series represented by such Global Security registered in their
names, will not receive or be entitled to receive physical delivery of Debt
Securities of such series in certificated form and will not be considered the
Holders thereof for any purposes under the Indenture, except that the rights of
the beneficial owners of such interests to receive payment of the principal of
and interest on such Securities, on or after the respective due dates expressed
in such Securities, or to institute suit for the enforcement of any such payment
on or after such respective dates, shall not be impaired or affected without the
consent of the beneficial owners of such interests. (Sections 202 and 305)
Accordingly, each Person owning a beneficial interest in such Global Security
must rely on the procedures of the Depositary and, if such Person is not a
participant, on the procedures of the participant through which such Person owns
its interest, to exercise any rights of a Holder under the Indenture. Ahmanson
understands that under existing industry practices, if Ahmanson requests any
action of Holders or an owner of a beneficial interest in such Global Security
desires to give any notice or take any action a Holder is entitled to give or
take under the Indenture, the Depositary would authorize the participants to
give such notice or take such action, and participants would
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<PAGE> 37
authorize beneficial owners owning through such participants to give such notice
or take such action or would otherwise act upon the instructions of beneficial
owners owning through them.
Principal of and any premium and interest on a Global Security will be
payable in the manner described in the applicable Prospectus Supplement.
TEMPORARY GLOBAL SECURITIES
If so specified in the applicable Prospectus Supplement, all or any portion
of the Debt Securities of a series that are issuable as bearer Debt Securities
will initially be represented by one or more temporary Global Securities,
without interest coupons, to be deposited with a common depositary, appointed by
Ahmanson, for credit to designated accounts. On and after the date determined as
provided in any such temporary Global Security and described in the applicable
Prospectus Supplement, but within a reasonable time, each such temporary Global
Security will be exchangeable for definitive bearer Debt Securities, definitive
registered Debt Securities or all or a portion of a permanent bearer Global
Security, or any combination thereof, as specified in such Prospectus
Supplement. No definitive bearer Debt Security or permanent bearer Global
Security delivered in exchange for a portion of a temporary Global Security
shall be mailed or otherwise delivered to any location in the United States in
connection with such exchange. Additional information regarding restrictions on
and special United States federal income tax consequences relating to temporary
Global Securities will be set forth in the Prospectus Supplement relating
thereto.
PAYING AGENTS FOR BEARER DEBT SECURITIES
Unless otherwise indicated in the applicable Prospectus Supplement,
payments of principal of and premium, if any, and interest, if any, on bearer
Debt Securities will be payable, subject to any applicable laws and regulations,
at such Paying Agencies outside the United States (or its possessions) as
Ahmanson may appoint from time to time. Unless otherwise indicated in the
applicable Prospectus Supplement, payment of interest on bearer Debt Securities
on any Interest Payment Date will be made only against surrender of the coupon
relating to such Interest Payment Date to a Paying Agent outside the United
States. (Sections 1001 and 1002) No payment with respect to any bearer Debt
Security will be made at any office or Paying Agency maintained by Ahmanson in
the United States nor will any such payment be made by transfer to an account,
or by mail to an address, in the United States. Notwithstanding the foregoing,
payments of principal of and premium, if any, and interest, if any, on bearer
Debt Securities will be made at an office or agency of, and designated by,
Ahmanson located in the United States, if payment of the full amount thereof at
all Paying Agencies outside the United States is illegal or effectively
precluded by exchange controls or other similar restrictions, and the Trustee
receives an opinion of counsel that such payment within the United States is
legal. (Section 1002)
The Paying Agents outside the United States initially appointed by Ahmanson
for a series of Debt Securities will be named in the applicable Prospectus
Supplement. Ahmanson may terminate the appointment of any of such Paying Agents
from time to time, except that Ahmanson will maintain at least one Paying Agent
in the City of New York for payments with respect to bearer Debt Securities
under the limited circumstances described above, and at least one Paying Agent
outside the United States so long as any bearer Debt Securities are outstanding,
where such bearer Debt Securities may be presented for payment and may be
surrendered for exchange, provided that so long as any series of Debt Securities
is listed on The International (London) Stock Exchange or any other stock
exchange located outside the United States, and such stock exchange shall so
require, Ahmanson will maintain a Paying Agent in London or any other required
city located outside the United States, as the case may be, for such series of
Debt Securities. (Section 1002)
RESTRICTIVE COVENANTS
The Indenture provides that, unless otherwise specified therein with
respect to a series of Offered Debt Securities, Ahmanson (a) will not (i) sell,
transfer or otherwise dispose of any shares of the Voting Stock of Home Savings
or (ii) permit Home Savings to issue, sell or otherwise dispose of shares of its
Voting Stock unless in either case Home Savings remains a Controlled Subsidiary
and (b) will not permit Home Savings to
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<PAGE> 38
(i) merge or consolidate unless the surviving entity is Ahmanson or a Controlled
Subsidiary or (ii) convey or transfer its properties and assets substantially as
an entirety to any person, except to Ahmanson or a Controlled Subsidiary.
(Section 1008) However, Ahmanson may avoid this restriction if prior to any such
transaction Home Savings unconditionally guarantees payment when due of the
principal of, premium, if any, and interest on the Debt Securities, Home Savings
obtains all regulatory approvals, if any, required to permit such guarantee, and
Ahmanson obtains an opinion of counsel pertaining to such guarantee. For
purposes of these covenants, Home Savings includes any successor but not a
Subsidiary of Home Savings, "Controlled Subsidiary" means any Person at least
80% of the outstanding shares of Voting Stock (except for directors' qualifying
shares) of which is at the time owned directly or indirectly by Ahmanson and
"Voting Stock" of any Person means stock of any class or classes, however
designated, having ordinary voting power for the election of a majority of the
board of directors of such Person, other than stock having such power only by
reason of the occurrence of a contingency. (Sections 101 and 1008)
The Indenture also provides that, unless otherwise specified with respect
to a series of Offered Debt Securities, Ahmanson will not create, assume, incur
or suffer to exist, as security for indebtedness for borrowed money any
mortgage, pledge, encumbrance, lien or charge of any kind upon the Voting Stock
of Home Savings (other than directors' qualifying shares) without effectively
providing that such series of Offered Debt Securities is secured equally and
ratably with (or prior to) such indebtedness; provided, however, that Ahmanson
may create, assume, incur or suffer to exist any such mortgage, pledge,
encumbrance, lien or charge without regard to the foregoing provisions so long
as after giving effect thereto Ahmanson will own directly or indirectly at least
80% of the Voting Stock of Home Savings then issued and outstanding, free and
clear of any such mortgage, pledge, encumbrance, lien or charge. Ahmanson may
also avoid this restriction if prior to creating, assuming, incurring or
suffering to exist any such mortgage, pledge, encumbrance, lien or charge, Home
Savings unconditionally guarantees payment when due of the principal of,
premium, if any, and interest on the Debt Securities, Home Savings obtains all
regulatory approvals, if any, required to permit such guarantee, and Ahmanson
obtains an opinion of counsel pertaining to such guarantee.
The Indenture does not restrict Ahmanson from incurring, assuming or
becoming liable for any type of debt or from creating, assuming, incurring or
permitting to exist any mortgage, pledge, encumbrance, lien or charge on its
property (except the Voting Stock of Home Savings). The Indenture does not
require Ahmanson to maintain any financial ratios or specified levels of net
worth or liquidity.
Unless otherwise indicated in the applicable Prospectus Supplement with
respect to a series of Offered Debt Securities, the covenants contained in the
Indenture would not necessarily provide Holders of Debt Securities any
protection in the event of a highly leveraged or other transaction involving
Ahmanson that may adversely affect Holders.
Any additional restrictive covenants with respect to any series of Offered
Debt Securities, and any variations from the foregoing restrictive covenants
applicable to any series of Offered Debt Securities, will be described in the
applicable Prospectus Supplement.
EVENTS OF DEFAULT
Unless otherwise specified in the Indenture relating to a series of Offered
Debt Securities, the following are Events of Default under the Indenture with
respect to Debt Securities of any series: (a) failure to pay principal of or
premium, if any, on any Debt Security of that series when due; (b) failure to
pay any interest on any Debt Security of that series when due, continued for 30
days; (c) failure to make any sinking fund payment, when due, in respect of any
Debt Security of that series; (d) failure to perform any other covenant of
Ahmanson in the Indenture (other than a covenant included in the Indenture
solely for the benefit of a series of Debt Securities other than that series),
continued for 60 days after written notice as provided in the Indenture; (e) a
default under any evidence of indebtedness for money borrowed by Ahmanson or
Home Savings (including a default with respect to Debt Securities of any other
series) having an aggregate principal amount outstanding of at least $25,000,000
or under any instrument under which there may be issued or by which there may be
secured or evidenced any indebtedness for money borrowed by Ahmanson or Home
Savings (including the Indenture) having an aggregate principal amount
outstanding of at least $25,000,000,
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whether such indebtedness exists as of the date of the Indenture or is
thereafter created, which default will constitute a failure to pay any portion
of the principal of such indebtedness when due and payable or will result in the
acceleration of such indebtedness, without such indebtedness having been
discharged, or such acceleration having been rescinded or annulled, within 35
days after written notice to Ahmanson by the Trustee or by the Holders of at
least 25% in principal amount of the Outstanding Debt Securities of such series
as provided in the Indenture (unless Ahmanson or Home Savings is contesting the
validity of such event in good faith by appropriate proceedings); (f) certain
events of bankruptcy, insolvency or reorganization; and (g) any other Event of
Default provided with respect to Debt Securities of that series. (Section 501)
If an Event of Default with respect to Outstanding Debt Securities of any series
shall occur and be continuing, either the Trustee or the Holders of at least 25%
in principal amount of the Outstanding Debt Securities of that series by notice
as provided in the Indenture may declare the principal amount (or, if the Debt
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount as may be specified in the terms of that series) of all
Debt Securities of that series to be due and payable immediately. However, at
any time after a declaration of acceleration with respect to Debt Securities of
any series has been made, but before a judgment or decree based on such
acceleration has been obtained, the Holders of a majority in principal amount of
the Outstanding Debt Securities of that series may, under certain circumstances,
rescind and annul such acceleration. (Section 502) For information as to waiver
of defaults, see "Modification and Waiver."
Any additional Events of Default with respect to any series of Offered Debt
Securities, and any variations from the foregoing Events of Default applicable
to any series of Offered Debt Securities will be described in the applicable
Prospectus Supplement.
The Indenture provides that, subject to the duty of the Trustee during an
Event of Default to act with the required standard of care, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request or direction of any of the Holders, unless such Holders have
offered to the Trustee reasonable security or indemnity. (Sections 601 and 603)
Subject to certain provisions, including those requiring security or
indemnification of the Trustee, the Holders of a majority in principal amount of
the Outstanding Debt Securities of any series will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee, with
respect to the Debt Securities of that series. (Section 512)
During all times that Debt Securities are outstanding under the Indenture,
Ahmanson will be required to furnish to the Trustee annually a statement as to
the performance by Ahmanson of its obligations under the Indenture and as to any
default in such performance. (Section 1004)
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by Ahmanson and
the Trustee with the consent of the Holders of not less than a majority in
principal amount of the Outstanding Debt Securities of each series affected
thereby; provided, however, that no such modification or amendment may, without
the consent of the Holder of each Outstanding Debt Security affected thereby:
(a) change the Stated Maturity of the principal of, or any installment of
principal of, or interest on, any Debt Security; (b) reduce the principal amount
of, the rate of interest on, or the premium, if any, payable upon the redemption
of, any Debt Security; (c) reduce the amount of principal of an Original Issue
Discount Security payable upon acceleration of the maturity thereof; (d) change
the currency of payment of principal of, or premium, if any, or interest on any
Debt Security; (e) impair the right to institute suit for the enforcement of any
payment on or with respect to any Debt Security on or after the Stated Maturity
or Redemption Date thereof; (f) reduce the percentage in principal amount of
Outstanding Debt Securities of any series if the consent of the Holders of such
series is required for modification or amendment of the Indenture or for waiver
of compliance with certain provisions of the Indenture or for waiver of certain
defaults; or (g) in the case of Subordinated Debt Securities, modify the
provisions of the Indenture with respect to subordination of such Subordinated
Debt Securities in a manner adverse to the Holders. (Section 902) The Holders of
at least a majority in principal amount of the Outstanding Debt Securities of
any series may on behalf of the Holders of all Debt Securities of that series
waive, insofar as that series is concerned, compliance by Ahmanson with certain
covenants of the Indenture.
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(Section 1009) The Holders of not less than a majority in principal amount of
the Outstanding Debt Securities of any series may, on behalf of the Holders of
all Debt Securities of that series, waive any past default under the Indenture
with respect to that series, except a default in the payment of the principal
of, or premium, if any, or interest on, any Debt Security of that series or in
respect of a provision that under the Indenture cannot be modified or amended
without the consent of the Holder of each Outstanding Debt Security of the
series affected. (Section 513)
Each Indenture contains provisions for convening meetings of the Holders of
Debt Securities of a series issued thereunder if Debt Securities of that series
are issuable in whole or in part as bearer Debt Securities. (Section 1401 of the
Senior Indenture, Section 1501 of the Subordinated Indenture) A meeting may be
called at any time by the Trustee for such Debt Securities, or upon the request
of Ahmanson or the Holders of at least 10% in principal amount of the
Outstanding Debt Securities of such series, in any such case upon notice given
in accordance with the Indenture with respect thereto. (Section 1402 of the
Senior Indenture, Section 1502 of the Subordinated Indenture) Except as limited
by the proviso in the first sentence of the preceding paragraph, any resolution
presented at a meeting or adjourned meeting at which a quorum is present may be
adopted by the affirmative vote of the Holders of a majority in principal amount
of the Outstanding Debt Securities of that series; provided, however, that,
except as limited by the proviso in the first sentence of the preceding
paragraph, any resolution with respect to any demand, consent, waiver or other
action that may be made, given or taken by the Holders of a specified percentage
that is less than a majority in principal amount of the Outstanding Debt
Securities of a series issued under an Indenture may be adopted at a meeting or
adjourned meeting at which a quorum is present by the affirmative vote of the
Holders of such specified percentage in principal amount of the Outstanding Debt
Securities of that series. (Section 1404 of the Senior Indenture, Section 1504
of the Subordinated Indenture)
Any resolution passed or decision taken at any meeting of Holders of Debt
Securities of any series duly held in accordance with the applicable Indenture
will be binding on all Holders of Debt Securities of that series and the related
coupons issued under that indenture. The quorum at any meeting of Holders of a
series of Debt Securities called to adopt a resolution, and at any reconvened
meeting, will be persons holding or representing a majority in principal amount
of the Outstanding Debt Securities of such series. (Section 1404 of the Senior
indenture, Section 1504 of the Subordinated Indenture)
CONSOLIDATION, MERGER AND SALE OF ASSETS
Ahmanson, without the consent of any Holders of Outstanding Debt
Securities, may consolidate with or merge into, or transfer or lease its assets
substantially as an entirety to, any Person, and any other Person may
consolidate with or merge into, or transfer or lease its assets substantially as
an entirety to, Ahmanson, provided that (a) the Person (if other than Ahmanson)
formed by such consolidation or into which Ahmanson is merged or which acquires
or leases the assets of Ahmanson substantially as an entirety is a Person
organized and existing under the laws of any United States jurisdiction and
assumes Ahmanson's obligations on the Debt Securities and under the Indenture,
(b) after giving effect to such transaction no Event of Default, and no event
that, after notice or lapse of time or both, would become an Event of Default,
happened and is continuing, and (c) certain other conditions are met. (Section
801)
DEFEASANCE
Unless otherwise indicated in the applicable Prospectus Supplement with
respect to the Debt Securities of a series, Ahmanson, at its option, (i) will be
discharged from any and all obligations in respect of the Debt Securities of
such series (except for certain obligations to register the transfer or exchange
of Debt Securities of such series, to replace destroyed, stolen, lost or
mutilated Debt Securities of such series, and to maintain Paying Agents and hold
moneys for payment in trust) or (ii) need not comply with the provisions under
Section 1005 through 1008, inclusive, in the Indenture, and the occurrence of an
event described in clause (d) under "Events of Default" above with respect to
any such covenant and clauses (e) and (g) of the "Events of Default" above shall
no longer be an Event of Default if, in either case, Ahmanson deposits with the
Trustee, in trust, money or U.S. Government Obligations that through the payment
of interest thereon and principal thereof in accordance with their terms will
provide money in an amount sufficient to pay all the
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principal of (and premium, if any) and any interest on the Debt Securities of
such series on the dates such payments are due (which may include one or more
redemption dates designated by Ahmanson) in accordance with the terms of such
Debt Securities. (Sections 1302 and 1303) Such a trust may only be established
if, among other things: (a) no Event of Default or event that with the giving of
notice or lapse of time, or both, would become an Event of Default under the
Indenture has occurred and is continuing on the date of such deposit, (b) no
Event of Default described under clause (f) under "Events of Default" above or
event that with the giving of notice or lapse of time, or both, would become an
Event of Default described under such clause (f) shall have occurred and be
continuing at any time during the period ending on the 91st day following such
date of deposit, and (c) Ahmanson shall have delivered an Opinion of Counsel to
the effect that the Holders of the Debt Securities will not recognize gain or
loss for Federal income tax purposes as a result of such deposit or defeasance
and will be subject to Federal income tax in the same manner as if such
defeasance had not occurred. In the event Ahmanson omits to comply with its
remaining obligations under the Indenture after a defeasance of the Indenture
with respect to the Debt Securities of any series as described under clause (ii)
above, and the Debt Securities of such series are declared due and payable
because of the occurrence of any Event of Default, the amount of money and U.S.
Government Obligations on deposit with the Trustee may be insufficient to pay
amounts due on the Debt Securities of such series at the time of the
acceleration resulting from such Event of Default. However, Ahmanson will remain
liable in respect of such payments. (Section 1304)
SUBORDINATION
The payment of the principal of and interest on the Subordinated Debt
Securities will, to the extent set forth in the Indenture relating thereto, be
subordinated in right of payment to the prior payment in full of all Senior
Indebtedness (as defined). Upon any payment or distribution of assets to
creditors upon any liquidation, dissolution, winding up, reorganization,
assignment for the benefit of creditors, marshalling of assets or any
bankruptcy, insolvency, receivership or similar proceedings of Ahmanson, the
holders of all Senior Indebtedness will first be entitled to receive payment in
full of all amounts due or to become due thereon before the Holders of the
Subordinated Debt Securities will be entitled to receive any payment in respect
of the principal of or interest thereon. In the event of the acceleration of the
maturity of any Subordinated Debt Securities, the holders of all Senior
Indebtedness will first be entitled to receive payment in full of all amounts
due thereon before the Holders of the Subordinated Debt Securities will be
entitled to receive any payment upon the principal of or interest thereon. No
payments on account of principal or interest in respect of the Subordinated Debt
Securities may be made if there shall have occurred and be continuing beyond any
applicable grace period a default in any payment with respect to Senior
Indebtedness, or if there shall have occurred an event of default with respect
to any Senior Indebtedness permitting the holders thereof to accelerate the
maturity thereof, or if any judicial proceeding shall be pending with respect to
any such default. (Article Fourteen of the Subordinated Indenture)
By reason of such subordination, in the event of insolvency, Holders of the
Subordinated Debt Securities may recover less, ratably, than other creditors of
Ahmanson, including holders of Senior Indebtedness.
"Senior Indebtedness" is defined in the Indenture to mean the principal of
(and premium, if any) and interest on (a) all indebtedness of Ahmanson
(including indebtedness of others guaranteed by Ahmanson) other than the
Subordinated Debt Securities and other than Ahmanson's 9.875% Subordinated Notes
Due 1999 and 7.875% Subordinated Notes Due September 1, 2004, which is (i) for
money borrowed or (ii) evidenced by a note or similar instrument given in
connection with the acquisition of any businesses, properties or assets of any
kind, (b) obligations of Ahmanson as lessee under leases required to be
capitalized on the balance sheet of the lessee under generally accepted
accounting principles and leases of property or assets made as part of any sale
and lease-back transaction to which Ahmanson is a party and (c) amendments,
renewals, extensions, modifications and refundings of any such indebtedness or
obligation, unless in any case in the instrument creating or evidencing any such
indebtedness or obligation or pursuant to which the same is outstanding it is
provided that such indebtedness or obligation is not superior in right of
payment to the Subordinated Debt Securities or such indebtedness or obligation
is subordinated to senior indebtedness of Ahmanson to substantially the same
extent as the Subordinated Debt Securities are subordinated to the
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<PAGE> 42
Senior Indebtedness, in each case whether such indebtedness or obligation is
outstanding on the date of the Indenture or thereafter created, incurred or
assumed. (Section 101 of the Subordinated Indenture) The Indenture relating to
the Subordinated Debt Securities does not prohibit or limit the incurrence of
additional Senior Indebtedness.
GOVERNING LAW
The Indenture and the Debt Securities will be governed by, and construed in
accordance with, the laws of the state specified in the Indenture and the
applicable Prospectus Supplement. (Section 112)
REGARDING THE TRUSTEE
The Indenture contains certain limitations on the right of the Trustee,
should it become a creditor of Ahmanson, to obtain payment of claims in certain
cases, or to realize for its own account on certain property received in respect
of any such claim as security or otherwise. (Section 613) The Trustee will be
permitted to engage in certain other transactions; provided, however, that if it
acquires any conflicting interest and there is a default under the Debt
Securities, it must eliminate such conflict or resign. (Section 608)
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of certain of the United States
federal income tax considerations that may be relevant to the purchase,
ownership and disposition of the Debt Securities by investors who hold the Debt
Securities as a capital asset and does not purport to be a complete analysis of
all the potential tax consequences thereof. The discussion is based upon the
Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations and
Internal Revenue Service ("IRS") rulings and judicial decisions now in effect,
all of which are subject to change at any time by legislative, judicial or
administrative action. Any such changes could be retroactively applied in a
manner that adversely affects holders of such Debt Securities. Potential
investors should be aware that the discussion does not address all of the tax
considerations that may be relevant to particular investors in light of their
individual circumstances or to holders subject to special treatment under United
States federal income tax laws, such as dealers in securities, insurance
companies, foreign persons, tax-exempt organizations and financial institutions.
EACH PROSPECTIVE INVESTOR SHOULD CONSULT HIS OR HER OWN TAX ADVISOR
CONCERNING THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES, AS WELL AS ALL
APPLICABLE STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF THE PURCHASE,
OWNERSHIP AND DISPOSITION OF ANY SERIES OF THE DEBT SECURITIES OFFERED HEREBY.
DEBT SECURITIES IN GENERAL
Stated Interest. Except in the case of any Debt Securities issued with
original issue discount, interest paid to a holder of any series of Debt
Securities will generally be taken into income in accordance with the holder's
method of accounting for federal income tax purposes. Accordingly, holders of
Debt Securities using the accrual method of accounting will generally be
required to include interest in ordinary income as such interest accrues, while
a holder using the cash method will be required to include interest in income
when cash payments are received (or made available for receipt) by such holder.
Original Issue Discount. If any series of Debt Securities having a maturity
date of more than one year from the date of issue is issued with a stated
redemption price at maturity that exceeds the issue price by more than a
statutory de minimus amount, or does not provide for interest payable at least
annually based upon a fixed rate or certain variable rates (as described in
Treasury Regulations), such series of Debt Securities may be subject to the
original issue discount provisions of the Code. Holders of any series of Debt
Securities subject to the original issue discount provisions will be required to
include such original issue discount in taxable income based on an accrual to
maturity method, regardless of the holders' general method of accounting for
federal income tax purposes. Application of the original issue discount
provisions may result in
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the recognition of taxable income by holders of Debt Securities in excess of the
actual interest paid for a taxable year with respect to any series of Debt
Securities subject to the original issue discount rules.
Sales of Debt Securities. Subject to the market discount rules discussed
below, gain or loss realized upon a sale or exchange of Debt Securities
generally will be treated as long-term capital gain or loss, provided that the
Debt Securities were held as a capital asset for more than one year, except to
the extent a holder realizes ordinary income attributable to accrued interest.
Market Discount. Purchasers of any Debt Securities should be aware that the
resale of Debt Securities may be affected by the market discount provisions of
the Code. These provisions generally provide that if a subsequent holder of a
debt security purchases the security at a discount in excess of a statutorily
defined de minimus amount, and thereafter recognizes gain upon a disposition
(including upon redemption or at maturity) of the security, the lesser of such
gain or the portion of the market discount that accrued while the security was
held by such holder will be treated as ordinary income at the time of
disposition. The holder of such a market discount security may also be required
to defer a portion of any interest expense that may otherwise be deductible on
any indebtedness incurred or maintained to purchase or carry such a market
discount security until the holder disposes of it in a taxable transaction. If a
holder of a debt security purchased at market discount elects to include market
discount in income currently, however, neither of the foregoing rules would
apply.
BEARER SECURITIES
Under Sections 165(j) and 1287(a) of the Code, United States holders of
bearer Debt Securities generally will not be entitled to deduct any loss on such
Debt Securities (including for this purpose any Debt Securities in global form
exchangeable for bearer Debt Securities) or coupons and must treat as ordinary
income any gain realized on the sale or other disposition (including the receipt
of principal) of bearer Debt Securities or coupons thereon (other than bearer
Debt Securities having a maturity of one year or less from their date of
issuance).
Certain information regarding restrictions on the offer, issuance, exchange
and transfer of, and special United States federal income tax considerations
relating to, bearer Debt Securities will be set forth in the applicable
Prospectus Supplement.
FURTHER INFORMATION ON FEDERAL INCOME TAX CONSEQUENCES
Further information concerning the particular federal income tax treatment
of holders of certain series of Debt Securities, including Debt Securities
denominated or payable in foreign currencies or foreign currency units and Debt
Securities issued at a discount or otherwise subject to the original issue
discount provisions of the Code, will be discussed in the Prospectus Supplement
related to such series.
PLAN OF DISTRIBUTION
Ahmanson may sell the Debt Securities to one or more underwriters for
public offering and sale by them or may sell the Debt Securities to investors
directly or through agents. Any such underwriter or agent involved in the offer
and sale of the Debt Securities will be named in the related Prospectus
Supplement. Ahmanson has reserved the right to sell the Debt Securities directly
to investors on its own behalf in those jurisdictions where it is authorized to
do so.
Underwriters may offer and sell the Debt Securities at a fixed price or
prices that may be changed, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices.
Ahmanson also may offer and sell the Debt Securities in exchange for one or more
of its outstanding series of equity or debt securities. Ahmanson also may, from
time to time, authorize dealers, acting as Ahmanson's agents, to offer and sell
the Debt Securities upon such terms and conditions as are set forth in the
related Prospectus Supplement. In connection with the sale of the Debt
Securities, underwriters may receive compensation from Ahmanson in the form of
underwriting discounts or commissions and may also receive commissions from
purchasers of the Debt Securities for whom they may act as agent. Underwriters
may sell
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<PAGE> 44
the Debt Securities to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or commissions from the purchasers for whom they may act as
agents.
Any underwriting compensation paid by Ahmanson to underwriters or agents in
connection with the offering of the Debt Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the related Prospectus Supplement. Dealers and agents
participating in the distribution of the Debt Securities may be deemed to be
underwriters, and any discounts and commissions received by them and any profit
realized by them on resale of the Debt Securities may be deemed to be
underwriting discounts and commissions. Underwriters, dealers and agents may be
entitled, under agreements entered into with Ahmanson, to indemnification
against and contribution toward certain civil liabilities.
If so indicated in the related Prospectus Supplement, Ahmanson will
authorize dealers acting as Ahmanson's agents to solicit offers by certain
institutions to purchase the Debt Securities from Ahmanson at the public
offering price set forth in the related Prospectus Supplement pursuant to
delayed delivery contracts ("Contracts") providing for payment and delivery on
the date or dates stated in a Prospectus Supplement. Each Contract will be for
an amount not less than, and the aggregate amount of the Debt Securities, based
on the liquidation value thereof, sold pursuant to Contracts will be not less
nor more than the respective amounts stated in a Prospectus Supplement.
Institutions with whom Contracts, when authorized, may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions and other institutions, but
will in all cases be subject to the approval of Ahmanson. Contracts will be
subject to the condition that the purchase by an institution of the Debt
Securities covered by Contracts will not at the time of delivery be prohibited
under the laws of any jurisdiction in the United States to which such
institution is subject.
Any Debt Securities issued hereunder will be new issues of securities with
no established trading market. Any underwriters or agents to or through whom
Debt Securities are sold by Ahmanson for public offering and sale may make a
market in such Debt Securities, but such underwriters or agents will not be
obligated to do so and may discontinue any market making at any time without
notice. No assurance can be given as to the liquidity of the trading market for
any Debt Securities.
Certain of the underwriters, dealers or agents and their associates may be
customers of, engage in transactions with, and perform services for, Ahmanson
and certain of its affiliates in the ordinary course of business. Except as
otherwise stated in the applicable Prospectus Supplement, any loans and
outstanding commitments to such underwriters, dealers or agents and their
associates will be made on terms, including interest rates and collateral, no
more favorable than those prevailing at the time for comparable transactions
with other persons and will not involve more than normal risk of collectibility.
LEGAL MATTERS
Certain legal matters with respect to the Debt Securities offered hereby
will be passed upon for Ahmanson by Gibson, Dunn & Crutcher, Los Angeles,
California and for any underwriters by counsel named in the related Prospectus
Supplement. Arthur W. Schmutz, a director of Ahmanson, is a retired former
partner of Gibson, Dunn & Crutcher.
EXPERTS
The consolidated financial statements of Ahmanson as of December 31, 1994
and 1993 and for each of the years in the three-year period ended December 31,
1994 included in Ahmanson's Annual Report on Form 10-K for the year ended
December 31, 1994 have been incorporated herein by reference in reliance on the
report of KPMG Peat Marwick LLP, independent certified public accountants,
incorporated herein by reference, and upon the authority of such firm as experts
in auditing and accounting.
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NO DEALER, AGENT, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY AHMANSON, BY THE AGENTS OR BY ANY OTHER PERSON. THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY
PERSON OR BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION MAY NOT
LAWFULLY BE MADE. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR ANY
PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF AHMANSON SINCE THE DATE HEREOF OR THAT INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
Description of Notes....................... S-3
Certain United States Federal Income Tax
Considerations........................... S-19
Supplemental Plan of Distribution.......... S-26
Validity of Notes.......................... S-27
PROSPECTUS
Available Information...................... 2
Documents Incorporated by Reference........ 2
H. F. Ahmanson & Company................... 3
Use of Proceeds............................ 6
Ratio of Earnings to Fixed Charges......... 6
Description of Debt Securities............. 6
Certain Federal Income Tax
Considerations........................... 15
Plan of Distribution....................... 16
Legal Matters.............................. 17
Experts.................................... 17
</TABLE>
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$500,000,000
MEDIUM-TERM NOTES,
SERIES A
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PROSPECTUS SUPPLEMENT
APRIL 4, 1995
---------------------------
LEHMAN BROTHERS
BEAR, STEARNS & CO. INC.
CS FIRST BOSTON
MERRILL LYNCH & CO.
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