QuickLinks
-- Click here to rapidly navigate through this document
|
Title of Each Class of Securities Offered
|
|
Maximum Aggregate
Offering Price
|
|
Amount of
Registration Fee(1)
|
|
7.25% Global Notes due February 1, 2018
|
|
$
|
3,000,000,000
|
|
$
|
117,900
|
|
-
(1)
-
Calculated
in accordance with Rule 457(r) of the Securities Act of 1933, as amended. The filing fee of $117,900 is being paid in connection with the registration of these
Global Notes.
Filed Pursuant to 424(b)(5)
File No. 333-136666
PROSPECTUS SUPPLEMENT
(To Prospectus Dated August 16, 2006)
U.S. $3,000,000,000
The Bear Stearns Companies Inc.
7.25% Global Notes Due February 1, 2018
Set forth below is a summary of the terms of the Notes offered by this prospectus supplement and the accompanying prospectus. For more detail,
see
"
Description of the Notes.
"
-
Global Offering
We
are offering the 7.25% Global Notes due February 1, 2018 (the "Notes") in the United States and in parts of Europe and Asia where it is legal to offer the Notes.
-
Interest
The
Notes have a fixed annual rate of 7.25%, which will be paid every six months on August 1
st
and February 1
st
, with the first payment to be made on
August 1, 2008.
-
Maturity
The
Notes will mature on February 1, 2018.
-
Ranking
The
Notes will be our unsecured senior debt and will rank equally with all of our other unsecured and unsubordinated debt.
-
Redemption
The
Notes are only redeemable prior to maturity if certain events involving US taxation occur.
-
No Sinking Fund
The
Notes will not be subject to any sinking fund.
-
Book-Entry Notes
The
Notes will be represented by one or more global securities registered in the name of Cede & Co., as nominee of The Depository Trust Company.
-
Listing
We
will make application to the Financial Services Authority in its capacity as competent authority under the Financial Services and Markets Act 2000 for the Notes to be admitted to the official list
of the UK Listing Authority and to the London Stock Exchange plc for such Notes to be admitted to trading on the London Stock Exchange's market for listed securities, although we are not required to
maintain the listing.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of
this prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense.
|
|
Per Note
|
|
Total
|
Initial public offering price
|
|
99.726
|
%
|
$
|
2,991,780,000
|
Underwriting discount
|
|
0.450
|
%
|
$
|
13,500,000
|
Proceeds, before expenses, to us
|
|
99.276
|
%
|
$
|
2,978,280,000
|
Bear, Stearns & Co. Inc. is the Global Coordinator for the offering of the Notes. Bear, Stearns International Limited is the International
Coordinator for all Notes to be sold to purchasers in Europe. The underwriters named in Underwriting of this prospectus supplement (Underwriters) expect to deliver the Notes in book-entry
form only through the facilities of The Depository Trust Company, Clearstream Banking, société anonyme and Euroclear Bank S.A./N.V., as operator of the Euroclear System
against payment on or about February 1, 2008.
After
this offering is complete, the Underwriters may use this prospectus supplement and the accompanying prospectus in connection with market-making transactions at negotiated prices related to the
prevailing market prices at the time of sale. The Underwriters may act as principal or agent in these transactions.
The Underwriters for the Notes
Bear, Stearns & Co. Inc.
Bear, Stearns International Limited
Citi
|
|
RBC Capital Markets
|
Banc of America Securities LLC
|
|
BB&T Capital Markets
|
Mitsubishi UFJ Securities
|
|
DZ Financial Markets, LLC
|
HSBC
|
|
Scotia Capital (USA) Inc.
|
Stifel Nicolaus
|
|
Wells Fargo Securities
|
The date of this prospectus supplement is January 29, 2008
Offers and sales of the Notes are subject to restrictions in certain jurisdictions. In particular, there are restrictions on the distribution of this prospectus
supplement and the accompanying prospectus and the offer or sale of the Notes in the United Kingdom, and details of these restrictions are set out in "Underwriting" in this prospectus supplement. The
distribution of this prospectus supplement and the accompanying prospectus and the offer or sale of the Notes in certain other jurisdictions may be restricted by law. Persons who come into possession
of this prospectus supplement and the accompanying prospectus or any Notes must inform themselves about and observe any applicable restrictions on the distribution of this prospectus supplement and
the accompanying prospectus and the offer and sale of the Notes.
We accept responsibility for the information contained in this prospectus supplement and the accompanying prospectus. To the best of our knowledge and belief
(having taken all reasonable care to ensure that such is the case) the information contained in this prospectus supplement and the accompanying prospectus is in accordance with the facts and does not
omit anything likely to affect the import of the information.
You must read this prospectus supplement and the accompanying prospectus as one along with all the documents which are deemed to be incorporated in this
prospectus supplement and the accompanying prospectus by reference (see
"
Where You Can Find More
Information
"
). This prospectus supplement and the accompanying prospectus must be read and construed on the basis that the incorporated documents are so
incorporated and form part of this document, except as specified in this document.
We have not authorized any person to give any information or represent anything not contained in this prospectus supplement and the accompanying prospectus. You
must not rely on any unauthorized information.
In order to facilitate the offering of the Notes, Bear Stearns, in its capacity as Global Coordinator of the offering of the Notes, may over-allot or
effect transactions which stabilize or maintain the market price of the Notes at a level higher than that which might otherwise prevail in the open market. Specifically, Bear Stearns, on behalf of the
Underwriters, may over-allot or otherwise create a short position in the Notes for the account of the Underwriters by selling more Notes than have been sold to them by us. Bear Stearns, on
behalf of the Underwriters, may elect to cover any such short position by purchasing Notes in the open market. In addition, Bear Stearns, on behalf of the Underwriters, may stabilize or maintain the
price of the Notes by bidding for or purchasing Notes in the open market and may impose penalty bids, under which selling concessions allowed to syndicate members or other broker-dealers participating
in the offering are reclaimed if Notes previously distributed in the offering are repurchased in connection with stabilization transactions or otherwise. The effect of these transactions may be to
stabilize or maintain
the market price of the Notes at a level above that which might otherwise prevail in the open market. The imposition of a penalty bid may also affect the price of the Notes to the extent that it
discourages resales of Notes. No representation is made as to the magnitude or effect of any such stabilization or other transactions. Such stabilizing, if commenced, may be discontinued at any time
and in any event shall be discontinued within a limited period. No other party may engage in stabilization.
S-2
FORWARD-LOOKING STATEMENTS
This prospectus supplement and the accompanying prospectus include and incorporate by reference "forward-looking statements" within the
meaning of the securities laws. All statements regarding our expected financial position, business and financing plans are forward-looking statements. Forward-looking statements also include
representations of our expectations or beliefs concerning future events that involve risks and uncertainties, including those associated with the effect of international, national and regional
economic conditions and the performance of our products within the prevailing economic environment. Although we believe that the expectations reflected in those forward-looking statements are
reasonable, those expectations may prove to be incorrect. Cautionary statements describing important factors that could cause actual results to differ materially from our expectations are disclosed in
this prospectus supplement along with the forward-looking statements included or incorporated by reference in this prospectus supplement and the accompanying prospectus. All subsequent written and
oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by such cautionary statements. These forward-looking statements speak only
as of the date of the document in which they are made. We disclaim any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in our
expectations or any change in events, conditions or circumstances on which the forward-looking statement is based.
WHERE YOU CAN FIND MORE INFORMATION
We file current, annual and quarterly reports, proxy statements and other information required by the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), with the Securities and Exchange Commission ("SEC"). You may read and copy any document we file at the SEC's public reference room located at 100 F Street, N.E., Washington, D.C. 20549, USA.
Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Our SEC filings are also available to the public from the SEC's internet
site at http://www.sec.gov. Copies of these reports, proxy statements and other information can also be inspected at the offices of the New York Stock Exchange, Inc. ("NYSE"), 20 Broad Street,
New York, New York 10005, USA.
Our
website is http://www.bearstearns.com. We make available free of charge on our website, via a link to the SEC's internet site at http://www.sec.gov, our annual reports on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and Forms 3, 4 and 5 filed on behalf of directors and
executive officers and any amendments to such reports filed or furnished pursuant to the Exchange Act as soon as reasonably practicable after such material is electronically filed with, or furnished
to, the SEC.
In
addition, we currently make available on http://www.bearstearns.com our most recent annual report on Form 10-K, our quarterly reports on
Form 10-Q for the current fiscal year and our most recent proxy statement, although in some cases these documents are not available on our website as soon as they are available on
the SEC's internet site. You will need to have on your computer the Adobe Acrobat Reader software to view these documents, which are in the .PDF format.
The
SEC allows us to "incorporate by reference" the information that we file with them, which means that we can disclose important information to you by referring you to the other
information we have filed with the SEC. The information that we incorporate by reference is considered to be part of this prospectus supplement, and information that we file later with the SEC will
automatically update and supersede this information.
S-3
The
following documents filed by us with the SEC pursuant to Section 13 of the Exchange Act (File No. 1-8989) and any future filings under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act made before the termination of the offering of the Notes are incorporated by reference:
-
(i)
-
the
Annual Report on Form 10-K (including the portions of the Company's Annual Report to Stockholders and Proxy Statement incorporated by reference therein) for the
fiscal year ended November 30, 2007 filed with the SEC on January 29, 2008;
-
(ii)
-
the
Current Reports on Form 8-K dated December 20, 2007 and January 8, 2008.
We
will provide to you without charge, a copy of any or all documents incorporated by reference into this prospectus supplement except the exhibits to such documents (unless such
exhibits are specifically incorporated by reference in such documents). You may request copies by writing or telephoning us at
our Investor Relations Department, The Bear Stearns Companies Inc., 383 Madison Avenue, New York, New York 10179, USA; telephone number (212) 272-2000. In addition, once the
Notes are admitted to the Official List of the UK Listing Authority (as defined below), these documents will be available from Bear, Stearns International Limited in its capacity as listing agent for
the Notes at its principal office at One Canada Square, London E14 5AD, England.
S-4
TERMS OF THE GLOBAL NOTES
Please note that in this section entitled "Terms of the Global Notes", references to "The Bear Stearns Companies Inc.", "Company",
"we", "us" and "our" mean only The Bear Stearns Companies Inc. and do not include its consolidated subsidiaries.
The
global notes will be a separate series of debt securities issued under our indenture, dated as of May 31, 1991, as supplemented by the First Supplemental Indenture, dated
January 29, 1998 (as supplemented, the "Indenture"), with The Bank of New York (formerly, JPMorgan Chase Bank, N.A.), as trustee. This prospectus supplement summarizes specific financial and
other terms that will apply to the global notes. The terms described here supplement those described in the accompanying prospectus and, if the terms described here are inconsistent with those
described there, the terms described here are controlling.
The
specific terms of this series of the Notes we are offering will be as follows:
-
-
Title:
7.25% Global Notes due February 1, 2018
-
-
Issuer of the notes:
The Bear Stearns Companies Inc.
-
-
Total principal amount being issued:
$3,000,000,000
-
-
Initial public offering price:
99.726% of the principal amount ($2,991,780,000)
-
-
Underwriting fee:
0.450% ($13,500,000 in the aggregate)
-
-
Issue Date:
February 1, 2008
-
-
Due date for principal:
February 1, 2018
-
-
Interest rate:
7.25% annually
-
-
Date interest starts accruing:
February 1, 2008
-
-
Payment dates for interest:
every August 1 and February 1
-
-
First payment date for interest:
August 1, 2008
-
-
Day Count:
30/360; we will calculate accrued interest on the basis of a 360-day year of twelve 30-day months
-
-
Denominations:
integral multiples of $1,000, subject to a minimum denomination of $1,000.
-
-
Additional Amounts:
We intend to pay principal and interest without deducting U.S. withholding taxes. If we are required to
deduct U.S. withholding taxes from payments to non-U.S. investors, however, we will pay additional amounts on those payments, but only to the extent described under "Description of Debt Securities
Payment of Additional Amounts" in the accompanying prospectus.
-
-
Tax Redemption:
The global notes will not be redeemable, in whole or in part, by us or by the holders thereof at any time
prior to their maturity, except that the global notes may be redeemable by us, in whole but not in part, and only upon the occurrence of certain tax events as described under "Description of Debt
Securities Redemption Upon Certain Tax Events" in the accompanying prospectus.
-
-
Further Issuances:
We may from time to time, without the consent of the existing holders of the global notes, "reopen" this
issue, which means that we may create and issue further global notes having the same terms and conditions as the global notes being offered hereby in all respects, except for the first payment of
interest thereon. Additional global notes issued in this manner will be consolidated with, and will form a single series with, the previously outstanding global notes unless such additional global
notes will not be treated as fungible with the previously issued and outstanding global notes for U.S. federal income tax purposes.
S-5
-
-
Listing:
The global notes will not be listed on any U.S. securities exchange or included for trading in any quotation system.
We will make application to the Financial Services Authority in its capacity as competent authority under the Financial Services and Markets Act 2000 for the Notes to be admitted to the official list
of the UK Listing Authority and to the London Stock Exchange plc for such Notes to be admitted to trading on the London Stock Exchange's market for listed securities, although we are not required to
maintain the listing.
-
-
Rating of the Global Notes:
A2 (Moody's) / A (Standard & Poor's) / A+ (Fitch). An explanation of
the significance of ratings may be obtained from the rating agencies. Generally, rating agencies base their ratings on such material and information, and such of their own investigations, studies and
assumptions, as they deem appropriate. The rating of the securities should be evaluated independently from similar ratings of other securities. A credit rating of a security is not a recommendation to
buy, sell or hold securities and maybe subject to review, revision, suspension, reduction or withdrawal at any time by the assigning rating agency.
We
will issue the global notes only in book-entry formi.e., as global notes registered in the name of The Depositary Trust Company, New York, New York, or its
nominee. The sale of the global notes will settle in immediately available funds through DTC. Please review the special considerations that apply to indirect owners in the accompanying prospectus,
under
"Book-Entry Procedures and Settlement". You will not be permitted to withdraw the global notes from DTC except in the limited situations described in the accompanying prospectus under
"Book-Entry Procedures and SettlementCertificates in Registered Form; The Depository Trust Company."
Investors
may hold interests in a global note through organizations that participate, directly or indirectly, in the DTC system. Those organizations include Euroclear and Clearstream,
Luxembourg. See "Book-Entry Procedures and Settlement" in the accompanying prospectus for additional information about indirect ownership of interests in the global notes.
S-6
RISK FACTORS
Your investment in the global notes involves risk. In consultation with your financial, tax and legal advisers, you should carefully
consider the following risks and the other information included or incorporated by reference in this prospectus supplement and the accompanying prospectus, including the information under "Risk
Factors" in the Company's Form 10-K for the fiscal year ended November 30, 2007, and the information under "Where You Can Find More Information" herein, before deciding that an
investment in the global notes is suitable for you. You should not purchase the global notes unless you understand and can bear the investment risks of the global notes.
There may not be any Trading Market for Your Global Notes; Many Factors Affect the Trading Market and Value of Your Global
Notes.
The
global notes will be a new issuance and will not have an established U.S. trading market or be listed on a U.S. securities exchange. We cannot assure you a trading market for the
global notes will ever develop or, if one develops, that it will be maintained in the U.S. If you wish to liquidate your investment in the global notes prior to maturity, selling your global notes may
be your only option. At that time, there may be an illiquid market for the global notes or no market at all. In addition to our own creditworthiness, many other factors may affect the trading market
value of, and trading market for, your global notes. These factors include:
-
-
the
rate of interest on your global notes;
-
-
the
time remaining to the maturity of your global notes;
-
-
the
total outstanding amount of any particular issuance of our debt securities in total; and
-
-
the
level, direction and volatility of market interest rates generally.
We
expect that changes in interest rates will affect the trading value of the Notes. In general, if U.S. interest rates increase, we expect that the trading value of the Notes will
decrease and, conversely, if U.S. interest rates decrease, we expect that the trading value of the Notes will increase.
In
addition, there may be a limited number of buyers when you decide to sell your global notes. This may affect the price you receive for your global notes or your ability to sell your
global notes at all. You should not purchase global notes unless you understand and know you can bear all of the investment risks related to your global notes.
The Global Notes are not Insured Against Loss by any Third Party; You can only Depend on our Earnings and Assets for Payment of Principal and Interest
on the Global Notes.
The
global notes will be solely our obligations, and no other entity will have any obligation, contingent or otherwise, to make any payments in respect of the global notes.
In
addition, because we are a holding company whose primary assets consist of shares of stock or other equity interests in our subsidiaries, almost all of our income is derived from
those subsidiaries. Our subsidiaries will have no obligation to pay any amount in respect of the global notes or to make any funds available for payment of the global notes. Accordingly, we will be
dependent on dividends and other distributions or loans from our subsidiaries to generate the funds necessary to meet our obligations with respect to the global notes, including the payment of
principal and interest. The global notes will also be effectively subordinated to the claims of creditors of our subsidiaries with respect to their assets.
If
funds from dividends, other distributions or loans from our subsidiaries are not adequate, we may be unable to make payments of principal or interest in respect of the global notes
and you could lose all or a part of your investment.
S-7
Changes in Our Credit Ratings are Expected to Affect the Value of the Global Notes.
Our
credit ratings are an assessment of our ability to pay our obligations. Consequently, actual or anticipated changes in our credit ratings, as well as our financial condition or
results of operations may significantly affect the trading value of the global notes. However, because the return on the global notes depends upon factors in addition to our ability to pay our
obligations, an improvement in our credit ratings, financial condition or results of operations will not reduce the other investment risks related to the global notes.
The Global Notes are Redeemable upon Certain Tax Events, and we may Repurchase such Notes when Prevailing Interest Rates are Relatively
Low.
The
global notes are subject to redemption, at our option, upon the occurrence of certain tax events, as described under "Description of Debt SecuritiesRedemption Upon
Certain Tax Events" in the accompanying prospectus. In the event that prevailing interest rates are relatively low when we choose to repurchase the global notes, you may not be able to reinvest the
repurchased proceeds in a comparable security with a yield as high as that on the global notes being repurchased.
THE BEAR STEARNS COMPANIES INC.
We are a holding company that, through our broker-dealer and international bank subsidiaries, principally Bear, Stearns & Co. Inc. ("Bear Stearns"),
Bear, Stearns Securities Corp. ("BSSC"), Bear, Stearns International Limited ("BSIL") and Bear Stearns Bank plc ("BSB"), is a leading investment banking, securities and derivatives
trading, clearance and brokerage firm serving corporations, governments, institutional and individual investors worldwide. In addition to conducting a substantial portion of our operating activities
through certain of our regulated subsidiaries (Bear Stearns, BSSC, BSIL and BSB), we also conduct activities through the following wholly-owned subsidiaries: Bear Stearns Global Lending Limited,
Custodial Trust Company, Bear Stearns Financial Products Inc., Bear Stearns Capital Markets Inc., Bear Stearns Credit Products Inc., Bear Stearns Forex Inc., EMC Mortgage
Corporation, Bear Stearns Commercial Mortgage Inc., Bear Stearns Investment Products Inc. and Bear Energy L.P.
Our
business includes:
-
-
market-making
and trading in U.S. government, government agency, corporate debt and equity, mortgage-related, asset-backed, municipal securities and high yield products;
-
-
trading
in options, futures, foreign currencies, interest rate swaps and other derivative products;
-
-
securities,
options and futures brokerage;
-
-
providing
securities clearance services;
-
-
managing
equity and fixed income assets for institutional and individual clients;
-
-
financing
customer activities;
-
-
securities
lending;
-
-
securities
and futures arbitrage;
-
-
involvement
in specialist activities on the NYSE, American Stock Exchange ("AMEX") and International Securities Exchange ("ISE");
-
-
underwriting
and distributing securities;
-
-
arranging
for the private placement of securities;
-
-
assisting
in mergers, acquisitions, restructurings and leveraged transactions;
S-8
-
-
making
principal investments in leveraged acquisitions;
-
-
engaging
in commercial and residential mortgage loan origination and securitization activities;
-
-
investment
management and advisory services; and
-
-
fiduciary,
custody, agency and securities research services.
Our
business is conducted:
-
-
from
our principal offices in New York City;
-
-
from
domestic regional offices in Atlanta, Boston, Chicago, Dallas, Denver, Houston, Los Angeles, San Francisco, San Juan and Scottsdale;
-
-
from
representative offices in Beijing, Hong Kong, Sao Paulo and Shanghai; and
-
-
through
international offices in Dublin, Hong Kong, London, Lugano, Milan, Singapore and Tokyo.
We
are incorporated in the State of Delaware. Our principal executive office is located at 383 Madison, New York, New York 10179, USA, and our telephone number is
(212) 272-2000. Our internet address is http://www.bearstearns.com. Unless otherwise stated in this prospectus supplement, the terms "Company," "we," "us" and "our" refer to The
Bear Stearns Companies Inc. and its subsidiaries.
S-9
USE OF PROCEEDS
We will use the net proceeds before expenses from the sale of the Notes of approximately $2.978 billion for general corporate purposes. These purposes may
include additions to working capital, the repayment of short-term and long-term debt and making investments in or extending credit to our subsidiaries.
S-10
CAPITALIZATION
The following table sets forth our consolidated capitalization as of November 30, 2007, and as adjusted to give effect to the offering of the Notes. It is
important that you read the following information along with the unaudited condensed consolidated financial statements and notes thereto incorporated by reference in this prospectus supplement and the
accompanying prospectus. See "Where You Can Find More Information" and "General Information."
|
|
Actual
November 30, 2007
|
|
As Adjusted
November 30, 2007
|
|
|
|
(In millions of U.S. dollar)
|
|
Short-term borrowings:
|
|
|
|
|
|
|
|
|
Unsecured Borrowings:
|
|
|
|
|
|
|
|
|
|
Commercial paper
|
|
$
|
3,901
|
|
$
|
3,901
|
|
|
|
Bank loans
|
|
|
3,126
|
|
|
3,126
|
|
|
|
Medium term notes
|
|
|
1,873
|
|
|
1,873
|
|
|
|
Other unsecured borrowings
|
|
|
2,743
|
|
|
2,743
|
|
|
|
|
|
|
|
|
|
|
Total unsecured borrowings
|
|
|
11,643
|
|
|
11,643
|
|
|
Secured borrowings
|
|
|
12,361
|
|
|
12,361
|
|
|
|
|
|
|
|
|
|
|
|
Total short-term borrowings
|
|
|
24,004
|
|
|
24,004
|
|
|
|
|
|
|
|
Long-term borrowings:
|
|
|
|
|
|
|
|
|
Fixed rate notes due 2008 to 2047; interest rates ranging from 2.7% to 7.7%
|
|
|
28,759
|
|
|
31,751
|
|
|
Floating rate notes due 2008 to 2046
|
|
|
31,336
|
|
|
31,336
|
|
|
Index/equity/credit-linked notes
|
|
|
8,443
|
|
|
8,443
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term borrowings
|
|
|
68,538
|
|
|
71,530
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
|
Preferred stock, $1.00 par value; series E, F and G, 10,000,000 shares authorized; 7,032,425 shares issued
|
|
|
352
|
|
|
352
|
|
|
Common stock, $1.00 par value; 500,000,000 shares authorized; 184,805,847 shares issued
|
|
|
185
|
|
|
185
|
|
|
Paid-in capital
|
|
|
4,986
|
|
|
4,986
|
|
|
Retained earnings
|
|
|
9,441
|
|
|
9,441
|
|
|
Employee stock compensation plans
|
|
|
2,478
|
|
|
2,478
|
|
|
Accumulated other comprehensive loss
|
|
|
(8
|
)
|
|
(8
|
)
|
|
Treasury stock, at cost: common stock, 71,807,227 shares
|
|
|
(5,641
|
)
|
|
(5,641
|
)
|
|
|
|
|
|
|
|
|
|
|
Total stockholders' equity
|
|
|
11,793
|
|
|
11,793
|
|
|
|
|
|
|
|
Total short-term borrowings, long-term borrowings and stockholders' equity
|
|
$
|
104,335
|
|
$
|
107,327
|
|
|
|
|
|
|
|
S-11
The
financial data in the following table for the fiscal years ended November 30, 2007, November 30, 2006, November 30, 2005, November 30, 2004 and
November 30, 2003 has been derived from information contained in or incorporated by reference into our Annual Reports on Form 10-K. See "Where You Can Find More Information"
and "General Information."
Financial Highlights
|
|
Fiscal Years Ended November 30,
|
|
|
|
2007
|
|
2006
|
|
2005
|
|
2004
|
|
2003
|
|
|
|
(In millions, except common share data, financial ratios and other data)
|
|
Results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues, net of interest expense
|
|
$
|
5,945
|
|
$
|
9,227
|
|
$
|
7,411
|
|
$
|
6,813
|
|
$
|
5,994
|
|
|
Employee compensation and benefits
|
|
|
3,425
|
|
|
4,343
|
|
|
3,553
|
|
|
3,254
|
|
|
2,881
|
|
|
Non-compensation expenses
|
|
|
2,327
|
|
|
1,737
|
|
|
1,651
|
|
|
1,537
|
|
|
1,342
|
|
|
Total expenses
|
|
|
5,752
|
|
|
6,080
|
|
|
5,204
|
|
|
4,791
|
|
|
4,222
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
233
|
|
$
|
2,054
|
|
$
|
1,462
|
|
$
|
1,345
|
|
$
|
1,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income applicable to common shares
|
|
$
|
212
|
|
$
|
2,033
|
|
$
|
1,438
|
|
$
|
1,317
|
|
$
|
1,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Position:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets(1)
|
|
$
|
395,362
|
|
$
|
350,433
|
|
$
|
287,293
|
|
$
|
252,113
|
|
$
|
209,181
|
|
|
Long-term borrowings
|
|
$
|
68,538
|
|
$
|
54,570
|
|
$
|
43,490
|
|
$
|
36,843
|
|
$
|
29,430
|
|
|
Guaranteed Preferred Beneficial Interests in Company Subordinated Debt Securities(2)
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
563
|
|
|
Stockholders' equity
|
|
$
|
11,793
|
|
$
|
12,129
|
|
$
|
10,791
|
|
$
|
8,991
|
|
$
|
7,470
|
|
Common Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
$
|
1.68
|
|
$
|
15.79
|
|
$
|
11.42
|
|
$
|
10.88
|
|
$
|
9.44
|
|
|
Diluted earnings per share
|
|
$
|
1.52
|
|
$
|
14.27
|
|
$
|
10.31
|
|
$
|
9.76
|
|
$
|
8.52
|
|
|
Cash dividends declared per common share
|
|
$
|
1.28
|
|
$
|
1.12
|
|
$
|
1.00
|
|
$
|
0.85
|
|
$
|
0.74
|
|
|
Book value per common share
|
|
$
|
84.09
|
|
$
|
86.39
|
(3)
|
$
|
71.08
|
|
$
|
59.13
|
|
$
|
48.69
|
|
|
Common shares outstanding(4)
|
|
|
136,155,586
|
|
|
145,693,021
|
|
|
146,431,767
|
|
|
144,484,099
|
|
|
142,369,836
|
|
Financial Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average common equity
|
|
|
1.8
|
%
|
|
19.1
|
%
|
|
16.5
|
%
|
|
19.1
|
%
|
|
20.2
|
%
|
|
Profit margin(5)
|
|
|
3.2
|
%
|
|
34.1
|
%
|
|
29.8
|
%
|
|
29.7
|
%
|
|
29.6
|
%
|
Other Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets under management (in billions)
|
|
$
|
44.6
|
|
$
|
52.5
|
|
$
|
41.9
|
|
$
|
37.8
|
|
$
|
29.2
|
|
|
Average value-at-risk (in millions)
|
|
$
|
33.1
|
|
$
|
28.6
|
|
$
|
20.5
|
|
$
|
15.8
|
|
$
|
15.8
|
|
|
Employees (end of year)
|
|
|
14,153
|
|
|
13,566
|
|
|
11,843
|
|
|
10,961
|
|
|
10,532
|
|
-
(1)
-
As
of November 30, 2006, the Company elected, under FIN No. 39, "Offsetting Amounts Related to Certain Contracts," to net cash collateral received or paid against
its derivatives inventory, on a counterparty basis, provided that the legal right of offset exists. The Consolidated Statements of Financial Condition as of November 30, 2005, 2004, and 2003
have been adjusted to conform to the current year's presentation.
-
(2)
-
In
accordance with FIN No. 46 (R), the Company has deconsolidated Bear Stearns Capital Trust III effective beginning with the quarter ended
February 29, 2004. As a result, the Debentures issued by the Company to Bear Stearns Capital Trust III are included within long-term borrowings. The $263 million of Preferred
Securities issued by Capital Trust III is still outstanding, providing the funding for such Debentures. The Preferred Securities issued by Capital Trust III are no longer included in the
Company's Consolidated Statements of Financial Condition. As of November 30, 2003, Guaranteed Preferred Beneficial Interests in Company Subordinated Debt Securities consists of
$300 million of Preferred Securities issued by Bear Stearns Capital Trust II and $263 million of Preferred Securities issued by Bear Stearns Capital Trust III.
-
(3)
-
For
book value purposes, at November 30, 2006, common stockholders' equity was adjusted by $816 million and common stock outstanding was adjusted by 4.6 million
units, which represents stock-based compensation associated with fiscal 2006 awards that was reflected in stockholders' equity as of the grant date in December 2006, in accordance with
SFAS No. 123 (R), "Share-based Payment." In years prior to fiscal 2006, stock-based compensation granted in December was included in stockholders' equity at November year-end. The
Company changed the requisite service period associated with its 2007 stock-based compensation awards to align it with the vesting schedules. As a result, an adjustment to stockholders' equity was not
applicable.
-
(4)
-
Common
shares outstanding include units issued under certain stock compensation plans, which will be distributed as shares of common stock.
-
(5)
-
Represents
the ratio of income before provision for income taxes to revenues, net of interest expense.
S-12
DESCRIPTION OF THE NOTES
The following discussion of the terms of the Notes and the Indenture supplements the general terms and provisions of the debt securities contained in the
accompanying prospectus under the heading "Description of Debt Securities" and identifies any general terms and provisions described in the accompanying prospectus that will not apply to the Notes.
You
can find the definitions of certain capitalized terms used in this section under "Description of Debt Securities" in the accompanying prospectus. For purposes of this section only,
references to "we," "us" and "our" include only The Bear Stearns Companies Inc. and not its subsidiaries. We will issue the Notes under the Indenture, dated as of May 31, 1991, as
supplemented by the First Supplemental Indenture, dated January 29, 1998 (as supplemented, the "Indenture"), between us and The Bank of New York (formerly, JPMorgan Chase Bank, N.A., as
trustee) (the "Trustee").
The
terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended. A copy of the Indenture has
been filed as an exhibit to the Registration Statement and is available as set forth under "Where You Can Find More Information" and "General Information."
The
following description along with the description in the accompanying prospectus is a summary of the material provisions of the Indenture. It does not restate the Indenture in its
entirety. We urge you to read the Indenture because it, and not these descriptions, defines your rights as a holder of the Notes (a "Holder").
Brief Description of the Notes
The Notes will:
-
-
each
be a single series of our debt securities under the Indenture;
-
-
be
our unsecured senior debt;
-
-
rank
equally with all of our other unsecured and unsubordinated debt;
-
-
only
be redeemable before their maturity if certain events involving US taxation occur as discussed under "Redemption Upon Certain Tax Events";
-
-
be
subject to defeasance in compliance with the Indenture, see "Description of Debt SecuritiesDefeasance" in the accompanying prospectus; and
-
-
be
issued in denominations of $1,000 increased in multiples of $1,000.
Because
we are a holding company, the Notes will be effectively subordinated to the claims of creditors of our subsidiaries. At November 30, 2007:
-
-
we
had outstanding (on an unconsolidated basis) approximately $84.3 billion of debt and other obligations, including approximately $77.3 billion of unsecured
senior debt and senior obligations and $7.0 billion of unsecured inter-company debt; and
-
-
our
subsidiaries had outstanding (after elimination of inter-company items) approximately $306.2 billion of senior debt and other senior obligations (including
$102.4 billion related to securities sold under repurchase agreements, $83.2 billion related to payables to customers, $42.5 billion related to financial instruments sold, but not
yet purchased, and $78.1 billion of other liabilities, including $21.7 billion of debt).
You
should refer to "Certain US Federal Income Tax Considerations" for a discussion of certain federal income tax considerations to you as a Holder.
S-13
Principal, Maturity and Interest
Notes in the aggregate principal amount of U.S. $3,000,000,000 will be issued in the offering and will mature on February 1, 2018. We may, without your
consent, issue additional notes having the same ranking and the same interest rate, maturity and other terms as the Notes. Any of these additional notes, together with the Notes, will constitute a
single series of debt securities under the Indenture. However, no additional notes may be issued if an Event of Default has occurred and is continuing with respect to the Notes.
Interest
on the Notes will accrue at the rate of 7.25% per annum and will be paid every six months on each August 1 and February 1, beginning August 1, 2008 (which
first payment includes interest from and including the date of issuance), to the persons who are registered Holders at the close of business on the July 1 and January 1 immediately
before the applicable interest payment date. If an interest payment date is not a Business Day, the interest payment will be made on the next Business Day, and the Holder is not entitled to any
additional interest for the delay.
Interest
on the Notes will accrue from the most recent date to which interest has been paid, or if no interest has been paid, from and including February 1, 2008. Interest will be
computed on the basis of a 360-day year of twelve 30-day months. The Notes will not be entitled to the benefit of any mandatory sinking fund.
The
following terms have the following meanings:
"Business
Day" means any day that (a) is not a Saturday or Sunday, (b) in New York, New York, is not a day on which banking institutions generally are authorized or
required by law or executive order to close, and (c) is also a London Banking Day.
"London
Banking Day" means any day on which dealings in deposits in US dollars are transacted in the London interbank market.
All
percentages resulting from any calculations on the Notes will be rounded, if necessary, to the nearest one hundred-thousandth of a percent, with five one-millionths of a
percent being rounded upward (for example, 6.876545% (or .06876545) being rounded to 6.87655% (or .0687655) and 6.876544% (or .06876544) being rounded to 6.87654% or (.0687654)), and all US dollar
amounts used in or resulting from such calculation will be rounded to the nearest cent (with one-half cent being rounded upward).
The
interest rate on the Notes will not be higher than the maximum rate permitted by New York law, as modified by federal law. Current New York law provides a maximum interest rate of
25% per annum. This limit does not apply to Notes with principal amounts of more than $2,500,000.
Principal Paying Agent, Paying Agents, Registrar and Transfer Agent
The Bank of New York (formerly, JPMorgan Chase Bank, N.A., as trustee), the Trustee under the Indenture, will initially act as the principal office or agency
where Notes may be presented for payment (the "Principal Paying Agent"). We have also agreed that as long as the Notes are listed on the London Stock Exchange and its rules require, we will appoint
and maintain a transfer agent and paying agent in London. We have appointed The Bank of New York (formerly, JPMorgan Chase Bank, N.A.) to serve as registrar (the "Registrar") under the Indenture. The
terms "paying agent" and "transfer agent" include the Principal Paying Agent and the Registrar and any additional or successor agents appointed by us. The names of the initial Paying Agents and
Transfer Agents and their initial specified offices are set out below.
S-14
Methods of Receiving Payments on the Notes
The Principal Paying Agent will pay interest to DTC, or its nominee, by wire transfer of same day funds for credit to the accounts of DTC's participants and
subsequent distribution to the beneficial owners of the Notes, or, if the Notes are issued in certificated form under the circumstances described below in "Book-Entry,
Delivery and FormDefinitive Notes," the Principal Paying Agent will pay the registered Holder of the Notes against presentation and surrender by such Holder of its Note to any paying
agent, by US dollar check drawn on a bank in New York City and mailed on the business day immediately before the interest due date.
Payment of Additional Amounts
Subject to the various exceptions and limitations set forth below, we will pay as additional interest or principal, as the case may be, on the Notes, all such
additional amounts that are necessary in order that the net payment by us or a paying agent of the principal of and interest on the Notes to a person that is not a "US person" for US federal income
tax purposes, after deduction for any present or future tax, assessment or governmental charge of the United States or a political subdivision or taxing authority thereof or therein, imposed by
withholding with respect to the payment, will not be less than the amount provided in the Notes to be then due and payable. However, the obligation to pay additional amounts shall not apply:
-
(1)
-
to
a tax, assessment or governmental charge that is imposed or withheld solely by reason of the Holder, or a fiduciary, settlor, beneficiary, member or shareholder of the Holder, if
the Holder is an estate, trust, partnership or corporation for federal income tax purposes, or a person holding a power over such an estate, trust, partnership or corporation, or a person holding a
power over such an estate or trust administered by a fiduciary holder, being considered as:
-
(a)
-
being
or having been present or engaged in a trade or business in the United States or having or having had a permanent establishment in the United States;
-
(b)
-
having
a current or former connection with the United States, including a connection as a citizen or resident thereof;
-
(c)
-
being
or having been a domestic personal holding company, a passive foreign investment company or a controlled foreign corporation with respect to the United States or a corporation
that has accumulated earnings to avoid United States federal income tax;
-
(d)
-
being
or having been a private foundation or other tax-exempt organization;
-
(e)
-
being
or having been a "10-percent shareholder" of the Company as defined in Section 871(h)(3) of the United States Internal Revenue Code or any successor
provision; or
-
(f)
-
being
a bank receiving payments on an extension of credit made pursuant to a loan agreement entered into in the ordinary course of its trade or business;
-
(2)
-
to
any Holder that is not the sole beneficial owner of the Notes, or a portion thereof, or that is a fiduciary or partnership, but only to the extent that a beneficiary or settlor
with respect to the fiduciary, a beneficial owner or member of the partnership would not have been entitled to the payment of an additional amount had the beneficiary, settlor, beneficial owner or
member received directly its beneficial or distributive share of the payment;
-
(3)
-
to
a tax, assessment or governmental charge that is imposed or withheld solely by reason of the failure of the Holder or any other person to comply with certification, identification
or information reporting requirements concerning the nationality, residence, identity or
S-15
connection
with the United States of the Holder or beneficial owner of such Note, if compliance is required by statute or regulation of the United States or of any political subdivision or taxing
authority thereof or therein, or by an applicable income tax treaty to which the United States is a party as a precondition to exemption from such tax, assessment or other governmental charge;
-
(4)
-
to
a tax, assessment or governmental charge that is imposed otherwise than by withholding by us or a paying agent from payments on or in respect of a Note;
-
(5)
-
to
a tax, assessment or governmental charge that is imposed or withheld by reason of the presentation by or on behalf of the beneficial owner of any Note for payment on a date more
than 15 days after the payment becomes due or is duly provided for, whichever occurs later;
-
(6)
-
to
an estate, inheritance, gift, sales, excise, transfer, wealth or personal property tax or a similar tax, assessment or governmental charge;
-
(7)
-
to
any tax, assessment or other governmental charge required to be withheld by any paying agent from any payment of principal of or interest on any Note, if such payment can be made
without such withholding by any other paying agent; or
-
(8)
-
in
the case of any combination of any of the above items;
nor
shall additional amounts be paid with respect to any payment on a Note to a Holder who is a fiduciary or partnership or other than the sole beneficial owner of such payment to the extent such
payment would be required by the laws of the United States (or any political subdivision thereof) to be included in the income, for tax purposes, of a beneficiary or settlor with respect to such
fiduciary or a member of such partnership or a beneficial owner who would not have been entitled to the additional amounts had such beneficiary, settlor, member or beneficial owner held its interest
in the Note directly.
The
Notes are subject in all cases to any tax, fiscal or other law or regulation or administrative or judicial interpretation that is applicable to them. Except as specifically provided
under this heading "Payment of Additional Amounts" and under the heading "Redemption Upon Certain Tax Events," we are not required to make any payments with respect to any
tax, assessment or governmental charge imposed by any government or a political subdivision or taxing authority thereof or therein.
Redemption Upon Certain Tax Events
If,
(a) as
a result of any change in, or amendment to, the laws (or any regulations or rulings promulgated thereunder) of the United States (or any political subdivision or
taxing authority thereof or therein), or any change in, or amendment to, the official position regarding the application or interpretation of such laws, regulations or rulings, which is announced or
becomes effective on or after the date of this prospectus supplement, we determine that we will be or will become obligated to pay additional amounts as described in this prospectus supplement under
the heading "Payment of Additional Amounts"; or
(b) any
act is taken by a taxing authority of the United States on or after the date of this prospectus supplement, whether such act is taken with respect to us or any
affiliate, that results in a substantial probability that we will or may be required to pay such additional amounts;
then
we may, at our option, redeem, as a whole, but not in part, the Notes on any Interest Payment Date on not less than 30 nor more than 60 days' prior notice, at a redemption price equal to
100% of their principal amount, together with interest accrued thereon to the date fixed for redemption; provided that we determine, in our business judgment, that the obligation to pay such
additional
S-16
amounts
cannot be avoided by the use of reasonable measures available to us, not including substitution of the obligor under the Notes. No redemption pursuant to clause (b) above may be made
unless we have delivered to the Trustee a written opinion of independent legal counsel of recognized legal standing to the effect that an act taken by a taxing authority of the United States has
resulted or will result in a substantial probability that we will or may be required to pay the additional amounts described herein under the heading "Payment of Additional Amounts" and
that we are therefore entitled to redeem the Notes pursuant to their terms.
Unclaimed Amounts
The Indenture provides that any payments in respect of principal and any interest remaining that are unclaimed for two years after their due date will be paid to
us, and the Holder of the Note will after that time look, as an unsecured creditor, only to us for payment of those amounts.
Notices
All notices regarding the Notes will be valid if published (i) in a leading English language daily newspaper of general circulation in London, and
(ii) in a leading English language daily newspaper of general circulation in New York. However, it is expected that that publication will be made in (i) the
Financial Times
or another daily
newspaper in London approved by the Trustee or, if this is not possible, in one other English language daily newspaper
approved by the Trustee with general circulation in Europe, and (ii)
The Wall Street Journal
(Eastern Edition) in New York. Any notice will be
deemed to have been given on the date of the first publication in all the relevant newspapers.
Until
the time any definitive Notes are issued under the circumstances described below in "Book-Entry, Delivery and FormDefinitive Notes," and as
long as the fully registered global notes (the "Global Securities") are held in their entirety on behalf of Euroclear and/or Clearstream and DTC, publication in the specified newspapers may be
replaced with the delivery of the relevant notice to Euroclear and/or Clearstream and DTC for communication by them to the Holders of the Notes. Any notice shall be deemed to have been given to the
Holders of the Notes on the seventh day after the day on which the notice was given to Euroclear and/or Clearstream or DTC.
Book-Entry, Delivery and Form
The Notes will be issued only in book-entry form. This means that we will not issue certificates to you. Instead, the Notes will be issued in the form
of one or more Global Securities, which will be deposited with a custodian. The Notes will be registered in the name of Cede & Co., as the nominee for DTC. You will not receive a definitive
note representing your interest. This form will be referred to as "book-entry only."
You
may elect to hold your interests in the Global Securities either through DTC (in the United States) or through Clearstream or Euroclear (in Europe). Interests will be held on behalf
of Clearstream and Euroclear participants on the books of their respective depositaries.
Beneficial interests in the Global Securities will be held in denominations of $1,000 increased in multiples of $1,000. Except as set forth below, the Global
Securities may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its nominee.
DTC has informed us that DTC is:
-
-
a
limited purpose trust company organized under the New York Banking Law;
S-17
-
-
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" under Section 17A of the Securities Exchange Act of 1934.
DTC
holds securities that its participants ("DTC Participants") deposit with DTC. DTC Participants include both United States and non-United States securities brokers and
dealers, banks, trust companies, clearing corporations and certain other organizations. DTC also facilitates the post trade settlement among these DTC Participants of sales and other securities
transactions in deposited securities through electronic computerized book-entry transfers and pledges between Participants, which eliminates the need for physical movement of securities
certificates.
DTC
is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of DTC Participants and members of the National
Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, also subsidiaries of DTCC, as well as by The New York
Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both United
States and non-United States securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a DTC
Participant, either directly or indirectly. The DTC rules applicable to its Participants are on file with the SEC.
A
further description of DTC and DTC's procedures with respect to the Global Securities is set forth in the accompanying prospectus under "Book-Entry Procedures and
SettlementDepositories for Global Securities" and "Special Considerations for Global Securities."
Clearstream is incorporated under the laws of Luxembourg as a professional depositary. Clearstream holds securities for its participating organizations
("Clearstream Participants") and facilitates the clearance and settlement of securities transactions between Clearstream Participants through electronic book-entry charges in accounts of
Clearstream Participants, which eliminates the need for physical movement of certificates. Clearstream provides to Clearstream Participants, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities and securities lending and borrowing.
Conducting
business in the domestic markets of several countries as a professional depositary, Clearstream is regulated by the Luxembourg Monetary Institute. Clearstream Participants are
recognized financial institutions around the world, including underwriters, securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations and may
include some of the Underwriters. Indirect access to Clearstream is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Clearstream Participant either directly or indirectly.
Distributions
with respect to the Notes that are held beneficially through Clearstream will be credited to cash accounts of Clearstream Participants in accordance with its rules and
procedures, and to the extent received by the US depositary for Clearstream.
Euroclear
was created in 1968 to hold securities for its participants ("Euroclear Participants") and to clear and settle transactions between Euroclear Participants through simultaneous
electronic book-entry delivery against payment, thereby eliminating the need for physical movement of certificates and any risk from lack of simultaneous transfers of securities and cash.
The Euroclear System is owned by Euroclear Clearance System Public Limited Company ("ECSplc") and operated through a license
S-18
agreement
by Euroclear Bank S.A./N.V., a bank incorporated under the laws of the Kingdom of Belgium (the "Euroclear Operator").
The
Euroclear Operator holds securities and book-entry interests in securities for participating organizations and facilitates the clearance and settlement of securities
transactions between Euroclear Participants, and between Euroclear Participants and participants of certain other securities intermediaries through electronic book-entry changes in
accounts of such participants or other securities intermediaries.
The
Euroclear Operator provides Euroclear Participants, among other things, with safekeeping, administration, clearance and settlement, securities lending and borrowing and related
services.
Non-participants
of Euroclear may hold and transfer book-entry interests in securities through accounts with a direct Euroclear Participant or any other
securities intermediary that holds a book-entry interest in securities through one or more securities intermediaries standing between such other securities intermediary and the Euroclear
Operator.
The
Euroclear Operator is regulated and examined by the Belgian Banking and Finance Commission and the National Bank of Belgium. Securities clearance accounts and cash accounts with the
Euroclear Operator are governed by the Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of the Euroclear System and applicable Belgian law (collectively, the
"Euroclear Terms and Conditions"). The Euroclear Terms and Conditions govern transfers of securities and cash within Euroclear, withdrawals of securities and cash from Euroclear, and receipts of
payments with respect to securities in Euroclear.
All
securities in Euroclear are held on a fungible basis without attribution of specific certificates to specific securities clearance accounts. The Euroclear Operator acts under the
Euroclear Terms and Conditions only on behalf of Euroclear Participants and has no record of or relationship with persons holding through Euroclear Participants.
Distributions
with respect to Notes held beneficially through Euroclear will be credited to the cash accounts of Euroclear Participants in accordance with the Euroclear Terms and
Conditions, to the extent received by the US depositary for Euroclear.
Definitive Notes may be issued upon:
(i) Euroclear
and/or Clearstream being closed for a continuous period of 14 days (other than by reason of public holidays); and/or
(ii) in
the limited circumstances set forth in "Book-Entry Procedures and SettlementCertificates in Registered Form" in the accompanying prospectus.
If
definitive Notes are issued, payment of principal of and interest on the Notes will be made as set forth under "Methods of Receiving Payments on the Notes" above.
Definitive Notes can be transferred by presentation for registration to the Registrar or other transfer agent at any of their specified offices and must be duly endorsed by the holder or his attorney
duly authorized in writing, or accompanied by a written instrument or instruments of transfer in form satisfactory to us or the Trustee duly executed by the holder or his attorney duly authorized in
writing. We may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any exchange or registration of transfer of definitive Notes.
For
the purposes of this description, "business day" means any day, other than a Saturday or Sunday, that is not a day on which banks are authorized or required by law or regulation to
close in New York and, where definitive Notes have been issued, the relevant place of presentation.
S-19
Initial settlement for the Notes will be made in same day funds. Secondary market trading and transfers within DTC, Clearstream or Euroclear, as the case may be,
will be made in accordance with the usual rules and operating procedures of those systems. Secondary market trading between DTC Participants will occur in the ordinary way in accordance with DTC rules
and will be settled in same day funds using DTC's Same-Day Funds Settlement System. Secondary market trading between Clearstream Participants and/or Euroclear Participants will occur in
the ordinary way in accordance with the applicable rules and operating procedures of Clearstream and Euroclear and will be settled using the procedures applicable to conventional eurobonds in
registered form in same day funds.
Since
the purchaser determines the place of delivery, it is important to establish at the time of the trade where both the purchaser's and seller's accounts are located to ensure that
settlement can be made on the desired value date.
Trading between DTC Purchasers and Sellers.
Secondary market trading between DTC Participants will be settled using the
procedures applicable to global bonds in same-day funds.
Trading between Euroclear and/or Clearstream Participants.
Secondary market trading between Euroclear Participants and/or
Clearstream Participants will be settled using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC Seller and Euroclear or Clearstream Purchaser.
When Notes are to be transferred from the account of a DTC
Participant to the account of a Euroclear or Clearstream Participant, the purchaser will send instructions to Euroclear or Clearstream through a Euroclear or Clearstream Participant, as the case may
be, at least one business day before settlement. Euroclear or Clearstream will instruct its respective depositary to receive those Notes against payment. Payment for the Notes will then be made by the
depositary to the DTC Participant's account against delivery of the Notes. After settlement has been completed, the Notes will be credited to the respective clearing systems, and by the clearing
system, in accordance with its usual procedures, to the Euroclear or Clearstream Participant\'s account. The securities credit will appear the next day (European time) and the cash debit will be
back-valued to the value date, which would be the preceding day when
settlement occurred in New York. If settlement is not completed on the intended value date and the trade fails, the Euroclear or Clearstream cash debit will be valued as of the actual settlement date.
Euroclear
and Clearstream Participants will need to make available to the respective clearing systems the funds necessary to process same-day funds settlement. The most
direct means of doing so is to preposition funds for settlement, either from cash on hand or existing lines of credit. However, under this approach, DTC Participants may take on credit exposure to
Euroclear and Clearstream until the interests in the Global Security are credited to their accounts one day later.
As
an alternative, if Euroclear or Clearstream has extended a line of credit to a Euroclear or Clearstream Participant, as the case may be, that Participant may elect not to preposition
funds and allow that credit line to be drawn upon to finance settlement. Under this procedure, Euroclear or Clearstream Participants purchasing Notes would incur overdraft charges for one day,
assuming they cleared the overdraft when the Notes were credited to their accounts. However, interest on the Notes would accrue from the value date. Therefore, in many cases the investment income on
Notes earned during that one-day period may substantially reduce or offset the amount of such overdraft charges, although this result will depend on each Participant's particular cost of
funds.
Since
the settlement occurs during New York business hours, DTC Participants can employ their usual procedures for transferring global bonds to the respective depositaries of Euroclear
or Clearstream for the benefit of Euroclear or Clearstream Participants. The sale proceeds will be
S-20
available
to the DTC seller on the settlement date. Thus, to the DTC seller, a cross-market sale transaction will settle no differently than a trade between two DTC Participants.
Trading between Euroclear or Clearstream Seller and DTC Purchaser.
Because the time zone difference operates in their favor,
Euroclear and Clearstream Participants may employ their customary procedures for transactions in which Notes are to be transferred by the respective clearing system, through its respective depositary,
to a DTC Participant. The seller will send instructions to Euroclear or Clearstream through a Euroclear or Clearstream Participant at least one business day before settlement. In these cases,
Euroclear or Clearstream will instruct its respective depositary to credit the Notes to the DTC Participant's account against payment. The payment will then be reflected in the account of the
Euroclear or Clearstream Participant on the following day, and receipt of the cash proceeds in the Euroclear or Clearstream Participant's account would be back-valued to the value date
(which would be the preceding day, when settlement occurred in New York).
If
the Euroclear or Clearstream Participant has a line of credit in its respective clearing system and elects to be in a debt position in anticipation of receipt of the sale proceeds in
its account, the back-valuation may substantially reduce or offset any overdraft charges incurred over that one-day period. If settlement is not completed on the intended value
date (that is,
the trade fails), receipt of the cash proceeds in the Euroclear or Clearstream Participant's account would instead be valued as of the actual settlement date.
Finally,
day traders that use Euroclear or Clearstream to purchase Notes from DTC Participants for delivery to Euroclear or Clearstream Participants should note that these trades
automatically fail on the sale side unless some form of affirmative action is taken. At least three techniques should be readily available to eliminate this potential problem:
(i) borrowing
through Euroclear or Clearstream for one day (until the purchase side of the day trade is reflected in their Euroclear or Clearstream accounts) in accordance
with the clearing system's customary procedures;
(ii) borrowing
the Notes in the United States from a DTC Participant no later than one day before settlement, which would give the Notes sufficient time to be reflected in
their Euroclear or Clearstream account in order to settle the sale side of the trade; or
(iii) staggering
the value date for the buy and sell sides of the trade so that the value date for the purchase from the DTC Participant is at least one day before the value
date for the sale to the Euroclear or Clearstream Participant.
Although
DTC, Clearstream and Euroclear have agreed to the foregoing procedures in order to facilitate transfers of Notes among participants of DTC, Clearstream and Euroclear, they are
not obligated to perform or continue to perform these procedures. As a result, these procedures may be discontinued at any time.
The
information in this section concerning DTC, Clearstream, Euroclear and their book-entry systems has been obtained from sources that we believe to be accurate, but we
assume no responsibility for the accuracy of this information. We are not responsible for DTC's, Clearstream's, Euroclear's or their participants' performance of their respective obligations, as they
are described above or under the rules and procedures governing their respective operations.
S-21
CERTAIN US FEDERAL INCOME TAX CONSIDERATIONS
In the opinion of Cadwalader, Wickersham & Taft LLP, special tax counsel to us, the following discussion summarizes certain US federal income tax
consequences of the purchase, beneficial ownership and disposition of Notes. Except as provided below under "Federal Income Tax Consequences to Non-US Holders," this summary
deals only with a beneficial owner of a Note that is:
-
-
a
citizen or resident of the United States;
-
-
a
corporation (or other entity that is treated as a corporation for US federal tax purposes) created or organized in or under the laws of the United States or any State
thereof (including the District of Columbia);
-
-
an
estate the income of which is subject to US federal income taxation regardless of its source; or
-
-
a
trust with respect to which a court within the United States is able to exercise primary supervision over its administration and one or more United States persons, within
the meaning of the Internal Revenue Code of 1986, as amended (the "Code"), have the authority to control all of its substantial decisions (each, a "US Holder").
An
individual may, subject to certain exceptions, be deemed to be a resident of the United States for US federal income tax purposes by reason of being present in the United States for
at least 31 days in the calendar year and for an aggregate of at least 183 days during a three-year period ending in the current calendar year (counting for such purposes all
of the days present in the current year, one-third of the days present in the immediately preceding year, and one-sixth of the days present in the second preceding year).
This
discussion is based on interpretations of the Code, US Treasury regulations issued thereunder, and rulings, decisions and administrative pronouncements currently in effect (or in
some cases proposed), all of which are subject to change. Any such change may be applied retroactively and may adversely affect the US federal income tax consequences described herein. This summary
addresses only US Holders that purchase Notes at initial issuance and beneficially own such Notes as capital assets and not as part of a "straddle," "hedge," "synthetic security" or "conversion
transaction" for US federal income tax purposes, or as part of some other integrated investment. This summary does not discuss all of the tax consequences that may be relevant to particular investors
or to investors subject to special treatment under the US federal income tax laws (such as banks, thrifts, or other financial institutions; insurance companies; securities dealers or brokers, or
traders in securities electing mark-to-market treatment; regulated investment companies; real estate investment trusts; small business investment companies; S corporations;
partnerships or other entities treated as partnerships for US federal tax purposes; investors whose functional currency is not the US dollar; certain former citizens or residents of the United States;
persons subject to the alternative minimum tax; retirement plans or other tax-exempt entities, or persons holding the Notes in tax-deferred or tax-advantaged
accounts; or "controlled foreign corporations" or "passive foreign investments companies" as defined for US federal income tax purposes). This summary also does not address the tax consequences to
shareholders, or other equity holders in, or beneficiaries of, a holder, or any state, local or foreign tax consequences of the purchase, ownership or disposition of the Notes. Accordingly,
prospective investors are urged to consult their tax advisors with respect to the federal, state and local tax consequences of investing in the Notes, as well as any consequences arising under the
laws of any other taxing jurisdiction to which they may be subject.
PROSPECTIVE
PURCHASERS OF NOTES SHOULD CONSULT THEIR TAX ADVISORS AS TO THE FEDERAL, STATE, LOCAL, AND OTHER TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF NOTES.
S-22
Federal Income Tax Consequences to US Holders
Stated interest on the Notes will be taxable to a US Holder as ordinary interest income as the interest accrues or is paid (in accordance with the US Holder's
method of tax accounting).
Upon the sale, exchange, retirement or other taxable disposition of a Note, a US Holder will recognize gain or loss equal to the difference between the amount
received (other than amounts in respect of accrued and unpaid interest, which will be taxable as such) and the adjusted tax basis of the Note. A US Holder's tax basis in a Note will be, in general,
such US Holder's cost therefor. Gain or loss realized on the sale, exchange or retirement of a Note generally will be capital gain or loss, and will be long-term capital gain or loss if,
at the time of such sale, exchange or retirement, the Note had been held for more than one year. Long term capital gain of non corporate taxpayers from the maturity, sale, exchange or other
disposition of a note may be eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations.
Federal Income Tax Consequences to Non-US Holders
As used in this discussion, the term "Non-US Holder" means a beneficial owner of a Note that is, for US federal income tax purposes:
-
-
a
nonresident alien individual,
-
-
a
foreign corporation,
-
-
an
estate whose income is not subject to US federal income tax on a net income basis, or
-
-
a
trust if no court within the United States is able to exercise primary supervision over its administration or if no United States persons, within the meaning of the Code,
have the authority to control all of its substantial decisions.
Treatment of Interest
Interest payments on the Notes to Non-US Holders will not be subject to US federal income or withholding tax if the following conditions are
satisfied:
-
-
the
Non-US Holder does not actually or constructively own 10% or more of the total combined voting power of all classes of our stock entitled to vote,
-
-
the
Non-US Holder is not a controlled foreign corporation for US federal income tax purposes that is related to us through actual or constructive ownership,
-
-
the
Non-US Holder is not a bank receiving interest on a loan in the ordinary course of its trade or business, and
-
-
the
payments are not effectively connected with a trade or business conducted by the Non-US Holder in the United States and either (a) the
Non-US Holder provides to us a correct, complete and executed IRS Form W-8BEN, Form W-8EXP or Form W-8IMY (or successor form) with
all of the attachments required by the IRS, or (b) the Non-US Holder holds its Note through a qualified intermediary (generally a foreign financial institution or clearing
organization or a non-US branch or office of a US financial institution or clearing organization that is a party to a withholding agreement with the IRS) which has provided to us an IRS
Form W-8IMY stating that it is a qualified intermediary and has received documentation upon which it can rely to treat the payment as made to a foreign person.
S-23
If
any of the above conditions are not satisfied, interest on the Notes will be subject to a 30% withholding tax when paid, unless an income tax treaty reduces or eliminates the tax or
the interest is effectively connected with the conduct of a US trade or business and the Non-US Holder provides a correct, complete and executed IRS Form W-8ECI. In the
latter event, Non-US Holders generally will be subject to US federal income tax with respect to all income from the Notes in the same manner as US Holders, as described above, and
Non-US Holders that are corporations could be subject to a branch profits tax on such income as well, in each case unless an income tax treaty reduces or eliminates the tax.
In general, gain realized on the sale, exchange or retirement of a Note by a Non-US Holder will not be subject to US federal income tax, unless:
A Note held by an individual who at death is a Non-US Holder will not be includible in the Non-US Holder's gross estate for US federal
estate tax purposes if none of the payments on the Notes to the Non-US Holder would have been subject to US federal income or withholding tax at the time of death under the tests described
above.
Information Reporting and Backup Withholding
Information reporting will apply to certain payments on a Note and proceeds of the sale of a Note held by a US Holder that is not an exempt recipient (such as a
corporation). Backup withholding may apply to payments made to a US Holder if (a) the US Holder has failed to provide its correct taxpayer identification number on IRS
Form W-9, (b) we have been notified by the IRS of an underreporting by the US Holder (underreporting generally refers to a determination by the IRS that a payee has failed to
include in income on its tax return any reportable dividend and interest payments required to be shown on a tax return for a taxable year), or (c) we have been notified by the IRS that the tax
identification number provided to the IRS on an information return does not match IRS records or that the number was not on the information return.
Backup
withholding will not be required with respect to interest paid to Non-US Holders, so long as we have received from the Non-US Holder a correct, complete
and executed IRS Form W-8BEN, W-8ECI, W-8EXP or Form W-8IMY with all of the attachments required by the IRS. Interest paid to a
Non-US Holder will be reported on IRS Form 1042-S which is filed with the IRS and sent to Non-US Holders.
Information
reporting and backup withholding may apply to the proceeds of a sale of a Note by a Non-US Holder made within the United States or conducted through certain US
related financial intermediaries, unless we receive one of the tax forms described above.
Backup
withholding is not an additional tax and may be refunded (or credited against your US federal income tax liability, if any). The information reporting requirements may apply
regardless of
S-24
whether
withholding is required. For Non-US Holders, copies of the information returns reporting such interest and withholding also may be made available to the tax authorities in the
country in which a Non-US Holder is a resident under the provisions of an applicable income tax treaty or agreement.
The preceding discussion is only a summary of certain of the tax implications of an investment in Notes. Prospective investors are urged to consult with their own
tax advisors prior to investing to determine the tax implications of such investment in light of each such investor's particular circumstances.
State, Local and Foreign Taxes
US and Non-US Holders should consult their tax advisors with respect to state, local and foreign tax considerations relevant to an investment in
Notes.
S-25
EU DIRECTIVE ON THE TAXATION OF SAVINGS INCOME
The EU has adopted a Directive (2003/48/EC) regarding the taxation of savings income. From 1 July, 2005, Member States are required to provide to the tax
authorities of other Member States details of payments of interest and other similar income paid by a person to an individual in another Member State, except that Austria, Belgium and Luxembourg
instead impose a withholding system for a transitional period (unless during such period they elect otherwise). A number of countries and territories have adopted similar measures.
CERTAIN ERISA CONSIDERATIONS
Section 4975 of the Code prohibits the borrowing of money, the sale of property and certain other transactions involving the assets of plans that are
qualified under the Code ("Qualified Plans") or individual retirement accounts ("IRAs") and persons who have certain specified relationships to them. Section 406 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), prohibits similar transactions involving employee benefit plans that are subject to ERISA ("ERISA Plans"). Qualified Plans, IRAs and ERISA Plans are
referred to as "Plans."
Persons
who have such specified relationships are referred to as "parties in interest" under ERISA and as "disqualified persons" under the Code. "Parties in interest" and "disqualified
persons" encompass a wide range of persons, including any fiduciary (for example, an investment manager, trustee or custodian) of a Plan, any person providing services (for example, a broker) to a
Plan, the Plan sponsor, an employee organization any of whose members are covered by the Plan, and certain persons related to or affiliated with any of the foregoing.
The
purchase and/or holding of Notes by a Plan with respect to which we, Bear Stearns and/or certain of our affiliates is a fiduciary and/or a service provider (or otherwise is a "party
in interest" or "disqualified person") would constitute or result in a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code, unless such the Notes are acquired
or held pursuant to and in accordance with an applicable statutory or administrative exemption. Each of us, Bear Stearns and BSSC is considered a "disqualified person" under the Code or a "party in
interest" under ERISA with respect to many Plans, although neither we nor Bear Stearns can be a "party in interest" to any IRA other than certain employer-sponsored IRAs, as only employer-sponsored
IRAs are covered by ERISA.
Applicable
administrative exemptions may include certain prohibited transaction class exemptions (for example, Prohibited Transaction Class Exemption ("PTCE") 84-14 relating
to qualified professional asset managers, PTCE 96-23 relating to certain in-house asset managers, PTCE 91-38 relating to bank collective investment funds, PTCE
90-1 relating to insurance company separate accounts and PTCE 95-60 relating to insurance company general accounts).
It
should also be noted that the recently enacted Pension Protection Act of 2006 contains a statutory exemption from the prohibited transaction provisions of Section 406 of ERISA
and Section 4975 of the Code for transactions involving certain parties in interest or disqualified persons who are such merely because they are a service provider to a Plan, or because they
are related to a service provider. Generally, the new exemption would be applicable if the party to the transaction with the Plan is a party in interest or a disqualified person to the Plan but is not
(i) an employer, (ii) a fiduciary who has or exercises any discretionary authority or control with respect to the investment of the Plan assets involved in the transaction,
(iii) a fiduciary who renders investment advice (within the meaning of ERISA and Section 4975 of the Code) with respect to those assets, or (iv) an affiliate of (i),
(ii) or (iii). Any Plan fiduciary relying on this statutory exemption (Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Code) and purchasing Notes on behalf of a Plan
will be deemed to represent that (x) the fiduciary has made a good faith determination that the Plan is paying no more than, and is receiving no less than, adequate consideration in connection
with the transaction and (y) neither we, Bear Stearns, nor any of our affiliates directly or indirectly exercises any discretionary
S-26
authority
or control or renders investment advice (as defined above) with respect to the assets of the Plan which such fiduciary is using to purchase the Notes, both of which are necessary
preconditions to utilizing this exemption. Any purchaser that is a Plan is encouraged to consult with counsel regarding the application of any exemption.
A
fiduciary who causes a Plan to engage, directly or indirectly, in a non-exempt prohibited transaction may be subject to a penalty under ERISA, and may be liable for any
losses to the Plan resulting from such transaction. Code Section 4975 generally imposes an excise tax on disqualified persons who engage, directly or indirectly, in non-exempt
transactions with the assets of Plans subject to such Section. If an IRA engages in a prohibited transaction, the assets of the IRA are deemed to have been distributed to the IRA beneficiaries.
In
accordance with ERISA's general fiduciary requirements, a fiduciary with respect to any ERISA Plan who is considering the purchase of Notes on behalf of such plan should consider the
foregoing information and the information set forth herein and any applicable pricing supplement, and should determine whether such purchase is permitted under the governing plan document and is
prudent and appropriate for the ERISA Plan in view of its overall investment policy and the composition and diversification of its portfolio. Fiduciaries of Plans established with, or for which
services are provided by, us, Bear Stearns, and/or certain of our affiliates should consult with counsel before making any acquisition. Each purchaser of any Notes, the assets of which constitute the
assets of one or more Plans, and each fiduciary that directs such purchaser with respect to the purchase or holding of such Notes, will be deemed to represent that the purchase, holding and
disposition of the Notes does not
and will not constitute a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code for which an exemption is not available.
Certain
employee benefit plans, such as governmental plans (as defined in Section 3(32) of ERISA) and, if no election has been made under Section 410(d) of the Code, church
plans (as defined in Section 3(33) of ERISA), are not subject to Section 406 of ERISA or Section 4975 of the Code. However, such plans may be subject to the provisions of
applicable federal, state or local law ("Similar Law") similar to the foregoing provisions of ERISA or the Code. Fiduciaries of such plans ("Similar Law Plans") should consider applicable Similar Law
when investing in the Notes. Each fiduciary of a Similar Law Plan will be deemed to represent that the Similar Law Plan's acquisition and holding of the Notes will not result in a
non-exempt violation of applicable Similar Law.
The
sale of any Note to a Plan or a Similar Law Plan is in no respect a representation by us or any of our affiliates that such an investment meets all relevant legal requirements with
respect to investments by Plans or Similar Law Plans generally or any particular Plan or Similar Law Plan, or that such an investment is appropriate for a Plan or a Similar Law Plan generally or any
particular Plan or Similar Law Plan.
S-27
UNDERWRITING
Subject to the terms and conditions set forth in underwriting agreements dated January 29, 2008 (the "Underwriting Agreement") between us and the
Underwriters named below, we have agreed to sell to each of the Underwriters, and each of the Underwriters has severally, and not jointly, agreed to purchase from us, the aggregate principal amount of
Notes set forth opposite its name below.
Underwriter
|
|
Principal
Amount
|
Bear, Stearns & Co. Inc.
|
|
$
|
1,140,000,000
|
Bear, Stearns International Limited
|
|
$
|
1,140,000,000
|
Citigroup Global Markets Inc.
|
|
$
|
120,000,000
|
RBC Capital Markets Corporation
|
|
$
|
120,000,000
|
Banc of America Securities LLC
|
|
$
|
60,000,000
|
BB&T Capital Markets, a division of Scott & Stringfellow, Inc.
|
|
$
|
60,000,000
|
Mitsubishi UFJ Securities International, plc
|
|
$
|
60,000,000
|
DZ Financial Markets, LLC
|
|
$
|
60,000,000
|
HSBC Securities (USA) Inc.
|
|
$
|
60,000,000
|
Scotia Capital (USA) Inc.
|
|
$
|
60,000,000
|
Stifel, Nicolaus & Company, Incorporated
|
|
$
|
60,000,000
|
Wells Fargo Securities, LLC
|
|
$
|
60,000,000
|
|
|
|
|
|
$
|
3,000,000,000
|
The
Underwriters have advised us that they propose to offer some or all of the Notes to the public at the offering price set forth on the cover page of this prospectus
supplement and any balance to certain dealers at a price that reflects concessions not in excess of 0.250% of the principal amount of Notes. After the initial offering to the public, the public
offering price and other selling terms may be changed. The Underwriting Agreement provides that we will pay as underwriters' compensation the amounts set forth as underwriting discount on the table on
the cover page of this prospectus supplement. The expenses of the offering of the Notes are estimated to be approximately $125,000.
In
the event of default by one or more Underwriters, the Underwriting Agreement provides that in certain circumstances other underwriters may be substituted or the commitment of each
non-defaulting Underwriter may be increased up to 10%. However, if the default involves more than 10% of the aggregate principal amount of the Notes, the Underwriting Agreements may be
terminated.
The
Underwriting Agreements provide that the obligations of the Underwriters are subject to certain conditions precedent and that the Underwriters will purchase all of the Notes if any
are purchased. The Underwriters reserve the right to withdraw, cancel or modify the offering, and to reject orders in whole or in part.
Bear
Stearns is acting as Global Coordinator and BSIL as the International Coordinator for the offering of the Notes. The Underwriters propose initially to offer the Notes for sale in
the United States and in those jurisdictions in Europe and Asia where it is legal to make such offers. All Notes to be sold to purchasers in Europe will be sold through BSIL as the International
Coordinator. However, no action has been or, except in connection with the application for the Notes to be admitted to the Official List of the UK Listing Authority, will be taken in any jurisdiction
by the Underwriters or us that would permit a public offering of the Notes or possession or distribution of this prospectus supplement and the accompanying prospectus in any jurisdiction, other than
the United States, where, or in any circumstances in which, action for that purpose is required.
Each
Underwriter has represented and agreed that:
(a)
it has not offered or sold and will not offer or sell any Notes to persons in the United Kingdom prior to the earlier of (1) the expiry of the period of six months from the
payment date
S-28
and
(2) the admission of such Notes to listing in accordance with Part VI of the Financial Services and Markets Act 2000 except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the Financial Services and Markets Act 2000;
(b)
it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the
meaning of Section 21 of the Financial Services and Markets Act 2000) received by it in connection with the issue of any Notes in circumstances in which Section 21(1) of the Financial
Services and Markets Act 2000 does not apply to the Company; and
(c)
it has complied and will comply with all applicable provisions of the Financial Services and Markets Act 2000 with respect to anything done by it in relation to the Notes in, from or
otherwise involving the United Kingdom.
Each
Underwriter has agreed that it will (to the best of its knowledge and belief) comply with all applicable securities laws and regulations in force in any jurisdiction in which it
offers, sells or delivers
any of the Notes or possesses or distributes this prospectus supplement and the accompanying prospectus and will obtain any consent, approval or permission which is (to the best of its knowledge and
belief) required by it for the purchase, offer, sale or delivery by it of the Notes under the laws and regulations in force in any jurisdiction to which it is subject or in which it makes such
purchases, offers, sales or deliveries and neither we nor any other Underwriter shall have any responsibility therefor.
You
may be required to pay stamp taxes and other charges in accordance with the laws and practices of the country of purchase in addition to the issue price set forth on the cover page
hereof.
The
Notes are a further issuance of securities and currently have no established trading market. Although we intend to cause the Notes to be admitted to the Official List of the UK
Listing Authority, no guarantees can be given that the application will be approved, and we do not intend to apply for listing of the Notes on a national securities exchange in the United States. We
have been advised by Bear Stearns that, following completion of the offering of the Notes, Bear Stearns and its affiliates intend to make a market in the Notes, although they are under no obligation
to do so and may discontinue any market-making activities at any time without notice. Accordingly, no guarantees can be given as to whether an active trading market for the Notes will develop or, if
such a trading market develops, as to the liquidity of such trading market.
Listing Considerations.
The EU Transparency Obligations Directive, which we refer to as the "directive," was implemented in
the United Kingdom in January 2007. Despite having been implemented certain financial reporting items remain under consideration at the European Union level and the result of that consideration
may be burdensome for us. In particular, we may be required to prepare our financial statements in accordance with International Financial Reporting Standards for accounting periods beginning on or
after January 1, 2007. We are under no obligation to maintain the listing of the Notes and holders should be aware that, in circumstances where admission to the Official List of the UK Listing
Authority would require preparation of financial statements in accordance with standards other than US generally accepted accounting principles, or in any other circumstances where the directive is
implemented in a manner that we in good faith believe is unduly burdensome, the Notes may be de-listed. We may, but are not obligated to, seek an alternative listing for the Notes on a
stock exchange outside the European Union. However, if such an alternative listing is not available or is, in our opinion, unduly burdensome for us, an alternative listing for the Notes may not be
obtained.
All
secondary trading in the Notes will settle in same day funds. See "Description of the NotesBook-Entry, Delivery and FormGlobal Clearance and
Settlement Procedures."
S-29
It
is expected that delivery of the Notes will be made against payment therefor on or about February 1, 2008, which is the third business day following the date hereof (such
settlement cycle being herein referred to as "T+3"). Purchasers of Notes should note that the ability to settle secondary market trades of the Notes executed on the date of pricing may be affected by
the T+3 settlement.
The
Underwriting Agreement provides that we will indemnify the Underwriters against certain liabilities, including liabilities under the United States Securities Act of 1933, as amended,
or contribute to payments the Underwriters may be required to make in respect thereof.
Bear
Stearns and BSIL are our wholly-owned subsidiaries. To the extent that part or all of the Notes so purchased by Bear Stearns or BSIL are not resold by them at the initial offering
price, the funds derived from our sale of the Notes on a consolidated basis may be reduced, because we will not derive any additional funds from Notes purchased by Bear Stearns or BSIL and not resold.
Bear Stearns and BSIL intend to resell any Notes that they are unable to resell from time to time, at prevailing market prices, subject to applicable prospectus delivery and other legal requirements.
The
offer and sale of the Notes in respect of which this prospectus supplement is delivered complies with the requirements set forth in Rule 2720 of the Conduct Rules of the
Financial Industry Regulatory Association ("FINRA") regarding underwriting securities of an affiliate of a FINRA member.
In
order to facilitate the offering of the Notes, Bear Stearns, in its capacity as Global Coordinator of the offering of the Notes, may over-allot or effect transactions
which stabilize or maintain the market price of the Notes at a level higher than that which might otherwise prevail in the open market. Specifically, Bear Stearns, on behalf of the Underwriters, may
over-allot or otherwise create a short position in the Notes for the account of the Underwriters by selling more Notes than have been sold to us. Bear Stearns, on behalf of the
Underwriters, may elect to cover any such short position by purchasing Notes in the open market. In addition, Bear Stearns, on behalf of the Underwriters, may stabilize or maintain the price of the
Notes by bidding for or purchasing Notes in the open market and may impose penalty bids, under which selling concessions allowed to syndicate members or other broker-dealers participating in the
offering are reclaimed if Notes previously distributed in the offering are repurchased in connection with stabilization transactions or otherwise. The effect of these transactions may be to stabilize
or maintain the market price of the Notes at a level above that which might otherwise prevail in the open market. The imposition of a penalty bid may also affect the price of the Notes to the extent
that it discourages resales of Notes. No representation is made as to the magnitude or effect of any such stabilization or other transactions. Such stabilizing, if commenced, may be discontinued at
any time and in any event shall be discontinued within a limited period. No other party may engage in stabilization.
Bear
Stearns will make the Notes available for distribution on the Internet through a proprietary web site and/or a third-party system operated by Market Axess Inc., an
Internet-based communications technology provider. We own less than 10% of Market Axess Inc. Market Axess Inc. is providing the system as a conduit for communications between Bear
Stearns and its customers and is not a party to any transactions. We do not believe that Market Axess Inc. will function as our underwriter or agent of the issuer, nor do we believe that Market
Axess Inc. will act as a broker for any customer of Bear
Stearns. Market Axess Inc., a registered broker-dealer, will receive compensation from Bear Stearns based on transactions Bear Stearns conducts through the system. Bear Stearns will make the
Notes available to its customers through the Internet distributions, whether through a proprietary or third-party system, on the same terms as distributions made through other channels.
S-30
LEGAL MATTERS
The validity of the Notes will be passed upon for us by Cadwalader, Wickersham & Taft LLP, New York, New York, USA. Certain legal matters will be passed
upon for the Underwriters by Kramer Levin Naftalis & Frankel LLP, New York, New York, USA. Certain legal matters relating to the laws of England and Wales are being passed upon for us by
Cadwalader, Wickersham & Taft LLP, London, England, and for the Underwriters by Berwin Leighton Paisner, London, England.
EXPERTS
The consolidated financial statements, the related financial statement schedule, and the effectiveness of the Company's internal control over financial reporting
incorporated by reference in this prospectus supplement from the Company's Annual Report on Form 10-K for the year ended November 30, 2007, have been audited by
Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their reports, which are incorporated herein by reference (which reports (1) express an unqualified
opinion on the consolidated financial statements and financial statement schedule and include an explanatory paragraph relating to the adoption of Statement of Financial Accounting Standards ("SFAS")
No. 155, "Accounting for Certain Hybrid Instruments, an amendment of FASB Statements No. 133 and 140" and SFAS No. 157, "Fair Value Measurements," as discussed in Notes 1
and 3 to the Consolidated Financial Statements and (2) express an unqualified opinion on the effectiveness of internal control over financial reporting). Such consolidated financial statements
and financial statement schedule have been so incorporated in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.
S-31
GENERAL INFORMATION
We are incorporated with shares and limited liability under the laws of the State of Delaware, the United States. Our registered office is at The Corporation
Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, USA. Our principal executive office is 383 Madison Avenue, New York, New York 10179, USA.
So
long as the Notes are outstanding, copies of the following documents will be available from our principal executive office and from the specified offices of the paying agents in
London:
(i)
our Certificate of Incorporation and By-laws;
(ii)
our published audited consolidated financial statements contained in our Annual Report on Form 10-K for the two fiscal years ended November 30, 2007 and
November 30, 2006;
(iii)
the Underwriting Agreement and the Indenture;
(iv)
a copy of this prospectus supplement and accompanying prospectus;
(v)
the written agreement of Cadwalader, Wickersham & Taft LLP referred to below; and
(vi)
any other documents incorporated herein by reference.
Cadwalader,
Wickersham & Taft LLP have given and have not withdrawn their written agreement to the inclusion of their tax summary in this prospectus supplement in the form and
context in which it appears.
Other
than as disclosed or contemplated herein, there has been no material change in our financial or trading position since November 30, 2007 and no material adverse change in
our financial position or prospects since November 30, 2007.
In
the normal course of our business, we have been named as defendant in various legal actions, including arbitrations, class actions and other litigation, arising out of our activities
as a broker and dealer, as an underwriter, as an investment banker, as an employer or arising out of alleged employee misconduct. Certain of the legal actions include claims for substantial
compensatory and/or punitive damages or claims for indeterminate amounts of damages. We are also involved from time to time in investigations and proceedings by governmental agencies and
self-regulatory organizations regarding our business. Although the ultimate outcome of these matters cannot be ascertained at this time, it is the opinion of our management, that the
resolution of the foregoing matters will not have a material adverse effect on our financial condition, taken as a whole; such resolution may, however, have a material effect on the operating results
in any future period, depending upon the level of income for such period. There are no legal or arbitration proceedings (including any such proceedings which are pending or threatened) of which we are
aware which may have or have had during the 12 months before the date of this document a material effect on our consolidated financial condition.
The
Notes have been assigned Euroclear and Clearstream Common Code 034505560, International Security Identification Number (ISIN) US073902RU43 and CUSIP No. 073902RU4.
S-32
PROSPECTUS
The Bear Stearns Companies Inc.
Debt Securities
Warrants
Preferred Stock
Depositary Shares
Purchase Contracts
Units
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is a criminal offense.
We
may use this prospectus in the initial sale of these securities. In addition, Bear, Stearns & Co. Inc. or any of our other affiliates may use this prospectus in a
market-making transaction in any of these or similar securities after their initial sale.
Unless we or our agent inform the purchaser otherwise in the confirmation of sale,
this prospectus is being used in a market-making transaction.
Bear, Stearns & Co. Inc.
Prospectus dated August 16, 2006.
The information contained in this prospectus is not complete and may be changed. You should only rely on the information incorporated by reference or provided in
this prospectus or any supplement to this prospectus. We have not authorized anyone else to provide you with different information. These securities are not being offered in any state where the offer
is not permitted. You should not assume that the information in this prospectus or any supplement to this prospectus is accurate as of any date other than the date on the front of those
documents.
TABLE OF CONTENTS
WHERE YOU CAN FIND MORE INFORMATION
|
|
1
|
THE BEAR STEARNS COMPANIES INC.
|
|
2
|
USE OF PROCEEDS
|
|
4
|
DESCRIPTION OF DEBT SECURITIES
|
|
4
|
DESCRIPTION OF WARRANTS
|
|
16
|
DESCRIPTION OF PREFERRED STOCK
|
|
21
|
DESCRIPTION OF DEPOSITARY SHARES
|
|
25
|
DESCRIPTION OF PURCHASE CONTRACTS
|
|
28
|
DESCRIPTION OF UNITS
|
|
31
|
BOOK-ENTRY PROCEDURES AND SETTLEMENT
|
|
33
|
LIMITATIONS ON ISSUANCE OF BEARER DEBT SECURITIES AND BEARER WARRANTS
|
|
43
|
PLAN OF DISTRIBUTION
|
|
44
|
ERISA CONSIDERATIONS
|
|
48
|
LEGAL MATTERS
|
|
49
|
EXPERTS
|
|
49
|
Offers and sales of the securities are subject to restrictions in certain jurisdictions. The distribution of this prospectus and the offer or sale of the
securities in certain jurisdictions may be restricted by law. Persons who come into possession of this prospectus or any securities must inform themselves about and observe any applicable restrictions
on the distribution of this prospectus and the offer and sale of the securities.
We accept responsibility for the information contained in this prospectus. To the best of our knowledge and belief (having taken all reasonable care to ensure
that such is the case) the information contained in this prospectus is in accordance with the facts and does not omit anything likely to affect the import of the information.
You must read this prospectus as one along with all the documents which are deemed to be incorporated in this prospectus by reference (see "Where You Can Find
More Information"). This prospectus must be read and construed on the basis that the incorporated documents are so incorporated and form part of this document, except as specified in this
document.
We have not authorized any person to give any information or represent anything not contained in this prospectus. You must not rely on any unauthorized
information.
i
WHERE YOU CAN FIND MORE INFORMATION
We file current, annual and quarterly reports, proxy statements and other information required by the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), with the SEC. You may read and copy any document we file at the SEC's public reference room located at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information about the public reference room. Our SEC filings are also available to the public from the SEC's Internet site at
http://www.sec.gov. Copies of these reports, proxy statements and other information can also be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005.
Our
website is http://www.bearstearns.com. We make available free of charge on our website, via a link to the SEC's internet site at http://www.sec.gov, our annual reports on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and Forms 3, 4 and 5 filed on behalf of directors and
executive officers and any amendments to those reports filed or furnished pursuant to the Exchange Act as soon as reasonably practicable after such material is electronically filed with, or furnished
to, the SEC.
In
addition, we currently make available on http://www.bearstearns.com our most recent annual report on Form 10-K, our quarterly reports on
Form 10-Q for the current fiscal year and our most recent proxy statement, although in some cases these documents are not available on our website as soon as they are available on
the SEC's internet site. You will need to have on your computer the Adobe Acrobat Reader software to view these documents, which are in the PDF format.
We
have filed with the SEC a registration statement on Form S-3 (the "Registration Statement") under the Securities Act of 1933, as amended, with respect to the
securities. This prospectus, which constitutes a part of that Registration Statement, does not include all the information contained in that Registration Statement and its exhibits. For further
information with respect to the securities, you should consult the Registration Statement and its exhibits.
Statements
contained in this prospectus concerning the provisions of any documents are necessarily summaries of those documents, and each statement is qualified in its entirety by
reference to the copy of the document filed with the SEC. The Registration Statement and any of its amendments, including
exhibits filed as a part of the Registration Statement or an amendment to the Registration Statement, are available for inspection and copying through the entities listed above.
The
SEC allows us to "incorporate by reference" the information that we file with them, which means that we can disclose important information to you by referring you to the other
information we have filed with the SEC. The information that we incorporate by reference is considered to be part of this prospectus, and information that we file later with the SEC will automatically
update and supersede this information.
The
following documents filed by us with the SEC pursuant to Section 13 of the Exchange Act (File No. 1-8989) and any future filings under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act made before the termination of the offering are incorporated by reference:
(1) the
Annual Report on Form 10-K as amended by Form 10-K/A (including the portions of the Company's Annual Report to Stockholders and
Proxy Statement incorporated by reference therein) for the fiscal year ended November 30, 2005 filed with the SEC on February 13, 2006, as amended on Form 10-K/A filed
with the SEC on February 22, 2006;
(2) the
Quarterly Reports on Form 10-Q for the fiscal quarters ended February 28, 2006 and May 31, 2006; and
1
(3) the
Current Reports on Form 8-K dated December 9, 2005, December 15, 2005, December 27, 2005, January 20, 2006,
January 25, 2006, March 16, 2006 (two separate reports), June 15, 2006 and June 21, 2006.
We
will provide to you without charge, a copy of any or all documents incorporated by reference into this prospectus except the exhibits to those documents (unless they are specifically
incorporated by reference in those documents). You may request copies by writing or telephoning us at our Investor Relations Department, The Bear Stearns Companies Inc., 383 Madison Avenue, New
York, New York 10179, Attn.: Investor Relations, telephone number (212) 272-2000.
THE BEAR STEARNS COMPANIES INC.
We are a holding company that, through our broker-dealer and international bank subsidiaries, principally Bear, Stearns & Co. Inc. ("Bear Stearns"),
Bear, Stearns Securities Corp. ("BSSC"), Bear, Stearns International Limited ("BSIL") and Bear Stearns Bank plc ("BSB"), is a leading investment banking, securities and derivatives
trading, clearance and brokerage firm serving corporations, governments, institutional and individual investors worldwide. BSSC, a subsidiary of Bear Stearns, provides professional and correspondent
clearing services, in addition to clearing and settling customer transactions and certain of our proprietary transactions. In addition to conducting a substantial portion of our operating activities
through certain of our regulated subsidiaries (Bear Stearns, BSSC, BSIL and BSB), we also conduct significant activities through other wholly-owned subsidiaries including: Bear Stearns Global Lending
Limited; Custodial Trust Company; Bear Stearns Financial Products Inc.; Bear Stearns Capital Markets Inc.; Bear Stearns Credit Products Inc.; Bear Stearns Forex Inc.; EMC
Mortgage Corporation; Bear Stearns Commercial Mortgage Inc and through our majority owned subsidiary Bear Hunter Holdings LLC.
Our
business includes:
-
-
market-making
and trading in U.S. government, government agency, corporate debt and equity, mortgage-related, asset-backed, municipal securities and high yield products;
-
-
trading
in options, futures, foreign currencies, interest rate swaps and other derivative products;
-
-
securities,
options and futures brokerage;
-
-
providing
securities clearance services;
-
-
managing
equity and fixed income assets for institutional and individual clients;
-
-
financing
customer activities;
-
-
securities
lending;
-
-
securities
and futures arbitrage;
-
-
involvement
in specialist and market-making activities on the New York Stock Exchange ("NYSE"), American Stock Exchange ("AMEX") and International Securities Exchange
("ISE");
-
-
underwriting
and distributing securities;
-
-
arranging
for the private placement of securities;
-
-
assisting
in mergers, acquisitions, restructurings and leveraged transactions;
-
-
making
principal investments in leveraged acquisitions;
-
-
engaging
in commercial real estate activities;
-
-
investment
management and advisory services; and
2
-
-
fiduciary,
custody, agency and securities research services.
Our
business is conducted:
-
-
from
our principal offices in New York City;
-
-
from
domestic regional offices in Atlanta, Boston, Chicago, Dallas, Denver, Los Angeles, San Francisco, San Juan and Scottsdale;
-
-
from
representative offices in Beijing, Hong Kong, Sao Paulo and Shanghai; and
-
-
through
international offices in Dublin, Hong Kong, London, Lugano, Milan, Singapore and Tokyo.
Our
international offices provide services and engage in investment activities involving foreign clients and international transactions. Additionally, certain of these foreign offices
provide services to U.S. clients.
Bear
Stearns and BSSC are broker-dealers registered with the SEC. Additionally, Bear Stearns is registered as an investment adviser with the SEC. Bear Stearns and/or BSSC are also
members of the NYSE, all other principal U.S. securities and futures exchanges, the National Association of Securities Dealers, Inc. ("NASD"), the National Futures Association and the ISE. Bear
Stearns is a "primary dealer" in U.S. government securities as designated by the Federal Reserve Bank of New York.
BSIL
is a full service broker-dealer based in London. BSIL is incorporated in the United Kingdom and is authorized and regulated by the Financial Services Authority.
BSB
is bank based in the Republic of Ireland, which was registered in 1996 and subsequently granted a banking license on April 10, 1997 under the Irish Central Bank Act, 1971. BSB
allows our existing and prospective clients the opportunity of dealing with a banking counterparty. BSB is incorporated in Ireland.
Bear
Stearns Global Lending Limited ("BSGL") provides loans to certain Bear Stearns customers. BSGL is incorporated in the Cayman Islands.
Custodial
Trust Company ("CTC"), an FDIC insured New Jersey State chartered bank, offers a range of trust, lending and securities-clearance services. CTC provides us with banking powers
including access to the securities and funds-wire services of the Federal Reserve System. CTC provides trust, custody, agency and securities lending services for institutional accounts;
commercial and margin lending; the clearance of government securities for institutions and dealers; and the processing of mortgage and mortgage-related products, including derivatives and
collateralized mortgage obligations products. At November 30, 2005, CTC held approximately $61 billion of assets for clients, including institutional clients such as pension funds,
mutual funds, endowment funds and insurance companies. CTC is incorporated in the State of New Jersey.
Bear
Stearns Financial Products Inc. ("BSFP") transacts business as a triple-A-rated counterparty to eligible clients, offering a wide range of fixed
income and equity derivative products. Eligible clients are those rated A3 or better by Moody's Investors Service, Inc. and A- or better by Standard & Poor's Ratings Services
or counterparties acceptable to both rating agencies. BSFP transfers its market risk associated with derivative transactions to Bear Stearns Capital Markets Inc., an affiliate of BSFP and one
of our wholly-owned subsidiaries. BSFP is incorporated in the State of Delaware.
Bear
Stearns Capital Markets Inc. ("BSCM") is engaged in fixed income derivatives transactions and hedges associated therewith. BSCM is incorporated in the State of Delaware.
Bear
Stearns Credit Products Inc. ("BSCPI") is engaged in credit derivatives transactions and hedges associated therewith. BSCPI is incorporated in the State of Delaware.
3
Bear
Stearns Forex Inc. ("BSFX") is a foreign exchange dealer engaged in foreign currency transactions and hedges associated therewith. BSFX is incorporated in the State of
Delaware.
EMC
Mortgage Corporation ("EMC"), is a U.S. Department of Housing and Urban Development and Freddie MAC approved lender based in Irving, Texas. EMC purchases both conforming and
non-conforming, investment-grade and non-investment grade, conventional fixed rate and adjustable rate residential mortgage loans with servicing released or retained and sells
such loans to investors. EMC also purchases and sells residual certificates and mortgage servicing rights. EMC is incorporated in the State of Delaware.
Bear
Stearns Commercial Mortgage Inc. ("BSCMI") is primarily engaged in the origination and securitization of commercial mortgage loans for resale in the form of
pass-through securities ("certificates"). These certificates represent fractional and undivided interests in pools of mortgage loans held in a trust. BSCMI is incorporated in the State of
New York.
Bear
Hunter Holdings LLC ("BHH") is a Delaware limited liability company jointly owned by us and Hunter Partners LLC. Bear Wagner Specialists LLC, BHH's principal wholly owned
subsidiary, is a registered broker dealer primarily engaged in specialist and market-making activities on the NYSE, AMEX and ISE.
We
are incorporated in the State of Delaware. Our principal executive office is located at 383 Madison, New York, New York 10179, USA, and our telephone number is
(212) 272-2000. Our internet address is http://www.bearstearns.com. In this prospectus, the terms "Company," "we," "us" and "our" refer only to The Bear Stearns
Companies Inc. excluding its consolidated subsidiaries.
USE OF PROCEEDS
Unless otherwise specified in the applicable prospectus supplement, we intend to use the net proceeds from the sale of our securities for general corporate
purposes, which may include additions to working capital, the repayment of short-term and long-term debt and investments in, or extensions of credit to, subsidiaries. Pending
such uses, the net proceeds may be temporarily invested in short-term obligations.
DESCRIPTION OF DEBT SECURITIES
This section describes certain general terms and provisions of the debt securities to which any prospectus supplement may relate. The particular terms of any debt
securities offered by a prospectus supplement and the extent to which these general terms and provisions will not apply to the particular series of debt securities being offered, will be described in
the prospectus supplement relating to that particular series of debt securities.
We
may issue either senior debt (the "Senior Debt Securities" or "Senior Debt") or senior subordinated debt (the "Subordinated Debt Securities" or "Subordinated Debt"). Senior Debt
Securities will be issued under the senior debt indenture dated as of May 31, 1991, as amended (the "Senior Indenture"), between us and JPMorgan Chase Bank, N.A. (formerly, The Chase Manhattan
Bank), as trustee (the "Trustee"). Subordinated Debt Securities will be issued under the form of subordinated debt indenture filed as an exhibit to the Registration Statement of which this prospectus
is a part (the "Subordinated Indenture"). We refer to the Senior Indenture and the Subordinated Indenture individually as an "Indenture" and collectively as the "Indentures."
The
terms of the debt securities include those stated in the Indentures and those made part of the Indentures by reference to the TIA. We have filed copies of the Indentures as exhibits
to the Registration Statement of which this prospectus forms a part. Copies of the Indentures are available as described under "Where You Can Find More Information."
4
This
section, along with the description in the applicable prospectus supplement, is a summary of the material provisions of the Indentures and is not complete. It does not restate the
Indentures in their entirety. We urge you to read the Indentures because they, and not these descriptions, define your rights as a holder of debt securities.
Unless
otherwise provided in the applicable prospectus supplement, the trustee under both the Senior Indenture and the Subordinated Indenture will be JPMorgan Chase Bank, N.A. (formerly,
The Chase Manhattan Bank).
Because
we are a holding company, our rights and the rights of our creditors, including the holders of the debt securities, to participate in the assets of any subsidiary upon the
subsidiary's liquidation or reorganization or otherwise would be subject to the prior claims of the subsidiary's creditors, except to the extent that we may be a creditor with recognized claims
against such subsidiary.
The
Indentures do not limit the aggregate principal amount of debt securities that may be issued. We may issue debt securities in series up to the aggregate principal amount that may be
authorized from time to time by us without your consent. The debt securities will be our unsecured obligations. The Senior Debt Securities will rank equally with all of our other unsecured and
unsubordinated indebtedness. We extend credit to our subsidiaries at various times. Any credit we may extend to our subsidiaries may be subordinated to the claims of unaffiliated creditors of those
subsidiaries. The Subordinated Debt Securities will be subordinate in right of payment as described under "Subordination."
General
As of the date of this prospectus, we have issued approximately $103,755,094,650 aggregate principal amount of Senior Debt Securities under the Senior Indenture,
of which $32,752,155,000 is currently outstanding. As of the date of this prospectus, we have not issued any Subordinated Debt Securities. The Indentures permit us to:
-
-
issue
debt securities at various times in one or more series;
-
-
issue
an unlimited principal amount of debt securities;
-
-
provide
for the issuance of debt securities under the Indentures other than those authorized on the date of this prospectus at various times and without your consent; and
-
-
"reopen"
a previous issue of a series of debt securities and issue additional debt securities of the series.
Each
prospectus supplement will describe the terms of any debt securities we issue, which may include the following:
-
-
the
title and type of the debt securities, including the subordination provisions, if any, applicable to the debt securities;
-
-
the
total principal amount of the debt securities;
-
-
the
minimum denominations;
-
-
the
percentage of the stated principal amount at which the debt securities will be sold and, if applicable, the method of determining the price;
-
-
the
person to whom interest is payable, if other than the owner of the debt securities;
-
-
the
maturity date or dates;
-
-
the
interest rate or rates, which may be fixed or variable, and the method used to calculate that interest;
5
-
-
any
index used to determine the amounts of any payments on the debt securities and the manner in which those amounts will be determined;
-
-
the
interest payment dates, the regular record dates for the interest payment dates, and the date interest will begin to accrue;
-
-
the
place or places where payments on the debt securities may be made and the place or places where the debt securities may be presented for registration of transfer or
exchange;
-
-
any
date or dates after which the debt securities may be redeemed, repurchased, or repaid in whole or in part at our option or the option of the holder and the periods,
prices, terms, and conditions of that redemption, repurchase, or repayment;
-
-
any
exchange or conversion features;
-
-
if
other than the full principal amount, the portion of the principal amount of the debt securities that will be payable if their maturity is accelerated;
-
-
the
currency of principal, any premium, interest, and any other amounts payable on the debt securities, if other than U.S. dollars;
-
-
if
the debt securities will be issued in other than book-entry form;
-
-
the
identification of or method of selecting any interest rate calculation agents, exchange rate agents, or any other agents for the debt securities;
-
-
any
provisions for the discharge of our obligations relating to the debt securities by the deposit of funds or U.S. government obligations;
-
-
any
provision relating to the extension or renewal of the maturity date of the debt securities;
-
-
any
applicable U.S. federal income tax consequences;
-
-
whether
the debt securities will be listed on any securities exchange; and
-
-
any
other terms of the debt securities, which could be different from those described in this prospectus.
Unless
we provide otherwise in an applicable prospectus supplement, we will issue debt securities only in registered form without coupons in denominations of $1,000 and integral
multiples of $1,000, and in bearer form with or without coupons in the denomination of $5,000. If we issue bearer debt securities of a series, we will describe the U.S. federal income tax consequences
and other special considerations applicable to those bearer debt securities in the prospectus supplement relating to that series.
Unless
we provide otherwise in the applicable prospectus supplement and subject to any limitations in the Indenture, you may transfer or exchange your registered securities at the
corporate trust office or agency of the Trustee in the City and State of New York without paying a service charge, other than applicable tax or governmental charges. Bearer debt securities will be
transferable by delivery. We will describe the provisions relating to the exchange of bearer debt securities of any series in the prospectus supplement relating to that series.
If
the principal, any premium or interest on the debt securities of any series is payable in a foreign or composite currency, the applicable prospectus supplement will describe any
restrictions, elections, U.S. federal income tax consequences, specific terms and other information that apply to those debt securities and the currency.
We
may sell one or more series of debt securities at a substantial discount below the stated principal amount, bearing either no interest or interest at a rate that at the time of
issuance is below
6
market
rate. One or more series of debt securities may be variable rate debt securities that may be exchanged for fixed rate debt securities. We will describe the U.S. federal income tax consequences
and other special considerations applicable to a series in the prospectus supplement relating to that series.
Ranking
The Senior Debt and the Subordinated Debt will be unsecured and will rank equally with all of our other unsecured and unsubordinated indebtedness. The
Subordinated Debt will be subordinate in right of payment as described under "Subordination." We extend credit to our subsidiaries at various times. Any credit we may extend to our subsidiaries may be
subordinated to the claims of unaffiliated creditors of those subsidiaries.
We
are a holding company and depend on the earnings and cash flow of our subsidiaries to meet our obligations under the debt securities. Because the creditors of our subsidiaries
generally would have a right to receive payment superior to our right to receive payment from the assets of our subsidiaries, the holders of our debt securities will effectively be subordinated to the
creditors of our subsidiaries. If we were to liquidate or reorganize, your right to participate in any distribution of our subsidiaries' assets is necessarily subject to the senior claims of the
subsidiaries' creditors. Furthermore, the Exchange Act and the rules of certain exchanges and other regulatory bodies, as well as covenants governing certain indebtedness of our subsidiaries, impose
net capital requirements on some of our subsidiaries that limit their ability to pay dividends or make loans and advances to us.
Methods of Receiving Payment on the Debt Securities
Registered Debt Securities.
Unless we otherwise provide in the applicable prospectus supplement, if the debt securities are
in registered form, then the principal, any premium and interest will be payable at the corporate trust office or agency of the Trustee in the City and State of New York.
Interest
payments made before maturity or redemption on registered debt securities may be made:
-
-
at
our option, by check mailed to the address of the person entitled to payment; or
-
-
at
your option, if you hold at least $10 million in principal amount of registered debt securities, by wire transfer to an account you have designated in writing at
least 16 days before the date on which the payment is due.
Bearer Debt Securities.
Unless we provide otherwise in the applicable prospectus supplement, if the debt securities are in
bearer form, then the principal, any premium and interest will be payable at the Trustee's office located outside the United States that is maintained for this purpose. No payment on a bearer debt
security will be made by mail to a U.S. address or by wire transfer to an account maintained in the United States, or will otherwise be made inside the United States, unless otherwise provided in the
applicable prospectus supplement.
Notices
Registered Debt Securities.
Unless otherwise provided in the applicable prospectus supplement, any notice given to a holder
of a registered debt security will be mailed to the last address of such holder set forth in the applicable security register.
Bearer Debt Securities.
Any notice given to a holder of a bearer debt security will be published in a daily newspaper of
general circulation in the city or cities specified in the prospectus supplement relating to such bearer debt security.
7
Limitation on Liens
The Indentures do not allow us, and we may not permit any of our Restricted Subsidiaries to, issue, incur, assume, guarantee or suffer to exist any indebtedness
for borrowed money secured by a pledge of, lien on or security interest in any shares of voting stock of any Restricted Subsidiary without effectively providing that the securities issued under the
Indentures will be secured equally and ratably with such secured indebtedness.
The
term "Restricted Subsidiary" as defined in the Indentures means Bear Stearns, CTC, BSSC and any of our other subsidiaries owning, directly or indirectly, any of the common stock of,
or succeeding to a significant portion of the business, property or assets of, a Restricted Subsidiary, or with which a Restricted Subsidiary is merged or consolidated.
Merger and Consolidation
The Indentures allow us to consolidate or merge with or into any other corporation, and may sell, lease or convey all or substantially all of our assets to any
corporation, organized and existing under the laws of the United States or any U.S. state, if:
(1) we
or any other successor corporation shall not immediately after the merger or consolidation be in default under the Indentures; and
(2) the
continuing corporation (if other than us), or the resulting entity that receives substantially all of our assets, shall expressly assume:
(a) payment
of the principal of, and premium, if any, and interest on (and any additional amounts payable in respect of) the debt securities and
(b) performance
and observance of all of the covenants and conditions of the Indentures to be performed or observed by us.
Unless
otherwise provided in the applicable prospectus supplement, and subject to the foregoing, the Indentures permit:
-
-
a
consolidation, merger, sale of assets or other similar transaction that may adversely affect our creditworthiness or that of a successor or combined entity;
-
-
a
change in control; or
-
-
a
highly leveraged transaction involving us, whether or not involving a change in control;
and
the Indentures, therefore, will not protect holders of the debt securities from the substantial impact that any of the transactions described above may have on the value of the debt securities.
Modification and Waiver
With the consent of the holders of 66
2
/
3
% in principal amount of the outstanding debt securities of each series affected, we and the Trustee may
modify or amend the applicable Indenture, without the consent of each holder of the outstanding debt security affected, unless the modification or amendment:
-
-
changes
the stated maturity or the date of any installment of principal of, or interest on, any debt security or changes its redemption price or optional redemption price;
-
-
reduces
the principal amount of, or the rate of interest on, or the amount of any additional amount payable on, any debt security, or reduces the amount of principal that
could be declared due and payable before the stated maturity of that debt security, or changes our obligation to pay any additional amounts (except as permitted under the applicable Indenture), or
reduces the
8
We
may make any of these amendments or modifications, however, with the consent of the holder of each outstanding debt security affected.
Except
with respect to defaults relating to certain fundamental provisions of the applicable Indenture, which cannot be waived without the consent of the holders of each outstanding
security of a series affected, the holders of at least a majority in principal amount of outstanding debt securities of any series may, with respect to that series, waive past defaults under the
applicable Indenture and waive compliance with certain provisions of the applicable Indenture, either in a specific instance or generally.
Events of DefaultSenior Indenture
Under the Senior Indenture, an "Event of Default" with respect to any Senior Debt Securities mean:
(1) a
failure to pay any interest, or any additional amounts payable, on any debt securities of that series for 30 days after payment is due;
(2) a
failure to pay the principal of, and premium, if any, on any debt security of that series when due;
(3) a
failure to deposit any sinking fund payment when due relating to that series;
(4) a
failure to perform any other covenant contained in the Indenture or relating to that series that has continued for 60 days after written notice was provided;
(5) a
failure lasting 10 days after notice relating to any of our other indebtedness for borrowed money or indebtedness of any Restricted Subsidiary in excess of
$10 million, that results in such indebtedness becoming due and payable before maturity;
(6) certain
events of bankruptcy, insolvency or reorganization, whether voluntary or involuntary; and
(7) any
other Event of Default with respect to debt securities of that series.
If
an Event of Default for any series of Senior Debt Securities occurs and continues, the Trustee or the holders of 25% of the aggregate principal amount (or any lesser amount that the
series may provide) of the outstanding Senior Debt Securities affected by the default may require us to immediately repay the entire principal amount (or any lesser amount that the series may provide)
of the outstanding Senior Debt Securities of such series.
So
long as the Trustee has not yet obtained a judgment or decree for payment of money due, and we have paid all amounts due (other than those due solely as a result of acceleration) and
have remedied all Events of Default, the holders of a majority in principal amount of the outstanding Senior
9
Debt
Securities of the affected series may rescind any acceleration and its consequences or may waive any past default. However, the holders of a majority in principal amount of all outstanding Senior
Debt Securities of the affected series may not waive any Event of Default with respect to any series of Senior Debt Securities in the following two circumstances:
-
-
a
failure to pay the principal of, and premium, if any, or interest on, or any additional amounts payable in respect of, any Senior Debt Security of that series for which
payment had not been subsequently made; or
-
-
a
covenant or provision that cannot be modified or amended without the consent of each holder of outstanding Senior Debt Security of that series.
The
holders of a majority in principal amount of the outstanding Senior Debt Securities of a series may 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 Senior Debt Securities of that series, provided that this direction is not in conflict with any rule
of law or the Senior Indenture. Before proceeding to exercise any right or power under the Senior Indenture at the direction of those holders, the Trustee will be entitled to receive from those
holders reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in complying with any such direction.
Events of DefaultSubordinated Indenture
The only events of default under the Subordinated Indenture with respect to Subordinated Debt Securities of any series will be (i) certain events in
bankruptcy or insolvency, whether voluntary or involuntary, involving us or our receivership or the receivership of substantially all our assets; (ii) default in the deposit of any sinking fund
payment; (iii) and default in the performance, or breach, of our covenants or warranties, subject to applicable notice requirements and grace periods.
If
an event of default with respect to Subordinated Debt Securities of any series at the time outstanding occurs and is continuing, the Trustee or the holders of at least 25% in
principal amount of the outstanding Subordinated Debt Securities of that series may declare the principal amount of (or, if any of the Subordinated Debt Securities of that series are discount
securities or indexed securities, the portion of the principal amount of such Subordinated Debt Securities as may be specified in the terms thereof) and all accrued but unpaid interest on all the
Subordinated Debt Securities of that series to be due and payable immediately, by a written notice to us (and to the Trustee, if given by holders), and upon such a declaration the principal amount (or
specified amount) and interest of that series shall become immediately due and payable.
The
foregoing provision would, in the event of the bankruptcy or insolvency involving us, be subject as to enforcement to the broad equity powers of a federal bankruptcy court and to the
determination by that court of the nature and status of the payment claims of the holders of the Subordinated Debt Securities. At any time after a declaration of acceleration with respect to the
Subordinated Debt Securities of any series has been made, but before a judgment or decree for payment of the money due has been obtained, the holders of a majority in principal amount of outstanding
Subordinated Debt Securities of that series may, under certain circumstances, rescind and annul the acceleration and its consequences but only if all Defaults have been remedied, or if permitted,
waived, and if certain other conditions have been satisfied.
The
following events will be defaults ("Defaults") under the Subordinated Indenture with respect to Subordinated Debt Securities of any series:
10
(b) failure
to pay principal or premium, if any, on any Subordinated Debt Securities of that series at maturity, continued for seven days; and
(c) failure
to pay any interest, if any, on any Subordinated Debt Securities of that series when due and payable, continued for 30 days.
If
a Default with respect to the Subordinated Debt Securities of any series occurs and is continuing, the Trustee may, subject to certain limitations and conditions, seek to enforce its
rights and the rights of the holders of Subordinated Debt Securities of that series and may demand that the Company pay to it the whole amount then due and payable on such Subordinated Debt
Securities.
The
Subordinated Indenture provides that, subject to the duty of the Trustee upon the occurrence of a 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 Subordinated Indenture at the request or direction of any of the holders of Subordinated Securities of any series unless the same holders
shall have offered to the Trustee reasonable indemnity or security against the costs, expenses and liabilities which may be incurred by the Trustee in compliance with the request or direction. Subject
to certain provisions, the holders of a majority in principal amount of the outstanding Subordinated 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 Subordinated Debt Securities of that series.
Concerning the Trustee
Under the Indentures, within 90 days after any default, the Trustee will notify you of the default, unless the default is cured or waived.
The
Trustee may withhold notice of a default (except a default relating to the payment of principal, premium or interest, or any additional amounts related to any debt security or the
payment of any sinking fund installment), if the Trustee in good faith determines that withholding notice is in your interests.
If
a default in the performance or breach of any covenant or warranty in the Indentures or relating to that series occurs and continues for 60 days after written notice has been
given to us or the Trustee by the holders of at least 25% in principal amount of the outstanding debt securities of a series, the Trustee will not give notice to the holders for at least an additional
30 days after such default.
11
Under the Indentures, we are required to deliver to the Trustee an annual statement as to our fulfillment of all of our indenture obligations.
Subordinated Debt Securities
The Subordinated Debt Securities will be our direct, unsecured obligations. Our obligations pursuant to the Subordinated Debt Securities will be subordinate in
right of payment to all Senior Indebtedness as defined below under "Subordination."
Subordination
Our obligation to make any payment on account of the principal of or premium, if any, and interest, if any, on the Subordinated Debt Securities will be
subordinate and junior in right of payment to our obligations to the holders of our Senior Indebtedness to the extent described herein.
"Senior
Indebtedness" is defined in the Subordinated Indenture to mean our "Indebtedness for Money Borrowed," whether outstanding on the date of the Subordinated Indenture or thereafter
created, assumed or incurred, except "Indebtedness Ranking on a Parity with the Securities" or "Indebtedness Ranking Junior to the Securities" and any deferrals, renewals or extensions of the Senior
Indebtedness. As of May 31, 2006, our Senior Indebtedness, as defined in the Subordinated Indenture, was approximately $65.9 billion. This number does not include the
$248.6 billion, as of May 31, 2006, of our subsidiaries' indebtedness and liabilities. Senior Indebtedness, as defined in the Subordinated Indenture, is effectively subordinated to our
subsidiaries' indebtedness and liabilities.
"Indebtedness
for Money Borrowed" is defined in the Subordinated Indenture as:
(a) any
obligation of ours, or any obligation guaranteed by us, for the repayment of borrowed money, whether or not evidenced by bonds, debentures, notes or other written
instruments,
(b) similar
obligations arising from off-balance sheet guarantees and direct credit substitutes,
(c) obligations
associated with derivative products, such as interest-rate and foreign-exchange-rate contracts, commodity contracts and similar
arrangements and
(d) any
deferred obligations for the payment of the purchase price of property or assets.
"Indebtedness
Ranking on a Parity with the Securities" is defined in the Subordinated Indenture to mean our Indebtedness for Money Borrowed, whether outstanding on the date of the Subordinated
Indenture or thereafter created, assumed or incurred, which specifically by its terms ranks equally with and not prior to the Subordinated Debt Securities in the right of payment upon the happening of
any event of the kind specified in the first sentence of the next paragraph. As of May 31, 2006, there was no Indebtedness Ranking on a Parity with the Securities, as defined in the
Subordinated Indenture.
"Indebtedness
Ranking Junior to the Securities" is defined in the Subordinated Indenture to mean any of our Indebtedness for Money Borrowed, whether outstanding on the date of execution of the
Subordinated Indenture or thereafter created, assumed or incurred, which specifically by its terms ranks junior to and not equally with or prior to the Subordinated Debt Securities (and any other
Indebtedness Ranking on a Parity with the Subordinated Debt Securities) in right of payment upon the happening of certain bankruptcy, insolvency, receivership or winding-up events
described below. As of May 31, 2006, there was no Indebtedness Ranking Junior to the Securities, as defined in the Subordinated Indenture.
In
the case of any bankruptcy, insolvency, receivership, conservatorship, reorganization, readjustment of debt, marshaling of assets and liabilities or similar proceedings or any
liquidation or winding up involving us, whether voluntary or involuntary, all of our obligations to holders of our
12
Senior
Indebtedness will be entitled to be paid in full before any payment can be made on account of the principal of, or premium, if any, or interest, if any, on the Subordinated Debt Securities of
any series. In the event and during the continuation of any default in the payment of principal of, or premium, if any, or interest, if any, on, any Senior Indebtedness beyond any applicable grace
period, or in the event that any event of default with respect to any Senior Indebtedness has occurred and is continuing, or would occur as a result of certain payments, permitting the holders of the
relevant Senior Indebtedness (or a trustee on behalf of the holders thereof) to accelerate its maturity, then, unless and until we cure such default or event of default or such default or event of
default is waived or ceases to exist, we will not make any payment of principal of, or premium, if any, or interest, if any, on the Subordinated Debt Securities, or in respect of any redemption,
exchange, retirement, purchase or other acquisition of any of the Subordinated Debt Securities.
As
of May 31, 2006, we had no Subordinated Debt Securities outstanding. When issued, our Subordinated Debt Securities will be subordinated to our Senior Debt Securities and both
the Senior Debt Securities are and the Subordinated Debt Securities will be effectively subordinated to our subsidiaries' existing and future indebtedness and liabilities, which as of May 31,
2006 totaled $248.6 billion.
Any
applicable prospectus supplement relating to an issuance of Subordinated Debt Securities will set forth (as of the most recent practicable date) the aggregate amount of outstanding
Senior Indebtedness and any limitation on the issuance of additional Senior Indebtedness.
Holders
of Subordinated Securities, by their acceptance of the Subordinated Debt Securities, will be deemed to have irrevocably waived any rights they may have to counterclaim or
set-off amounts they owe to us against amounts owed to them by us under the Subordinated Indenture or to institute proceedings in respect of these amounts.
By
reason of the above subordination in favor of the holders of our Senior Indebtedness, in the event of our bankruptcy or insolvency, holders of our Senior Indebtedness may receive
more, ratably, and holders of the Subordinated Debt Securities having a claim pursuant to the Subordinated Debt Securities may receive less, ratably, than our other creditors.
Defeasance
If provided for under the Indentures with respect to Senior Debt Securities or Subordinated Debt Securities of any series that are registered debt securities
denominated and payable only in U.S. dollars (except as otherwise provided under the applicable Indenture), we will:
-
-
be
discharged from any and all obligations in respect of the debt securities of that series under the Indenture (except for certain obligations to register the transfer or
exchange of debt securities of that series, replace stolen, lost or mutilated debt securities of that series, maintain paying agents and hold moneys for payment in trust) on the 91st day after the
applicable conditions described in this paragraph have been satisfied; or
-
-
not
be subject to provisions of the Indenture described above under the subsections entitled "Limitation on Liens" and "Merger and Consolidation"
with respect to the debt securities of that series;
in
each case if we deposit with the Trustee, in trust, money or U.S. government obligations that, through the payment of interest and principal in accordance with their terms, will provide money in an
amount sufficient to pay all the principal (including any mandatory sinking fund payments) of, and premium, if any, and any interest on, the debt securities of that series on the dates such payments
are due in accordance with the terms of those debt securities.
13
To
exercise either option, we are required to deliver to the Trustee an opinion of counsel to the effect that:
(1) the
deposit and related defeasance would not cause the holders of the debt securities of the series being defeased to recognize income, gain or loss for U.S. federal
income tax purposes; and
(2) if
the debt securities of that series are then listed on the NYSE, the exercise of the option would not result in delisting.
We
may specify defeasance provisions with respect to any series of debt securities.
Redemption Upon Certain Tax Events
If (a) as a result of any change in, or amendment to, the laws (or any regulations or rulings promulgated under those laws) of the United States (or any
political subdivision or taxing authority of the United States or in the United States), or any change in, or amendments to, the official position regarding the application or interpretation of these
laws, regulations or rulings, which is announced or becomes effective on or after the date of this prospectus, we become or will become obligated to pay additional amounts as described in the
applicable prospectus supplement or (b) any act is taken by a taxing authority of the United States on or after the date of this prospectus, whether that act is taken with respect to us or any
affiliate, that results in a substantial probability that we will or may be required to pay such additional amounts, then we may, at our option, redeem, in whole, but not in part, the debt securities
on any Interest Payment Date on not less than 30 nor more than 60 days' prior notice, at a redemption price equal to 100% of their principal amount, together with interest accrued on the debt
securities to the date fixed for redemption; provided that we determine, in our business judgment, that the obligation to pay such additional amounts cannot be avoided by the use of reasonable
measures available to us, not including substitution of the obligor under the securities.
Principal Paying Agent, Paying Agents, Registrar and Transfer Agent
JPMorgan Chase Bank, N.A. will initially act as the principal office or agency where the Senior Debt Securities and the Subordinated Debt Securities may be
presented for payment (the "Principal Paying Agent"). We have appointed JPMorgan Chase Bank, N.A. (formerly, The Chase Manhattan Bank) to serve as registrar (the "Registrar") under each of the
Indentures.
Methods of Receiving Payments on the Debt Securities
The Principal Paying Agent will pay interest to The Depository Trust Company ("DTC"), or its nominee, by wire transfer of same day funds for credit to the
accounts of DTC's participants and subsequent distribution to the beneficial owners of the securities, or, if the securities are issued in certificated form under the circumstances described below in
"Certificates in Registered Form," the Principal Paying Agent will pay the registered holder of the securities against presentation and surrender by such holder of its security to any
paying agent, by check drawn on a bank in New York City and mailed on the business day immediately before the interest due date.
Payment of Additional Amounts
Subject to the various exceptions and limitations set forth below, we may pay as additional interest or principal, as the case may be, on the debt securities, all
such additional amounts that are necessary in order that the net payment by us or a paying agent of the principal of and interest on the debt securities to a person that is not a "U.S." person "for
U.S.", federal income tax purposes, after deduction for any tax, assessment or governmental charge of the United States or a political subdivision or taxing authority thereof or therein, imposed by
withholding with respect to the payment and as a
14
result
of any change in, or amendment to, the laws (or any regulations or rulings promulgated thereunder) of the United States (or any political subdivision or taxing authority thereof or therein), or
any change in, or amendment to, the official position regarding the application or interpretation of such laws, regulations or rulings, which is announced or becomes effective on or after the closing
date of the debt securities, will not be less than the amount provided in the debt securities to be then due and payable. However, the obligation to pay additional amounts shall not apply:
(1) to
a tax, assessment or governmental charge that is imposed or withheld solely by reason of the holder, or a fiduciary, settlor, beneficiary, member or shareholder of
the holder, if the holder is an estate, trust, partnership or corporation for U.S. federal income tax purposes, or a person holding a power over such an estate, trust, partnership or corporation, or a
person holding a power over such an estate or trust administered by a fiduciary holder, being considered as:
(a) being
or having been present or engaged in a trade or business in the United States or having or having had a permanent establishment in the United States;
(b) having
a current or former connection with the United States, including a connection as a citizen or resident thereof;
(c) being
or having been a domestic personal holding company, a passive foreign investment company or a controlled foreign corporation with respect to the United States or a
corporation that has accumulated earnings to avoid U.S. federal income tax;
(d) being
or having been a private foundation or other tax-exempt organization;
(e) being
or having been a "10-percent shareholder" of the Company as defined in Section 871(h)(3) of the U.S. Internal Revenue Code of 1986, as amended,
or any successor provision; or
(f) being
a bank receiving payments on an extension of credit made pursuant to a loan agreement entered into in the ordinary course of its trade or business;
(2) to
any holder that is not the sole beneficial owner of the debt securities, or a portion thereof, or that is a fiduciary or partnership, but only to the extent that a
beneficiary or settlor with respect to the fiduciary, a beneficial owner or member of the partnership would not have been entitled to the payment of an additional amount had the beneficiary, settlor,
beneficial owner or member received directly its beneficial or distributive share of the payment;
(3) to
a tax, assessment or governmental charge that is imposed or withheld solely by reason of the failure of the holder or any other person to comply with certification,
identification or information reporting requirements concerning the nationality, residence, identity or connection with the United States of the holder or beneficial owner of such debt security, if
compliance is required by statute or regulation of the United States or of any political subdivision or taxing authority thereof or therein, or by an applicable income tax treaty to which the United
States is a party as a precondition to exemption from such tax, assessment or other governmental charge;
(4) to
a tax, assessment or governmental charge that is imposed otherwise than by withholding by us or a paying agent from payments on or in respect of a debt security;
(5) to
a tax, assessment or governmental charge that is imposed or withheld by reason of the presentation by or on behalf of the beneficial owner of any debt security for
payment on a date more than 15 days after the payment becomes due or is duly provided for, whichever occurs later;
(6) to
an estate, inheritance, gift, sales, excise, transfer, wealth or personal property tax or a similar tax, assessment or governmental charge;
15
(7) to
any tax, assessment or other governmental charge required to be withheld by any paying agent from any payment of principal of or interest on any debt security, if
such payment can be made without such withholding by any other paying agent; or
(8) in
the case of any combination of any of the above items;
nor
shall additional amounts be paid with respect to any payment on a debt security to a holder who is a fiduciary or partnership or other than the sole beneficial owner of such payment to the extent
such payment would be required by the laws of the United States (or any political subdivision thereof) to be included in the income, for tax purposes, of a beneficiary or settlor with respect to such
fiduciary or a member of such partnership or a beneficial owner who would not have been entitled to the additional amounts had such beneficiary, settlor, member or beneficial owner held its interest
in the debt security directly.
The
debt securities are subject in all cases to any tax, fiscal or other law or regulation or administrative or judicial interpretation that is applicable to them. Except as specifically
provided under this heading "Payment of Additional Amounts" and under the heading "Redemption Upon Certain Tax Events," we are not required to make any payments with respect
to any tax, assessment or governmental charge imposed by any government or a political subdivision or taxing authority thereof or therein.
Unclaimed Amounts
The Indentures provide that any payments in respect of principal and any interest remaining that are unclaimed for two years after their due date will be paid to
us, and the holder of the debt security will after that time look, as an unsecured creditor, only to us for payment of those amounts.
Governing Law
The Indentures, the Senior Debt Securities and the Subordinated Debt Securities will be governed by and construed in accordance with the laws of the State of New
York.
DESCRIPTION OF WARRANTS
This section sets forth certain general terms and provisions of the warrants to which any prospectus supplement may relate. The particular terms of the warrants
offered by any prospectus supplement and the extent to which such general terms and provisions will not apply to the warrants so offered will be described in the prospectus supplement relating to
those warrants.
We
may issue warrants that are debt warrants, index warrants, interest rate warrants or universal warrants as described in the applicable prospectus supplement. Warrants may be offered
independently of or together with one or more additional warrants, any series of debt securities, preferred stock or other securities or any combination thereof and may be attached to or separate from
any such securities. The warrants will be settled either through physical delivery or through payment of a cash settlement value as described in this prospectus and in any applicable prospectus
supplement.
Each
series of warrants will be issued under a separate warrant agreement to be entered into between us and a bank or a trust company, as warrant agent, all as described in the
prospectus supplement relating to that series of warrants. The warrant agent will act solely as our agent under the applicable warrant agreement and in connection with the certificates for any
warrants of that series, and will not assume any obligation or relationship of agency or trust for or with any holders of those warrant certificates or beneficial owners of those warrants.
This
section, along with the description in the applicable prospectus supplement, is a summary of certain provisions of the forms of warrant agreements and warrant certificates and is
not complete. We
16
urge
you to read the warrant agreements and the warrant certificates, because those documents, and not these descriptions, define your rights as a holder of warrants. We have filed copies of the forms
of the warrant agreements and warrant certificates as exhibits to the Registration Statement of which this prospectus is a part. Copies of the forms of warrant agreements and warrant certificates are
available as described under "Where You Can Find More Information."
Debt Warrants
We may issue, together with debt securities or separately, debt warrants for the purchase of debt securities on terms to be determined at the time of sale.
Index Warrants
We may issue index warrants entitling the holders thereof to receive from us, upon exercise, an amount in cash determined by reference to decreases or increases
in the level of a specific index or in the levels (or relative levels) of two or more indices or combinations of indices, which index or indices may be based on one or more stocks, bonds or other
securities, one or more interest rates, one or more currencies or currency units, or any combination of the foregoing.
Interest Rate Warrants
We may issue interest rate warrants entitling the holders thereof to receive from us, upon exercise, an amount in cash determined by reference to decreases or
increases in the yield or closing price of one or more specified debt instruments or in the interest rates, interest rate swap rates, or other rates established from time to time by one or more
specified financial institutions, or any combination of the foregoing.
Universal Warrants
We may also issue universal warrants:
-
-
to
purchase or sell securities of one or more issuers, securities based on the performance of an issuer, securities based on the performance of an issuer but excluding the
performance of a particular subsidiary or subsidiaries of that issuer, a basket of securities, or securities whose value is determined by reference to the performance, level, or value of, any other
financial, economic or other measure or instrument, including the occurrence or non-occurrence of any event or circumstance, or any combination of the above;
-
-
entitling
the holders thereof to receive from us, upon exercise, an amount in cash determined by reference to the right to purchase or the right to sell a specified amount
of one or more currencies or currency units or any combination of the foregoing for a specified amount of one or more different currencies or currency units or any combination of the foregoing;
-
-
to
purchase or sell commodities; or
-
-
in
such other form as shall be specified in the applicable prospectus supplement.
We
refer to the property in the above clauses as the warrant property. We may satisfy our obligations, if any, with respect to any universal warrants by delivering the warrant property,
cash or in the case of warrants to purchase or sell securities or commodities, the cash value of the securities or commodities, as described in the applicable prospectus supplement.
17
Further Information in Prospectus Supplement
The applicable prospectus supplement may contain, where applicable, the following additional information relating to the warrants:
The applicable prospectus supplement may contain, where applicable, the following additional information relating to any debt warrants:
The applicable prospectus supplement may contain, where applicable, the following additional information relating to any index and interest rate warrants:
-
-
the
exercise price, if any;
18
The applicable prospectus supplement may contain, where applicable, the following additional information relating to any universal warrants:
-
-
whether
the universal warrants are put warrants or call warrants and whether you or we will be entitled to exercise the warrants;
-
-
the
specific warrant property, and the amount or the method for determining the amount of the warrant property, that may be purchased or sold upon exercise of each universal
warrant;
19
-
-
the
currency in which the exercise price, if any, and the cash settlement value of such warrants is payable;
-
-
the
base currency and the reference currency for any currency warrants;
-
-
the
price at which and the currency with which the underlying securities or commodities may be purchased or sold upon the exercise of each universal warrant, or the method
of determining that price;
-
-
whether
the exercise price may be paid in cash, by the exchange of any other security offered with the universal warrants or both and the method of exercising the universal
warrants; and
-
-
whether
the exercise of the universal warrants is to be settled in cash or by delivery of the underlying securities or commodities or both.
Before
you exercise your warrants, you will not have any of the rights of (1) holders of the debt securities of the series purchasable upon such exercise, including the right to
receive payments of principal, any premium or interest on those debt securities, or to enforce any of the covenants or rights in the relevant indenture or any other agreement or (2) holders of
preferred stock or other securities purchasable upon such exercise, including the right to receive payments of dividends, if any, on such preferred stock or other securities or to exercise any
applicable right to vote.
You
may exchange registered warrants of any series for registered warrants of the same series representing in total the number of warrants that you have surrendered for exchange. To the
extent permitted, you may exchange warrant certificates and transfer registered warrants at the corporate trust office of the warrant agent for that series of warrants (or any other office indicated
in the prospectus supplement relating to that series of warrants).
Unless
otherwise specified in the applicable prospectus supplement, warrants will be issued in book-entry only form, and will be represented by a single global warrant
certificate, registered in the name of the nominee of the depository of the warrants.
Bearer
warrants will be transferable by delivery. The applicable prospectus supplement will describe the terms of exchange applicable to any bearer warrants.
Exercise of Warrants
You may exercise your warrants at the corporate trust office of the warrant agent (or any other office indicated in the prospectus supplement relating to those
warrants) up to 5:00 p.m., New York time, on the date stated in the prospectus supplement relating to those warrants or as may be otherwise stated in the prospectus supplement. If you do not
exercise your warrants before the time on that date (or such later date that we may set), your unexercised warrants will become void.
Only
registered securities will be issued and delivered upon exercise of registered warrants. Warrants will be deemed to have been exercised upon receipt of the warrant certificate and
any payment, if applicable, at the corporate trust office of the warrant agent or any other office indicated in the applicable prospectus supplement and we will, as soon as practicable after such
receipt and payment, issue and deliver the warrant property or pay the settlement value in respect of the warrants.
If
fewer than all of the warrants represented by such warrant certificate are exercised, a new warrant certificate will be issued for the remaining amount of the warrants. Special
provisions relating to the exercise of any bearer warrants or automatic exercise of warrants will be described in the applicable prospectus supplement.
20
DESCRIPTION OF PREFERRED STOCK
This section describes certain general terms and provisions of the preferred stock to which any prospectus supplement may relate. The particular terms of the
preferred stock offered by any prospectus supplement and the extent, if any, to which such general terms will not apply to the preferred stock so offered will be described in the prospectus supplement
relating to such preferred stock.
This
section, along with the description in the applicable prospectus supplement, is a summary of certain provisions of our restated certificate of incorporation, as amended, including
the applicable certificates of designation, and is not complete.
We
urge you to read the restated certificate of incorporation, as amended, and the certificate of designation for the relevant series of preferred stock in which you are intending to
invest, because those documents, and not these descriptions, define your rights as a holder of preferred stock. We have filed a copy of the restated certificate of incorporation, as amended, and the
certificates of designation for our currently outstanding shares of preferred stock as exhibits to the Registration Statement of which this prospectus is a part. Copies of the restated certificate of
incorporation, as amended, are available described under "Where You Can Find More Information."
General
Our restated certificate of incorporation, as amended, authorizes the issuance of 10,000,000 shares of preferred stock, $1.00 par value. We may issue preferred
stock from time to time in one or more series. The exact terms of each series will be established by our board of directors or a duly authorized committee of the board.
The
terms of any particular series of preferred stock will be described in the prospectus supplement relating to that particular series of preferred stock, including, where applicable:
(1) the
designation, stated value and liquidation preference of such preferred stock and the number of shares offered;
(2) the
offering price;
(3) the
dividend rate or rates (or method of calculation), the date or dates from which dividends shall accrue, and whether such dividends shall be cumulative or
noncumulative and, if cumulative, the dates from which dividends shall commence to cumulate;
(4) any
redemption or sinking fund provisions;
(5) the
amount that shares of such series shall be entitled to receive in the event of our liquidation, dissolution or winding up;
(6) the
terms and conditions, if any, on which shares of such series shall be exchangeable for shares of our stock of any other class or classes, or other series of the same
class;
(7) the
voting rights, if any, of shares of such series in addition to those set forth in "Voting Rights" below;
(8) the
status as to reissuance or sale of shares of such series redeemed, purchased or otherwise reacquired, or surrendered to us on conversion or exchange;
(9) the
conditions and restrictions, if any, on the payment of dividends or on the making of other distributions on, or the purchase, redemption or other acquisition by us
or any subsidiary of, the common stock or any other class of our stock ranking junior to the shares of such series as to dividends or upon liquidation;
21
(10) the
conditions and restrictions, if any, on the creation of indebtedness of us or of any subsidiary, or on the issue of any additional stock ranking on a parity with or
prior to the shares of such series as to dividends or upon liquidation; and
(11) any
additional dividend, liquidation, redemption, sinking or retirement fund and other rights, preferences, privileges, limitations and restrictions of such preferred
stock.
The
preferred stock will, when issued, be fully paid and nonassessable. Unless otherwise specified in the applicable prospectus supplement, the shares of each series of preferred stock
will upon issuance rank senior to the common stock and on a parity in all respects with each other outstanding series of preferred stock. As of May 31, 2006, there were outstanding:
-
-
3,493,250
depositary shares, each representing a one-fourth interest in a share of 6.15% Cumulative Preferred Stock, Series E;
-
-
1,800,200
depositary shares, each representing a one-fourth interest in a share of 5.72% Cumulative Preferred Stock, Series F; and
-
-
2,044,675
depositary shares, each representing a one-fourth interest in a share of 5.49% Cumulative Preferred Stock, Series G.
The
preferred stock will have no preemptive rights to subscribe for any additional securities that may be issued by us.
Dividends
Unless otherwise specified in the applicable prospectus supplement, before any dividends may be declared or paid to the holders of shares of our common stock, par
value $1.00 per share, or of any other of our capital stock ranking junior to any series of the preferred stock as to the payment of dividends, the holders of the preferred stock of that series will
be entitled to receive, when and as declared by the board of directors or a duly authorized committee of the board, out of our net profits or net assets legally available therefor, dividends payable
quarterly on January 15, April 15, July 15 and October 15, in each year at such rates as will be specified in the applicable prospectus supplement. Such rates may be fixed
or variable or both. If variable, the formula used for determining the dividend rate for each dividend period will be specified in the applicable prospectus supplement. Dividends will be payable to
the holders of record as they appear on our stock transfer records on such dates (not less than 15 days nor more than 60 days prior to a dividend payment date) as will be fixed by the
board of directors or a duly authorized committee thereof. Dividends will be paid in the form of cash.
Dividends
on any series of preferred stock may be cumulative or noncumulative, as specified in the applicable prospectus supplement. If the board of directors fails to declare a dividend
payable on a dividend payment date on any series of preferred stock for which dividends are noncumulative, then the holders of the preferred stock of that series will have no right to receive a
dividend in respect of the dividend period relating to such dividend payment date, and we will have no obligation to pay the dividend accrued for such period, whether or not dividends on that series
are declared or paid on any future dividend payment dates. If dividends on any series of preferred stock are not paid in full or declared in full and sums set apart for the payment thereof, then no
dividends shall be declared and paid on that series unless declared and paid ratably on all shares of every series of preferred stock then outstanding, including dividends accrued or in arrears, if
any, in proportion to the respective amounts that would be payable per share if all such dividends were declared and paid in full.
The
prospectus supplement relating to a series of preferred stock will specify the conditions and restrictions, if any, on the payment of dividends or on the making of other
distributions on, or the purchase, redemption or other acquisition by us or any of our subsidiaries of, the common stock or any other class of our stock ranking junior to the shares of that series as
to dividends or upon liquidation
22
and
any other preferences, rights, restrictions and qualifications that are not inconsistent with the certificate of incorporation and the applicable certificates of designation.
Liquidation Rights
Unless otherwise specified in the prospectus supplement relating to a series of preferred stock, upon our liquidation, dissolution or winding up (whether
voluntary or involuntary), the holders of preferred stock of that series will be entitled to receive out of our assets available for distribution to our stockholders, whether from capital, surplus or
earnings, the amount specified in the applicable prospectus supplement for that series, together with all dividends accrued and unpaid, before any distribution of the assets will be made to the
holders of common stock or any other class or series of shares ranking junior to that series of preferred stock upon liquidation, dissolution or winding up, and will be entitled to no other or further
distribution. If, upon our liquidation, dissolution or winding up, the assets distributable among the holders of a series of preferred stock shall be insufficient to permit the payment in full to the
holders of that series of preferred stock of all amounts payable to those holders, then the entire amount of our assets thus distributable will be distributed ratably among the holders of that series
of preferred stock in proportion to the respective amounts that would be payable per share if those assets were sufficient to permit payment in full.
Neither
our consolidation, merger or other business combination with or into any other individual, firm, corporation or other entity nor the sale, lease, exchange or conveyance of all or
any part of our property, assets or business will be deemed to be a liquidation, dissolution or winding up.
Redemption
If so specified in the applicable prospectus supplement, any series of preferred stock may be redeemable, in whole or in part, at our option or pursuant to a
retirement or sinking fund or otherwise, on terms and at the times and the redemption prices specified in that prospectus supplement. If less than all shares of the series at the time outstanding are
to be redeemed, the shares to be redeemed will be selected pro rata or by lot, in such manner as may be prescribed by resolution of the board of directors.
Notice
of any redemption of a series of preferred stock will be given by publication in a newspaper of general circulation in the Borough of Manhattan, the City of New York, not less
than 30 nor more than 60 days prior to the redemption date. We will mail a similar notice, postage prepaid, not less than 30 nor more than 60 days prior to the redemption date, addressed
to the respective holders of record of shares of that series at the addresses shown on our stock transfer records, but the mailing of such notice will not be a condition of such redemption. In order
to facilitate the redemption of shares of preferred stock, the board of directors may fix a record date for the determination of the shares to be redeemed. Such record date will be not more than
60 days nor less than 30 days prior to the redemption date.
23
Prior to the redemption date, we will deposit money for the payment of the redemption price with a bank or trust company doing business in the Borough of Manhattan, the City of New York,
and having a capital and surplus of at least $10,000,000. Unless we fail to make such deposit, on the redemption date, all dividends on the series of preferred stock called for redemption will cease
to accrue and all rights of the holders of shares of that series as our stockholders shall cease, except the right to receive the redemption price (but without interest). Unless otherwise specified in
the applicable prospectus supplement, any monies so deposited which remain unclaimed by the holders of the shares of that series at the end of six years after the redemption date will become our
property, and will be paid by the bank or trust company with which it has been so deposited to us.
Conversion Rights
Unless otherwise specified in the applicable prospectus supplement, no series of preferred stock will be convertible into common stock.
Voting Rights
Unless otherwise determined by the board of directors and indicated in the applicable prospectus supplement, holders of the preferred stock of that series will
not have any voting rights except as described below or as otherwise from time to time required by law. Whenever dividends on any series of preferred stock or any other class or series of stock
ranking on a parity with that series with respect to the payment of dividends shall be in arrears for dividend periods, whether or not consecutive, containing in the aggregate a number of days
equivalent to six calendar quarters, the holders of shares of that series (voting separately as a class with all other series of preferred stock upon which like voting rights have been conferred and
are exercisable) will be entitled to vote for the election of two of the authorized number of our directors at the next annual meeting of stockholders and at each subsequent meeting until all
dividends accumulated on that series have been fully paid or set apart for payment. The term of office of all directors elected by the holders of a series of preferred stock shall terminate
immediately upon the termination of the right of the holders of that series to vote for directors. Whenever the shares of a series are or become entitled to vote, each holder of shares of that series
will have one vote for each share held.
So
long as shares of any series of preferred stock remain outstanding, we shall not, without the consent of the holders of at least two-thirds of the shares of that series
outstanding at the time
(voting separately as a class with all other series of preferred stock upon which like voting rights have been conferred and are exercisable):
(1) issue
or increase the authorized amount of any class or series of stock ranking senior to the shares of that series as to dividends or upon liquidation; or
(2) amend,
alter or repeal the provisions of our certificate of incorporation or of the resolutions contained in the certificates of designation, whether by merger,
consolidation or otherwise, so as to materially and adversely affect any power, preference or special right of the outstanding shares of that series or the holders thereof. Any increase in the amount
of the authorized common stock or authorized preferred stock or the creation and issuance of common stock or any other series of preferred stock ranking on a parity with or junior to a series of
preferred stock as to dividends and upon liquidation shall not be deemed to materially and adversely affect the powers, preferences or special rights of the shares of that series.
Unless
otherwise indicated in the applicable prospectus supplement, the transfer agent, dividend disbursing agent and registrar for each series of preferred stock will be Mellon Investor
Services L.L.C.
24
DESCRIPTION OF DEPOSITARY SHARES
This section describes certain general terms and provisions of the depositary shares and depositary receipts which we may elect to issue and to which any
prospectus supplement may relate.
This
section, along with the description in the applicable prospectus supplement, is a summary of certain provisions of the deposit agreement (a form of which is filed as an exhibit
hereto) relating to the applicable series of Preferred Stock and is not complete.
General
We may, at our option, elect to offer fractional interests in shares of a series of preferred stock, rather than whole shares. If we exercise our option, we will
provide for the issuance by a depository of depositary receipts evidencing depositary shares, each of which will represent a fractional interest (to be specified in the applicable prospectus
supplement) in a share of a particular series of the Preferred Stock as more fully described below.
If
we offer fractional shares of any series of preferred stock, those shares will be deposited under a separate deposit agreement among us, a depositary bank or trust company selected by
us and having its principal office in the United States and having a combined capital and surplus of at least $50,000,000 and the holders from time to time of the depositary receipts issued thereunder
by that depository. The applicable prospectus supplement will set forth the name and address of the depositary. Subject to the terms of the deposit agreement, each owner of a depositary share will be
entitled, in proportion to the applicable fractional interest in a share of preferred stock underlying such depositary share, to all the rights and preferences of the fractional share of preferred
stock underlying such depositary share (including dividend, voting, redemption and liquidation rights).
Until
definitive engraved depositary receipts are prepared, upon our written order, the depository may issue temporary depositary receipts substantially identical to (and entitling the
holders thereof to all the rights pertaining to) the definitive depositary receipts but not in definitive form. Definitive depositary receipts will be prepared thereafter without unreasonable delay.
Temporary depositary receipts will be exchangeable for definitive depositary receipts at our expense.
Dividends and Other Distributions
The depository will distribute to the holders of depositary receipts evidencing depositary shares all cash dividends or other cash distributions received in
respect of the underlying fractional shares of preferred stock in proportion to their respective holdings of the depositary shares on the relevant record date. The depository will distribute only the
amount that can be distributed without attributing to any holder of depositary shares a fraction of one cent. Any balance not so distributed will be held by the depository (without liability for
interest thereon) and will be added to and treated as part of the next sum received by the depository for distribution to holders of depositary receipts then outstanding.
If
we distribute property other than cash in respect of shares of preferred stock deposited under a deposit agreement, the depository will distribute the property received by it to the
record holders of depositary receipts evidencing the depositary shares relating to those shares of preferred stock, in proportion, as nearly as may be practicable, to their respective holdings of the
depositary shares on the relevant record dates. If the depository determines that it is not feasible to make such a distribution, the depository may, with our approval, adopt such method as it deems
equitable and practicable to give
effect to the distribution, including the sale of the property so received and distribution of the net proceeds from such sale to the holders of the depositary receipts.
Each
deposit agreement will also contain provisions relating to the manner in which any subscription or similar right offered by us to holders of the preferred stock deposited under such
deposit agreement will be made available to holders of depositary shares.
25
Redemption of Depositary Shares
If the shares of preferred stock deposited under a deposit agreement are subject to redemption, in whole or in part, then, upon any such redemption, the
depositary shares relating to those deposited shares will be redeemed from the proceeds received by the depository as a result of the redemption. Whenever we redeem shares of preferred stock held by a
depository, the depository will redeem as of the same redemption date the number of depositary shares representing the shares of preferred stock so redeemed. The depository will mail the notice of
redemption not less than 20 and not more than 50 days prior to the date fixed for redemption to the record holders of the depositary shares to be so redeemed. The redemption price per
depositary share will be equal to the applicable fraction of the per share redemption price of the preferred stock underlying such depositary share. If less than all the depositary shares are to be
redeemed, the depositary shares to be redeemed will be selected by lot or pro rata as may be determined by the depository.
Once
notice of redemption has been given, from and after the redemption date, the depositary shares called for redemption will no longer be deemed to be outstanding, unless we fail to
redeem the shares of preferred stock so called for redemption. On the redemption date, all rights of the holders of depositary shares will cease, except for the right to receive the monies payable
upon such redemption and any money or other property to which the holders of depositary shares were entitled upon such redemption (but without interest), upon surrender to the depository of the
depositary receipts evidencing depositary shares.
Voting Rights
As soon as practicable after receipt of notice of any meeting at which the holders of shares of preferred stock deposited under a deposit agreement are entitled
to vote, the depository will mail the information contained in that notice of meeting (and any accompanying proxy materials) to the holders
of the depositary shares relating to such preferred stock as of the record date for such meeting. Each such holder will be entitled, subject to any applicable restrictions, to instruct the depository
as to the exercise of the voting rights of the preferred stock represented by such holder's depositary shares. The depository will attempt to vote the preferred stock represented by those depositary
shares in accordance with the holder's instructions, and we will agree to take all action deemed necessary by the depository to enable the depository to do so. The depository will abstain from voting
shares of preferred stock deposited under a deposit agreement if it has not received specific instructions from the holders of the depositary shares representing those shares.
Withdrawal of Stock
Upon surrender of depositary receipts at the principal office of the depository (unless the depositary shares evidenced by the depositary receipts have previously
been called for redemption), and subject to the terms of the deposit agreement, the owner of the depositary shares shall be entitled to delivery of whole shares of preferred stock and all money and
other property, if any, represented by those depositary shares. Fractional shares of preferred stock will not be delivered. If the depositary receipts surrendered by the holder evidence depositary
shares in excess of those representing the number of whole shares of preferred stock to be withdrawn, the depository will deliver to the holder at the same time a new depositary receipt evidencing the
excess depositary shares. Holders of shares of preferred stock which are withdrawn will not thereafter be entitled to deposit such shares under a deposit agreement or to receive depositary shares. We
do not expect that there will be any public trading market for the preferred stock, except as represented by depositary shares.
26
Amendment and Termination of the Deposit Agreement
We may from time to time amend the form of depositary receipt evidencing any depositary shares and any provision of a deposit agreement by agreement between us
and the depository. However, any amendment that materially and adversely alters the rights of the existing holders of depositary shares will not be effective unless and until approved by the holders
of at least a majority of the depositary shares then outstanding under that deposit agreement. Each deposit agreement will provide that each holder of depositary shares who continues to hold those
depositary shares at the time an amendment becomes effective will be deemed to have consented to the amendment and will be bound by that amendment. Except as may be necessary to comply with any
mandatory provisions of applicable law, no amendment may impair the right, subject to the terms of the deposit agreement, of any holder of any depositary shares to surrender the depositary receipt
evidencing those depositary shares to the depository together with instructions to deliver to the holder the whole shares of preferred stock
represented by the surrendered depositary shares and all money and other property, if any, represented thereby. A deposit agreement may be terminated by us or the depository only if:
(1) all
outstanding depositary shares issued under the deposit agreement have been redeemed; or
(2) there
has been a final distribution in respect of the preferred stock relating to those depositary shares in connection with any liquidation, dissolution or winding up
of the Company and the amount received by the depository as a result of that distribution has been distributed by the depository to the holders of those depositary shares.
Charges of Depository
We will pay all transfer and other taxes and governmental charges arising solely from the existence of the depositary arrangements. We will pay charges of any
depository in connection with the initial deposit of preferred stock and the initial issuance of the depositary shares and any redemption of such preferred stock. Holders of depositary shares will pay
any other taxes and charges incurred for their accounts as are provided in the deposit agreement.
Reports
Each depository will forward to the holders of depositary shares issued by that depository all reports and communications from us that are delivered to the
depository and that we are required to furnish to the holders of the preferred stock held by the depository. In addition, each depository will make available for inspection by the holders of those
depositary shares, at the principal office of such depository and at such other places as it may from time to time deem advisable, all reports and communications received from us that are received by
such depository as the holder of preferred stock.
Limitation on Liability
Neither we nor any depository will assume any obligation or will be subject to any liability under a deposit agreement to holders of the depositary shares other
than for its negligence or willful misconduct. Neither we nor any depository will be liable if it is prevented or delayed by law or any circumstance beyond its control in performing its obligations
under a deposit agreement. The obligations of us and any depository under a deposit agreement will be limited to performance in good faith of its duties thereunder, and they will not be obligated to
prosecute or defend any legal
proceeding in respect of any depositary shares or preferred stock unless satisfactory indemnity is furnished. We and any depository may rely on written advice of counsel or accountants, on information
provided by persons presenting preferred stock for deposit, holders of depositary shares or other persons believed in good faith to be competent to give such information and on documents believed to
be genuine and to have been signed or presented by the proper party or parties.
27
Resignation and Removal of Depository
A depository may resign at any time by delivering to us notice of its election to resign, and we may remove any depository at any time. Any such resignation or
removal will take effect upon the appointment of a successor depository and its acceptance of such appointment. Such successor depository must be appointed within 60 days after delivery of the
notice of resignation or removal and must be a bank or trust company having its principal office in the United States of America and having a combined capital and surplus of at least $50,000,000.
DESCRIPTION OF PURCHASE CONTRACTS
This section describes certain general terms and provisions of the purchase contracts which we may elect to issue. The particular terms of any offered purchase
contracts will be described in the applicable prospectus supplement. In addition, we may issue a purchase contract separately or as part of a unit as described below in "Description of Units."
General
The following description of the purchase contracts sets forth certain general terms and provisions of the purchase contracts to which any prospectus supplement
may relate. We urge you to read the more detailed provisions of the applicable purchase contracts for a complete description and for provisions that might be important to you because these documents,
and not these descriptions, define your rights as a party to the purchase contract. We have filed copies of the forms of the purchase contract reflecting the particular terms and provisions of a
series of offered purchase contracts as exhibits to the Registration Statement of which this prospectus is a part. Copies of the forms of the purchase contracts are available as described under "Where
You Can Find More Information."
Purchase Contract Property
We may offer purchase contracts for the purchase or sale of, or whose cash value is determined in whole or in part by reference to the performance, level or value
of, one or more of the following:
-
-
securities
of one or more issuers, including our securities;
-
-
one
or more currencies;
-
-
one
or more commodities;
-
-
any
index, formula or any other method, including a method based on changes in the prices or performance of particular securities, currencies, intangibles, goods, articles,
or commodities; or any other financial, economic or other measure or instrument, including the occurrence or non-occurrence of any event or circumstance, which may include any credit event
relating to any company or companies or other entity or entities, which may include a government or governmental agency, other than us; and/or
-
-
one
or more indices or baskets of the items described above.
Each
instrument, measure or event described above is referred to as a "Purchase Contract Property."
Each
purchase contract will obligate the holder to purchase or sell, and obligate us to sell or purchase, on specified dates, one or more Purchase Contract Properties at a specified
price or prices, or the holder or us to settle the purchase contract with a cash payment determined by reference to the value, performance or level of one or more Purchase Contract Properties, on
specified dates and at a specified price or prices.
28
Some
purchase contracts may include multiple obligations to purchase or sell different Purchase Contract Properties, and both we and the holder may be sellers or buyers under the same
purchase contract.
Types of Purchase Contracts We May Issue
We may issue purchase contracts in such amounts and in as many distinct series as we wish. We may also "reopen" a previously issued series of purchase contracts
and issue additional purchase contracts of that series. In addition, we may issue a purchase contract separately or as part of a unit, as described below under "Description of Units."
This
section summarizes terms of the purchase contracts that apply generally to all purchase contracts. We describe most of the financial and other specific terms of your purchase
contract in the applicable prospectus supplement and those terms may vary from the terms described here.
As
you read this section, please remember that the specific terms of your purchase contract as described in the prospectus supplement will supplement and, if applicable, may modify or
replace the general terms described in this section. If there are differences between the prospectus supplement and this prospectus, the prospectus supplement will control. Thus, the statements we
make in this section may not apply to your purchase contract.
When
we refer to a series of purchase contracts, we mean all the purchase contracts issued as part of the same series under the applicable governing instrument. When we refer to the
prospectus supplement, we mean the prospectus supplement describing the specific terms of the purchase contract you purchase. The terms used in the prospectus supplement will have the meanings
described in this prospectus, unless otherwise specified.
General Terms of Purchase Contracts
The applicable prospectus supplement may contain, where applicable, the following information about your purchase contract:
-
-
whether
the purchase contract obligates the holder to purchase or sell, or both purchase and sell, one or more Purchase Contract Properties and the nature and amount of each
of those properties, or the method of determining those amounts;
-
-
whether
the purchase contract is to be prepaid or not and the governing document for the contract;
-
-
whether
the purchase contract is to be settled by delivery, or by reference or linkage to the value, performance or level of, the Purchase Contract Properties;
-
-
any
acceleration, cancellation, termination or other provisions relating to the settlement of the purchase contract;
-
-
any
applicable U.S. federal income tax consequences;
-
-
whether
the purchase contract will be issued as part of a unit and, if so, the other securities comprising the unit and whether any unit securities will be subject to a
security interest in our favor as described below; and
-
-
whether
the purchase contract will be issued in fully registered or bearer form and in global or non-global form.
If
we issue a purchase contract as part of a unit, the accompanying prospectus supplement will state whether the contract will be separable from the other securities in the unit before
the contract
29
settlement
date. A purchase contract issued in a unit in the United States may not be separated before the 91st day after the unit is issued.
Purchase Contracts
Some purchase contracts may require the holders to satisfy their obligations under the purchase contracts at the time the contracts are issued. We refer to these
contracts as "Prepaid Purchase Contracts." Some purchase contracts do not require the holders to satisfy their obligations under the purchase contracts until settlement. We refer to those purchase
contracts as "Non-Prepaid Purchase Contracts." The holder of a Non-Prepaid Purchase Contract may remain obligated to perform under the purchase contract for a substantial
period of time.
Purchase
Contracts may be issued under a unit agreement, if they are issued in units, or under some other document, if they are not. We describe unit agreements generally under
"Description of Units" below. We will describe the particular governing document that applies to your Purchase Contracts in the applicable prospectus supplement.
Pledge by Holders to Secure Performance.
The applicable prospectus supplement will describe the holder's obligations under
the purchase contract and the governing documents that may be secured by collateral. In that case, the holder, acting through the unit agent as its attorney-in-fact, if
applicable, will pledge the items described below to a collateral agent named in the prospectus supplement, which will hold them, for our benefit, as collateral to secure the holder's obligations. We
refer to this as the "Pledge." The Pledge will create a security interest in and a lien upon and right of set off against the holder's entire interest in and to the unit (if the purchase contract is
part of a unit):
-
-
any
preferred stock, debt security, warrants, depositary shares or other property that is, or becomes, part of units that include the purchase contracts, or other property
as may be specified in the applicable prospectus supplement, which we refer to as the "Pledged Items;"
-
-
all
additions to and substitutions for the Pledged Items as may be permissible, if specified in the applicable prospectus supplement;
-
-
all
income, proceeds and collections received or to be received, or derived or to be derived, at any time from or in connection with the Pledged Items described above; and
-
-
all
powers and rights owned or thereafter acquired under or with respect to the Pledged Items.
The
collateral agent will forward all payments from the Pledged Items to us, unless the payments have been released from the Pledge in accordance with the purchase contract and the
governing document. We will use the payments from the Pledged Items to satisfy the holder's obligations under the purchase contract.
Form
We will issue each purchase contract in global (book-entry) form only, unless we specify otherwise in the applicable prospectus supplement. Purchase
contracts in book-entry form will be represented by a global security registered in the name of a depositary, which will be the holder of all the purchase contracts represented by the
global security. Those who own beneficial interests in a purchase contract will do so through participants in the depositary's system, and the rights of these indirect owners will be governed solely
by the applicable procedures of the depositary and its participants. We describe book-entry securities under "Book-Entry Procedures and Settlement."
30
DESCRIPTION OF UNITS
General
This section describes certain general terms and provisions of any combination of one or more debt securities, preferred stock, warrants, depositary shares,
purchase contracts and other securities and property. Each unit will be issued so that the holder of the unit is also the holder of each security included in the unit. Thus, the holder of a unit will
have the rights and obligations of a holder of each included security. The unit agreement under which a unit is issued may provide that the securities included in the unit may not be held or
transferred separately, at any time or at any time before a specified date.
The
applicable prospectus supplement may describe the designation and terms of the units and of the securities comprising the units issued by us, securities of an entity affiliated or
not affiliated with us or other property constituting the units, including whether and under what circumstances those securities may be held or transferred separately; any provisions of the governing
unit agreement that differ from those described below; any provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units; and any
applicable United States federal income tax consequences.
The
applicable provisions described in this section, as well as those described under "Description of Debt Securities," "Description of Warrants," "Description of Preferred Stock,"
"Description of Depositary Shares" "Description of Purchase Contracts," and "Description of Units" will apply to each unit and to any debt security, preferred stock, warrant, depositary share or
purchase contract included in each unit, respectively.
Series of Units We May Issue
We may issue units in such amounts and in as many distinct series as we wish. We may also "reopen" a previously issued series of units and issue additional units
of that series. This section summarizes terms of the units that apply generally to all series. We describe most of the financial and other specific terms of your series in the prospectus supplement
accompanying this prospectus. The specific terms of your unit as described in the prospectus supplement will supplement and, if applicable, may modify or replace the terms described herein.
When
we refer to a series of units, we mean all units issued as part of the same series under the applicable unit agreement. We will identify the series of which your units are a part in
the prospectus supplement. When we refer to the prospectus supplement, we mean the prospectus supplement describing the specific terms of the units you purchase. The terms used in the prospectus
supplement will have the meanings described in this prospectus, unless otherwise specified.
General Terms of a Unit Agreement
The following provisions will generally apply to all unit agreements unless otherwise stated in the applicable prospectus supplement.
Enforcement of Rights.
The unit agent under a unit agreement will act solely as our agent in connection with the units issued
under that agreement. The unit agent will not assume any obligation or relationship of agency or trust for or with any holders of those units or of the securities comprising those units. The unit
agent will not be obligated to take any action on behalf of those holders to enforce or protect their rights under the units or the included securities.
Except
as described in the next paragraph, a holder of a unit may, without the consent of the unit agent or any other holder, enforce its rights as holder under any security included in
the unit, in accordance with the terms of that security and the indenture, warrant agreement, deposit agreement,
31
purchase
contract or other agreement or instrument under which that security is issued. Those terms are described elsewhere in this prospectus under the sections relating to debt securities, preferred
stock, warrants, depositary shares and purchase contracts.
Limitations
affecting the ability of a holder of units issued under that agreement to enforce its rights, including any right to bring a legal action, will be described in the applicable
prospectus supplement.
Modification Without Consent of Holders.
We and the applicable unit agent may amend or supplement any unit or unit agreement
without the consent of any holder to evidence our successor's assumption of our obligations under the units and the unit agreement; cure any ambiguity; correct or supplement any defective or
inconsistent provision; or to make any other change that we believe is necessary or desirable and will not adversely affect the interests of the affected holders in any material respect.
We
do not need any approval to make changes that affect only units to be issued after the changes take effect. We may also make changes that do not adversely affect a particular unit in
any material respect, even if they adversely affect other units in a material respect. In those cases, we do not need to obtain the approval of the holder of the unaffected unit; we need only obtain
any required approvals from the holders of the affected units.
Modification With Consent of Holders.
We may not amend any particular unit or a unit agreement with respect to any particular
unit unless we obtain the consent of the holder of that unit, if the amendment would:
(1) modify
or affect any unit agreement or any units in a manner materially adverse to the holder; or
(2) reduce
the percentage of outstanding units the consent of whose owners is required to amend that series or class, or the applicable unit agreement with respect to that
series or class.
We
may not amend any particular purchase contract or a unit agreement as it relates to any purchase contract or the rights of the holders of units with respect to any purchase contract,
if the amendment would:
(1) impair
the right of the holder to institute suit for the enforcement of any purchase contract;
(2) reduce
the percentage of outstanding purchase contracts the consent of whose owners is required to amend the applicable unit agreement relating to purchase contracts or
for the waiver of any purchase contract defaults under any unit agreement or the consequences of such defaults; or
(3) modify
or affect the holders' rights and obligations under any purchase contract in a manner materially adverse to the holder.
Any
other change to a particular unit agreement and the units or purchase contracts issued under that agreement would require the following approval:
(1) If
the change affects only the units of a particular series issued under that agreement, the change must be approved by the holders of a majority of the outstanding
units of that series;
(2) If
the change affects the units of more than one series issued under that agreement, it must be approved by the holders of a majority of all outstanding units of all
series affected by the change, with the units of all the affected series voting together as one class for this purpose;
32
(3) If
the change affects only purchase contracts or a unit agreement as it relates to purchase contracts, the change must be approved by the holders of a majority of the
affected unsettled purchase contracts.
Unit Agreements Will Not Be Qualified Under Trust Indenture Act.
No unit agreement will be qualified as an Indenture, and no
unit agent will be required to qualify as a trustee, under the TIA. Therefore, holders of units issued under unit agreements will not have the protections of the TIA with respect to their units.
Mergers and Similar Transactions Permitted; No Restrictive Covenants or Events of Default
The unit agreements will not restrict our ability to merge or consolidate with, or sell our assets to, another corporation or other entity or to engage in any
other transactions. If at any time we merge or consolidate with, or sell our assets substantially as an entirety to, another corporation or other entity, the successor entity will succeed to and
assume our obligations under the unit agreements. We will then be relieved of any further obligation under these agreements.
The
unit agreements will not include any restrictions on our ability to put liens on our assets, including our interests in our subsidiaries, nor will they restrict our ability to sell
our assets. Other than in connection with purchase contracts and the Indentures, the unit agreements also will not provide for any events of default or remedies upon the occurrence of any events of
default.
Form, Exchange and Transfer
We will issue each unit in global (book-entry) form only, unless we specify otherwise in the applicable prospectus supplement. Units in
book-entry form will be represented by a global security registered in the name of a depositary, which will be the holder of all the units represented by the global security. Those who own
beneficial interests in a unit will do so through participants in the depositary's system, and the rights of these indirect owners will be governed solely by the applicable procedures of the
depositary and its participants. We describe book-entry securities below under "Book-Entry Procedures and Settlement."
In
addition, we will issue each unit in registered form, unless otherwise specified in the applicable prospectus supplement.
BOOK-ENTRY PROCEDURES AND SETTLEMENT
Each debt security, warrant, share of preferred stock, depositary share, purchase contract and unit in registered form will be represented either:
-
-
by
one or more global securities representing the entire issuance of securities; or
-
-
by
a certificate issued in definitive form to a particular investor.
Book-Entry System
Unless otherwise specified in a prospectus supplement, we will issue each security in book-entry only form. This means that we will not issue actual
notes or certificates. You will not receive a definitive note or other certificate representing your interest in the securities. Instead, we will issue global securities in registered form
representing the entire issuance of securities. Each global security will be registered in the name of a financial institution that holds them as depository on behalf of other financial institutions
that participate in that depository's book-entry system. These participating institutions, in turn, hold beneficial interests in the securities on their own behalf or on behalf of their
customers.
33
If a security is registered on the books that we or the Trustee, warrant agent, depository, unit agent, trustee or other agent maintain in the name of a particular investor, we refer to
that investor as the "holder" of that security. These persons are the legal holders of the securities. Consequently, for securities issued in global form, we will recognize only the depository as the
holder of the securities and we will make all payments on the securities, including deliveries of any property other than cash, to the depository. The depository passes along the payments it receives
from us to its participants, which in turn pass the payments along to their customers who are the beneficial owners. The depository and its participants are obligated to pass these payments along
under agreements they have made with one another or with their customers, and they are not obligated to do so under the terms of the securities.
As
a result, investors will not own securities issued in book-entry form directly. Instead, they will own beneficial interests in a global security through a bank, broker, or
other financial institution that participates in the depository's book-entry system or holds an interest through a participant in the depository's book-entry system. As long as
the securities are issued in global form, investors will be indirect owners, and not holders, of the securities. The depository will not have knowledge of the actual beneficial owners of the
securities.
Certificates in Registered Form
In the future we may cancel a global security or issue securities initially in non-global, or certificated, form. We do not expect to exchange global
securities for actual notes or certificates registered in the names of the beneficial owners of the global securities representing the securities unless:
-
-
the
depository, such as DTC, notifies us that it is unwilling or unable to continue as depository for the global securities or we become aware that the depository has ceased
to be a clearing agency registered under the Exchange Act, and in any case we fail to appoint a successor to the depository within 90 calendar days; or
-
-
we,
in our sole discretion, determine not to have any notes of a series represented by a global security.
Upon
the occurrence of either of the foregoing events, we will issue securities in certificated form in exchange for all outstanding global securities. An owner of a beneficial interest
in the global securities to be exchanged will be entitled to delivery in definitive form of securities equal in principal amount to such beneficial interest and to have such securities registered in
its name. Debt securities issued in definitive form will be issued in denominations of $1,000 and integral multiples of $1,000 in excess thereof, except as otherwise specified in the applicable
pricing supplement, and will be issued in registered form only, without coupons.
You
should read "Limitations on Issuance of Bearer Debt Securities and Bearer Warrants" for a description of certain restrictions on the issuance of individual bearer debt securities in
exchange for beneficial interests in a global security.
Street Name Owners
When actual notes or certificates registered in the names of the beneficial owners are issued, investors may choose to hold their securities in their own names or
in street name. Securities held by an investor in street name would be registered in the name of a bank, broker, or other financial institution that the investor chooses, and the investor would hold
only a beneficial interest in those securities through an account that he or she maintains at that institution. For securities held in street name, we will recognize only the intermediary banks,
brokers, and other financial institutions in whose names the securities are registered as the holders of those securities and we will make all payments on those securities, including deliveries of any
property other than cash, to them. These institutions pass
34
along
the payments they receive to their customers who are the beneficial owners, but only because they agree to do so in their customer agreements or because they are legally required to do so.
Investors who hold securities in street name will be indirect owners, not holders, of those securities.
Legal Holders
Our obligations, as well as the obligations of the Trustee under the Indentures and the obligations, if any, of any warrant agents, deposit agent, Property
Trustee, and any other third parties employed by us, the Trustee, or any of those agents, run only to the holders of the securities. We do not have obligations to investors who hold beneficial
interests in global securities, who hold the securities in street name, or who hold the securities by any other indirect means. This will be the case whether an investor chooses to be an indirect
owner of a security or has no choice because we are issuing the securities only in global form. For example, once we make a payment or give a notice to the holder, we have no further responsibility
for that payment or notice even if that holder is required, under agreements with depository participants or customers or by law, to pass it along to the indirect owners,
but does not do so. Similarly, if we want to obtain the approval of the holders for any purpose, such as to amend the Indenture for a series of debt securities or a warrant agreement for a series of
warrants or to relieve us of the consequences of a default or of our obligation to comply with a particular provision of the Indenture, we would seek the approval only from the holders, and not the
indirect owners, of the relevant securities. Whether and how the holders contact the indirect owners is up to the holders. When we refer to "you" in this section, we mean those who invest in the
securities being offered by this prospectus, whether they are the holders or only indirect owners of those securities. When we refer to "your securities" in this section, we mean the securities in
which you will hold a direct or indirect interest.
Special Considerations for Indirect Owners
If you hold securities through a bank, broker, or other financial institution, either in book-entry form or in street name, you should check with your
own institution to find out:
-
-
how
it handles payments on your securities and notices;
-
-
whether
you can provide contact information to the registrar to receive copies of notices directly;
-
-
whether
it imposes fees or charges;
-
-
whether
and how you can instruct it to exercise any rights to purchase or sell warrant property under a warrant or to exchange or convert a security for or into other
property;
-
-
how
it would handle a request for the holders' consent, if required;
-
-
whether
and how you can instruct it to send you the securities registered in your own name so you can be a holder, if that is permitted at any time;
-
-
how
it would exercise rights under the securities if there were a default or other event triggering the need for holders to act to protect their interests; and
-
-
if
the securities are in book-entry form, how the depository's rules and procedures will affect these matters.
Depositories for Global Securities
Each security issued in book-entry form and represented by a global security will be deposited with, and registered in the name of, one or more
financial institutions or clearing systems, or their nominees, which we will select. These financial institutions or clearing systems that we select for any
35
security
are called "depositories." Each series of securities will have one or more of the following as the depositories:
-
-
DTC;
-
-
a
financial institution holding the securities on behalf of Euroclear Bank S.A./N.V., as operator of the Euroclear system, which is known as "Euroclear;"
-
-
a
financial institution holding the securities on behalf of Clearstream Banking, société anonyme, Luxembourg, which is known as "Clearstream;"
and
-
-
any
other clearing system or financial institution named in the applicable prospectus supplement.
The
depositories named above also may be participants in one another's systems. For example, if DTC is the depository for a global security, investors may hold beneficial interests in
that security through Euroclear or Clearstream as DTC participants. The depository or depositories for your securities will be named in the applicable prospectus supplement. If no depository is named,
the depository will be DTC.
The Depository Trust Company
The following is based on information on DTC's website at www.dtcc.com:
DTC
will act as securities depository for the securities. The securities will be issued as fully-registered securities registered in the name of Cede & Co., which is DTC's
partnership nominee, or any other name as may be requested by an authorized representative of DTC. Generally, one fully registered global security will be issued for each issue of the securities, each
in the aggregate principal amount of the issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued
with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of the issue.
DTC,
the world's largest depository, 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 under Section 17A of the Exchange
Act. DTC holds and provides asset servicing for over two million issues of United States and non-United States equity issues, corporate and municipal debt issues, and money market
instruments from over 100 countries that its participants deposit with DTC. DTC also facilitates the post-trade settlement among direct participants of sales and other securities
transactions in deposited securities through electronic computerized book-entry transfers and pledges between direct participants. This eliminates the need for physical movement of
certificates representing securities. Direct participants include both United States and non-United States securities brokers and dealers, banks, trust companies, clearing corporations,
and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of direct participants of DTC and
members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, also subsidiaries of DTCC, as
well as by NYSE Group, Inc., the American Stock Exchange LLC, and the NASD. Access to the DTC system is also available to others such as both United States and non-United States
securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a direct participant, either directly or indirectly. The
DTC rules applicable to its participants are on file with the SEC.
Purchases
of the securities under the DTC system must be made by or through direct participants, which will receive a credit for the securities on DTC's records. The beneficial interest
of each actual
36
purchaser
of each security is in turn to be recorded on the direct and indirect participants' records. Beneficial owners will not receive written confirmation from DTC of their purchase. A beneficial
owner, however, is expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the direct or indirect participant through
which the beneficial owner entered into the transaction. Transfers of beneficial interests in the securities are to be accomplished by entries made on the books of direct and indirect participants
acting on behalf of beneficial owners. Beneficial owners will not receive certificates representing their beneficial interests in the securities, except if the use of the book-entry system
for the securities is discontinued.
To
facilitate subsequent transfers, all securities deposited by direct participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other
name as may be requested by an authorized representative of DTC. The deposit of securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any
change in beneficial ownership. DTC has no knowledge of the actual beneficial owners of the securities; DTC's records reflect only the identity of the direct participants to whose accounts such
securities are credited, which may or may not be the beneficial owners. The direct and indirect participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance
of notices and other communications by DTC to direct participants, by direct participants to indirect participants, and by direct 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.
None
of DTC, Cede & Co., or any other DTC nominee will consent or vote with respect to the securities unless authorized by a direct participant in accordance with DTC's
procedures. Under its usual procedures, DTC mails an omnibus proxy to us as soon as possible after the regular record date. The omnibus proxy assigns Cede & Co.'s consenting or voting rights to
those direct participants to whose accounts the securities are credited on the regular record date. These participants are identified in a listing attached to the omnibus proxy.
We
will make payments of principal, any premium, interest, or other amounts on the securities in immediately available funds directly to Cede & Co., or any other nominee as may be
requested by an authorized representative of DTC. DTC's practice is to credit direct participants' accounts upon DTC's receipt of funds and corresponding detail information from us, on the applicable
payment date in accordance with their respective holdings shown on DTC's records. Payments by participants to beneficial owners will be governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in bearer form or registered in street name. These payments will be the responsibility of these participants and not of DTC or any other
party, subject to any statutory or regulatory requirements that may be in effect from time to time. Payment of principal
and any premium or interest to Cede & Co., or any other nominee as may be requested by an authorized representative of DTC, is our responsibility. Disbursement of the payments to direct
participants is the responsibility of DTC, and disbursement of the payments to the beneficial owners is the responsibility of the direct or indirect participants.
We
will send any redemption notices to DTC. If less than all of the securities of a series are being redeemed, DTC's practice is to determine by lot the amount of the interest of each
direct participant in the issue to be redeemed.
DTC
may discontinue providing its services as depository for the securities at any time by giving us reasonable notice. If this occurs, and if a successor securities depository is not
obtained, we will print and deliver certificated securities.
The
information in this section concerning DTC and DTC's book-entry system has been obtained from sources that we believe to be reliable, but we take no responsibility for
its accuracy.
37
Clearstream and Euroclear
Each series of securities represented by a global security sold or traded outside the United States may be held through Clearstream or Euroclear, which provide
clearing, settlement, depository, and related services for internationally traded securities. Both Clearstream and Euroclear provide a clearing and settlement organization for cross-border bonds,
equities, and investment funds. Clearstream is incorporated under the laws of Luxembourg. Euroclear is incorporated under the laws of Belgium.
Euroclear
and Clearstream are securities clearance systems in Europe that clear and settle securities transactions between their participants through electronic, book-entry
delivery of securities against payment. Euroclear and Clearstream may be depositories for a global security. In addition, if DTC is the depository for a global security, Euroclear and Clearstream may
hold interests in the global security as participants in DTC. As long as any global security is held by Euroclear or Clearstream as depository, you may hold an interest in the global security only
through an organization that participates, directly or indirectly, in Euroclear or Clearstream. If Euroclear or Clearstream is the depository for a global security and there is no depository in the
United States, you will not be able to hold interests in that global security through any securities clearance system in the United States. Payments, deliveries, transfers, exchanges, notices, and
other matters relating to the securities made through Euroclear or Clearstream must comply with the rules and procedures of those systems. Those
systems could change their rules and procedures at any time. We have no control over those systems or their participants and we take no responsibility for their activities. Transactions between
participants in Euroclear or Clearstream on one hand, and participants in DTC, on the other hand, when DTC is the depository, also would be subject to DTC's rules and procedures.
Investors
will be able to make and receive through Euroclear and Clearstream payments, deliveries, transfers, exchanges, notices, and other transactions involving any securities held
through those systems only on days when those systems are open for business. Those systems may not be open for business on days when banks, brokers, and other institutions are open for business in the
United States. In addition, because of time-zone differences, United States investors who hold their interests in the securities through these systems and wish to transfer their interests,
or to receive or make a payment or delivery or exercise any other right with respect to their interests, on a particular day may find that the transaction will not be effected until the next business
day in Luxembourg or Brussels, as applicable. Thus, investors who wish to exercise rights that expire on a particular day may need to act before the expiration date. In addition, investors who hold
their interests through both DTC and Euroclear or Clearstream may need to make special arrangements to finance any purchases or sales of their interests between the United States and European clearing
systems, and those transactions may settle later than would be the case for transactions within one clearing system.
Clearstream is incorporated under the laws of Luxembourg as a professional depositary. Clearstream holds securities for its participating organizations
("Clearstream Participants") and facilitates the clearance and settlement of securities transactions between Clearstream Participants through electronic book-entry charges in accounts of
Clearstream Participants, which eliminates the need for physical movement of certificates. Clearstream provides to Clearstream Participants, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities and securities lending and borrowing.
Conducting
business in the domestic markets of several countries as a professional depositary, Clearstream is regulated by the Luxembourg Monetary Institute. Clearstream Participants are
recognized financial institutions around the world, including underwriters, securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations and may
include some of the Underwriters. Indirect access to Clearstream is also available to others, such as banks,
38
brokers,
dealers and trust companies that clear through or maintain a custodial relationship with a Clearstream Participant either directly or indirectly.
Distributions
with respect to the securities that are held beneficially through Clearstream will be credited to cash accounts of Clearstream Participants in accordance with its rules and
procedures, and to the extent received by the U.S. depositary for Clearstream.
Euroclear was created in 1968 to hold securities for its participants ("Euroclear Participants") and to clear and settle transactions between Euroclear
Participants through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of certificates and any risk from lack of simultaneous
transfers of securities and cash. The Euroclear System is owned by Euroclear Clearance System Public Limited Company ("ECSplc") and operated through a license agreement by Euroclear Bank S.A./N.V., a
bank incorporated under the laws of the Kingdom of Belgium (the "Euroclear Operator").
The
Euroclear Operator holds securities and book-entry interests in securities for participating organizations and facilitates the clearance and settlement of securities
transactions between Euroclear Participants, and between Euroclear Participants and participants of certain other securities intermediaries through electronic book-entry changes in
accounts of such participants or other securities intermediaries.
The
Euroclear Operator provides Euroclear Participants, among other things, with safekeeping, administration, clearance and settlement, securities lending and borrowing and related
services.
Non-participants
of Euroclear may hold and transfer book-entry interests in securities through accounts with a direct Euroclear Participant or any other
securities intermediary that holds a book-entry interest in securities through one or more securities intermediaries standing between such other securities intermediary and the Euroclear
Operator.
The
Euroclear Operator is regulated and examined by the Belgian Banking and Finance Commission and the National Bank of Belgium. Securities clearance accounts and cash accounts with the
Euroclear Operator are governed by the Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of the Euroclear System and applicable Belgian law (collectively, the
"Euroclear Terms and Conditions"). The Euroclear Terms and Conditions govern transfers of securities and cash within Euroclear, withdrawals of securities and cash from Euroclear, and receipts of
payments with respect to securities in Euroclear.
All
securities in Euroclear are held on a fungible basis without attribution of specific certificates to specific securities clearance accounts. The Euroclear Operator acts under the
Euroclear Terms and
Conditions only on behalf of Euroclear Participants and has no record of or relationship with persons holding through Euroclear Participants.
Distributions
with respect to securities held beneficially through Euroclear will be credited to the cash accounts of Euroclear Participants in accordance with the Euroclear Terms and
Conditions, to the extent received by the U.S. depositary for Euroclear.
Definitive securities may be issued upon:
(i) Euroclear
and/or Clearstream being closed for a continuous period of 14 days (other than by reason of public holidays); and/or
39
(ii) in
the limited circumstances set forth in "Book-Entry Procedures and SettlementCertificates in Registered Form" in the accompanying prospectus.
Definitive
securities can be transferred by presentation for registration to the registrar for the securities or other transfer agent at any of their specified offices and must be duly
endorsed by the holder or his attorney duly authorized in writing, or accompanied by a written instrument or instruments of transfer in form satisfactory to us or the Trustee, warrant agent, deposit
agent, or unit agent, as the case may be, duly executed by the holder or his attorney duly authorized in writing. We may require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any exchange or registration of transfer of definitive securities.
For
the purposes of this description, "business day" means any day, other than a Saturday or Sunday, that is not a day on which banks are authorized or required by law or regulation to
close in New York and, where definitive securities have been issued, the relevant place of presentation.
Initial settlement for the securities will be made in same day funds. Secondary market trading and transfers within DTC, Clearstream or Euroclear, as the case may
be, will be made in accordance with the usual rules and operating procedures of those systems. Secondary market trading between DTC participants will occur in the ordinary way in accordance with DTC
rules and will be settled in same day funds using DTC's Same-Day Funds Settlement System. Secondary market trading between Clearstream Participants and/or Euroclear Participants will occur
in the ordinary way in accordance with the applicable rules and operating procedures of Clearstream and Euroclear and will be settled using the procedures applicable to conventional eurobonds in
registered form in same day funds.
Since
the purchaser determines the place of delivery, it is important to establish at the time of the trade where both the purchaser's and seller's accounts are located to ensure that
settlement can be made on the desired value date.
Trading between DTC Purchasers and Sellers.
Secondary market trading between DTC participants will be settled using the
procedures applicable to global bonds in same-day funds.
Trading between Euroclear and/or Clearstream Participants.
Secondary market trading between Euroclear Participants and/or
Clearstream Participants will be settled using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC Seller and Euroclear or Clearstream Purchaser.
When securities are to be transferred from the account of
a DTC participant to the account of a Euroclear or Clearstream Participant, the purchaser will send instructions to Euroclear or Clearstream through a Euroclear or Clearstream Participant, as the case
may be, at least one business day before settlement. Euroclear or Clearstream will instruct its respective depositary to receive those securities against payment. Payment for the securities will then
be made by the depositary to the DTC participant's account against delivery of the securities. After settlement has been completed, the securities will be credited to the respective clearing systems,
and by the clearing system, in accordance with its usual procedures, to the Euroclear or Clearstream Participant's account. The securities credit will appear the next day (European time) and the cash
debit will be back-valued to the value date, which would be the preceding day when settlement occurred in New York. If settlement is not completed on the intended value date and the trade
fails, the Euroclear or Clearstream cash debit will be valued as of the actual settlement date.
Euroclear
and Clearstream Participants will need to make available to the respective clearing systems the funds necessary to process same-day funds settlement. The most
direct means of doing so is to preposition funds for settlement, either from cash on hand or existing lines of credit. However,
40
under
this approach, DTC participants may take on credit exposure to Euroclear and Clearstream until the interests in the Global Security are credited to their accounts one day later.
As
an alternative, if Euroclear or Clearstream has extended a line of credit to a Euroclear or Clearstream Participant, as the case may be, that Participant may elect not to preposition
funds and allow that credit line to be drawn upon to finance settlement. Under this procedure, Euroclear or Clearstream Participants purchasing securities would incur overdraft charges for one day,
assuming they cleared the overdraft when the securities were credited to their accounts. However, interest on the securities would accrue from the value date. Therefore, in many cases the investment
income on securities earned during that one-day period may substantially reduce or offset the amount of such overdraft charges, although this result will depend on each Participant's
particular cost of funds.
Since
the settlement occurs during New York business hours, DTC participants can employ their usual procedures for transferring global bonds to the respective depositaries of Euroclear
or Clearstream for the benefit of Euroclear or Clearstream Participants. The sale proceeds will be available to the DTC seller on the settlement date. Thus, to the DTC seller, a cross-market sale
transaction will settle no differently than a trade between two DTC Participants.
Trading between Euroclear or Clearstream Seller and DTC Purchaser.
Because the time zone difference operates in their favor,
Euroclear and Clearstream Participants may employ their customary procedures for transactions in which securities are to be transferred by the respective clearing system, through its respective
depositary, to a DTC participant. The seller will send instructions to Euroclear or Clearstream through a Euroclear or Clearstream Participant at least one business day before settlement. In these
cases, Euroclear or Clearstream will instruct its respective depositary to credit the securities to the DTC participant's account against payment. The payment will then be reflected in the account of
the Euroclear or Clearstream Participant on the following day, and receipt of the cash proceeds in the Euroclear or Clearstream Participant's account would be back-valued to the value date
(which would be the preceding day, when settlement occurred in New York).
If
the Euroclear or Clearstream Participant has a line of credit in its respective clearing system and elects to be in a debt position in anticipation of receipt of the sale proceeds in
its account, the back-valuation may substantially reduce or offset any overdraft charges incurred over that one-day period. If settlement is not completed on the intended value
date (that is, the trade fails), receipt of the cash proceeds in the Euroclear or Clearstream Participant's account would instead be valued as of the actual settlement date.
Finally,
day traders that use Euroclear or Clearstream to purchase securities from DTC participants for delivery to Euroclear or Clearstream Participants should note that these trades
automatically fail on the sale side unless some form of affirmative action is taken. At least three techniques should be readily available to eliminate this potential problem:
(i) borrowing
through Euroclear or Clearstream for one day (until the purchase side of the day trade is reflected in their Euroclear or Clearstream accounts) in accordance
with the clearing system's customary procedures;
(ii) borrowing
the securities in the United States from a DTC participant no later than one day before settlement, which would give the securities sufficient time to be
reflected in their Euroclear or Clearstream account in order to settle the sale side of the trade; or
(iii) staggering
the value date for the buy and sell sides of the trade so that the value date for the purchase from the DTC participant is at least one day before the value
date for the sale to the Euroclear or Clearstream Participant.
Although
DTC, Clearstream and Euroclear have agreed to the foregoing procedures in order to facilitate transfers of securities among participants of DTC, Clearstream and Euroclear, they
are not
41
obligated
to perform or continue to perform these procedures. As a result, these procedures may be discontinued at any time.
The
information in this section concerning DTC, Clearstream, Euroclear and their book-entry systems has been obtained from sources that we believe to be accurate, but we
assume no responsibility for the accuracy of this information. We are not responsible for DTC's, Clearstream's, Euroclear's or their participants' performance of their respective obligations, as they
are described above or under the rules and procedures governing their respective operations.
Special Considerations for Global Securities
As an indirect owner, an investor's rights relating to a global security will be governed by the account rules of the depository and those of the investor's
financial institution or other intermediary through which it holds its interest (e.g., Euroclear or Clearstream if DTC is the depository), as well as general laws relating to securities transfers. We
do not recognize this type of investor or any intermediary as a
holder of securities. Instead, we deal only with the depository that holds the global security. If securities are issued only in the form of a global security, an investor should be aware of the
following:
-
-
an
investor cannot cause the securities to be registered in his or her own name, and cannot obtain non-global certificates for his or her interest in the
securities, except in the special situations described above;
-
-
an
investor will be an indirect holder and must look to his or her own bank or broker for payments on the securities and protection of any legal rights relating to the
securities;
-
-
an
investor may not be able to sell interests in the securities to some insurance companies and other institutions that are required by law to own their securities in
non-book-entry form;
-
-
an
investor may not be able to pledge his or her interest in a global security in circumstances where certificates representing the securities must be delivered to the
lender or other beneficiary of the pledge in order for the pledge to be effective;
-
-
the
depository's policies will govern payments, deliveries, transfers, exchanges, notices, and other matters relating to an investor's interest in a global security, and
those policies may change from time to time;
-
-
we,
the Trustee, and any warrant agents will not be responsible for any aspect of the depository's policies, actions, or records of ownership interests in a global security;
-
-
we,
the Trustee, and any warrant agents do not supervise the depository in any way;
-
-
the
depository may require that those who purchase and sell interests in a global security within its book-entry system use immediately available funds, and your
broker or bank may require you to do so as well; and
-
-
financial
institutions that participate in the depository's book-entry system and through which an investor holds his or her interest in the global securities,
directly or indirectly, also may have their own policies affecting payments, deliveries, transfers, exchanges, notices, and other matters relating to the securities. Those policies may change from
time to time. For example, if you hold an interest in a global security through Euroclear or Clearstream when DTC is the depository, Euroclear or Clearstream, as applicable, will require those who
purchase and sell interests in that security through them to use immediately available funds and comply with other policies and procedures, including deadlines for giving instructions as to
transactions that are to be effected on a particular day. There may be more than one financial intermediary in the chain of
42
Receipt
by owners of beneficial interests in a temporary global security of payments relating to their interests will be subject to the restrictions discussed under "Limitations on
Issuance of Bearer Securities."
If
interest is paid on a bearer global debt security, or if no interest has been paid but the bearer global debt security remains outstanding beyond a reasonable period of time after the
restricted period (as defined in applicable U.S. Treasury regulations) has ended, the depository must provide us with a certificate to the effect that the owners of the beneficial interests in the
bearer global security are non-U.S. persons or U.S. persons that are permitted to hold bearer debt securities under applicable U.S. Treasury regulations.
In
general, U.S. persons that are permitted to hold bearer debt securities are U.S. persons who acquire the securities through the foreign branch of certain U.S. financial institutions
and certain U.S. financial institutions that hold the bearer debt securities for resale to non-U.S. persons or who hold the bearer debt securities on their own account through a foreign
branch. The certificate must be provided within a reasonable period of time after the end of the restricted period, but in no event later than the date when interest is paid. The certificate must be
based on statements provided to the depository by the owners of the beneficial interests.
LIMITATIONS ON ISSUANCE OF BEARER DEBT SECURITIES AND BEARER WARRANTS
In compliance with U.S. federal income tax laws and regulations, bearer debt securities, including bearer debt securities in global form, will not be offered,
sold, resold or delivered, directly or indirectly, in the United States or its possessions or to "United States persons," as defined below, except as
otherwise permitted by certain U.S. Treasury regulations. Any underwriters, dealers or agents participating in the offerings of bearer debt securities, directly or indirectly, must agree that they
will not, in connection with the original issuance of any bearer debt securities or during the "restricted period" (as defined in the Treasury regulations) offer, sell, resell or deliver, directly or
indirectly, any bearer debt securities in the United States or to United States persons, other than as permitted by the Treasury regulations. In addition, any underwriters, dealers or agents must have
procedures reasonably designed to ensure that their employees or agents who are directly engaged in selling bearer debt securities are aware of the restrictions on the offering, sale, resale or
delivery of bearer debt securities.
We
will not deliver a bearer debt security (other than a temporary global bearer debt security) in connection with its original issuance or make payments on any bearer debt security
until we have received the written certification provided for in the Indentures, the warrant agreement, the deposit agreement, the unit agreement or other applicable agreement or instrument. Each
bearer debt security, other than a temporary global bearer debt security, will bear the following legend on the face of the security and on any interest coupons that may be detachable:
"Any
United States person who holds this obligation will be subject to limitations under the U.S. income tax laws, including the limitations provided in Sections 165(j) and 1287(a) of
the Internal Revenue Code."
The
legend also will be evidenced on any book-entry system maintained with respect to the bearer debt securities.
The
sections referred to in the legend provide, in general, that a U.S. taxpayer who holds a bearer security or coupon may not deduct any loss realized on the sale, exchange or
redemption of the bearer security and any gain which otherwise would be treated as capital gain will be treated as ordinary income, unless the taxpayer is, or holds the bearer security or coupon
through, a "financial institution" (as defined in the relevant Treasury regulations) and certain other conditions are satisfied.
For
these purposes, "United States" means the United States of America (including the District of Columbia), and its possessions. "United States person" generally means:
-
-
a
citizen or resident of the United States;
-
-
a
corporation or partnership (or other entity treated as a corporation or partnership for U.S. federal income tax purposes) created or organized in or under the laws of the
United States or any state thereof (including the District of Columbia);
-
-
an
estate whose income is subject to U.S. federal income taxation regardless of its source; or
-
-
a
trust, if a court within the United States is able to exercise primary supervision over its administration, and one or more United States persons have the authority to
control all of its substantial decisions.
43
The prospectus supplement relating to bearer warrants will describe any limitations on the offer, sale, delivery and exercise of bearer warrants (including a requirement that a
certificate of non-U.S. beneficial ownership be delivered once a bearer warrant is exercised).
PLAN OF DISTRIBUTION
We may sell the securities by any of the following methods:
-
-
to
underwriters (including Bear Stearns) or dealers, who may act directly or through a syndicate represented by one or more managing underwriters (including Bear Stearns);
-
-
through
broker-dealers (including Bear Stearns) we have designated to act on our behalf as agents;
-
-
directly
to one or more purchasers;
-
-
directly
to the public through Bear Stearns utilizing DA
i
SS
SM
(Dutch Auction internet Syndication
System
SM
), a rules-based, proprietary, single-priced, modified Dutch Auction syndication system for the pricing and allocation of securities; or
-
-
through
a combination of any of these methods of sale.
Each
prospectus supplement will describe the manner and terms of an offering of securities, including:
-
-
the
names of any underwriters, dealers, or agents;
-
-
whether
that offering is being made to underwriters or through agents or directly;
-
-
the
rules and procedures for the auction process through DA
i
SS
SM
, if used;
-
-
any
underwriting discounts, dealer concessions, agency commissions and any other items that may be deemed to constitute underwriters', dealers' or agents' compensation;
-
-
the
securities' purchase price or initial public offering price;
-
-
the
proceeds we anticipate from the sale of the securities; and
-
-
any
securities exchange on which the offered securities may be listed.
We
may enter into derivative or other hedging transactions with financial institutions. These financial institutions may in turn engage in sales of securities to hedge their position,
deliver this prospectus in connection with some or all of those sales and use the securities covered by this prospectus to close out any loan of securities or short position created in connection with
those sales.
We
may effect sales of securities in connection with forward sale agreements with third parties. Any distribution of securities pursuant to any forward sale agreement may be effected
from time to time in one or more transactions that may take place through the NYSE, including block trades or ordinary broker's transactions, or through broker-dealers acting either as principal or
agent, or through privately negotiated transactions, or through an underwritten public offering, or through a combination of any
such methods of sale, at market prices prevailing at the time of sale, at prices relating to such prevailing market prices or at negotiated or fixed prices.
We
may also sell securities short using this prospectus and deliver securities covered by this prospectus to close out any loan of securities or such short positions, or loan or pledge
securities to financial institutions that in turn may sell the securities using this prospectus.
We
may pledge or grant a security interest in some or all of the securities covered by this prospectus to support a derivative or hedging position or other obligation and, if we default
in the
44
performance
of our obligations, the pledgees or secured parties may offer and sell the securities from time to time pursuant to this prospectus.
Distribution Through Underwriters
When securities are to be sold to underwriters, we will execute an underwriting agreement with them at the time of the sale and will name them in the prospectus
supplement. Unless otherwise set forth in the applicable prospectus supplement, the underwriters' obligations to purchase those securities will be subject to certain conditions set forth in the
underwriting agreement. If the underwriters purchase any of the securities, they will be obligated to purchase all of the securities. The underwriters will acquire the securities for their own
accounts as principal and may resell them, either directly to the public or to securities dealers, at various times in one or more transactions, including negotiated transactions, either at a fixed
public offering price or at varying prices determined at the time of sale. The underwriters may sell the offered securities to or through dealers, and those dealers may receive discounts, concessions,
or commissions from the underwriters as well as from the purchasers for whom they may act as agent.
Distribution Through Dealers
We may offer and sell securities from time to time to one or more dealers who would purchase the securities as principal. The dealers then may resell the offered
securities to the public at fixed or varying prices to be determined by those dealers at the time of resale. We will set forth the names of the dealers and the terms of the transaction in the
prospectus supplement. Any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time.
Distribution Through Agents
We may offer and sell securities on a continuous basis through agents that become parties to an underwriting or distribution agreement. We will name any agent
involved in the offer and sale and describe any commissions payable by us in the prospectus supplement. Unless otherwise indicated in the prospectus supplement, the agent will be acting on a best
efforts basis during the appointment period.
General Information
To the extent that any securities underwritten by Bear Stearns are not resold by Bear Stearns for an amount at least equal to their public offering price, the
proceeds from the offering of those securities will be reduced. Until resold, any such preferred stock and depositary shares will be treated as if they were not outstanding. Bear Stearns intends to
resell any of those securities at various times after the termination of the offering at varying prices related to prevailing market prices at the time of sale, subject to applicable prospectus
delivery requirements.
Securities
bought in accordance with a redemption or repayment under their terms also may be offered and sold, if so indicated in the applicable prospectus supplement, in connection with
a remarketing by one or more firms acting as principals for their own accounts or as agents for us. Any remarketing firm will be identified and the terms of its agreement, if any, with us and its
compensation will be described in the prospectus supplement. Remarketing firms may be deemed to be underwriters in connection with the securities remarketed by them.
If
so indicated in the applicable prospectus supplement, we will authorize agents, underwriters or dealers to solicit offers by certain specified institutions to purchase securities at
the public offering price set forth in the prospectus supplement pursuant to delayed delivery contracts providing for payment and delivery on a future date specified in the prospectus supplement.
These contracts will be
45
subject
only to those conditions set forth in the applicable prospectus supplement, and the prospectus supplement will set forth the commissions payable for solicitation of these contracts.
Underwriters,
dealers and agents participating in any distribution of securities may be deemed "underwriters" within the meaning of the Securities Act and any discounts or commissions
they receive in connection with the distribution may be deemed to be underwriting compensation. Those
underwriters and agents may be entitled, under their agreements with us, to indemnification by us against certain civil liabilities, including liabilities under the Securities Act, or to contribution
by us to payments that they may be required to make in respect of those civil liabilities. Various of those underwriters or agents may be customers of, engage in transactions with or perform services
for us or our affiliates in the ordinary course of business.
Following
the initial distribution of any series of securities (and in the case of shares of preferred stock, subject to obtaining approval or exemption from the NYSE), Bear Stearns may
offer and sell previously issued securities of that series at various times in the course of its business as a broker-dealer. Bear Stearns may act as principal or agent in those transactions. Bear
Stearns will use this prospectus and the prospectus supplement applicable to those securities in connection with those transactions. Sales will be made at prices related to prevailing prices at the
time of sale or at related or negotiated prices. Our other affiliates, including BSIL, may also engage in such transactions and may use this prospectus and any applicable prospectus supplement for
such purpose.
In
this prospectus, the terms "offering" means the initial offering of the securities made in connection with their original issuance. This term does not refer to any subsequent resales
of securities in market-making transactions. Information about the trade and settlement dates, as well as the purchase price, for a market-making transaction will be provided to the purchaser in a
separate confirmation of sale. Unless we or an agent inform you in your confirmation of sale that your security is being purchased in its original offering and sale, you may assume that you are
purchasing your security in a market-making transaction.
In
order to facilitate the offering of certain securities under this Registration Statement or an applicable prospectus supplement, certain persons participating in the offering of those
securities may engage in transactions that stabilize, maintain or otherwise affect the price of those securities during and after the offering of those securities. Specifically, if the applicable
prospectus supplement permits, the underwriters of those securities may over-allot or otherwise create a short position in those securities for their own account by selling more of those
securities than have been sold to them by us and may elect to cover any such short position by purchasing those securities in the open market.
In
addition, the underwriters may stabilize or maintain the price of those securities by bidding for or purchasing those securities in the open market and may impose penalty bids, under
which selling concessions allowed to syndicate members or other broker-dealers participating in the offering are reclaimed if securities previously distributed in the offering are repurchased in
connection with stabilization transactions or otherwise. The effect of these transactions may be to stabilize or maintain the market price of the securities at a level above that which might otherwise
prevail in the open market. The imposition of a penalty bid may also affect the price of securities to the extent that it discourages resales of the securities. No representation is made as to the
magnitude or effect of any such stabilization or other transactions. Such transactions, if commenced, may be discontinued at any time.
Each
series of offered securities will be a new issue of securities and will have no established trading market. Any underwriters to whom offered securities are sold for public offering
and sale may make a market in such offered securities, but such underwriters will not be obligated to do so and may discontinue any market-making at any time without notice. The offered securities may
or may not be listed on a national securities exchange. No assurance can be given as to the liquidity or trading market for the offered securities.
46
The
underwriters, dealers and agents, and their affiliates may be customers of, engage in transactions with, or perform services for, us and our subsidiaries in the ordinary course of
business.
This
prospectus, the applicable prospectus supplement and any applicable pricing supplement in electronic format may be made available on the Internet sites of, or through other online
services maintained by, us and/or one or more of the agents and/or dealers participating in an offering of securities, or by their affiliates. In those cases, prospective investors may be able to view
offering terms online and, depending upon the particular agent or dealer, prospective investors may be allowed to place orders online.
Other
than this prospectus, the applicable prospectus supplement and any applicable pricing supplement in electronic format, the information on our or any agent's or dealer's web site
and any information contained in any other web site maintained by any agent or dealer is not part of this prospectus, the applicable prospectus supplement and any applicable pricing supplement or the
registration statement of which they form a part; has not been approved or endorsed by us or by any agent or dealer in its capacity as an agent or dealer, except, in each case, with respect to
the respective web site maintained by such entity; and should not be relied upon by investors.
We
may from time to time offer securities directly to the public through Bear Stearns and may utilize DA
i
SS
SM
, a
rules-based, proprietary, single-priced, modified Dutch Auction syndication system for the pricing and allocation of such securities.
DA
i
SS
SM
allows bidders to directly participate, through Internet access to an auction site, by submitting conditional offers to buy (each,
a "bid") that are subject to acceptance by the underwriter, and which may directly affect the price at which such securities are sold.
The
final offering price at which securities will be sold and the allocation of securities among bidders will be based solely on the results of the auction, subject to possible
stabilization activity previously described.
During
an auction, DA
i
SS
SM
will present to each bidder, on a real-time basis, the clearing spread at which the
offering would be sold, based on the bids submitted and not withdrawn, and whether a bidder's individual bids would be accepted, prorated or rejected. Upon completion of the auction, the offering
price of the securities will be the lowest spread at which the aggregate dollar amount of bids submitted, and not removed, at that spread and lower spreads equals or exceeds the size of the offering
as disclosed in the prospectus supplement which is the final clearing spread. If DA
i
SS
SM
is utilized, prior to the auction we and Bear
Stearns will establish minimum admissible bids, maximum quantity restrictions and other specific rules governing the auction process, all of which will be made available to bidders in the offering
cul-de-sac and described in the prospectus supplement.
Bids
at a lower spread than the final clearing spread will be fully allocated. Bids at the final clearing spread will be prorated based on the time of submission and pursuant to the
allocation procedures in the auction rules. Bids above the final clearing spread will receive no allocation.
If
an offering is made using DA
i
SS
SM
you should review the auction rules, as displayed in the offering
cul-de-sac and described in the prospectus supplement, for a more detailed description of the offering procedures.
The
maximum commission or discount to be received by any NASD member or independent broker-dealer will not be greater than eight percent of the gross proceeds from the sale of any
security being sold in the initial distribution.
Because
Bear Stearns and BSIL are our wholly owned subsidiaries, each distribution of securities will conform to the requirements set forth in Rule 2720 of the NASD Conduct Rules.
Furthermore, any underwriters offering the offered securities will not confirm sales to any accounts over which they exercise discretionary authority without the prior approval of the customer.
47
ERISA CONSIDERATIONS
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), prohibits the borrowing of money, the sale of property and certain other
transactions involving the assets of plans that are qualified under the Code ("Qualified Plans") or individual retirement accounts ("IRAs") and persons who have certain specified relationships to
them. Section 406 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), prohibits similar transactions involving employee benefit
plans that are subject to ERISA ("ERISA Plans"). Qualified Plans, IRAs and ERISA Plans are referred to as "Plans."
Persons
who have such specified relationships are referred to as "parties in interest" under ERISA and as "disqualified persons" under the Code. "Parties in interest" and "disqualified
persons" encompass a wide range of persons, including any fiduciary (for example, investment manager, trustee or custodian) of a Plan, any person providing services (for example, a broker) to a Plan,
the Plan sponsor, an employee organization any of whose members are covered by the Plan, and certain persons related to or affiliated with any of the foregoing.
The
purchase and/or holding of securities by a Plan with respect to which we, Bear Stearns, BSSC and/or certain of our affiliates is a fiduciary and/or a service provider (or otherwise
is a "party in interest" or "disqualified person") would constitute or result in a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code, unless such securities
are acquired or held pursuant to and in accordance with an applicable statutory or administrative exemption. Each of us, Bear Stearns and BSSC is considered a "disqualified person" under the Code or
"party in interest" under ERISA with respect to many Plans, although neither we nor Bear Stearns can be a "party in interest" to any IRA other than certain employer sponsored IRAs, as only employer
sponsored IRAs are covered by ERISA.
Applicable
administrative exemptions may include certain prohibited transaction class exemptions (for example, Prohibited Transaction Class Exemption ("PTCE") 8414 relating to qualified
professional asset managers, PTCE 9623 relating to certain in house asset managers, PTCE 9138 relating to bank collective investment funds, PTCE 901 relating to insurance company separate accounts and
PTCE 9560 relating to insurance company general accounts).
It
should also be noted that the Pension Protection Act of 2006 was recently passed by Congress and contains a new statutory exemption from the prohibited transaction provisions of
Section 406 of ERISA and Section 4975 of the Code for transactions involving certain parties in interest or disqualified persons who are such merely because they are a service provider
to a Plan, or because they are related to a service provider. Generally, the new exemption would be applicable if the party to the transaction with the Plan is a party in interest or a disqualified
person to the Plan but is not (i) an employer, (ii) a fiduciary who has or exercises any discretionary authority or control with respect to the investment of the Plan assets involved in
the transaction, (iii) a fiduciary who renders investment advice (within the meaning of ERISA and Section 4975 of the Code) with respect to those assets, or (iv) an affiliate of
(i), (ii) or (iii). Any Plan fiduciary relying on this new statutory exemption (Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Code) and purchasing securities on
behalf of a Plan will be deemed to have made a determination that the Plan is paying no more than, and is receiving no less than, adequate consideration in connection with the transaction, which is a
necessary precondition to utilizing this new exemption. Any purchaser that is a Plan is encouraged to consult with counsel regarding the application of the new exemption.
A
fiduciary who causes a Plan to engage, directly or indirectly, in a nonexempt prohibited transaction may be subject to a penalty under ERISA, and may be liable for any losses to the
Plan resulting from such transaction. Code Section 4975 generally imposes an excise tax on disqualified persons who engage, directly or indirectly, in nonexempt transactions with the assets of
Plans subject to
48
such
Section. If an IRA engages in a prohibited transaction, the assets of the IRA are deemed to have been distributed to the IRA beneficiaries.
In
accordance with ERISA's general fiduciary requirements, a fiduciary with respect to any ERISA Plan who is considering the purchase of securities on behalf of such plan should consider
the foregoing information and the information set forth in the applicable prospectus supplement and any applicable pricing supplement, and should determine whether such purchase is permitted under the
governing plan document and is prudent and appropriate for the ERISA Plan in view of its overall investment policy and the composition and diversification of its portfolio. Fiduciaries of Plans
established with, or for which services are provided by, us, Bear Stearns, BSSC and/or certain of our affiliates should consult with counsel before making any acquisition. Each purchaser of any
securities, the assets of which constitute the assets of one or more Plans, and each fiduciary that directs such purchaser with respect to the purchase or holding of such securities, will be deemed to
represent that the purchase, holding and disposition of the securities does not and will not constitute a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code
for which an exemption is not available.
Certain
employee benefit plans, such as governmental plans (as defined in Section 3(32) of ERISA) and, if no election has been made under Section 410(d) of the Code, church
plans (as defined in Section 3(33) of ERISA), are not subject to Section 406 of ERISA or Section 4975 of the Code. However, such plans may be subject to the provisions of
applicable federal, state or local law ("Similar Law") materially similar to the foregoing provisions of ERISA or the Code. Fiduciaries of such plans ("Similar Law Plans") should consider applicable
Similar Law when investing in the securities. Each fiduciary of a Similar Law Plan will be deemed to represent that the Similar Law Plan's acquisition and holding of the securities will not result in
a nonexempt violation of applicable Similar Law.
The
sale of any security to a Plan or a Similar Law Plan is in no respect a representation by us or any of our affiliates that such an investment meets all relevant legal requirements
with respect to investments by Plans or Similar Law Plans generally or any particular Plan or Similar Law Plan, or that such an investment is appropriate for a Plan or a Similar Law Plan generally or
any particular Plan or Similar Law Plan.
LEGAL MATTERS
The validity of the securities will be passed upon for us by Cadwalader, Wickersham & Taft LLP, New York, New York, USA. Certain legal matters relating to
the laws of England and Wales are being passed upon for us by Cadwalader, Wickersham & Taft LLP, London, England.
EXPERTS
The consolidated financial statements, the related financial statement schedule, and management's report on the effectiveness of internal control over financial
reporting incorporated by reference in this Registration Statement from the Company's Annual Report on Form 10-K for the year ended November 30, 2005, as amended by Amendment
No. 1 on Form 10-K/A, have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their reports, which are incorporated
herein by reference (which reports (1) express an unqualified opinion on the consolidated financial statements and related financial statement schedule and include an explanatory paragraph
referring to the adoption of Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation" as amended by SFAS No. 148, "Accounting for
Stock-Based CompensationTransition and Disclosure, an amendment of FASB Statement No. 123," in 2003, discussed in Note 1 to the consolidated financial statements,
(2) express an unqualified opinion on management's assessment regarding the effectiveness of internal control over financial reporting, and (3) express an unqualified opinion on the
effectiveness of internal control over financial reporting), and
49
have
been so incorporated in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.
With
respect to the unaudited interim financial information for the periods ended February 28, 2006 and 2005 and May 31, 2006 and 2005 which are incorporated by reference
in this Registration Statement, Deloitte & Touche LLP, an independent registered public accounting firm, have applied limited procedures in accordance with the standards of the Public Company
Accounting Oversight Board (United States) for a review of such information. However, as stated in their reports included in the Company's Quarterly Reports on Form 10-Q for the
quarters ended February 28, 2006 and May 31, 2006, and incorporated by reference herein, they did not audit and they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their reports on such information should be restricted in light of the limited nature of the review procedures applied. Deloitte & Touche LLP are not
subject to the liability provisions of Section 11 of the Securities Act of 1933 for their reports on the unaudited interim financial information because those reports are not a "report" or a
"part" of the Registration Statement prepared or certified by Deloitte & Touche LLP within the meaning of Sections 7 and 11 of the Act.
50
We have not authorized any dealer, salesperson or other person to give any information or represent anything not contained in this prospectus
supplement and the
accompanying prospectus. You must not rely on any unauthorized information. This prospectus supplement and the accompanying prospectus is not an offer to sell or buy any securities in any jurisdiction
where it is unlawful. The information in this prospectus supplement is current as of January 18, 2006 and the information in the accompanying prospectus is current as of August 16, 2006.
TABLE OF CONTENTS
|
|
Page
|
Prospectus Supplement
|
Forward-Looking Statements
|
|
S-3
|
Where You Can Find More Information
|
|
S-3
|
Terms of the Global Notes
|
|
S-5
|
Risk Factors
|
|
S-7
|
The Bear Stearns Companies Inc.
|
|
S-8
|
Use of Proceeds
|
|
S-10
|
Capitalization
|
|
S-11
|
Description of the Notes
|
|
S-13
|
Certain US Federal Income Tax Considerations
|
|
S-22
|
EU Directive on the Taxation of Savings Income
|
|
S-26
|
Certain ERISA Considerations
|
|
S-26
|
Underwriting
|
|
S-28
|
Legal Matters
|
|
S-31
|
Experts
|
|
S-31
|
General Information
|
|
S-32
|
Prospectus
|
Where You Can Find More Information
|
|
1
|
The Bear Stearns Companies Inc
|
|
2
|
Use of Proceeds
|
|
4
|
Description of Debt Securities
|
|
4
|
Description of Warrants
|
|
16
|
Description of Preferred Stock
|
|
21
|
Description of Depositary Shares
|
|
25
|
Description of Purchase Contracts
|
|
28
|
Description of Units
|
|
31
|
Book-Entry Procedures and Settlement
|
|
33
|
Limitations on Issuance of Bearer Debt Securities and Bearer Warrants
|
|
43
|
Plan of Distribution
|
|
44
|
ERISA Considerations
|
|
48
|
Legal Matters
|
|
49
|
Experts
|
|
49
|
U.S. $3,000,000,000
7.25% Global Notes Due February 1, 2018
The Bear Stearns
Companies Inc.
PROSPECTUS SUPPLEMENT
Bear, Stearns & Co. Inc.
Bear, Stearns International Limited
Citi
RBC Capital Markets
Banc of America Securities LLC
BB&T Capital Markets
Mitsubishi UFJ Securities
DZ Financial Markets, LLC
HSBC
Scotia Capital (USA) Inc.
Stifel Nicolaus
Wells Fargo Securities
January 29, 2008
QuickLinks
FORWARD-LOOKING STATEMENTS
WHERE YOU CAN FIND MORE INFORMATION
TERMS OF THE GLOBAL NOTES
RISK FACTORS
THE BEAR STEARNS COMPANIES INC.
USE OF PROCEEDS
CAPITALIZATION
Financial Highlights
DESCRIPTION OF THE NOTES
CERTAIN US FEDERAL INCOME TAX CONSIDERATIONS
EU DIRECTIVE ON THE TAXATION OF SAVINGS INCOME
CERTAIN ERISA CONSIDERATIONS
UNDERWRITING
LEGAL MATTERS
EXPERTS
GENERAL INFORMATION
TABLE OF CONTENTS
WHERE YOU CAN FIND MORE INFORMATION
THE BEAR STEARNS COMPANIES INC.
USE OF PROCEEDS
DESCRIPTION OF DEBT SECURITIES
DESCRIPTION OF WARRANTS
DESCRIPTION OF PREFERRED STOCK
DESCRIPTION OF DEPOSITARY SHARES
DESCRIPTION OF PURCHASE CONTRACTS
DESCRIPTION OF UNITS
BOOK-ENTRY PROCEDURES AND SETTLEMENT
PLAN OF DISTRIBUTION
ERISA CONSIDERATIONS
LEGAL MATTERS
EXPERTS
Bear Stearns (NYSE:BSC)
Historical Stock Chart
From Jun 2024 to Jul 2024
Bear Stearns (NYSE:BSC)
Historical Stock Chart
From Jul 2023 to Jul 2024