AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 3, 1996
REGISTRATION NO. 333-15253
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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WELLS FARGO & COMPANY DELAWARE 13-2553920
WELLS FARGO CAPITAL I DELAWARE 94-6701193
WELLS FARGO CAPITAL II DELAWARE 94-6701194
WELLS FARGO CAPITAL III DELAWARE 94-6701195
(EXACT NAME OF REGISTRANT (STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
AS SPECIFIED IN ITS
CHARTER)
420 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94163
(415) 477-1000
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
ALAN J. PABST
SENIOR VICE PRESIDENT AND TREASURER
WELLS FARGO & COMPANY
420 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94163
(415) 477-1000
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
----------------
COPIES TO:
DOUGLAS D. SMITH, ESQ. FRANK H. GOLAY, JR., ESQ.
BROBECK PHLEGER & HARRISON LLP SULLIVAN & CROMWELL
ONE MARKET PLAZA 444 S. FLOWER STREET, SUITE 1200
SAN FRANCISCO, CALIFORNIA 94105 LOS ANGELES, CALIFORNIA 90071
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act of 1933 registration statement
number of the earlier effective registration statement for the same offering.
[_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act of 1933 registration statement number of the earlier effective
registration statement for the same offering. [_]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
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THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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EXPLANATORY NOTE
This Registration Statement contains two forms of Prospectuses to be used in
connection with offerings of the following securities: (1) preferred
securities of Wells Fargo Capital I, II and III, severally, junior
subordinated debt securities of Wells Fargo & Company (the "Company") and
guarantees by the Company of preferred securities issued by Wells Fargo
Capital I, II and III and (2) debt securities (both senior and subordinated),
preferred stock, common stock and depositary shares of the Company. Each
offering of securities made under this Registration Statement will be made
pursuant to one of these two Prospectuses, with the specifications of the
securities offered thereby set forth in an accompanying Prospectus Supplement.
A form of Prospectus Supplement for the offering of the preferred securities
of Wells Fargo Capital I, the junior subordinated debt securities of the
Company and guarantees by the Company of preferred securities issued by Wells
Fargo Capital I, is also filed as part of this Registration Statement.
2
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ +
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. NEITHER THIS PROSPECTUS SUPPLEMENT NOR THE PROSPECTUS TO +
+WHICH IT RELATES SHALL CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN +
+OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN +
+WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO +
+REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. +
+ +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED DECEMBER 3, 1996
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED DECEMBER , 1996
20,000,000 PREFERRED SECURITIES
WELLS FARGO CAPITAL I
% CUMULATIVE QUARTERLY INCOME PREFERRED SECURITIES,
SERIES A (QUIPS(SM))*
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
WELLS FARGO & COMPANY
----------
The % Cumulative Quarterly Income Preferred Securities, Series A (the
"Series A QUIPS"), offered hereby represent beneficial ownership interests in
Wells Fargo Capital I, a business trust created under the laws of the State of
Delaware (the "Series A Issuer"). Wells Fargo & Company, a Delaware corporation
(the "Company"), will be the owner of all the common securities (the "Series A
Common Securities" and, collectively with the Series A QUIPS, the "Series A
Securities") of the Series
---------- (Continued on next page)
SEE "RISK FACTORS" BEGINNING ON PAGE S-5 HEREOF FOR CERTAIN INFORMATION
RELEVANT TO AN INVESTMENT IN THE SERIES A QUIPS.
THESE SECURITIES ARE NOT DEPOSITS OR SAVINGS ACCOUNTS OR OTHER OBLIGATIONS OF
A BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO
WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------
PROCEEDS TO
INITIAL PUBLIC UNDERWRITING THE SERIES A
OFFERING PRICE(1) COMMISSION(2) ISSUER(3)(4)
----------------- ------------- ------------
Per Series A QUIPS................. $25.00 (3) $
Total(5)........................... $500,000,000 (3) $
- -----
(1) Plus accumulated Distributions, if any, from , 1996.
(2) The Series A Issuer and the Company have each agreed to indemnify the
several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting."
(3) In view of the fact that the proceeds of the sale of the Series A QUIPS
will be invested in the Series A Subordinated Debentures, the Company has
agreed to pay to the Underwriters as compensation ("Underwriters'
Compensation") for their arranging the investment therein of such proceeds
$ . per Series A QUIPS (or $ in the aggregate). See
"Underwriting."
(4) Expenses of the offering, which are payable by the Company, are estimated
to be $ .
(5) The Series A Issuer has granted the Underwriters an option for 30 days to
purchase up to an additional 3,000,000 Series A QUIPS at the initial public
offering price per Series A QUIPS solely to cover over-allotments. The
Company will pay Underwriters' Compensation in the amount per Series A
QUIPS set forth in Note 3 with respect to such additional Series A QUIPS.
If such option is exercised in full, the total Initial Public Offering
Price, Underwriting Commission and Proceeds to the Series A Issuer will be
$ , $ and $ , respectively. See "Underwriting."
----------
The Series A QUIPS offered hereby are offered severally by the Underwriters,
as specified herein, subject to receipt and acceptance by them and subject to
their right to reject any order in whole or in part. It is expected that the
Series A QUIPS will be ready for delivery in book-entry form only through the
facilities of The Depository Trust Company in New York, New York, on or about
, 1996, against payment therefor in immediately available funds.
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*QUIPS is a service mark of Goldman, Sachs & Co.
GOLDMAN, SACHS & CO.
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The date of this Prospectus Supplement is , 1996
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES A
QUIPS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
----------------
(Continued from previous page)
A Issuer. The First National Bank of Chicago is the Property Trustee of the
Series A Issuer. The Series A Issuer exists for the sole purpose of issuing
Series A QUIPS and Series A Common Securities and investing the proceeds
thereof in % Junior Subordinated Deferrable Interest Debentures, Series A
(the "Series A Subordinated Debentures"), to be issued by the Company. The
Series A Subordinated Debentures will mature on January 1, 2027, which date
may be (i) shortened to a date not earlier than January 1, 2002 or
(ii) extended to a date not later than January 1, 2046, in each case if
certain conditions are met (including, in the case of a shortening of the
Stated Maturity (as defined herein), the Company having received prior
approval of the Board of Governors of the Federal Reserve System (the "Federal
Reserve") to do so if then required under applicable capital guidelines or
policies. The Series A QUIPS will have a preference under certain
circumstances with respect to cash distributions and amounts payable on
liquidation, redemption or otherwise over the Series A Common Securities. See
"Description of Preferred Securities -- Subordination of Common Securities" in
the accompanying Prospectus. The Series A Common Securities, like the Series A
QUIPS, will have a Liquidation Amount of $25 per security, and the Company
will acquire Series A Common Securities in an aggregate Liquidation Amount
equal to 3% of the total capital of the Series A Issuer (rounded up to the
nearest $50,000).
Holders of the Series A QUIPS will be entitled to receive preferential
cumulative cash distributions accumulating from the date of original issuance
and payable quarterly in arrears on the first day of January, April, July and
October of each year, commencing April 1, 1997, at the annual rate of % of
the Liquidation Amount of $25 per Series A QUIPS ("Distributions"). Subject to
certain exceptions described herein, the Company has the right to defer
payment of interest on the Series A Subordinated Debentures at any time or
from time to time for a period not exceeding 20 consecutive quarters with
respect to each deferral period (each, an "Extension Period"), provided that
no Extension Period may extend beyond the Stated Maturity of the Series A
Subordinated Debentures. Upon the termination of any such Extension Period and
the payment of all amounts then due, the Company may elect to begin a new
Extension Period subject to the requirements set forth herein. If interest
payments on the Series A Subordinated Debentures are so deferred,
Distributions on the Series A QUIPS will also be deferred and the Company will
not be permitted, subject to certain exceptions described herein, to declare
or pay any cash distributions with respect to the Company's capital stock or
debt securities of the Company that rank pari passu with or junior to the
Series A Subordinated Debentures. During an Extension Period, interest on the
Series A Subordinated Debentures will continue to accrue (and the amount of
Distributions to which holders of the Series A QUIPS are entitled will
accumulate) at the rate of % per annum, compounded quarterly, and holders
of Series A QUIPS will be required to accrue interest income for United States
federal income tax purposes. See "Certain Terms of Series A Subordinated
Debentures -- Option to Defer Interest Payments" and "Certain Federal Income
Tax Consequences -- Interest Income and Original Issue Discount."
The Company has, through the Series A Guarantee, the Trust Agreement, the
Series A Subordinated Debentures, the Indenture and the Expense Agreement
(each as defined herein), taken together, fully, irrevocably and
unconditionally guaranteed on a subordinated basis all of the Series A
Issuer's obligations under the Series A QUIPS. See "Relationship Among the
Preferred Securities, the Corresponding Junior Subordinated Debentures and the
Guarantees -- Full and Unconditional Guarantee" in the accompanying
Prospectus. The Series A Guarantee of the Company guarantees the payment of
Distributions and payments on liquidation or redemption of the Series A QUIPS,
but only in each case to the extent of funds held by the Series A Issuer, as
described herein (the "Series A
S-2
Guarantee"). See "Description of Guarantees" in the accompanying Prospectus.
If the Company does not make interest payments on the Series A Subordinated
Debentures held by the Series A Issuer, the Series A Issuer will have
insufficient funds to pay Distributions on the Series A QUIPS. The Series A
Guarantee does not cover payment of Distributions when the Series A Issuer
does not have sufficient funds to pay such Distributions. In the event of an
Event of Default (as defined herein) under the Indenture, a holder of Series A
QUIPS may institute a legal proceeding directly against the Company to enforce
payment of a pro-rata portion of the payment due on the Corresponding Series A
Subordinated Debentures. See "Description of Junior Subordinated Debentures --
Enforcement of Certain Rights By Holders of Preferred Securities" in the
accompanying Prospectus. The obligations of the Company under the Series A
Guarantee and the Series A Subordinated Debentures are unsecured and are
subordinate and junior in right of payment to all Senior Indebtedness (as
defined in "Description of Junior Subordinated Debentures -- Subordination" in
the accompanying Prospectus) of the Company. At September 30, 1996, the
aggregate outstanding Senior Indebtedness of the Company was approximately
$5.4 billion. None of the Indenture, the Series A Guarantee or the Trust
Agreement places any limitation on the amount of additional Senior
Indebtedness that may be incurred by the Company.
The Series A QUIPS are subject to mandatory redemption, in whole or in part,
upon repayment of the Series A Subordinated Debentures at maturity or their
earlier redemption. Subject to the Company having received prior approval of
the Federal Reserve to do so if then required under applicable guidelines or
policies, the Series A Subordinated Debentures are redeemable prior to
maturity at the option of the Company (i) on or after January 1, 2002, in
whole at any time or in part from time to time, or (ii) at any time, in whole
(but not in part), upon the occurrence and continuation of a Tax Event,
Capital Treatment Event or Investment Company Event (as defined herein), in
each case at a redemption price equal to the accrued and unpaid interest on
the Series A Subordinated Debentures so redeemed to the date fixed for
redemption, plus 100% of the principal amount thereof. See "Certain Terms of
the Series A QUIPS -- Redemption."
The Company will have the right at any time to terminate the Series A Issuer
and, after satisfaction of liabilities to creditors of the Series A Issuer as
required by applicable laws, cause the Series A Subordinated Debentures to be
distributed to the holders of the Series A QUIPS in liquidation of the Series
A Issuer, subject to the Company having received prior approval of the Federal
Reserve to do so if then required under applicable capital guidelines or
policies. See "Certain Terms of Series A QUIPS -- Liquidation of Series A
Issuer and Distribution of Series A Subordinated Debentures to Holders."
In the event of the termination of the Series A Issuer, after satisfaction
of liabilities to creditors of the Series A Issuer as required by applicable
law, the holders of the Series A QUIPS will be entitled to receive a
Liquidation Amount of $25 per Series A QUIPS plus accumulated and unpaid
Distributions thereon to the date of payment, which may be in the form of a
distribution of such amount in Series A Subordinated Debentures, subject to
certain exceptions. See "Description of Preferred Securities --Liquidation
Distribution Upon Termination" in the accompanying Prospectus.
Application will be made to list the Series A QUIPS on the New York Stock
Exchange under the symbol " Pr ". If the Series A Subordinated Debentures
are distributed to the holders of Series A QUIPS upon the liquidation of the
Series A Issuer, the Company will use its best efforts to list the Series A
Subordinated Debentures on the New York Stock Exchange or such other stock
exchanges or other automated quotation systems, if any, on which the Series A
QUIPS are then listed or traded.
The Series A QUIPS will be represented by global certificates registered in
the name of The Depository Trust Company ("DTC") or its nominee. Beneficial
interests in the Series A QUIPS will be shown on, and transfers thereof will
be effected only through, records maintained by participants in
S-3
DTC. Except as described in the accompanying Prospectus, Series A QUIPS in
certificated form will not be issued in exchange for the global certificates.
See "Book-Entry Issuance" in the accompanying Prospectus.
The information in this Prospectus Supplement supplements and should be read
in conjunction with the information contained in the accompanying Prospectus.
As used herein, (i) the "Indenture" means the Junior Subordinated Indenture,
as amended and supplemented from time to time, between the Company and The
First National Bank of Chicago, as trustee (the "Debenture Trustee"), and
(ii) the "Trust Agreement" means the Amended and Restated Trust Agreement
relating to the Series A Issuer executed by the Company, as Depositor, The
First National Bank of Chicago, as Property Trustee (the "Property Trustee"),
First Chicago Delaware Inc., as Delaware Trustee (the "Delaware Trustee"), and
the Administrative Trustees named therein (collectively, with the Property
Trustee and Delaware Trustee, the "Issuer Trustees"). The Trust Agreement
provides that each holder of Series A QUIPS by acceptance thereof agrees to
the provisions of the Series A Guarantee and the Indenture. Each of the other
capitalized terms used in this Prospectus Supplement and not otherwise defined
in this Prospectus Supplement has the meaning set forth in the accompanying
Prospectus.
S-4
RISK FACTORS
Prospective purchasers of the Series A QUIPS should carefully review the
information contained elsewhere in this Prospectus Supplement and in the
accompanying Prospectus and should particularly consider the following
matters. Because holders of Series A QUIPS may receive Series A Subordinated
Debentures on termination of the Series A Issuer, prospective purchasers of
Series A QUIPS are also making an investment decision with regard to the
Series A Subordinated Debentures and should carefully review all the
information regarding the Series A Subordinated Debentures contained herein.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE SERIES A GUARANTEE AND THE
SERIES A SUBORDINATED DEBENTURES
The obligations of the Company under the Series A Subordinated Debentures
are unsecured and rank subordinate and junior in right of payment to all
Senior Indebtedness of the Company. The obligations of the Company under the
Series A Guarantee are unsecured and rank subordinate and junior in right of
payment to all liabilities of the Company other than any liabilities which
expressly by their terms are made pari passu or subordinate to the obligations
of the Company under the Series A Guarantee. At September 30, 1996, the
aggregate outstanding Senior Indebtedness of the Company was approximately
$5.4 billion. None of the Indenture, the Series A Guarantee or the Trust
Agreement places any limitation on the amount of additional secured or
unsecured debt, including Senior Indebtedness, that may be incurred by the
Company. See "Description of Guarantees -- Status of the Guarantees" and
"Description of Junior Subordinated Debentures -- Subordination" in the
accompanying Prospectus. The Company is a legal entity separate and distinct
from its principal subsidiary, Wells Fargo Bank, National Association (the
"Bank"), and its other affiliates. There are various legal limitations on the
extent to which the Bank may extend credit, pay dividends or otherwise supply
funds to the Company or various of its affiliates. Since the Company is a
holding company, the right of the Company to participate in any distribution
of assets of any subsidiary upon such subsidiary's liquidation or
reorganization or otherwise (and thus the ability of holders of the Series A
QUIPS to benefit indirectly from such distribution) is subject to the prior
claims of creditors of that subsidiary, except to the extent that the Company
may itself be a creditor of that subsidiary. Claims on the Company's
subsidiaries by creditors other than the Company include long-term debt and
substantial obligations in respect of federal funds purchased, securities sold
under repurchase agreements and certain other short-term borrowings, as well
as deposit liabilities. Accordingly, the Series A Subordinated Debentures will
be effectively subordinated to all existing and future liabilities of the
Company's subsidiaries, and holders of Series A Subordinated Debentures should
look only to the assets of the Company for payments on the Series A
Subordinated Debentures. See "Wells Fargo & Company."
The ability of the Series A Issuer to pay amounts due on the Series A QUIPS
is solely dependent upon the Company making payments on the Series A
Subordinated Debentures as and when required.
OPTION TO DEFER INTEREST PAYMENTS; TAX CONSEQUENCES; MARKET PRICE CONSEQUENCES
So long as no Event of Default under the Indenture has occurred or is
continuing, the Company has the right under the Indenture to defer the payment
of interest on the Series A Subordinated Debentures at any time or from time
to time for a period not exceeding 20 consecutive quarters with respect to
each Extension Period, provided that no Extension Period may extend beyond the
Stated Maturity of the Series A Subordinated Debentures. As a consequence of
any such deferral, quarterly Distributions on the Series A QUIPS by the Series
A Issuer will be deferred (and the amount of Distributions to which holders of
the Series A QUIPS are entitled will accumulate additional Distributions
thereon at the rate of % per annum, compounded quarterly from the relevant
S-5
payment date for such Distributions) during any such Extension Period. During
any such Extension Period, the Company may not, and may not permit any
subsidiary of the Company to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock or (ii) make any payment
of principal, interest or premium, if any, on or repay, repurchase or redeem
any debt securities of the Company (including other Junior Subordinated
Debentures) that rank pari passu with or junior in interest to the Series A
Subordinated Debentures or make any guarantee payments with respect to any
guarantee by the Company of the debt securities of any subsidiary of the
Company if such guarantee ranks pari passu with or junior in interest to the
Series A Subordinated Debentures (other than (a) dividends or distributions in
common stock of the Company, (b) any declaration of a dividend in connection
with the implementation of a stockholders' rights plan, or the issuance of
stock under any such plan in the future, or the redemption or repurchase of
any such rights pursuant thereto, (c) payments under any Guarantee, and (d)
purchases of common stock related to the issuance of common stock or rights
under any of the Company's benefit plans for its directors, officers or
employees). Prior to the termination of any such Extension Period, the Company
may further defer the payment of interest, provided that no Extension Period
may exceed 20 consecutive quarters or extend beyond the Stated Maturity of the
Series A Subordinated Debentures. Upon the termination of any Extension Period
and the payment of all interest then accrued and unpaid (together with
interest thereon at the annual rate of %, compounded quarterly, to the
extent permitted by applicable law), the Company may elect to begin a new
Extension Period subject to the above requirements. There is no limitation on
the number of times that the Company may elect to begin an Extension Period.
See "Certain Terms of Series A QUIPS -- Distributions" and "Certain Terms of
Series A Subordinated Debentures -- Option to Extend Interest Payment Period."
Should an Extension Period occur, a holder of Series A QUIPS will continue
to accrue income for United States federal income tax purposes (in the form of
original issue discount) in respect of its pro rata share of the Series A
Subordinated Debentures held by the Series A Issuer. As a result, a holder of
Series A QUIPS will include such income in gross income for United States
federal income tax purposes in advance of the receipt of cash, and will not
receive the cash related to such income from the Series A Issuer if the holder
disposes of the Series A QUIPS prior to the record date for the payment of
Distributions. See "Certain Federal Income Tax Consequences -- Interest Income
and Original Issue Discount" and "-- Sales or Redemption of Series A QUIPS."
The Company believes that the likelihood of its exercising its right to
defer payments of interest is remote. However, should the Company elect to
exercise such right in the future, the market price of the Series A QUIPS is
likely to be affected. A holder that disposes of its Series A QUIPS during an
Extension Period, therefore, might not receive the same return on its
investment as a holder that continues to hold its Series A QUIPS. In addition,
as a result of the existence of the Company's right to defer interest
payments, the market price of the Series A QUIPS (which represent preferred
beneficial interests in the Series A Issuer) may be more volatile than the
market prices of other securities on which original issue discount accrues
that are not subject to such deferrals.
S-6
TAX EVENT, CAPITAL TREATMENT EVENT OR INVESTMENT COMPANY EVENT -- REDEMPTION
Upon the occurrence and continuation of a Tax Event, Capital Treatment Event
or Investment Company Event, the Company has the right to redeem the Series A
Subordinated Debentures in whole (but not in part) within 90 days following
the occurrence of such Tax Event, Capital Treatment Event or Investment
Company Event and thereby cause a mandatory redemption of the Series A QUIPS
before, as well as on or after, January 1, 2002. The exercise of such
redemption right is subject to the Company having received prior approval from
the Federal Reserve to do so if then required under applicable guidelines or
policies of the Federal Reserve. An "Investment Company Event" means the
receipt by the Series A Issuer of an opinion of counsel experienced in such
matters to the effect that, as a result of the occurrence of a change in law
or regulation or change in interpretation or application of law or regulation
by any legislative body, court, governmental agency or regulatory authority (a
"Change in 1940 Act Law"), the Series A Issuer is or will be considered an
investment company that is required to be registered under the Investment
Company Act of 1940, as amended, which Change in 1940 Act Law becomes
effective on or after the date of original issuance of the Series A QUIPS.
The term "Capital Treatment Event" means the reasonable determination by the
Company that, as a result of the occurrence of any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision thereof or
therein, or as a result of any official or administrative pronouncement or
action or judicial decision interpreting or applying such laws or regulations,
which amendment or change is effective or which pronouncement, action or
decision is announced on or after the date of issuance of the Series A QUIPS,
there is more than an insubstantial risk that the Company will not be entitled
to treat an amount equal to the aggregate Liquidation Amount of the Series A
QUIPS as "Tier 1 Capital" (or the then equivalent thereof) for purposes of the
capital adequacy guidelines of the Federal Reserve, as then in effect and
applicable to the Company.
A "Tax Event" means the receipt by the Series A Issuer of an opinion of
counsel experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of issuance
of the Series A QUIPS under the Trust Agreement, there is more than an
insubstantial risk that (i) the Series A Issuer is, or will be within 90 days
of the date of such opinion, subject to United States Federal income tax with
respect to income received or accrued on the Series A Subordinated Debentures,
(ii) interest payable by the Company on the Series A Subordinated Debentures
is not, or within 90 days of such opinion, will not be, deductible by the
Company, in whole or in part, for United States Federal income tax purposes,
or (iii) the Series A Issuer is, or will be within 90 days of the date of the
opinion, subject to more than a de minimis amount of other taxes, duties or
other governmental charges.
See "Risk Factors -- Possible Tax Law Changes Affecting the Series A QUIPS"
for a discussion of certain legislative proposals that, if adopted, could give
rise to a Tax Event, which may permit the Company to cause a redemption of the
Series A QUIPS prior to January 1, 2002.
EXCHANGE OF SERIES A QUIPS FOR SERIES A SUBORDINATED DEBENTURES
The Company will have the right at any time to terminate the Series A Issuer
and, after satisfaction of liabilities to creditors of the Series A Issuer as
required by applicable law, cause the Series A Subordinated Debentures to be
distributed to the holders of the Series A QUIPS in exchange therefor upon
liquidation of the Series A Issuer. The exercise of such right is subject to
the Company having received prior approval of the Federal Reserve if then
required under applicable capital guidelines or
S-7
policies. See "Certain Terms of the Series A QUIPS -- Liquidation of Series A
Issuer and Distribution of Series A Subordinated Debentures to Holders."
Under current law, and assuming, as expected, the Series A Issuer is treated
as a grantor trust, a distribution by the Series A Issuer of the Series A
Subordinated Debentures as described under the caption "Certain Terms of
Series A QUIPS -- Liquidation of Series A Issuer and Distribution of Series A
Subordinated Debentures to Holders" will be non-taxable and will result in the
holder of Series A QUIPS receiving directly his pro rata share of the Series A
Subordinated Debentures previously held indirectly through the Series A
Issuer, with a holding period and aggregate tax basis equal to the holding
period and aggregate tax basis such holder of Series A QUIPS had in its
Series A QUIPS before such distribution. A holder of Series A QUIPS will
accrue interest in respect of Series A Subordinated Debentures received from
the Series A Issuer in the manner described below under "Certain Federal
Income Tax Consequences--Interest Income and Original Issue Discount."
However, if there should be a change in law (including a change in legal
interpretation), a distribution of Series A Subordinated Debentures could be a
taxable event to the holders of Series A QUIPS.
SHORTENING OF STATED MATURITY OF SERIES A SUBORDINATED DEBENTURES
The Company will have the right at any time to shorten the maturity of the
Series A Subordinated Debentures to a date not earlier than January 1, 2002
and thereby cause the Series A QUIPS to be redeemed on such earlier date. The
exercise of such right is subject to the Company having received prior
approval of the Federal Reserve if then required under applicable capital
guidelines or policies.
EXTENSION OF STATED MATURITY OF SERIES A SUBORDINATED DEBENTURES
The Company will also have the right to extend the maturity of the Series A
Subordinated Debentures whether or not the Series A Issuer is terminated and
the Series A Subordinated Debentures are distributed to holders of the Series
A QUIPS to a date no later than the 49th anniversary of the initial issuance
of the Series A QUIPS, provided that the Company can extend the maturity only
if at the time such election is made and at the time of such extension (i) the
Company is not in bankruptcy, otherwise insolvent or in liquidation, (ii) the
Company is not in default in the payment of any interest or principal on the
Series A Subordinated Debentures, (iii) the Series A Issuer is not in arrears
on payments of Distributions on the Series A QUIPS and no deferred
Distributions are accumulated and (iv) the Series A Subordinated Debentures
are rated not less than BBB- by Standard & Poor's Ratings Services or Baa3 by
Moody's Investor Service, Inc. or the equivalent by any other nationally
recognized statistical rating organization. To the extent that the Stated
Maturity of the Series A Subordinated Debentures is extended at such time as
the Series A QUIPS are outstanding, the Series A QUIPS would remain
outstanding until such extended date or until redeemed at an earlier date.
MARKET PRICES
There can be no assurance as to the market prices for Series A QUIPS or
Series A Subordinated Debentures that may be distributed in exchange for
Series A QUIPS if a liquidation of the Series A Issuer occurs. Accordingly,
the Series A QUIPS that an investor may purchase, whether pursuant to the
offer made hereby or in the secondary market, or the Series A Subordinated
Debentures that a holder of Series A QUIPS may receive on liquidation of the
Series A Issuer, may trade at a discount to the price that the investor paid
to purchase the Series A QUIPS offered hereby. As a result of the existence of
the Corporation's right to defer interest payments, the market price of the
Series A QUIPS (which represent beneficial ownership interests in the Series A
Issuer) may be more volatile than the market prices of other debt securities
that are not subject to such optional deferrals. In addition, because the
Company has the right to (i) shorten the Maturity of the Series A Subordinated
Debentures (subject to prior approval of the Federal Reserve if then required
under applicable capital
S-8
guidelines or policies) or (ii) extend the maturity of the Series A
Subordinated Debentures (subject to the conditions described above), there can
be no assurance that the Company will not exercise its option to change the
maturity of the Series A Subordinated Debentures as permitted by the terms
thereof and of the Indenture. See "Certain Terms of the Series A Subordinated
Debentures" and "Description of Junior Subordinated Debentures --
Corresponding Junior Subordinated Debentures" in the accompanying Prospectus.
RIGHTS UNDER THE SERIES A GUARANTEE
The Series A Guarantee will be qualified as an indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). The First
National Bank of Chicago will act as the indenture trustee under the Series A
Guarantee (the "Guarantee Trustee") for the purposes of compliance with the
Trust Indenture Act and will hold the Series A Guarantee for the benefit of
the holders of the Series A QUIPS. The First National Bank of Chicago will
also act as Debenture Trustee for the Series A Subordinated Debentures and as
Property Trustee under the Trust Agreement and its affiliate First Chicago
Delaware Inc. will act as Delaware Trustee under the Trust Agreement. The
Series A Guarantee guarantees to the holders of the Series A QUIPS the
following payments, to the extent not paid by the Series A Issuer: (i) any
accumulated and unpaid Distributions required to be paid on the Series A
QUIPS, to the extent that the Series A Issuer has funds on hand available
therefor at such time, (ii) the redemption price with respect to any Series A
QUIPS called for redemption, to the extent that the Series A Issuer has funds
on hand available therefor at such time, and (iii) upon a voluntary or
involuntary termination, winding-up or liquidation of the Series A Issuer
(unless the Series A Subordinated Debentures are distributed to holders of the
Series A QUIPS), the lesser of (a) the aggregate of the Liquidation Amount and
all accrued and unpaid Distributions to the date of payment to the extent that
the Series A Issuer has funds on hand available therefor at such time and (b)
the amount of assets of the Series A Issuer remaining available for
distribution to holders of the Series A QUIPS.
The holders of not less than a majority in aggregate Liquidation Amount of
the Series A QUIPS have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Series A Guarantee or to direct the exercise of any trust power
conferred upon the Guarantee Trustee under the Series A Guarantee. Any holder
of the Series A QUIPS may institute a legal proceeding directly against the
Company to enforce its rights under the Series A Guarantee without first
instituting a legal proceeding against the Series A Issuer, the Guarantee
Trustee or any other person or entity. If the Company were to default on its
obligation to pay amounts payable under the Series A Subordinated Debentures,
the Series A Issuer would lack funds for the payment of Distributions or
amounts payable on redemption of the Series A QUIPS or otherwise, and, in such
event, holders of the Series A QUIPS would not be able to rely upon the
Series A Guarantee for payment of such amounts. Instead, in the event a
Debenture Event of Default shall have occurred and be continuing and such
event is attributable to the failure of the Company to pay interest on or
principal of the Series A Subordinated Debentures on the applicable payment
date, then a holder of Series A QUIPS may institute a legal proceeding
directly against the Company for enforcement of payment to such holder of the
principal of or interest on such Series A Subordinated Debentures having a
principal amount equal to the aggregate Liquidation Amount of the Series A
QUIPS of such holder (a "Direct Action"). In connection with such Direct
Action, the Company will have a right of set-off under the Indenture to the
extent of any payment made by the Company to such holder of Series A QUIPS in
the Direct Action. Except as described herein, holders of Series A QUIPS will
not be able to exercise directly any other remedy available to the holders of
the Series A Subordinated Debentures or assert directly any other rights in
respect of the Series A Subordinated Debentures. See "Description of Junior
Subordinated Debentures --Enforcement of Certain Rights of Holders of
Preferred Securities," "Description of Junior Subordinated Debentures --
Debenture Events of Default" and "Description of Guarantees" in the
accompanying Prospectus. The Trust Agreement
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provides that each holder of Series A QUIPS by acceptance thereof agrees to
the provisions of the Series A Guarantee and the Indenture.
LIMITED VOTING RIGHTS
Holders of Series A QUIPS will generally have limited voting rights relating
only to the modification of the Series A QUIPS, and the exercise of the Series
A Guarantee and of the Series A Issuer's rights as holder of Series A
Subordinated Debentures. Holders of Series A QUIPS will not be entitled to
vote to appoint, remove or replace the Property Trustee or the Delaware
Trustee, and such voting rights are vested exclusively in the holder of the
Series A Common Securities except upon the occurrence of certain events
described herein. The Property Trustee, the Administrative Trustees and the
Company may amend the Trust Agreement without the consent of holders of Series
A QUIPS to ensure that the Series A Issuer will be classified for United
States federal income tax purposes as a grantor trust even if such action
adversely affects the interests of such holders. See "Description of Preferred
Securities -- Voting Rights; Amendment of Each Trust Agreement" and "--
Removal of Issuer Trustees" in the accompanying Prospectus.
TRADING CHARACTERISTICS OF SERIES A QUIPS
Application will be made to list the Series A QUIPS on the New York Stock
Exchange. If the Series A QUIPS are not listed on a national securities
exchange or the NASDAQ National Market and the underwriters do not make a
market for the securities, the liquidity of the Series A QUIPS could be
adversely affected. Even if listed, the Series A QUIPS may trade at prices
that do not fully reflect the value of accrued and unpaid interest with
respect to the underlying Series A Subordinated Debentures.
POSSIBLE TAX LAW CHANGES AFFECTING THE SERIES A QUIPS
On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill")
proposed by the Clinton administration was released. The Bill would, among
other things, generally deny interest deductions for interest on an instrument
issued by a corporation that has a maximum term of more than 20 years and that
is not shown as indebtedness on the separate balance sheet of the issuer or,
where the instrument is issued to a related party (other than a corporation),
where the holder or some other related party issues a related instrument that
is not shown as indebtedness on the issuer's consolidated balance sheet. If
the provision were to apply to the Series A Subordinated Debentures, the
Company would be unable to deduct interest on the Series A Subordinated
Debentures. However, on March 29, 1996, the Chairmen of the Senate Finance and
House Ways and Means Committees issued a joint statement to the effect that it
was their intention that the effective date of the President's legislative
proposals, if adopted, will be no earlier than the date of appropriate
Congressional action on the proposals. The proposals were not enacted in the
recently concluded session of Congress and, under current law, the Company is
able to deduct interest on the Series A Subordinated Debentures. There can be
no assurance, however, that final legislation similar to the Bill or future
legislative proposals, future regulations or official administrative
pronouncements, or future judicial decisions will not affect the ability of
the Company to deduct interest on the Series A Subordinated Debentures. Such a
change could give rise to a Tax Event, which may permit the Company, upon
approval of the Federal Reserve if then required under applicable capital
guidelines or policies, to cause a redemption of the Series A QUIPS before, as
well as after, January 1, 2002. See "Certain Terms of Series A Subordinated
Debentures -- Redemption" in this Prospectus Supplement and "Description of
Preferred Securities -- Redemption or Exchange -- Tax Event Redemption" in the
accompanying Prospectus. See also "Certain Federal Income Tax Consequences --
Possible Tax Law Changes."
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WELLS FARGO CAPITAL I
Wells Fargo Capital I (the "Series A Issuer") is a statutory business trust
created under Delaware law pursuant to (i) the Trust Agreement executed by the
Company, as Depositor, and an initial Delaware Trustee and (ii) the filing of
a certificate of trust and a restated certificate of trust with the Delaware
Secretary of State on October 30, 1996 and November 20, 1996, respectively.
Under the amended and restated Trust Agreement (the "Trust Agreement"), the
Series A Issuer's business and affairs are conducted by the Issuer Trustees:
the Property Trustee, the Delaware Trustee, and three individual
Administrative Trustees who are employees or officers of or affiliated with
the Company. The Series A Issuer exists for the exclusive purposes of
(i) issuing and selling the Series A QUIPS and Series A Common Securities,
(ii) using the proceeds from the sale of Series A QUIPS and Series A Common
Securities to acquire Series A Subordinated Debentures issued by the Company
and (iii) engaging in only those other activities necessary, advisable or
incidental thereto (such as registering the transfer of the Series A
Securities). Accordingly, the Series A Subordinated Debentures will be the
sole assets of the Series A Issuer, and payments by the Company under the
Series A Subordinated Debentures and the related Expense Agreement will be the
sole revenue of the Series A Issuer. All of the Series A Common Securities
will be owned by the Company. The Series A Common Securities will rank pari
passu, and payments will be made thereon pro rata, with the Series A QUIPS,
except that upon the occurrence and continuance of an event of default under
the Trust Agreement resulting from an Event of Default under the Indenture,
the rights of the Company as holder of the Series A Common Securities to
payment in respect of Distributions and payments upon liquidation, redemption
or otherwise will be subordinated to the rights of the holders of the Series A
QUIPS. See "Description of Preferred Securities -- Subordination of Common
Securities" in the accompanying Prospectus. The Company will acquire Series A
Common Securities in an aggregate liquidation amount of $15.5 million, which
is equal to approximately 3% of the total capital of the Series A Issuer. The
Series A Issuer has a term of 55 years, but may terminate earlier as provided
in the Trust Agreement. The principal executive office of the Series A Issuer
is 420 Montgomery Street, San Francisco, California 94163, and its telephone
number is (415) 477-1000. See "The Issuers" in the accompanying Prospectus.
The Company anticipates that the Series A Issuer will not be subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
WELLS FARGO & COMPANY
Wells Fargo & Company is a bank holding company registered under the Bank
Holding Company Act of 1956, as amended. On April 1, 1996, the Company
completed its acquisition of First Interstate Bancorp ("First Interstate"). On
the basis of assets as of September 30, 1996, the Company was the eighth
largest bank holding company in the United States. As of September 30, 1996,
the Company had loans of $69.2 billion, total assets of $109.2 billion, total
deposits of $83.7 billion and stockholders' equity of $14.9 billion. Its
principal subsidiary is Wells Fargo Bank, National Association (the "Bank").
The Bank is primarily engaged in retail, commercial and corporate banking,
real estate lending and trust and investment services.
The Company is a legal entity separate and distinct from the Bank and its
other affiliates. There are various legal limitations on the extent to which
the Bank may extend credit, pay dividends or otherwise supply funds to the
Company or various of its affiliates. The executive offices of the Company are
located at 420 Montgomery Street, San Francisco, California 94163. The
Company's telephone number is (415) 477-1000.
Since the Company is a holding company, the rights of the Company to
participate in any distribution of assets of any subsidiary upon its
liquidation or reorganization or otherwise (and thus the ability of holders of
the Series A Subordinated Debentures to benefit indirectly from such
distribution) are subject to the prior claims of creditors of that subsidiary,
except to the extent that the Company
S-11
may itself be a creditor of that subsidiary. Claims on the Company's
subsidiaries by creditors other than the Company include long-term debt and
substantial obligations in respect of federal funds purchased, securities sold
under repurchase agreements and certain other short-term borrowings, as well
as deposit liabilities.
Wells Fargo Capital A, Wells Fargo Capital B and Wells Fargo Capital C (each
a Delaware business trust all of whose common securities are owned by the
Company) have recently issued an aggregate of $750 million of capital
securities under a structure similar to the structure of the Series A QUIPS,
albeit on different terms. Wells Fargo Capital A and Wells Fargo Capital B
issued $300 million and $200 million of capital securities, respectively, on
November 27, 1996, and Wells Fargo Capital C issued $250 million of capital
securities on December 3, 1996. The capital securities issued by Wells Fargo
Capital A, Wells Fargo Capital B, and Wells Fargo Capital C, and the related
junior subordinated deferrable interest debentures and guarantee of the
Company, will rank pari passu with the Series A QUIPS, Series A Subordinated
Debentures and Series A Guarantee, respectively. All of such capital
securities are expected to qualify for Tier 1 capital treatment by the
Company. See "Regulatory Capital Benefits to Wells Fargo & Company" in the
accompanying Prospectus.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
The following sets forth the consolidated historical ratios of earnings to
fixed charges and the historical ratios of earnings to fixed charges and
preferred stock dividends of the Company for the periods indicated:
QUARTER ENDED NINE MONTHS ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, SEPTEMBER 30, ------------------------
1996 1996 1995 1994 1993 1992 1991
------------- ----------------- ---- ---- ---- ---- ----
Consolidated Ratios of
Earnings to
Fixed Charges (1)(3)
Including interest on
deposits............. 2.02 2.13 2.19 2.20 1.90 1.33 1.02
Excluding interest on
deposits............. 5.34 5.46 4.56 5.04 4.53 2.56 1.10
Consolidated Ratios of
Earnings to
Fixed Charges and Pre-
ferred Stock
Dividends (1)(2)(3)
Including interest on
deposits............. 1.91 2.02 2.09 2.07 1.77 1.26 1.00
Excluding interest on
deposits............. 4.28 4.48 3.99 4.18 3.51 2.02 1.01
- --------
(1) For purposes of computing these ratios, earnings represent income before
income tax expense plus fixed charges. Fixed charges represent interest
expense plus the estimated interest component of net rental expense.
(2) The preferred stock dividends are increased to amounts representing the
pretax earnings required to cover such dividends.
(3) These computations are included herein in compliance with Securities and
Exchange Commission regulations. However, management believes the fixed
charge ratios are not meaningful measures for the business of the Company
because of two factors. First, even if there were no change in net income,
the ratios would decline with an increase in the proportion of income
which is tax-exempt or, conversely, they would increase with a decrease in
the proportion of income which is tax-exempt. Second, even if there were
no change in net income, the ratios would decline if interest income and
interest expense increase by the same amount due to an increase in the
level of interest rates or, conversely, they would increase if interest
income and interest expense decrease by the same amount due to a decrease
in the level of interest rates.
S-12
ACCOUNTING TREATMENT
For financial reporting purposes, the Series A Issuer will be treated as a
subsidiary of the Company and, accordingly, the accounts of the Series A
Issuer will be included in the consolidated financial statements of the
Company. The assets of the Series A Issuer consist solely of the Series A
Subordinated Debentures and the right under the Expense Agreement to
reimbursement by the Company of the Series A Issuer's operating expenses. The
Series A Subordinated Debentures have a principal amount of $515.5 million, an
interest rate of % and mature on January 1, 2027, which date may be (i)
shortened to a date not earlier than January 1, 2002 or (ii) extended to a
date not later than January 1, 2046, in each case if certain conditions are
met (including, in the case of a shortening of maturity, the Company having
received prior approval of the Federal Reserve if then required under
applicable capital guidelines or policies).
The Series A QUIPS will be presented as a separate line item in the
consolidated balance sheet of the Company, which will be entitled "Guaranteed
Preferred Beneficial Interests in Company's Subordinated Debentures," and
appropriate disclosures about the Series A QUIPS, the Series A Guarantee and
the Series A Subordinated Debentures will be included in the notes to the
consolidated financial statements. For financial reporting purposes, the
Company will record Distributions payable on the Series A QUIPS as an expense
in the consolidated statement of income.
The Company has agreed that future financial reports of the Company will:
(i) present the Series A QUIPS and any other Preferred Securities of Issuers
(each as defined in the accompanying Prospectus) on the Company's balance
sheet as a separate line item, which will be entitled "Guaranteed Preferred
Beneficial Interests in Company's Subordinated Debentures;" (ii) include, in
an audited note to the financial statements, disclosure that the sole assets
of the Issuers are the Junior Subordinated Debentures (specifying as to each
Issuer the principal amount, interest rate and maturity date of Junior
Subordinated Debentures held); and (iii) if Staff Accounting Bulletin 53
treatment is sought, include, in an audited note to the financial statements,
disclosure that (a) the common securities of the Issuers are wholly owned by
the Company, (b) the sole assets of the Issuers are the Junior Subordinated
Debentures (specifying as to each Issuer the principal amount, interest rate
and maturity date of Junior Subordinated Debentures held) and (c) the
obligations of the Company under the Junior Subordinated Debentures, the
Indenture, the relevant trust agreement and the Guarantees, in the aggregate,
constitute a full and unconditional guarantee by the Company on a subordinated
basis of the Issuers' obligations under the Preferred Securities issued by
each Issuer.
CERTAIN TERMS OF SERIES A QUIPS
GENERAL
The following summary of certain terms and provisions of the Series A QUIPS
supplements the description of the terms and provisions of the Preferred
Securities set forth in the accompanying Prospectus under the heading
"Description of Preferred Securities," to which description reference is
hereby made. This summary of certain terms and provisions of the Series A
QUIPS does not purport to be complete and is subject to, and qualified in its
entirety by reference to, the Trust Agreement. The form of the Trust Agreement
has been filed as an exhibit to the Registration Statement of which this
Prospectus Supplement and accompanying Prospectus form is a part.
DISTRIBUTIONS
The Series A QUIPS represent beneficial ownership interests in the Series A
Issuer, and Distributions on each Series A QUIPS will be payable at the annual
rate of % of the stated Liquidation Amount of $25, payable quarterly in
arrears on January 1, April 1, July 1 and October 1 of each year, to the
holders of the Series A QUIPS on the relevant record dates. The record dates
will
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be, for so long as the Series A QUIPS remain in book-entry form, one Business
Day (as defined in the accompanying Prospectus) prior to the relevant
Distribution payment date and, in the event the Series A QUIPS are not in
book-entry form, the 15th day of the month in which the relevant Distribution
payment date occurs. Distributions will accumulate from the date of original
issuance. The first Distribution payment date for the Series A QUIPS will be
April 1, 1997. The amount of Distributions payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months. In the event
that any date on which Distributions are payable on the Series A QUIPS is not
a Business Day, then payment of the Distributions payable on such date will be
made on the next succeeding day that is a Business Day (and without any
additional Distributions or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year,
such payment shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on the date such payment was
originally payable. See "Description of Preferred Securities -- Distributions"
in the accompanying Prospectus.
So long as no Debenture Event of Default has occurred and is continuing, the
Company has the right under the Indenture to defer the payment of interest on
the Series A Subordinated Debentures at any time or from time to time for a
period not exceeding 20 consecutive quarters with respect to each Extension
Period, provided that no Extension Period may extend beyond the Stated
Maturity of the Series A Subordinated Debentures. As a consequence of any such
deferral, quarterly Distributions on the Series A QUIPS by the Series A Issuer
will also be deferred during any such Extension Period. Distributions to which
holders of the Series A QUIPS are entitled will accumulate additional
Distributions thereon at the rate per annum of % thereof, compounded
quarterly from the relevant payment date for such Distributions. The term
"Distributions" as used herein shall include any such additional
Distributions. During any such Extension Period, the Company may not, and may
not permit any subsidiary of the Company to, (i) declare or pay any dividends
or distributions on, or redeem, purchase, acquire, or make a liquidation
payment with respect to, any of the Company's capital stock or (ii) make any
payment of principal, interest or premium, if any, on or repay, repurchase or
redeem any debt securities of the Company (including other series of Junior
Subordinated Debentures) that rank pari passu with or junior in interest to
the Series A Subordinated Debentures or make any guarantee payments with
respect to any guarantee by the Company of the debt securities of any
subsidiary of the Company if such guarantee ranks pari passu or junior in
interest to the Series A Subordinated Debentures (other than (a) dividends or
distributions in common stock of the Company, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption
or repurchase of any such rights pursuant thereto, (c) payments under any
Guarantee, and (d) purchases of common stock related to the issuance of common
stock or rights under any of the Company's benefit plans for its directors,
officers or employees). Prior to the termination of any such Extension Period,
the Company may further defer the payment of interest, provided that no
Extension Period may exceed 20 consecutive quarters or extend beyond the
Stated Maturity of the Series A Subordinated Debentures. Following the
termination of any such Extension Period and the payment of all amounts then
due, the Company may elect to begin a new Extension Period. There is no
limitation on the number of times that the Company may elect to begin an
Extension Period. See "Certain Terms of Series A Subordinated Debentures --
Option to Extend Interest Payment Period" and "Certain Federal Income Tax
Consequences -- Original Issue Discount."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Series A
Subordinated Debentures.
REDEMPTION
Upon the repayment or redemption, in whole or in part, of the Series A
Subordinated Debentures, whether at Stated Maturity or upon earlier redemption
as provided in the Indenture, the proceeds from
S-14
such repayment or redemption shall be applied by the Property Trustee to
redeem a Like Amount (as defined in the accompanying Prospectus) of the Series
A Securities, upon not less than 15 nor more than 60 days notice prior to the
date fixed for repayment or redemption, at a redemption price, with respect to
the Series A QUIPS (the "Redemption Price"), equal to the aggregate
Liquidation Amount of such Series A QUIPS plus accumulated and unpaid
Distributions thereon to the date of redemption (the "Redemption Date"). See
"Description of Preferred Securities -- Redemption or Exchange" in the
accompanying Prospectus. For a description of the Stated Maturity and
redemption provisions of the Series A Subordinated Debentures, see "Certain
Terms of Series A Subordinated Debentures -- General" and "-- Redemption."
Under regulations of the Federal Reserve, any perpetual preferred securities
with a feature permitting redemption at the option of the issuer can qualify
as Tier 1 capital only if the redemption is subject to prior approval of the
Federal Reserve. Therefore, any redemption of the Series A Subordinated
Debentures and attendant redemption of the Series A Securities will be subject
to the prior approval of the Federal Reserve if such regulations have not been
revised. Under current policies, the Federal Reserve may grant approval of a
redemption without a formal application or notice if (1) the redemption,
together with other redemptions and repurchases of securities in the preceding
12 months, constitutes less than 10% of the bank holding company's net worth
or (2) both before and after the redemption, the bank holding company is well-
capitalized and highly-rated.
LIQUIDATION OF SERIES A ISSUER AND DISTRIBUTION OF SERIES A SUBORDINATED
DEBENTURES TO HOLDERS
The Company will have the right at any time to terminate the Series A Issuer
and, after satisfaction of liabilities to creditors of the Series A Issuer as
required by applicable law, cause the Series A Subordinated Debentures to be
distributed to the holders of Series A QUIPS in exchange therefor upon
liquidation of the Series A Issuer. Such right is subject to the Company
having received prior approval of the Federal Reserve if then required under
applicable guidelines or policies of the Federal Reserve.
Under current United States Federal income tax law and interpretations and
assuming, as expected, the Series A Issuer is treated as a grantor trust, a
distribution of the Series A Subordinated Debentures in exchange for Series A
QUIPS should not be a taxable event to holders of the Series A QUIPS. Should
there be a change in law, a change in legal interpretation, a Tax Event or
other circumstances, however, the distribution could be a taxable event to
holders of the Series A QUIPS. See "Certain Federal Income Tax Consequences --
Distribution of Series A Subordinated Debentures to Holders of Series A
QUIPS." If the Company elects neither to redeem the Series A Subordinated
Debentures prior to maturity nor to liquidate the Series A Issuer and
distribute the Series A Subordinated Debentures to holders of the Series A
QUIPS, the Series A QUIPS will remain outstanding until the repayment of the
Series A Subordinated Debentures.
If the Company elects to liquidate the Series A Issuer and thereby causes
the Series A Subordinated Debentures to be distributed to holders of the
Series A QUIPS in exchange therefor upon liquidation of the Series A Issuer,
the Company shall continue to have the right to shorten or extend the maturity
of such Series A Subordinated Debentures, subject to certain conditions as
described under "Certain Terms of Series A Subordinated Debentures --
General."
LIQUIDATION VALUE
The amount payable on the Series A QUIPS in the event of any liquidation of
the Series A Issuer is $25 per Series A QUIPS plus accumulated and unpaid
Distributions, which amount may be paid in the form of a distribution of such
amount in Series A Subordinated Debentures, subject to certain exceptions. See
"Description of Preferred Securities -- Liquidation Distribution Upon
Termination" in the accompanying Prospectus.
S-15
REGISTRATION OF SERIES A QUIPS
The Series A QUIPS will be represented by global certificates registered in
the name of DTC or its nominee. Beneficial interests in the Series A QUIPS
will be shown on, and transfers thereof will be effected only through, records
maintained by participants in DTC. Except as described below and in the
accompanying Prospectus, Series A QUIPS in certificated form will not be
issued in exchange for the global certificates. See "Book-Entry Issuance" in
the accompanying Prospectus.
A global security shall be exchangeable for Series A QUIPS registered in the
names of persons other than DTC or its nominee only if (i) DTC notifies the
Series A Issuer that it is unwilling or unable to continue as a depository for
such global security and no successor depository shall have been appointed, or
if at any time DTC ceases to be a clearing agency registered under the
Securities Exchange Act of 1934, as amended, at a time when DTC is required to
be so registered to act as such depository, (ii) the Series A Issuer in its
sole discretion determines that such global security shall be so exchangeable,
or (iii) there shall have occurred and be continuing an event of default under
the Indenture with respect to the Series A Subordinated Debentures. Any global
security that is exchangeable pursuant to the preceding sentence shall be
exchangeable for definitive certificates registered in such names as DTC shall
direct. It is expected that such instructions will be based upon directions
received by DTC from its Participants (as defined in the accompanying
Prospectus) with respect to ownership of beneficial interests in such global
security. In the event that Series A QUIPS are issued in definitive form, such
Series A QUIPS will be in denominations of $25 and integral multiples thereof
and may be transferred or exchanged at the offices described below.
Payments on Series A QUIPS represented by a global security will be made to
DTC, as the depositary for the Series A QUIPS. In the event Series A QUIPS are
issued in certificated form, the Redemption Price and Distributions will be
payable, the transfer of the Series A QUIPS will be registrable, and Series A
QUIPS will be exchangeable for Series A QUIPS of other denominations of a like
aggregate principal amount, at the corporate office of the Property Trustee in
New York, New York, or at the offices of any paying agent or transfer agent
appointed by the Administrative Trustees, provided that payment of any
Distribution may be made at the option of the Administrative Trustees by check
mailed to the address of the persons entitled thereto or by wire transfer. In
addition, if the Series A QUIPS are issued in certificated form, the record
dates for payment of Distributions will be the 15th day of the last month of
each calendar quarter. For a description of DTC and the terms of the
depositary arrangements relating to payments, transfers, voting rights,
redemptions and other notices and other matters, see "Book-Entry Issuance" in
the accompanying Prospectus.
CERTAIN TERMS OF SERIES A SUBORDINATED DEBENTURES
GENERAL
The following summary of certain terms and provisions of the Series A
Subordinated Debentures supplements the description of the terms and
provisions of the Corresponding Junior Subordinated Debentures set forth in
the accompanying Prospectus under the headings "Description of Junior
Subordinated Debentures" and "Description of Junior Subordinated Debentures --
Corresponding Junior Subordinated Debentures," to which description reference
is hereby made. The summary of certain terms and provisions of the Series A
Subordinated Debentures set forth below does not purport to be complete and is
subject to, and qualified in its entirety by reference to, the Indenture. The
Indenture has been filed as an exhibit to the Registration Statement of which
this Prospectus Supplement and accompanying Prospectus form a part.
Concurrently with the issuance of the Series A QUIPS, the Series A Issuer
will invest the proceeds thereof, together with the consideration paid by the
Company for the Series A Common Securities, in the Series A Subordinated
Debentures issued by the Company. The Series A Subordinated
S-16
Debentures will bear interest at the annual rate of % of the principal
amount thereof, payable quarterly in arrears on January 1, April 1, July 1 and
October 1 of each year (each, an "Interest Payment Date"), commencing April 1,
1997, to the person in whose name each Series A Subordinated Debenture is
registered, subject to certain exceptions, at the close of business on the
Business Day next preceding such Interest Payment Date. It is anticipated
that, until the liquidation, if any, of the Series A Issuer, all Series A
Subordinated Debentures will be held in the name of the Property Trustee in
trust for the benefit of the holders of the Series A QUIPS. The amount of
interest payable for any period will be computed on the basis of a 360-day
year of twelve 30-day months. In the event that any date on which interest is
payable on the Series A Subordinated Debentures is not a Business Day, then
payment of the interest payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on the date such payment was originally payable. Accrued
interest that is not paid on the applicable Interest Payment Date will bear
additional interest on the amount thereof (to the extent permitted by law) at
the rate per annum of % thereof, compounded quarterly. The term "interest"
as used herein shall include quarterly interest payments, interest on
quarterly interest payments not paid on the applicable Interest Payment Date
and Additional Sums (as defined below), as applicable.
The Series A Subordinated Debentures will be issued as a series of junior
subordinated debentures under the Indenture. The Series A Subordinated
Debentures will mature on January 1, 2027 (such date, as it may be shortened
or extended, as hereinafter described, the "Stated Maturity"). Such date may
be shortened at any time by the Company to any date not earlier than January
1, 2002, subject to the Company having received prior approval of the Federal
Reserve if then required under applicable capital guidelines or policies of
the Federal Reserve. Such date may also be extended at any time at the
election of the Company for one or more periods, but in no event to a date
later than January 1, 2046, provided that at the time such election is made
and at the time of extension (i) the Company is not in bankruptcy, otherwise
insolvent or in liquidation, (ii) the Company is not in default in the payment
of any interest or principal on the Series A Subordinated Debentures, (iii)
the Series A Issuer is not in arrears on payments of Distributions on the
Series A QUIPS and no deferred Distributions are accumulated, and (iv) the
Series A Subordinated Debentures are rated not less than BBB- by Standard &
Poor's Ratings Services or Baa3 by Moody's Investors Service, Inc. or the
equivalent by any other nationally recognized statistical rating organization.
In the event the Company elects to shorten or extend the Stated Maturity of
the Series A Subordinated Debentures, it shall give notice of such shortening
or extension to the Debenture Trustee, and the Debenture Trustee shall give
notice to the holders of the Series A Subordinated Debentures no more than 15
and no less than 60 days prior to the effectiveness thereof.
The Series A Subordinated Debentures will be unsecured and will rank junior
and be subordinate in right of payment to all Senior Indebtedness of the
Company. At September 30, 1996, the aggregate outstanding Senior Indebtedness
of the Company was approximately $5.4 billion. Since the Company is a holding
company, the right of the Company to participate in any distribution of assets
of any subsidiary upon such subsidiary's liquidation or reorganization or
otherwise (and thus the ability of holders of the Series A QUIPS to benefit
indirectly from such distribution) is subject to the prior claims of creditors
of that subsidiary, except to the extent that the Company may itself be a
creditor of that subsidiary. Claims on the Company's subsidiaries by creditors
other than the Company include long-term debt and substantial obligations in
respect of federal funds purchased, securities sold under repurchase
agreements and certain other short-term borrowings, as well as deposit
liabilities. Accordingly, the Series A Subordinated Debentures will be
effectively subordinated to all existing and future liabilities of the
Company's subsidiaries, and holders of Series A Subordinated Debentures should
look only to the assets of the Company for payments on the Series A
Subordinated Debentures. The Indenture does not limit the incurrence or
issuance of other secured or unsecured debt of the Company, including Senior
Indebtedness, whether under the Indenture or any existing or other
S-17
indenture that the Company may enter into in the future or otherwise,
including the Company's Senior and Subordinated Indentures entered into with
The Chase Manhattan Bank (formerly known as Chemical Bank) and Marine Midland
Bank, respectively. See "Description of Junior Subordinated Debentures --
Subordination" in the accompanying Prospectus.
OPTION TO DEFER INTEREST PAYMENTS
So long as no Event of Default under the Indenture has occurred or is
continuing, the Company has the right under the Indenture at any time during
the term of the Series A Subordinated Debentures to defer the payment of
interest on the Series A Subordinated Debentures at any time or from time to
time for a period not exceeding 20 consecutive quarters with respect to each
Extension Period, provided that no Extension Period may extend beyond the
Stated Maturity of the Series A Subordinated Debentures. At the end of such
Extension Period, the Company must pay all interest then accrued and unpaid on
the Series A Subordinated Debentures (together with interest thereon at the
annual rate of %, compounded quarterly, to the extent permitted by
applicable law). During an Extension Period, interest will continue to accrue
and holders of Series A Subordinated Debentures (and holders of Series A QUIPS
while such series is outstanding) will be required to accrue interest income
for United States federal income tax purposes. See "Certain Federal Income Tax
Consequences -- Original Issue Discount."
During any such Extension Period, the Company may not, and may not permit
any subsidiary of the Company to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock or (ii) make any payment
of principal, interest or premium, if any, on or repay, repurchase or redeem
any debt securities of the Company (including other series of Junior
Subordinated Debentures) that rank pari passu with or junior in interest to
the Series A Subordinated Debentures or make any guarantee payments with
respect to any guarantee by the Company of the debt securities of any
subsidiary of the Company if such guarantee ranks pari passu with or junior in
interest to the Series A Subordinated Debentures (other than (a) dividends or
distributions in common stock of the Company, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
with the issuance of stock under any such plan in the future, or the
redemption or repurchase of any such rights pursuant thereto, (c) payments
under any Guarantee, and (d) purchases of common stock related to the issuance
of common stock or rights under any of the Company's benefit plans for its
directors, officers or employees). Prior to the termination of any such
Extension Period, the Company may further defer the payment of interest on the
Series A Subordinated Debentures, provided that no Extension Period may exceed
20 consecutive quarters or extend beyond the Stated Maturity of the Series A
Subordinated Debentures. Following the termination of any such Extension
Period and the payment of all amounts then due on the Series A Subordinated
Debentures, the Company may elect to begin a new Extension Period subject to
the above requirements. No interest shall be due and payable during an
Extension Period, except at the end thereof. The Company must give the
Property Trustee, the Administrative Trustees and the Debenture Trustee notice
of its election to begin such Extension Period at least one Business Day prior
to the earlier of (i) the date the Distributions on the Series A QUIPS would
have been payable except for the election to begin such Extension Period or
(ii) the date the Administrative Trustees are required to give notice to the
New York Stock Exchange, the Nasdaq National Market or other applicable self-
regulatory organization or to holders of such Series A QUIPS of the record
date or (iii) the date such Distributions are payable, but in any event not
less than one Business Day prior to such record date. The Debenture Trustee
shall give notice of the Company's election to begin an Extension Period to
the holders of the Series A Subordinated Debentures, and the Administrative
Trustees shall give notice of the Company's election to the holders of the
Series A QUIPS. There is no limitation on the number of times that the Company
may elect to begin an Extension Period. See "Description of Junior
Subordinated Debentures -- Option to Extend Interest Payment Date" in the
accompanying Prospectus.
S-18
ADDITIONAL SUMS
If the Series A Issuer is required to pay any additional taxes, duties or
other governmental charges as a result of a Tax Event, the Company will pay as
additional amounts on the Series A Subordinated Debentures such amounts as
shall be required so that the Distributions payable by the Series A Issuer
shall not be reduced as a result of any such additional taxes, duties or other
governmental charges.
REDEMPTION
The Series A Subordinated Debentures are redeemable prior to maturity at the
option of the Company (i) on or after January 1, 2002, in whole at any time or
in part from time to time, or (ii) at any time in whole (but not in part),
upon the occurrence and continuation of a Tax Event, Capital Treatment Event
or Investment Company Event in each case at a redemption price equal to the
accrued and unpaid interest on the Series A Subordinated Debentures so
redeemed to the date fixed for redemption, plus 100% of the principal amount
thereof. As described above in "Certain Terms of Series A QUIPS --
Redemption," any redemption of the Series A Subordinated Debentures may be
subject to prior approval of the Federal Reserve. See "Description of Junior
Subordinated Debentures -- Redemption" in the accompanying Prospectus.
DISTRIBUTION OF SERIES A SUBORDINATED DEBENTURES
As described under "Certain Terms of Series A QUIPS -- Liquidation of Issuer
and Distribution of Series A Subordinated Debentures to Holders," under
certain circumstances involving the termination of the Series A Issuer, Series
A Subordinated Debentures may be distributed to the holders of the Series A
QUIPS in exchange therefor upon liquidation of the Series A Issuer after
satisfaction of liabilities to creditors of the Series A Issuer as provided by
applicable law. If distributed to holders of Series A QUIPS in liquidation,
the Series A Subordinated Debentures will initially be issued in the form of
one or more global securities and DTC, or any successor depositary for the
Series A QUIPS, will act as depositary for the Series A Subordinated
Debentures. It is anticipated that the depositary arrangements for the Series
A Subordinated Debentures would be substantially identical to those in effect
for the Series A QUIPS. If the Series A Subordinated Debentures are
distributed to the holders of Series A QUIPS upon the liquidation of the
Series A Issuer, the Company will use its best efforts to list the Series A
Subordinated Debentures on the New York Stock Exchange or such other stock
exchanges or automated quotation systems, if any, on which the Series A QUIPS
are then listed. There can be no assurance as to the market price of any
Series A Subordinated Debentures that may be distributed to the holders of
Series A QUIPS.
REGISTRATION OF SERIES A SUBORDINATED DEBENTURES
The Series A Subordinated Debentures will be represented by global
certificates registered in the name of DTC or its nominee. Beneficial
interests in the Series A Subordinated Debentures will be shown on, and
transfers thereof will be effected only through, records maintained by
participants in DTC. Except as described below and in the accompanying
Prospectus, Series A Subordinated Debentures in certificated form will not be
issued in exchange for the global certificates. See "Book-Entry Issuance" in
the accompanying Prospectus.
A global security shall be exchangeable for Series A Subordinated Debentures
registered in the names of persons other than DTC or its nominee only if (i)
DTC notifies the Company that it is unwilling or unable to continue as a
depository for such global security and no successor depository shall have
been appointed, or if at any time DTC ceases to be a clearing agency
registered under the Exchange Act at a time when DTC is required to be so
registered to act as such depository, (ii) the Company in its sole discretion
determines that such global security shall be so exchangeable, or (iii) there
shall have occurred and be continuing an Event of Default under the Indenture
with respect to the Series A
S-19
Subordinated Debentures. Any global security that is exchangeable pursuant to
the preceding sentence shall be exchangeable for definitive certificates
registered in such names as DTC shall direct. It is expected that such
instructions will be based upon directions received by DTC from its
Participants (as defined in the accompanying Prospectus) with respect to
ownership of beneficial interests in such global security. In the event that
Series A Subordinated Debentures are issued in definitive form, such Series A
Subordinated Debentures will be in denominations of $25 and integral multiples
thereof and may be transferred or exchanged at the offices described below.
Payments on Series A Subordinated Debentures represented by a global
security will be made to DTC, as the depositary for the Series A Subordinated
Debentures. In the event Series A Subordinated Debentures are issued in
certificated form, principal and interest will be payable, the transfer of the
Series A Subordinated Debentures will be registrable, and Series A
Subordinated Debentures will be exchangeable for Series A Subordinated
Debentures of other denominations of a like aggregate principal amount, at the
corporate office of the Debenture Trustee in New York, New York, or at the
offices of any paying agent or transfer agent appointed by the Company,
provided that payment of interest may be made at the option of the Company by
check mailed to the address of the persons entitled thereto or by wire
transfer. In addition, if the Series A Subordinated Debentures are issued in
certificated form, the record dates for payment of interest will be the 15th
day of the last month of each calendar quarter. For a description of DTC and
the terms of the depositary arrangements relating to payments, transfers,
voting rights, redemptions and other notices and other matters, see "Book-
Entry Issuance" in the accompanying Prospectus.
S-20
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the principal United States federal income tax
consequences of the purchase, ownership and disposition of Series A QUIPS. The
statements of law and legal conclusions set forth in this summary regarding
the tax consequences to the beneficial owners of Series A QUIPS (the
"Securityholders") represent the opinion of Brobeck, Phleger & Harrison LLP,
counsel to the Company and the Series A Issuer. This summary and the tax
opinion of counsel only address the tax consequences to a person that acquires
Series A QUIPS on their original issue at their original offering price and
that is (i) an individual citizen or resident of the United States, (ii) a
corporation or partnership organized in or under the laws of the United States
or any state thereof or the District of Columbia or (iii) an estate or trust
the income of which is subject to United States federal income tax regardless
of source (a "United States Person"). This summary does not address all tax
consequences that may be applicable to a United States Person that is a
Securityholder, nor does it address the tax consequences to (i) persons that
are not United States Persons, (ii) persons that may be subject to special
treatment under United States federal income tax law, such as banks, insurance
companies, thrift institutions, regulated investment companies, real estate
investment trusts, tax-exempt organizations and dealers in securities or
currencies, (iii) persons that will hold Series A QUIPS as part of a position
in a "straddle" or as part of a "hedging," "conversion" or other integrated
investment transaction for federal income tax purposes, (iv) persons whose
functional currency is not the United States dollar or (v) persons that do not
hold Series A QUIPS as capital assets.
This summary is based upon the Internal Revenue Code of 1986, as amended
(the "Code"), Treasury Regulations, Internal Revenue Service (the "Service")
rulings and pronouncements and judicial decisions now in effect, all of which
are subject to change at any time. Such changes may be applied retroactively
in a manner that could cause the tax consequences to vary substantially from
the consequences described below, possibly adversely affecting a beneficial
owner of Series A QUIPS. In particular, legislation has been proposed that
could adversely affect the Company's ability to deduct interest on the Series
A Subordinated Debentures, which may in turn permit the Company to cause a
redemption of the Series A QUIPS. See "-- Possible Tax Law Changes."
The authorities on which this summary is based (including authorities
distinguishing debt from equity) are subject to various interpretations, and
it is therefore possible that the federal income tax treatment of the Series A
QUIPS may differ from the treatment described below. No ruling has been
received from the Service regarding the tax consequences of the Series A
QUIPS. Counsel's opinion regarding such tax consequences represents only
counsel's best legal judgment based on current authorities and is not binding
on the Service or the courts.
PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT WITH THEIR OWN TAX ADVISORS IN
LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES AS TO THE FEDERAL TAX CONSEQUENCES
OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF SERIES A QUIPS, AS WELL AS THE
EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
CLASSIFICATION OF THE SERIES A ISSUER
In the opinion of Brobeck, Phleger & Harrison LLP, under current law and
assuming compliance with the terms of the Trust Agreement, the Series A Issuer
will be classified as a grantor trust and not as an association taxable as a
corporation for United States federal income tax purposes. As a result, each
Securityholder will be treated as owning an undivided beneficial interest in
the Series A Subordinated Debentures. Accordingly, each Securityholder will be
required to include in its gross income its pro rata share of the interest
income, including original issue discount, paid or accrued with respect to the
Series A Subordinated Debentures whether or not cash is actually distributed
to the Securityholders. See "-- Interest Income and Original Issue Discount."
No amount included in income with respect to the Series A QUIPS will be
eligible for the dividends-received deduction.
S-21
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under recently issued Treasury regulations applicable to debt instruments
issued on or after August 13, 1996 (the "Regulations"), a "remote" contingency
that stated interest will not be timely paid will be ignored in determining
whether a debt instrument is issued with original issue discount ("OID"). The
Company believes that the likelihood of its exercising its option to defer
payments is remote. Based on the foregoing, the Company believes that the
Series A Subordinated Debentures will not be considered to be issued with OID
at the time of their original issuance and, accordingly, a Securityholder
should include in gross income such Securityholder's allocable share of
interest on the Series A Subordinated Debentures in accordance with such
Securityholder's method of tax accounting.
Under the Regulations, if the Company should exercise its option to defer
any payment of interest, the Series A Subordinated Debentures would at that
time be treated as issued with OID, and all stated interest on the Series A
Subordinated Debentures would thereafter be treated as OID as long as the
Series A Subordinated Debentures remained outstanding. In such event, all of
the Securityholder's taxable interest income with respect to the Series A
Subordinated Debentures would be accounted for as OID on an economic accrual
basis regardless of such holder's method of tax accounting, and actual
distributions of stated interest would not be reported as taxable income.
Consequently, a Securityholder of Series A QUIPS would be required to include
in gross income OID even though the Company would not make any actual cash
payments during an Extension Period.
The Regulations have not been addressed in any rulings or other
interpretations by the Internal Revenue Service (the "IRS"), and it is
possible that the IRS could take a position contrary to the interpretation
herein.
DISTRIBUTION OF SERIES A SUBORDINATED DEBENTURES TO HOLDERS OF SERIES A QUIPS
Under current law, and assuming, as expected, the Series A Issuer is treated
as a grantor trust, a distribution by the Series A Issuer of the Series A
Subordinated Debentures as described under the caption "Certain Terms of
Series A QUIPS -- Liquidation of Series A Issuer or Distribution of Series A
Subordinated Debentures to Holders" will be non-taxable and will result in the
Securityholder receiving directly his pro rata share of the Series A
Subordinated Debentures previously held indirectly through the Series A
Issuer, with a holding period and aggregate tax basis equal to the holding
period and aggregate tax basis such Securityholder had in its Series A QUIPS
before such distribution. A Securityholder will accrue interest in respect of
Series A Subordinated Debentures received from the Series A Issuer in the
manner described above under "-- Interest Income and Original Issue Discount."
However, if there should be a change in law (including a change in legal
interpretation), a distribution of Series A Subordinated Debentures could be a
taxable event to the holders of Series A QUIPS.
SALES OR REDEMPTION OF SERIES A QUIPS
A Securityholder that sells (including a redemption for cash) Series A QUIPS
will recognize gain or loss equal to the difference between its adjusted tax
basis in the Series A QUIPS and the amount realized on the sale of such Series
A QUIPS. Assuming that the Company does not exercise its option to defer
payment of interest on the Series A Subordinated Debentures, and the Series A
QUIPS are not considered to be issued with OID, a Securityholder's adjusted
tax basis in the Series A QUIPS generally will be its initial purchase price.
If the Series A Subordinated Debentures are deemed to be issued with OID as a
result of the Company's deferral of any interest payment, a Securityholder's
tax basis in the Series A QUIPS generally will be its initial purchase price,
increased by OID previously includable in such Securityholder's gross income
to the date of disposition and decreased by distributions or other payments
received on the Series A QUIPS since and including the date of the first
Extension Period. Such gain or loss generally will be a capital gain or loss
(except to the extent of any accrued interest with respect to such
Securityholder's pro rata share of the Series A Subordinated Debentures
required to be included in income) and generally will be a long-term capital
gain or loss if the Series A QUIPS have been held for more than one year.
S-22
Should the Company exercise its option to defer any payment of interest on
the Series A Subordinated Debentures, the Series A QUIPS may trade at a price
that does not accurately reflect the value of accrued but unpaid interest with
respect to the underlying Series A Subordinated Debentures. In the event of
such a deferral, a Securityholder that disposes of its Series A QUIPS between
record dates for payments of distributions thereon will be required to include
in income as ordinary income accrued but unpaid interest on the Series A
Subordinated Debentures to the date of disposition, and to add such amount to
its adjusted tax basis in its pro rata share of the underlying Series A
Subordinated Debentures deemed disposed of. To the extent the selling price is
less than the Securityholder's adjusted tax basis, such Securityholder will
recognize a capital loss. Subject to certain limited exceptions, capital
losses cannot be applied to offset ordinary income for United States federal
income tax purposes.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of interest paid and any OID accrued on the Series A QUIPS held
of record by United States Persons (other than corporations and other exempt
Securityholders) will be reported to the Internal Revenue Service. "Backup"
withholding at a rate of 31% will apply to payments of interest to non-exempt
United States Persons unless the Securityholder furnishes its taxpayer
identification number in the manner prescribed in applicable Treasury
Regulations, certifies that such number is correct, certifies as to no loss of
exemption from backup withholding and meets certain other conditions.
Payment of the proceeds from the disposition of Series A QUIPS to or through
the United States office of a broker is subject to information reporting and
backup withholding unless the holder or beneficial owner establishes an
exemption from information reporting and backup withholding.
Any amounts withheld from a Securityholder under the backup withholding
rules will be allowed as a refund or a credit against such Securityholder's
United States federal income tax liability, provided the required information
is furnished to the Internal Revenue Service.
It is anticipated that income on the Series A QUIPS will be reported to
holders on Form 1099 and mailed to holders of the Series A QUIPS by January 31
following each calendar year.
POSSIBLE TAX LAW CHANGES
The Revenue Reconciliation Bill of 1996 (the "Bill"), the revenue portion of
President Clinton's budget proposal released on March 19, 1996, would, among
other things, generally deny interest deductions for interest on an instrument
issued by a corporation that has a maximum term of more than 20 years and that
is not shown as indebtedness on the separate balance sheet of the issuer or,
where the instrument is issued to a related party (other than a corporation),
where the holder or some other related party issues a related instrument that
is not shown as indebtedness on the issuer's consolidated balance sheet. The
above-described provision of the Bill was proposed to be effective generally
for instruments issued on or after December 7, 1995. If the provision were to
apply to the Series A Subordinated Debentures, the Company would be unable to
deduct interest on the Series A Subordinated Debentures. However, on March 29,
1996, the Chairmen of the Senate Finance and House Ways and Means Committees
issued a joint statement to the effect that it was their intention that the
effective date of the President's legislative proposals, if adopted, will be
no earlier than the date of appropriate Congressional action on the proposals.
S-23
The above-described provision of the Bill was not enacted in the recently-
concluded session of Congress and, under current law, the Company is able to
deduct interest on the Series A Subordinated Debentures. There can be no
assurance that future legislation similar to the Bill, future regulations or
official administrative pronouncements or future judicial decisions will not
affect the ability of the Company to deduct interest on the Series A
Subordinated Debentures. Such a change could give rise to a Tax Event, which
may permit the Company, upon approval of the Federal Reserve if then required
under applicable capital guidelines or policies, to cause a redemption of the
Series A QUIPS, as described more fully in the accompanying Prospectus under
"Description of Preferred Securities --Redemption or Exchange -- Tax Event
Redemption or Distribution of Corresponding Junior Subordinated Debentures."
S-24
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement,
the Company and the Series A Issuer have agreed that the Series A Issuer will
sell to Goldman, Sachs & Co., [other Underwriters] (the "Underwriters"), and
the Underwriters have agreed to purchase from the Series A Issuer, the
respective number of Series A QUIPS set forth opposite their names below. In
the Underwriting Agreement, the several Underwriters have agreed, subject to
the terms and conditions set forth therein, to purchase all the Series A QUIPS
offered hereby if any of the Series A QUIPS are purchased. In the event of
default by an Underwriter, the Underwriting Agreement provides that, in
certain circumstances, the purchase commitments of the nondefaulting
Underwriters may be increased or the Underwriting Agreement may be terminated.
NUMBER OF
SERIES A
UNDERWRITER QUIPS
----------- ---------
Goldman, Sachs & Co. .........................................
----------
Total..................................................... 20,000,000
==========
The Underwriters propose initially to offer the Series A QUIPS to the public
at the public offering price set forth on the cover of this Prospectus
Supplement and to certain dealers at such price less a concession not in
excess of $. per Series A QUIPS. The Underwriters may allow, and such
dealers may reallow, a discount not in excess of $. per Series A QUIPS to
certain other dealers. After the initial public offering, the public offering
price, concession and discount may be changed.
In view of the fact that the proceeds from the sale of the Series A QUIPS
will be used to purchase the Series A Subordinated Debentures issued by the
Company, the Underwriting Agreement provides that the Company will pay as
Underwriters' Compensation for the Underwriters' arranging the investment
therein of such proceeds an amount of $. per Series A QUIPS for the
accounts of the several Underwriters.
The Series A Issuer has granted the Underwriters an option exercisable for
30 days after the date of this Prospectus Supplement to purchase up to
3,000,000 additional Series A QUIPS to cover over-allotments, if any, at the
initial public offering price (with additional Underwriters' Compensation), as
set forth on the cover page of this Prospectus Supplement. If the Underwriters
exercise their over-allotment option, the Underwriters have severally agreed,
subject to certain conditions, to purchase approximately the same percentage
thereof that the number of Series A QUIPS to be purchased by each of them, as
shown on the foregoing table, bears to the number of Series A QUIPS offered
hereby.
The Company and the Series A Issuer have agreed that, during the period
beginning from the date of the Underwriting Agreement and continuing to and
including the earlier of (i) the termination of trading restrictions on the
Series A QUIPS, as determined by the Underwriters, and (ii) 30 days after the
closing date, they will not offer, sell, contract to sell or otherwise dispose
of any Preferred Securities, any other beneficial interests in the assets of
the Series A Issuer, or any preferred securities or any other securities of
the Series A Issuer or the Company which are substantially similar to the
Series A QUIPS, including any guarantee of such securities, or any securities
convertible into or exchangeable for or representing the right to receive
securities, preferred securities or any such substantially similar securities
of either the Series A Issuer or the Company, without the prior written
consent of the Underwriters, except for the Series A QUIPS offered in
connection with the offering.
S-25
Prior to this offering, there has been no public market for the Series A
QUIPS. Application will be made to list the Series A QUIPS on the New York
Stock Exchange. Trading of the Series A QUIPS on the New York Stock Exchange
is expected to commence within a 30-day period after the initial delivery of
the Series A QUIPS. The Underwriters have advised the Company that they intend
to make a market in the Series A QUIPS prior to commencement of trading on the
New York Stock Exchange, but are not obligated to do so and may discontinue
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Series A QUIPS.
In order to meet one of the requirements for listing the Series A QUIPS on
the New York Stock Exchange, the Underwriters will undertake to sell lots of
100 or more Series A QUIPS to a minimum of 400 beneficial holders.
The Company and the Series A Issuer have agreed to indemnify the several
Underwriters against, or contribute to payments that the Underwriters may be
required to make in respect of, certain liabilities, including liabilities
under the Securities Act of 1933, as amended.
Certain of the Underwriters or their affiliates have provided from time to
time, and expect to provide in the future, investment or commercial banking
services to the Company and its affiliates, for which such Underwriters or
their affiliates have received or will receive customary fees and commissions.
S-26
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE ISSUER OR BY THE
UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE COMPANY OR THE ISSUER SINCE THE DATE THEREOF. THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
---------------
TABLE OF CONTENTS
PAGE
----
Prospectus Supplement
Risk Factors............................................................. S-5
Wells Fargo Capital I.................................................... S-11
Wells Fargo & Company.................................................... S-11
Consolidated Ratios of Earnings to Fixed Charges......................... S-12
Accounting Treatment..................................................... S-13
Certain Terms of Series A QUIPS.......................................... S-13
Certain Terms of Series A Subordinated Debentures........................ S-16
Certain Federal Income Tax Consequences.................................. S-21
Underwriting............................................................. S-25
Prospectus
Available Information.................................................... 3
Incorporation of Certain Documents by Reference.......................... 4
Wells Fargo & Company.................................................... 5
Regulatory Capital Benefits to Wells Fargo Company....................... 5
The Issuers.............................................................. 6
Use of Proceeds.......................................................... 7
Description of Junior Subordinated Debentures............................ 7
Description of Preferred Securities...................................... 17
Book-Entry Issuance...................................................... 28
Description of Guarantees................................................ 30
Relationship Among the Preferred Securities, the Corresponding Junior
Subordinated Debentures and the Guarantees.............................. 33
Plan of Distribution..................................................... 34
Validity of Securities................................................... 35
Experts.................................................................. 35
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
20,000,000
PREFERRED SECURITIES
WELLS FARGO CAPITAL I
% CUMULATIVE QUARTERLY INCOME PREFERRED SECURITIES
SERIES A (QUIPS(SM)) FULLY AND
UNCONDITIONALLY GUARANTEED,
AS DESCRIBED HEREIN, BY
WELLS FARGO & COMPANY
---------------
PROSPECTUS SUPPLEMENT
---------------
GOLDMAN, SACHS & CO.
REPRESENTATIVES OF THE UNDERWRITERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED DECEMBER 3, 1996
$750,000,000
WELLS FARGO & COMPANY
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
WELLS FARGO CAPITAL I
WELLS FARGO CAPITAL II
WELLS FARGO CAPITAL III
PREFERRED SECURITIES FULLY AND UNCONDITIONALLY
GUARANTEED, AS DESCRIBED HEREIN, BY
WELLS FARGO & COMPANY
Wells Fargo & Company, a Delaware corporation (the "Company"), may from time
to time offer in one or more series or issuances its junior subordinated
deferrable interest debentures (the "Junior Subordinated Debentures"). The
Junior Subordinated Debentures will be unsecured and subordinate and junior in
right of payment to Senior Indebtedness (as defined in "Description of Junior
Subordinated Debentures -- Subordination") of the Company. If provided in an
accompanying Prospectus Supplement, the Company will have the right to defer
payments of interest on any series of Junior Subordinated Debentures by
extending the interest payment period thereon at any time or from time to time
for such number of consecutive interest payment periods (which shall not extend
beyond the Stated Maturity (as defined herein) of the Junior Subordinated
Debentures) with respect to each deferral period as may be specified in such
Prospectus Supplement (each, an "Extension Period"). See "Description of Junior
Subordinated Debentures -- Option to Defer Interest Payment Date".
Wells Fargo Capital I, Wells Fargo Capital II and Wells Fargo Capital III,
each a business trust created under the laws of the State of Delaware (each, an
"Issuer," and collectively, the "Issuers"), may severally offer, from time to
time, preferred securities (the "Preferred Securities") representing preferred
beneficial ownership interests in such Issuer. The Company will be the owner of
the common securities (the "Common Securities" and, together with the Preferred
Securities, the "Trust Securities") representing common beneficial ownership
interests in such Issuer. The payment of periodic cash distributions
("Distributions") with respect to the Preferred Securities of each Issuer and
payments on liquidation or redemption with respect to such Preferred
Securities, in each case out of funds held by such Issuer, are each irrevocably
guaranteed by the Company to the extent described herein (each, a "Guarantee").
See "Description of Guarantees". The obligations of the Company under each
Guarantee will be subordinate and junior in right of payment to all liabilities
of the Company, other than any liabilities which expressly by their terms are
made pari passu or subordinate to the obligations of the Company under the
Series A Guarantee. Concurrently with the issuance by an Issuer of its
Preferred Securities, such Issuer will invest the proceeds thereof and any
contributions made in respect of the Common Securities in a corresponding
series of the Company's Junior Subordinated Debentures (the "Corresponding
Junior Subordinated Debentures") with terms corresponding to the terms of that
Issuer's Preferred Securities (the "Related Preferred Securities"). The
Corresponding Junior Subordinated Debentures will be the sole assets of each
Issuer, and payments under the Corresponding Junior Subordinated Debentures and
the related Expense Agreement (as defined herein) will be the only revenue of
each Issuer. If provided in the accompanying Prospectus Supplement, the Company
may, upon receipt of approval of the Federal Reserve (if such approval is then
required), redeem the Corresponding Junior Subordinated Debentures (and cause
the redemption of the Trust Securities) or may terminate each Issuer and cause
the Corresponding Junior Subordinated Debentures to be distributed to the
holders of Preferred Securities in liquidation of their interests in such
Issuer. See "Description of Preferred Securities -- Liquidation Distribution
Upon Termination".
(continued on next page)
----------
THE PREFERRED SECURITIES AND THE JUNIOR SUBORDINATED DEBENTURES ARE NOT
DEPOSITS OR SAVINGS ACCOUNTS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY
OR INSTRUMENTALITY.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
----------
The date of this Prospectus is December , 1996.
(continued from previous page)
Holders of the Preferred Securities will be entitled to receive preferential
cumulative cash Distributions accumulating from the date of original issuance
and payable periodically as specified in an accompanying Prospectus
Supplement. If provided in an accompanying Prospectus Supplement, the Company
will have the right to defer payments of interest on any series of
Corresponding Junior Subordinated Debentures by extending the interest payment
period thereon at any time or from time to time for one or more Extension
Periods (which shall not extend beyond the Stated Maturity of the
Corresponding Junior Subordinated Debentures). If interest payments are so
deferred, Distributions on the Related Preferred Securities will also be
deferred and the Company will not be permitted, subject to certain exceptions
set forth herein, to declare or pay any cash distributions with respect to the
Company's capital stock or debt securities that rank pari passu with or junior
to the Corresponding Junior Subordinated Debentures. During an Extension
Period, Distributions will continue to accumulate (and the Preferred
Securities will accumulate additional Distributions thereon at the rate per
annum set forth in the related Prospectus Supplement). See "Description of
Preferred Securities -- Distributions".
Taken together, the Company's obligations under each series of Junior
Subordinated Debentures, the Indenture, the related Trust Agreement, the
related Expense Agreement and the related Guarantee (each, as defined herein),
in the aggregate, provide a full, irrevocable and unconditional guarantee on a
subordinated basis of payments of distributions and other amounts due on the
related series of Preferred Securities. See "Relationship Among the Preferred
Securities, the Corresponding Junior Subordinated Debentures and the
Guarantees -- Full and Unconditional Guarantee".
The Junior Subordinated Debentures and Preferred Securities may be offered
in amounts, at prices and on terms to be determined at the time of offering;
provided, however, the aggregate initial public offering price of all Junior
Subordinated Debentures (other than Corresponding Junior Subordinated
Debentures) and Preferred Securities (including the Corresponding Junior
Subordinated Debentures) issued pursuant to the Registration Statement of
which this Prospectus forms a part shall not exceed $750,000,000. Certain
specific terms of the Junior Subordinated Debentures or Preferred Securities
in respect of which this Prospectus is being delivered will be described in an
accompanying Prospectus Supplement, including without limitation and where
applicable and to the extent not set forth herein, (a) in the case of Junior
Subordinated Debentures, the specific designation, aggregate principal amount,
denominations, Stated Maturity (including any provisions for the shortening or
extension thereof), interest payment dates, interest rate (which may be fixed
or variable) or method of calculating interest, if any, applicable Extension
Period or interest deferral terms, if any, place or places where principal,
premium, if any, and interest, if any, will be payable, any terms of
redemption, any sinking fund provisions, terms for any conversion or exchange
into other securities, initial offering or purchase price, methods of
distribution and any other special terms, and (b) in the case of Preferred
Securities, the identity of the Issuer, specific title, aggregate amount,
stated liquidation preference, number of securities, Distribution rate or
method of calculating such rate, applicable Extension Period or Distribution
deferral terms, if any, place or places where Distributions will be payable,
any terms of redemption, exchange, initial offering or purchase price, methods
of distribution and any other special terms.
The Prospectus Supplement also will contain information, as applicable,
about certain United States Federal income tax consequences relating to the
Junior Subordinated Debentures or Preferred Securities.
The Junior Subordinated Debentures and Preferred Securities may be sold to
or through underwriters, through dealers, remarketing firms or agents or
directly to purchasers. See "Plan of Distribution". The names of any
underwriters, dealers, remarketing firms or agents involved in the sale of
Junior Subordinated Debentures or Preferred Securities in respect of which
this Prospectus is being delivered and any applicable fee, commission or
discount arrangements with them will be set forth in a Prospectus Supplement.
The Prospectus Supplement will state whether the Junior Subordinated
Debentures or Preferred Securities will be listed on any national securities
exchange or automated quotation system. If the Junior Subordinated Debentures
or Preferred Securities are not listed on any national securities exchange or
automated quotation system, there can be no assurance that there will be a
secondary market for the Junior Subordinated Debentures or Preferred
Securities.
2
This Prospectus may not be used to consummate sales of Junior Subordinated
Debentures or Preferred Securities unless accompanied by a Prospectus
Supplement.
No dealer, salesperson or other person has been authorized to give any
information or make any representations, other than those contained in this
Prospectus and the applicable Prospectus Supplement, and if given or made such
information or representations must not be relied upon as having been
authorized by the Company or any agent, underwriter or dealer. This Prospectus
and the applicable Prospectus Supplement do not constitute an offer of any
securities other than those to which they relate, or an offer to sell or a
solicitation of an offer to buy those to which they relate, in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. The delivery of this Prospectus and/or the
applicable Prospectus Supplement at any time does not imply that the
information herein or therein is correct as of any time subsequent to its
date.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the regional offices of the Commission located at 7 World
Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can also be obtained at prescribed rates by writing to the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549. Such material may also be accessed electronically by means of the
Commission's home page on the Internet at http://www.sec.gov. In addition,
such reports, proxy statements and other information can be inspected at the
offices of the New York and Pacific Stock Exchanges on which certain of the
Company's securities are listed.
The Company and the Issuers have filed with the Commission a Registration
Statement on Form S-3 (together with all amendments and exhibits thereto, the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act") with respect to the securities offered hereby. This
Prospectus does not contain all the information set forth in the Registration
Statement, certain portions of which have been omitted as permitted by the
rules and regulations of the Commission. For further information with respect
to the Company and the securities offered hereby, reference is made to the
Registration Statement and the exhibits and the financial statements, notes
and schedules filed as a part thereof or incorporated by reference therein,
which may be inspected at the public reference facilities of the Commission,
at the addresses set forth above or through the Commission's Internet home
page. Statements made in this Prospectus concerning the contents of any
documents referred to herein are not necessarily complete, and in each
instance are qualified in all respects by reference to the copy of such
document filed as an exhibit to the Registration Statement.
No separate financial statements of any Issuer have been included herein.
The Company and the Issuers do not consider that such financial statements
would be material to holders of the Preferred Securities because each Issuer
is a newly formed special purpose entity, has no operating history or
independent operations and is not engaged in and does not propose to engage in
any activity other than holding as trust assets the Corresponding Junior
Subordinated Debentures of the Company and issuing the Trust Securities. See
"The Issuers", "Description of Preferred Securities", "Description of Junior
Subordinated Debentures -- Corresponding Junior Subordinated Debentures" and
"Description of Guarantees". In addition, the Company does not expect that any
of the Issuers will be filing reports under the Exchange Act with the
Commission.
3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference in this Prospectus the
following reports filed with the Commission pursuant to Section 13 of the Act:
(i) the Company's Annual Report on Form 10-K for the year ended December 31,
1995, (ii) the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, June 30 and September 30, 1996; (iii) the Company's Current Reports
on Form 8-K filed on January 16, January 24, January 31, February 29, April 1,
April 5, April 10, April 16, July 16, August 9, September 20, September 23,
October 15 and November 15, 1996; and (iv) the consolidated financial
statements of First Interstate Bancorp ("First Interstate") as of December 31,
1995 and 1994 and for each of the years in the three-year period ended
December 31, 1995, as contained in First Interstate's Annual Report on Form
10-K for the year ended December 31, 1995. All documents filed by the Company
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Act subsequent to the
date of this Prospectus and prior to the termination of the offering of the
Offered Securities offered hereby shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
of such documents.
Any person receiving a copy of this Prospectus may obtain without charge,
upon oral or written request, a copy of any of the documents incorporated by
reference herein, except for the exhibits to such documents unless such
exhibits are specifically incorporated by reference into the information that
the Prospectus incorporates. Requests should be directed to Wells Fargo &
Company, Investor/Public Relations, MAC #0163-029, 343 Sansome Street, San
Francisco, California 94163, telephone (415) 396-0560.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
4
WELLS FARGO & COMPANY
Wells Fargo & Company is a bank holding company registered under the Bank
Holding Company Act of 1956, as amended. On April 1, 1996, the Company
completed its acquisition of First Interstate Bancorp ("First Interstate"). On
the basis of assets as of September 30, 1996, the Company was the eighth
largest bank holding company in the United States. As of September 30, 1996,
the Company had loans of $69.2 billion, total assets of $109.2 billion, total
deposits of $83.7 billion and stockholders' equity of $14.9 billion. Its
principal subsidiary is Wells Fargo Bank, National Association (the "Bank").
The Bank is primarily engaged in retail, commercial and corporate banking,
real estate lending and trust and investment services.
The Company is a legal entity separate and distinct from the Bank and its
other affiliates. There are various legal limitations on the extent to which
the Bank may extend credit, pay dividends or otherwise supply funds to the
Company or various of its affiliates. The executive offices of the Company are
located at 420 Montgomery Street, San Francisco, California 94163. The
Company's telephone number is (415) 477-1000.
Since the Company is a holding company, the rights of the Company to
participate in any distribution of assets of any subsidiary upon its
liquidation or reorganization or otherwise (and thus the ability of holders of
the Junior Subordinated Debentures to benefit indirectly from such
distribution) are subject to the prior claims of creditors of that subsidiary,
except to the extent that the Company may itself be a creditor of that
subsidiary. Claims on the Company's subsidiaries by creditors other than the
Company include long-term debt and substantial obligations in respect of
federal funds purchased, securities sold under repurchase agreements and
certain other short-term borrowings, as well as deposit liabilities.
REGULATORY CAPITAL BENEFITS TO WELLS FARGO & COMPANY
The Company is required by the Board of Governors of the Federal Reserve
System ("Federal Reserve Board") to maintain certain levels of capital for
bank regulatory purposes. For these purposes, different capital instruments
are classified as either Tier 1 or Tier 2 capital, with Tier 1 being the more
favorable classification. The Federal Reserve Board has recently stated that
long-term cumulative preferred instruments issued by a special-purpose
subsidiary of a bank holding company and structured in the manner in which the
Preferred Securities are structured normally will be accorded Tier 1 capital
treatment. The Company believes that the Preferred Securities will qualify for
Tier 1 capital treatment. Such treatment, together with the Company's ability
to deduct, for income tax purposes, the interest payable on the Junior
Subordinated Debentures, will provide the Company with a more cost-effective
means of obtaining capital for regulatory purposes than if the Company itself
were to issue additional preferred stock.
As of the date of this Prospectus, the Company had five series of Preferred
Stock outstanding which constitute Tier 1 Capital, consisting of 1,500,000
shares of Adjustable Rate Cumulative Preferred Stock, Series B ("Adjustable
Rate Preferred Stock"), 477,500 shares of 9% Preferred Stock, Series C ("9%
Preferred Stock") represented by 9,550,000 Depositary Shares each representing
a one-twentieth interest in a share of 9% Preferred Stock, 350,000 shares of 8
7/8% Preferred Stock, Series D (the "8 7/8% Preferred Stock" and together with
the 9% Preferred Stock, the "Fixed Rate Preferred Stock") represented by
7,000,000 Depositary Shares each representing a one-twentieth interest in a
share of 8 7/8% Preferred Stock, 750,000 shares of 9% Preferred Stock, Series
G ("9% Series G Preferred Stock") represented by 6,000,000 Depositary Shares
each representing a one-eighth interest in a share of 9% Series G Preferred
Stock and 4,000,000 shares of Fixed/Adjustable Rate Noncumulative Preferred
Stock, Series H (the "Fixed/Adjustable Rate Preferred Stock"). The Adjustable
Rate Preferred Stock has a liquidation preference of $50, the Fixed Rate
Preferred Stock has a liquidation preference of $500 per share or $25 per
Depositary Share, the 9% Series G Preferred Stock has a liquidation preference
of $200 per share or $25 per Depositary share and the Fixed/Adjustable Rate
Preferred Stock has a liquidation preference of $50 per share. The 9%
Preferred Stock has been called for redemption by the Company on December 31,
1996. The Company may call the other series of Preferred Stock for redemption
on dates from the date of this Prospectus to October 1, 2001.
5
THE ISSUERS
Each Issuer is a statutory business trust created under Delaware law
pursuant to (i) a trust agreement executed by the Company, as Depositor of the
Issuer, and an initial Delaware trustee and (ii) the filing of a certificate
of trust and restated certificate of trust with the Delaware Secretary of
State. Each trust agreement will be amended and restated in its entirety
(each, as so amended and restated, a "Trust Agreement") substantially in the
form filed as an exhibit to the Registration Statement of which this
Prospectus forms a part. Each Trust Agreement will be qualified as an
indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). Each Issuer exists for the exclusive purposes of (i) issuing
and selling its Trust Securities, (ii) using the proceeds from the sale of
such Trust Securities to acquire a corresponding series of Corresponding
Junior Subordinated Debentures issued by the Company, and (iii) engaging in
only those other activities necessary, convenient or incidental thereto.
Accordingly, the Corresponding Junior Subordinated Debentures and the right to
reimbursement of operating expenses under the related Expense Agreement will
be the sole assets of each Issuer, and payments under the Corresponding Junior
Subordinated Debentures and the related Expense Agreement will be the sole
revenue of each Issuer.
All of the Common Securities of each Issuer will be owned by the Company.
The Common Securities of an Issuer will rank pari passu, and payments will be
made thereon pro rata, with the Preferred Securities of such Issuer, except
that upon the occurrence and continuance of an event of default under a Trust
Agreement resulting from a Debenture Event of Default (as defined herein), the
rights of the Company as holder of the Common Securities to payment in respect
of Distributions and payments upon liquidation, redemption or otherwise will
be subordinated to the rights of the holders of the Preferred Securities of
such Issuer. See "Description of Preferred Securities -- Subordination of
Common Securities". The Company will acquire Common Securities in an aggregate
liquidation amount equal to not less than 3% of the total capital of each
Issuer.
Unless otherwise specified in the applicable Prospectus Supplement, each
Issuer has a term of approximately 55 years, but may terminate earlier as
provided in the applicable Trust Agreement. Each Issuer's business and affairs
are conducted by its trustees, each appointed by the Company as holder of the
Common Securities. Under the Trust Agreement, the trustees for each Issuer
will be the First National Bank of Chicago, as the Property Trustee (the
"Property Trustee"), First Chicago Delaware Inc. as the Delaware Trustee (the
"Delaware Trustee"), and three individual trustees (the "Administrative
Trustees") who are employees or officers of or affiliated with the Company
(collectively, the "Issuer Trustees"). The Property Trustee will act as sole
indenture trustee under each Trust Agreement for purposes of compliance with
the Trust Indenture Act. The First National Bank of Chicago will also act as
trustee under the Guarantees and the Indenture (each as defined herein). See
"Description of Guarantees" and "Description of Junior Subordinated
Debentures". The holder of the Common Securities of an Issuer, or the holders
of a majority in liquidation preference of the Related Preferred Securities if
a Debenture Event of Default under the Trust Agreement for such Issuer has
occurred and is continuing, will be entitled to appoint, remove or replace the
Property Trustee and/or the Delaware Trustee for such Issuer. In no event will
the holders of the Preferred Securities have the right to vote to appoint,
remove or replace the Administrative Trustees; such voting rights are vested
exclusively in the holder of the Common Securities. The duties and obligations
of each Issuer Trustee are governed by the applicable Trust Agreement. The
Company will pay all fees and expenses related to each Issuer and the offering
of the Preferred Securities and will pay, directly or indirectly, all ongoing
costs, expenses and liabilities of each Issuer.
Pursuant to the Expense Agreement entered into by the Company under each
Trust Agreement (the "Expense Agreement"), the Company will irrevocably and
unconditionally guarantee to each person or entity to whom the Issuer becomes
indebted or liable, the full payment of any costs, expenses or liabilities of
the Issuer, other than obligations of the Issuer to pay to the holders of any
Preferred Securities or other similar interests in the Issuer the amounts due
such holders pursuant to the terms of the Preferred Securities or such other
similar interests, as the case may be.
The principal executive office of each Issuer is 420 Montgomery Street, San
Francisco, California 94163, and its telephone number is (415) 477-1000.
6
USE OF PROCEEDS
All of the proceeds from the sale of Preferred Securities will be invested
by the Issuer in Junior Subordinated Debentures. The net proceeds from the
sale of the Junior Subordinated Debentures will be used by the Company for
general corporate purposes. Specific allocations of the proceeds to such
purposes have not been determined. The net proceeds may be used to reduce
outstanding commercial paper and other debt of the Company. Based upon the
anticipated future funding requirements of the Company and its subsidiaries,
the Company expects that it will, from time to time, engage in additional
financings of a character and in amounts to be determined and that its
commercial paper borrowings and other short-term debt may be increased above
the level prevailing after the initial use of proceeds.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are to be issued in one or more series
under an indenture dated as of November 27, 1996, as supplemented from time to
time (as so supplemented, the "Indenture") between the Company and The First
National Bank of Chicago, as Trustee (the "Debenture Trustee"). This summary
of certain terms and provisions of the Junior Subordinated Debentures,
Corresponding Junior Subordinated Debentures and the Indenture does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the Indenture, which is filed as an exhibit to the Registration
Statement of which this prospectus forms a part, and the Trust Indenture Act.
The Indenture is qualified under the Trust Indenture Act. Whenever particular
defined terms of the Indenture (as supplemented or amended from time to time)
are referred to herein or in a Prospectus Supplement, such defined terms are
incorporated herein or therein by reference.
GENERAL
The Indenture does not limit the amount of debt securities which can be
issued thereunder and provides that debt securities of any series may be
issued thereunder up to the aggregate principal amount which may be authorized
from time to time by the Company. The Indenture does not limit the amount of
other indebtedness or securities which may be issued by the Company. The
Junior Subordinated Debentures may be issued at various times with different
maturity dates and different principal repayment provisions, may bear interest
at different rates, may be payable in currencies other than United States
dollars, in composite currencies or in amounts determined by reference to an
index and may otherwise vary, all as provided in the Indenture.
The Prospectus Supplement will set forth the following specific terms
regarding the series of Junior Subordinated Debentures offered thereby: (i)
the designation and aggregate principal amount of Junior Subordinated
Debentures of such series; (ii) the percentage of their principal amount at
which such Junior Subordinated Debentures will be issued; (iii) the date or
dates (if any) on which such Junior Subordinated Debentures will mature; (iv)
the rate per annum or the method of determining the rate or rates per annum,
if any, at which such Junior Subordinated Debentures will bear interest; (v)
the dates from and on which such interest, if any, will accrue and be payable
and the designated record dates for such interest payments; (vi) the place or
places where the Junior Subordinated Debentures may be presented for payment,
if other than as described under "-- Payment and Paying Agents"; (vii) any
redemption terms; (viii) any conversion or exchange provisions; (ix)
provisions for issuance of global securities; (x) the terms and conditions of
any obligation or right of the Company or a holder to convert or exchange the
Junior Subordinated Debentures into Preferred Securities; (xi) the form of
Trust Agreement and Guarantee Agreement, if applicable; (xii) the relative
degree, if any, to which such Junior Subordinated Debentures of the series
shall be senior to or be subordinated to other series of such Junior
Subordinated Debentures or other indebtedness of the Company in right of
payment, whether such other series of Junior Subordinated Debentures or other
indebtedness are outstanding or not; and (xiii) any other terms of the Junior
Subordinated Debentures not inconsistent with the provisions of the Indenture.
If so indicated in the applicable Prospectus Supplement, the terms of the
Junior Subordinated Debentures offered thereby may differ from those set forth
herein.
7
Some of the Junior Subordinated Debentures may be issued as discounted
Junior Subordinated Debentures (bearing no interest or interest at a rate
which at the time of issuance is below market rates) to be sold at a discount
below their stated principal amount. Federal income tax consequences and other
special considerations applicable to such discounted Junior Subordinated
Debentures will be described in the Prospectus Supplement relating thereto.
Interest on the Junior Subordinated Debentures of any series will be payable
to the persons in whose names the Junior Subordinated Debentures are
registered at the close of business on the record date designated for an
interest payment date. The Junior Subordinated Debentures may be presented for
the payment of principal and interest, if any, transfer and exchange at the
offices or agencies of the appropriate Securities Registrar maintained for
such purposes in Chicago and New York City. Payment of any installment of
interest may be made at the option of the Company by check, mailed to the
address of the person entitled thereto as it appears on the Register of the
Junior Subordinated Debentures of such series. The initial Securities
Registrar will be The First National Bank of Chicago. The Junior Subordinated
Debentures will be issued in fully registered form, without coupons, in
denominations of $25 unless different authorized denominations are stated in
the Prospectus Supplement. No service charge will be made for any exchange or
registration of transfer of a Junior Subordinated Debenture, but the Company
may require payment of a sum sufficient to cover any tax or other governmental
charge. The Indenture provides that if a series of Junior Subordinated
Debentures is denominated in a currency other than United States dollars or in
a composite currency, in the absence of a contrary provision in the Junior
Subordinated Debentures any action or distribution under the Indenture will be
based on the relative amount of United States dollars that could be obtained
on such reasonable basis of exchange on such date as is specified by the
Company to the Debenture Trustee.
In the event of any redemption, neither the Company nor the Debenture
Trustee shall be required to (i) issue, register the transfer of or exchange
Junior Subordinated Debentures of a series during a period beginning at the
opening of business 15 days before the day of selection for redemption of
Junior Subordinated Debentures of that series and ending at the close of
business on the day of mailing of the relevant notice of redemption or
(ii) transfer or exchange any Junior Subordinated Debentures so selected for
redemption, except, in the case of any Junior Subordinated Debentures being
redeemed in part, any portion thereof not to be redeemed.
All of the Junior Subordinated Debentures will be unsecured general
obligations of the Company. Since the Company is a holding company, the rights
of the Company to participate in any distribution of assets of any subsidiary
upon its liquidation or reorganization or otherwise (and thus the ability of
holders of the Junior Subordinated Debentures to benefit indirectly from such
distribution) are subject to the prior claims of creditors of that subsidiary,
except to the extent that the Company may itself be a creditor of that
subsidiary. Claims on the Company's subsidiaries by creditors other than the
Company include long-term debt and substantial obligations in respect of
federal funds purchased, securities sold under repurchase agreements and
certain other short-term borrowings, as well as deposit liabilities.
Accordingly, the Junior Subordinated Debentures will be effectively
subordinated to all existing and future liabilities of the Company's
subsidiaries, and holders of the Junior Subordinated Debentures should look
only to the assets of the Company for payments on the Junior Subordinated
Debentures. Unless otherwise set forth in the applicable Prospectus
Supplement, neither the Indenture nor the Junior Subordinated Debentures
contain provisions which would afford holders of the Junior Subordinated
Debentures protection in the event of a takeover, recapitalization or similar
restructuring involving the Company which could adversely affect the Junior
Subordinated Debentures.
GLOBAL JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures of a series may be issued in whole or in
part in the form of one or more global securities ("Global Security") that
will be deposited with, or on behalf of, a depositary identified in the
Prospectus Supplement relating to such series. Global Securities will be
issued in registered form and in either temporary or definitive form. Unless
and until it is exchanged in whole or in part for Junior Subordinated
Debentures in definitive form, a Global Security may not be transferred except
as a whole by the depositary for such Global Security to a nominee of such
depositary or by a nominee of such depositary to such depositary or
8
another nominee of such depositary or by such depositary or any such nominee
to a successor of such depositary or a nominee of such successor.
The specific terms of the depositary arrangement with respect to any Junior
Subordinated Debentures of a series will be described in the Prospectus
Supplement relating to such series. The Company anticipates that the following
provisions will apply to all depositary arrangements.
Upon the issuance of a Global Security, the depositary for such Global
Security will credit, on its book-entry registration and transfer system, the
respective principal amounts of the Junior Subordinated Debentures represented
by such Global Security to the accounts of institutions that have accounts
with such depositary ("Participants"). The accounts to be credited shall be
designated by the underwriters of such Junior Subordinated Debentures, by
certain agents of the Company or by the Company, if such Junior Subordinated
Debentures are offered and sold directly by the Company. Ownership of
beneficial interests in a Global Security will be limited to Participants or
persons that may hold interests through Participants. Ownership of beneficial
interests in such Global Security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the depositary
with respect to Participants' interests in such Global Security or by
Participants or by persons that hold through Participants with respect to
beneficial owners' interests. The laws of some states require that certain
purchasers of securities take physical delivery of such securities in
definitive form. Such ownership limits and such laws may impair the ability to
transfer beneficial interests in a Global Security.
So long as the depositary for a Global Security, or its nominee, is the
holder of such Global Security, such depositary or such nominee, as the case
may be, will be considered the sole owner or holder of the Junior Subordinated
Debenture represented by such Global Security for all purposes under the
Indenture governing such Junior Subordinated Debentures. Except as set forth
below, owners of beneficial interests in a Global Security will not be
entitled to have Junior Subordinated Debentures of a series represented by
such Global Security registered in their names, will not receive or be
entitled to receive physical delivery of Junior Subordinated Debentures of
such series in definitive form and will not be considered the owners or
holders thereof under the Indenture governing such Junior Subordinated
Debentures.
Principal and interest payments on Junior Subordinated Debentures registered
in the name of or held by a depositary or its nominee will be made to the
depositary or its nominee, as the case may be, as the registered owner of the
Global Security representing such Junior Subordinated Debentures. The Company
expects that the depositary for Junior Subordinated Debentures of a series,
upon receipt of any payment of principal or interest in respect of a Global
Security, will immediately credit Participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the
principal amount of such Global Security as shown on the records of such
depositary. The Company also expects that payments by Participants or persons
who hold interests through Participants to owners of beneficial interests in
such Global Security held through such Participants or persons will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such
Participants or persons. None of the Company, the Debenture Trustee, any
paying agent or any registrar for such Junior Subordinated Debentures will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in a Global
Security for such Junior Subordinated Debentures or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
If a depositary for Junior Subordinated Debentures of a series is at any
time unwilling or unable to continue as depositary and a successor depositary
is not appointed by the Company within 90 days, the Company will issue Junior
Subordinated Debentures of such series in definitive form in exchange for the
Global Security or Securities representing the Junior Subordinated Debentures
of such series. In addition, the Company may at any time and in its sole
discretion determine not to have any Junior Subordinated Debentures of a
series represented by one or more Global Securities and, in such event, will
issue Junior Subordinated Debentures of such series in
9
definitive form in exchange for the Global Security or Securities representing
such Junior Subordinated Debentures.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal of (and premium, if any) and any interest on Junior Subordinated
Debentures will be made at the offices of The First National Bank of Chicago,
as paying agent in the City of Chicago or New York, or at the offices of such
other paying agent or paying agents as the Company may designate from time to
time in the applicable Prospectus Supplement, except that at the option of the
Company payment of any interest may be made (i), except in the case of Global
Junior Subordinated Debentures, by check mailed to the address of the Person
entitled thereto as such address shall appear in the Securities Register or
(ii) by transfer to an account maintained by the Person entitled thereto as
specified in the Securities Register, provided that proper transfer
instructions have been received by the Regular Record Date. Unless otherwise
indicated in the applicable Prospectus Supplement, payment of any interest on
Junior Subordinated Debentures will be made to the Person in whose name such
Junior Subordinated Debenture is registered at the close of business on the
Regular Record Date for such interest, except in the case of Defaulted
Interest. The Company may at any time designate additional paying agents or
rescind the designation of any paying agent; however the Company will at all
times be required to maintain a paying agent in Chicago or New York for each
series of Junior Subordinated Debentures.
Any monies deposited with the Debenture Trustee or any Paying Agent, or then
held by the Company in trust, for the payment of the principal of (and
premium, if any) or interest on any Junior Subordinated Debenture and
remaining unclaimed for two years after such principal (and premium, if any)
or interest has become due and payable shall, at the request of the Company,
be repaid to the Company and the holder of such Junior Subordinated Debenture
shall thereafter look, as a general unsecured creditor, only to the Company
for payment thereof.
OPTION TO DEFER INTEREST PAYMENTS
The Company shall have the right at any time and from time to time during
the term of any series of Junior Subordinated Debentures to defer payment of
interest for such number of consecutive interest payment periods as may be
specified in the applicable Prospectus Supplement (each, an "Extension
Period") on the terms described in the applicable Prospectus Supplement,
provided that such Extension Period may not extend beyond the Stated Maturity
of such series of Junior Subordinated Debentures. Certain United States
Federal income tax consequences and special considerations applicable to any
such Junior Subordinated Debentures will be described in the applicable
Prospectus Supplement.
REDEMPTION
Junior Subordinated Debentures will not be subject to any sinking fund
unless otherwise indicated in the applicable Prospectus Supplement.
The Company may, at its option and subject to receipt of prior approval by
the Board of Governors of the Federal Reserve System (the "Federal Reserve")
if then required under applicable capital guidelines or policies, redeem the
Junior Subordinated Debentures of any series in whole at any time or in part
from time to time, unless otherwise indicated in the applicable Prospectus
Supplement. If the Junior Subordinated Debentures of any series are so
redeemable only on or after a specified date or upon the satisfaction of
additional conditions, the applicable Prospectus Supplement will specify such
date or describe such conditions. Junior Subordinated Debentures in
denominations larger than $25 may be redeemed in part but only in integral
multiples of $25. The redemption price for any Junior Subordinated Debenture
so redeemed shall equal any accrued and unpaid interest thereon to the
redemption date, plus the principal amount thereof, unless otherwise indicated
in the applicable Prospectus Supplement. The Company may not redeem a series
of Corresponding Junior Subordinated Debentures in part unless all accrued and
unpaid interest has been paid in full on all outstanding Corresponding Junior
Subordinated Debentures of such series for all interest periods terminating on
or prior to the Redemption Date.
10
If a Tax Event, Capital Treatment Event or Investment Company Event (as
defined below) in respect of a series of Junior Subordinated Debentures shall
occur and be continuing, the Company may, at its option and subject to receipt
of prior approval by the Federal Reserve if then required under applicable
capital guidelines or policies, redeem such series of Junior Subordinated
Debentures in whole (but not in part) at any time within 90 days of the
occurrence of such Tax Event or Investment Company Event, at a redemption
price equal to 100% of the principal amount of such Junior Subordinated
Debentures then outstanding plus accrued and unpaid interest to the date fixed
for redemption unless otherwise indicated in the applicable Prospectus
Supplement.
"Tax Event" means the receipt by the applicable Issuer of an opinion of
counsel experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of issuance
of the applicable series of Junior Subordinated Debentures under the
Indenture, there is more than an insubstantial risk that (i) the Issuer is, or
will be within 90 days of the date of such opinion, subject to United States
Federal income tax with respect to income received or accrued on the Junior
Subordinated Debentures, (ii) interest payable by the Company on such series
of Junior Subordinated Debentures is not, or within 90 days of the date of
such opinion will not be, deductible by the Company, in whole or in part, for
United States Federal income tax purposes, or (iii) the Issuer is, or will be
within 90 days of the date of such opinion, subject to more than a de minimis
amount of other taxes, duties or other governmental charges.
"Capital Treatment Event" means the reasonable determination by the Company
that, as a result of the occurrence of any amendment to, or change (including
any announced prospective change) in, the laws (or any regulations thereunder)
of the United States or any political subdivision thereof or therein, or as a
result of any official or administrative pronouncement or action or judicial
decision interpreting or applying such laws or regulations, which amendment or
change is effective or which pronouncement, action or decision is announced on
or after the date of issuance of the applicable Preferred Securities, there is
more than an insubstantial risk that the Company will not be entitled to treat
an amount equal to the aggregate Liquidation Amount of the Preferred
Securities as "Tier 1 Capital" (or the then equivalent thereof) for purposes
of the capital adequacy guidelines of the Federal Reserve, as then in effect
and applicable to the Company.
"Investment Company Event" means the receipt by the applicable Issuer of an
opinion of counsel experienced in such matters to the effect that, as a result
of the occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act
Law"), the applicable Issuer is or will be considered an "investment company"
that is required to be registered under the Investment Company Act of 1940, as
amended (the "Investment Company Act"), which Change in 1940 Act Law becomes
effective on or after the date of original issuance of the series of Preferred
Securities issued by the Issuer.
Notice of any redemption will be mailed at least 15 days but not more than
60 days before the redemption date to each Holder of Junior Subordinated
Debentures to be redeemed at its registered address. Unless the Company
defaults in payment of the redemption price, on and after the redemption date
interest ceases to accrue on such Junior Subordinated Debentures or portions
thereof called for redemption.
RESTRICTIONS ON CERTAIN PAYMENTS
The Company will also covenant, as to each series of Junior Subordinated
Debentures, that it will not, and will not permit any subsidiary of the
Company to, (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any of the
Company's capital stock or (ii) make any payment of principal, interest or
premium, if any, on or repay or repurchase or redeem any debt securities of
the Company (including other Junior Subordinated Debentures) that rank pari
passu with or junior in interest to the Junior Subordinated Debentures or make
any guarantee payments with respect to any guarantee by the
11
Company of the debt securities of any subsidiary of the Company if such
guarantee ranks pari passu with or junior in interest to the Junior
Subordinated Debentures (other than (a) dividends or distributions in common
stock of the Company, (b) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto, (c) payments under any Guarantee with respect to the series
of Related Preferred Securities and (d) purchases of common stock related to
the issuance of common stock or rights under any of the Company's benefit plans
for its directors, officers or employees), if at such time (i) there shall have
occurred any event of which the Company has actual knowledge that (a) with the
giving of notice or the lapse of time, or both, would constitute an "Event of
Default" under the Indenture with respect to the Junior Subordinated Debentures
of such series and (b) in respect of which the Company shall not have taken
reasonable steps to cure, (ii) if such Junior Subordinated Debentures are held
by an Issuer of a series of Related Preferred Securities, the Company shall be
in default with respect to its payment of any obligations under the Guarantee
relating to such Related Preferred Securities or (iii) the Company shall have
given notice of its election of an Extension Period as provided in the
Indenture with respect to the Junior Subordinated Debentures of such series and
shall not have rescinded such notice, or such Extension Period, or any
extension thereof, shall be continuing.
MODIFICATION OF INDENTURE
From time to time, the Company and the Debenture Trustee may, without the
consent of the holders of any series of Junior Subordinated Debentures, amend,
waive or supplement the Indenture for specified purposes, including, among
other things, curing ambiguities, defects or inconsistencies (provided that any
such action does not materially adversely affect the interest of the holders of
any series of Junior Subordinated Debentures or, in the case of Corresponding
Junior Subordinated Debentures, the holders of Related Preferred Securities so
long as they remain outstanding) and qualifying, or maintaining the
qualification of, the Indenture under the Trust Indenture Act. In addition, the
Company and the Debenture Trustee may execute, without the consent of any
holder of Junior Subordinated Debentures, any supplemental indenture for the
purpose of creating any new series of Junior Subordinated Debentures.
The Indenture contains a provision permitting the Company and the Debenture
Trustee, with the consent of the holders of not less than a majority in
principal amount of the Junior Subordinated Debentures of all series then
outstanding under such Indenture affected by such supplemental indenture
(voting as one class), to execute supplemental indentures adding any provisions
to or changing or eliminating any of the provisions of such Indenture or
modifying the rights of the holders of Junior Subordinated Debentures of each
such series, provided that no such supplemental indenture may, without the
consent of the holder of each Junior Subordinated Debenture so affected, (i)
change the fixed maturity of any Junior Subordinated Debentures, or reduce the
rate or extend the time of payment of any interest thereon or on any overdue
principal amount, or reduce the principal amount thereof, or reduce any amount
payable upon any redemption thereof, or change the currency of payment of
principal or of any interest thereon or on any overdue principal amount, (ii)
reduce the aforesaid percentage of Junior Subordinated Debentures, the holders
of which are required to consent to any such supplemental indenture, (iii)
modify certain provisions of the Indenture relating to modification or waiver
except to increase the required percentage or (iv) modify the provisions with
respect to the subordination of outstanding Junior Subordinated Debentures of
any series in a manner adverse to the holders thereof; provided further that,
in the case of Corresponding Junior Subordinated Debentures, so long as any of
the Related Preferred Securities remain outstanding, no such modification may
be made that adversely affects the holders of such Preferred Securities in any
material respect, and no termination of the Indenture may occur, and no waiver
of any Event of Default or compliance with any covenant under the Indenture may
be effective, without the prior consent of the holders of at least a majority
of the aggregate liquidation preference of such Related Preferred Securities
unless and until the principal of the Corresponding Junior Subordinated
Debentures and all accrued and unpaid interest thereon have been paid in full
and certain other conditions are satisfied.
The Indenture provides that the Company may omit in any particular instance
to comply with any covenant or condition specifically contained in such
Indenture for the benefit of one or more series of Junior Subordinated
Debentures if before the time for such compliance the holders of a majority in
principal amount of the Junior
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Subordinated Debentures of all series then outstanding under such Indenture
affected by the omission (voting as one class) waive such compliance in such
instance, but such waiver shall not extend to or affect such covenant or
condition except to the extent so expressly waived.
DEBENTURE EVENTS OF DEFAULT
A Debenture Event of Default with respect to any series of Junior
Subordinated Debentures is defined in the Indenture as being: (a) default for
30 days in payment of any installment of interest on Junior Subordinated
Debentures of such series (subject to the deferral of any due date in the case
of an Extension Period); (b) default in payment of any principal or premium, if
any, on Junior Subordinated Debentures of such series; (c) default by the
Company in performance in any material respect of any of the covenants or
agreements in the Indenture specifically contained therein for the benefit of
the Junior Subordinated Debentures of such series which shall not have been
remedied for a period of 90 days after written notice to the Company by the
Debenture Trustee or to the Company and the Debenture Trustee by the holders of
not less than 25% in principal amount of the Junior Subordinated Debentures of
such series and all other series so benefited (all such series voting as one
class) then outstanding; or (d) certain events of bankruptcy, insolvency or
reorganization of the Company or the Bank. No Debenture Event of Default
described in clause (a), (b) or (c) above with respect to a particular series
of Junior Subordinated Debentures necessarily constitutes a Debenture Event of
Default with respect to any other series of Junior Subordinated Debentures.
The Indenture provides that if a Debenture Event of Default under clause (a),
(b) or (c) above shall have occurred and be continuing (but, in the case of
clause (c), only if the Debenture Event of Default is with respect to less than
all series of Junior Subordinated Debentures then outstanding under the
Indenture), either the Debenture Trustee or the holders of not less than 25% in
principal amount of the then outstanding Junior Subordinated Debentures of the
series as to which the Debenture Event of Default has occurred (each such
series voting as a separate class in the case of a Debenture Event of Default
under clause (a) or (b), and all such series voting as one class in the case of
a Debenture Event of Default under clause (c)) may declare the principal (or
portion thereof specified in the terms of such series) of all the Junior
Subordinated Debentures of such series, or of all such series in the case of a
Debenture Event of Default under clause (c) above, in each case together with
any accrued interest, to be due and payable immediately. In the case of
Corresponding Junior Subordinated Debentures, should the Debenture Trustee or
holders of such Corresponding Junior Subordinated Debentures fail to make such
declaration, the holders of at least 25% in aggregate liquidation preference of
the Related Preferred Securities shall have such right. The Indenture also
provides that if a Debenture Event of Default under clause (c) or (d) above
shall have occurred and be continuing (but, in the case of clause (c), only if
the Debenture Event of Default is with respect to all Junior Subordinated
Debentures then outstanding under the Indenture), either the Debenture Trustee
or the holders of not less than 25% in principal amount of all the Junior
Subordinated Debentures then outstanding (voting as one class) may declare the
principal (or portion thereof specified in the terms of any series) of all the
Junior Subordinated Debentures, together with any accrued interest, to be due
and payable immediately. In the case of Corresponding Junior Subordinated
Debentures, should the Debenture Trustee or such holders of such Corresponding
Junior Subordinated Debentures fail to make such declaration, the holders of at
least 25% in aggregate liquidation preference of the Related Preferred
Securities shall have such right. Upon certain conditions, (including a
declaration caused by a default in the payment of principal or interest, the
payment for which has subsequently been provided) such declaration may be
annulled by the holders of a majority in principal amount of the Junior
Subordinated Debentures of the series then outstanding as were entitled to
declare such default (such series or all series voting as one class, if more
than one series is so entitled). In the case of Corresponding Junior
Subordinated Debentures, should the holders of such Corresponding Junior
Subordinated Debentures fail to annul such declaration and waive such default,
the holders of a majority in aggregate liquidation preference of the Related
Preferred Securities shall have such right. In addition, past defaults may be
waived by the holders of a majority in principal amount of the Junior
Subordinated Debentures of all series then outstanding (all series voting as
one class), except a default in the payment of principal of or interest on the
Junior Subordinated Debentures or in respect of a covenant or provision of the
Indenture which cannot be modified or amended without the consent of the holder
of each Junior Subordinated Debenture so affected. In the case of Corresponding
Junior Subordinated Debentures, should the holders of such Corresponding
13
Junior Subordinated Debentures fail to waive such default, the holders of a
majority in aggregate liquidation preference of the Related Preferred
Securities shall have such right.
In case a Debenture Event of Default shall occur and be continuing as to a
series of Corresponding Junior Subordinated Debentures, the Property Trustee
will have the right, as the holder of such Corresponding Junior Subordinated
Debentures, to declare the principal of and the interest on such Corresponding
Junior Subordinated Debentures, and any other amounts payable under the
Indenture, to be immediately due and payable and to enforce its other rights
with respect to such Corresponding Junior Subordinated Debentures.
The Indenture contains a provision entitling the Debenture Trustee, subject
to the duty of the Debenture Trustee during default to act with the required
standard of care, to be indemnified by the holders of Junior Subordinated
Debentures issued under the Indenture before proceeding to exercise any right
or power under the Indenture at the request of such holders. The Indenture also
provides that the holders of a majority in principal amount of the outstanding
Junior Subordinated Debentures issued thereunder of all series affected (voting
as one class) may direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or exercising any
trust or power conferred on the Debenture Trustee, with respect to the
Securities of such series.
The Indenture contains a covenant that the Company will file annually with
the Debenture Trustee a certificate as to the absence of any default or
specifying any default that exists.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Debenture Event of Default with respect to a series of Corresponding
Junior Subordinated Debentures has occurred and is continuing and such event is
attributable to the failure of the Company to pay interest or principal on such
Corresponding Junior Subordinated Debentures on the date such interest or
principal is due and payable, a holder of Related Preferred Securities may
institute a legal proceeding directly against the Company for enforcement of
payment to such holder of the principal of or interest on such Corresponding
Junior Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Related Preferred Securities of such holder (a
"Direct Action"). The Company may not amend the Indenture to remove the
foregoing right to bring a Direct Action without the prior written consent of
the holders of all of the Preferred Securities outstanding. If the right to
bring a Direct Action is removed, the applicable Issuer may become subject to
reporting obligations under the Exchange Act. The Company shall have the right
under the Indenture to set-off any payment made to such holder of Preferred
Securities by the Company in connection with a Direct Action.
The holders of the Preferred Securities will not be able to exercise directly
any remedies other than those set forth in the preceding paragraph available to
the holders of the Junior Subordinated Debentures unless there shall have been
an Event of Default under the Trust Agreement. See "Description of Preferred
Securities --Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that the Company may not merge or consolidate or sell
or convey all or substantially all of its assets unless (i) the successor
entity (if other than the Company) is a U.S. entity and expressly assumes the
Company's obligations under such Indenture and on the Junior Subordinated
Debentures issued under such Indenture; (ii) immediately after giving effect to
such transaction, the Company or the successor would not be in default under
such Indenture; (iii) in the case of Corresponding Junior Subordinated
Debentures, such transaction is permitted under the related Trust Agreement or
Guarantee and does not give rise to any breach or violation of the related
Trust Agreement and Guarantee; and (iv) certain other conditions as prescribed
by the Indenture are met.
SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Junior Subordinated
Debentures not previously delivered to the Debenture Trustee for cancellation
(i) have become due and payable or (ii) will become due and payable at their
Stated Maturity within one year, and the Company deposits or causes to be
deposited with the Debenture Trustee trust funds, in trust, for the purpose and
in an amount in the currency or currencies in which
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the Junior Subordinated Debentures are payable sufficient to pay and discharge
the entire indebtedness on the Junior Subordinated Debentures not previously
delivered to the Debenture Trustee for cancellation, for the principal (and
premium, if any) and interest to the date of the deposit or to the Stated
Maturity, as the case may be, then the Indenture will cease to be of further
effect (except as to the Company's obligations to pay all other sums due
pursuant to the Indenture and to provide the officers' certificates and
opinions of counsel described therein), and the Company will be deemed to have
satisfied and discharged the Indenture.
CONVERSION OR EXCHANGE
The terms, if any, on which Junior Subordinate Debentures of any series are
convertible or exchangeable into Preferred Securities or other securities will
be set forth in the Prospectus Supplement relating thereto. Such terms may
include provisions for conversion or exchange, either mandatory, at the option
of the holder, or at the option of the Company, in which case the number of
shares of Preferred Securities or other securities to be received by the
holders of Junior Subordinated Debentures would be calculated as of a time and
in the manner stated in the Prospectus Supplement relating thereto.
SUBORDINATION
In the Indenture, the Company has covenanted and agreed that the obligations
of the Company to make any payment of or on account of the principal of and
interest on the Junior Subordinated Debentures of any series will be
subordinate and junior in right of payment to the Company's obligations to the
holders of Senior Indebtedness of the Company to the extent described in the
next two paragraphs. Senior Indebtedness of the Company with respect to the
Junior Subordinated Debentures will include the existing and future senior
notes, senior subordinated notes and subordinated notes of the Company and
means (i) any indebtedness of the Company for borrowed or purchased money,
whether or not evidenced by bonds, debentures, notes or other written
instruments, (ii) obligations under letters of credit, (iii) any indebtedness
or other obligations of the Company with respect to commodity contracts,
interest rate and currency swap agreements, cap, floor and collar agreements,
currency spot and forward contracts, and other similar agreements or
arrangements designed to protect against fluctuations in currency exchange or
interest rates, and (iv) any guarantees, endorsements (other than by
endorsement of negotiable instruments for collection in the ordinary course of
business) or other similar contingent obligations in respect of obligations of
others of a type described in (i), (ii) or (iii) above, whether or not such
obligation is classified as a liability on a balance sheet prepared in
accordance with generally accepted accounting principles, in each case listed
in (i), (ii), (iii) and (iv) above, whether outstanding on the date of
execution of the Indenture or thereafter incurred, other than obligations
"ranking on a parity" with the Junior Subordinated Debentures or "ranking
junior" to the Junior Subordinated Debentures (as those terms are defined in
the Supplemental Indenture); provided, however, that the Junior Subordinated
Debentures of any series will not be subordinate and junior in right of payment
to any trade creditors. As of September 30, 1996, there was $5.4 billion of
Senior Indebtedness of the Company outstanding. The Indenture does not limit
the amount of future increase in Senior Indebtedness of the Company. The
Company expects from time to time to issue additional indebtedness constituting
Senior Indebtedness.
No payments on account of principal (or premium, if any) or interest, if any,
in respect of the Junior Subordinated Debentures may be made if there shall
have occurred and be continuing a default in any payment with respect to Senior
Indebtedness, or an event of default with respect to any Senior Indebtedness
resulting in the acceleration of the maturity thereof, or if any judicial
proceeding shall be pending with respect to any such default.
In the case of any insolvency, receivership, conservatorship, reorganization,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings or any liquidation or winding-up of or relating to the Company as a
whole, whether voluntary or involuntary, all obligations of the Company to
holders of Senior Indebtedness of the Company shall be entitled to be paid in
full before any payment shall be made on account of the principal of or
interest on the Junior Subordinated Debentures. In the event of any such
proceeding, after payment in full of all sums owing with respect to Senior
Indebtedness of the Company, the holders of the Junior Subordinated Debentures,
together with the holders of any obligations of the Company ranking on a parity
with the Junior Subordinated Debentures, shall be entitled to be paid from the
remaining assets of the Company the
15
amount at the time due and owing on account of unpaid principal of and
interest on the Junior Subordinated Debentures before any payment or other
distribution, whether in cash, property or otherwise, shall be made on account
of any capital stock or any obligations of the Company ranking junior to the
Junior Subordinated Debentures. By reason of such subordination, in the event
of the insolvency of the Company, holders of Senior Indebtedness of the
Company may receive more, ratably, and holders of the Junior Subordinated
Debentures having a claim pursuant to the Junior Subordinated Debentures may
receive less, ratably, than the other creditors of the Company. Such
subordination will not prevent the occurrence of any Event of Default in
respect of the Junior Subordinated Debentures.
GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed by and
construed in accordance with the laws of the State of California.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the
Trust Indenture Act. Subject to such provisions, the Debenture Trustee is
under no obligation to exercise any of the powers vested in it by the
Indenture at the request of any holder of Junior Subordinated Debentures,
unless offered reasonable indemnity by such holder against the costs, expenses
and liabilities which might be incurred thereby. The Debenture Trustee is not
required to expend or risk its own funds or otherwise incur personal financial
liability in the performance of its duties if the Debenture Trustee reasonably
believes that repayment or adequate indemnity is not reasonably assured to it.
CORRESPONDING JUNIOR SUBORDINATED DEBENTURES
The Corresponding Junior Subordinated Debentures may be issued in one or
more series of Junior Subordinated Debentures under the Indenture with terms
corresponding to the terms of a series of Related Preferred Securities. In
that event, concurrently with the issuance of each Issuer's Preferred
Securities, such Issuer will invest the proceeds thereof and the consideration
paid by the Company for the Common Securities in a series of Corresponding
Junior Subordinated Debentures issued by the Company to such Issuer. Each
series of Corresponding Junior Subordinated Debentures will be in the
principal amount equal to the aggregate stated Liquidation Amount of the
Related Preferred Securities and the Common Securities of such Issuer and will
rank pari passu with all other series of Junior Subordinated Debentures.
Holders of the Related Preferred Securities for a series of Corresponding
Junior Subordinated Debentures will have the rights in connection with
modifications to the Indenture or upon occurrence of Debenture Events of
Default described under "-- Modification of Indenture" and "-- Debenture
Events of Default", unless provided otherwise in the Prospectus Supplement for
such Related Preferred Securities.
Unless otherwise specified in the applicable Prospectus Supplement, if a Tax
Event in respect of an Issuer of Related Preferred Securities shall occur and
be continuing, the Company may, at its option and subject to prior approval of
the Federal Reserve (if then so required under applicable guidelines or
policies), redeem the Corresponding Junior Subordinated Debentures at any time
within 90 days of the occurrence of such Tax Event, in whole but not in part,
subject to the provisions of the Indenture and whether or not such
Corresponding Junior Subordinated Debentures are then otherwise redeemable at
the option of the Company. The redemption price for any Corresponding Junior
Subordinated Debentures shall be equal to 100% of the principal amount of such
Corresponding Junior Subordinated Debentures then outstanding plus accrued and
unpaid interest to the date fixed for redemption. For so long as the
applicable Issuer is the holder of all the outstanding series of Corresponding
Junior Subordinated Debentures, the proceeds of any such redemption will be
used by the Issuer to redeem the corresponding Trust Securities in accordance
with their terms.
The Company will covenant in the Indenture as to each series of
Corresponding Junior Subordinated Debentures, that if and so long as (i) the
Issuer of the related series of Trust Securities is the holder of all such
16
Corresponding Junior Subordinated Debentures, (ii) a Tax Event in respect of
such Issuer has occurred and is continuing and (iii) the Company has elected,
and has not revoked such election, to pay Additional Sums (as defined under
"Description of Preferred Securities -- Redemption or Exchange") in respect of
such Trust Securities, the Company will pay to such Issuer such Additional
Sums. The Company will also covenant, as to each series of Corresponding
Junior Subordinated Debentures, (i) to maintain directly or indirectly 100%
ownership of the Common Securities of the Issuer to which Corresponding Junior
Subordinated Debentures have been issued, provided that certain successors
which are permitted pursuant to the Indenture may succeed to the Company's
ownership of the Common Securities, (ii) not to voluntarily terminate, wind-up
or liquidate any Issuer, except (a) in connection with a distribution of
Corresponding Junior Subordinated Debentures to the holders of the Preferred
Securities in liquidation of such Issuer, or (b) in connection with certain
mergers, consolidations or amalgamations permitted by the related Trust
Agreement, and (iii) to use its reasonable efforts, consistent with the terms
and provisions of the related Trust Agreement, to cause such Issuer to remain
classified as a grantor trust and not as an association taxable as a
corporation for United States Federal income tax purposes.
DESCRIPTION OF PREFERRED SECURITIES
Pursuant to the terms of the Trust Agreement for each Issuer, the Issuer
Trustees on behalf of such Issuer will issue the Preferred Securities and the
Common Securities. The Preferred Securities of a particular issue will
represent preferred beneficial ownership interests in the Issuer and the
holders thereof will be entitled to a preference in certain circumstances with
respect to Distributions and amounts payable on redemption or liquidation over
the Common Securities of such Issuer, as well as other benefits as described
in the corresponding Trust Agreement. This summary of certain provisions of
the Preferred Securities and each Trust Agreement does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of each Trust Agreement, including the definitions therein
of certain terms, and the Trust Indenture Act. Wherever particular defined
terms of a Trust Agreement (as amended or supplemented from time to time) are
referred to herein or in a Prospectus Supplement, such defined terms are
incorporated herein or therein by reference. The form of the Trust Agreement
has been filed as an exhibit to the Registration Statement of which this
Prospectus forms a part. Each of the Issuers is a legally separate entity and
the assets of one are not available to satisfy the obligations of any of the
others.
GENERAL
The Preferred Securities of an Issuer will rank pari passu, and payments
will be made thereon pro rata, with the Common Securities of that Issuer
except as described under "-- Subordination of Common Securities." Legal title
to the Corresponding Junior Subordinated Debentures will be held by the
Property Trustee in trust for the benefit of the holders of the related
Preferred Securities and Common Securities. Each Guarantee Agreement executed
by the Company for the benefit of the holders of an Issuer's Preferred
Securities (the "Guarantee" for such Preferred Securities) will be a guarantee
on a subordinated basis with respect to the related Preferred Securities but
will not guarantee payment of Distributions or amounts payable on redemption
or liquidation of such Preferred Securities when the related Issuer does not
have funds on hand available to make such payments. See "Description of
Guarantees."
DISTRIBUTIONS
Distributions on the Preferred Securities will be cumulative, will
accumulate from the date of original issuance and will be payable on such
dates as specified in the applicable Prospectus Supplement. In the event that
any date on which Distributions are payable on the Preferred Securities is not
a Business Day (as defined below), payment of the Distribution payable on such
date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect to any such delay) except
that, if such Business Day is in the next succeeding calendar year, payment of
such Distribution shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date (each
17
date on which Distributions are payable in accordance with the foregoing, a
"Distribution Date"). A "Business Day" shall mean any day other than a
Saturday or a Sunday, or a day on which banking institutions in The City of
New York and San Francisco are authorized or required by law or executive
order to remain closed or a day on which the corporate trust office of the
Property Trustee or the Debenture Trustee is closed for business.
Each Issuer's Preferred Securities represent preferred beneficial ownership
interests in the applicable Issuer, and the Distributions on each Preferred
Security will be payable at a rate specified in the Prospectus Supplement for
such Preferred Securities. The amount of Distributions payable for any period
will be computed on the basis of a 360-day year of twelve 30-day months unless
otherwise specified in the applicable Prospectus Supplement. Distributions to
which holders of Preferred Securities are entitled will accumulate additional
Distributions at the rate per annum if and as specified in the applicable
Prospectus Supplement. The term "Distributions" as used herein includes any
such additional Distributions unless otherwise stated.
If provided in the applicable Prospectus Supplement, the Company has the
right under the Indenture, pursuant to which it will issue the Corresponding
Junior Subordinated Debentures, to defer the payment of interest at any time
or from time to time on any series of the Corresponding Junior Subordinated
Debentures for a period which will be specified in such Prospectus Supplement
relating to such series (each, an "Extension Period"), provided that no
Extension Period may extend beyond the Stated Maturity of the Corresponding
Junior Subordinated Debentures. As a consequence of any such deferral,
Distributions on the Related Preferred Securities would be deferred (but would
continue to accumulate additional Distributions thereon at the rate per annum
set forth in the Prospectus Supplement for such Preferred Securities) by the
Issuer of such Preferred Securities during any such Extension Period. During
such Extension Period the Company may not, and may not permit any subsidiary
of the Company to, (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire or make a liquidation payment with respect to, any
of the Company's capital stock (ii) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt securities of the
Company that rank pari passu with or junior in interest to the Corresponding
Junior Subordinated Debentures or (iii) make any guarantee payments with
respect to any guarantee by the Company of debt securities of any subsidiary
of the Company if such guarantee ranks pari passu with or junior in interest
to the Corresponding Junior Subordinated Debentures (other than (a) dividends
or distributions in common stock of the Company, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights
plans, or the issuance of stock under any such plan in the future, or the
redemption or repurchase of any such rights pursuant thereto, (c) payments
under any Guarantee with respect to such Related Preferred Securities and (d)
purchases of common stock or rights related to the issuance of common stock
under any of the Company's benefit plans for its directors, officers or
employees).
The revenue of each Issuer available for distribution to holders of its
Preferred Securities will be limited to payments under the Corresponding
Junior Subordinated Debentures in which the Issuer will invest the proceeds
from the issuance and sale of its Trust Securities. See "Description of Junior
Subordinated Debentures -- Corresponding Junior Subordinated Debentures." If
the Company does not make interest payments on such Corresponding Junior
Subordinated Debentures, the Property Trustee will not have funds available to
pay Distributions on the Related Preferred Securities. The payment of
Distributions (if and to the extent the Issuer has funds legally available for
the payment of such Distributions and cash sufficient to make such payments)
is guaranteed by the Company on a limited basis as set forth herein under
"Description of Guarantees".
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the register of such Issuer on the relevant record
dates, which, as long as the Preferred Securities remain in book-entry form,
will be one Business Day prior to the relevant Distribution Date. Subject to
any applicable laws and regulations and the provisions of the applicable Trust
Agreement, each such payment will be made as described under "Book-Entry
Issuance." In the event any Preferred Securities are not in book-entry form,
the relevant record date for such Preferred Securities shall be the date at
least 15 days prior to the relevant Distribution Date, as specified in the
applicable Prospectus Supplement.
18
REDEMPTION OR EXCHANGE
Mandatory Redemption. Upon the repayment or redemption, in whole or in part,
of any Corresponding Junior Subordinated Debentures, whether at maturity or
upon earlier redemption as provided in the Indenture, the proceeds from such
repayment or redemption shall be applied by the Property Trustee to redeem a
Like Amount (as defined below) of the Trust Securities, upon not less than 15
nor more than 60 days notice, at a redemption price (the "Redemption Price")
equal to the aggregate Liquidation Amount of such Trust Securities plus
accumulated but unpaid Distributions thereon to the date of redemption (the
"Redemption Date") and the related amount of the premium, if any, paid by the
Company upon the concurrent redemption of such Corresponding Junior
Subordinated Debentures. See "Description of Junior Subordinated Debentures --
Redemption". If less than all of any series of Corresponding Junior
Subordinated Debentures are to be repaid or redeemed on a Redemption Date,
then the proceeds from such repayment or redemption shall be allocated to the
redemption pro rata of the related Preferred Securities and the Common
Securities. The amount of premium, if any, paid by the Company upon the
redemption of all or any part of any series of any Corresponding Junior
Subordinated Debentures to be repaid or redeemed on a Redemption Date shall be
allocated to the redemption pro rata of the Related Preferred Securities and
the Common Securities.
The Company will have the right to redeem any series of Corresponding Junior
Subordinated Debentures (i) on or after such date as may be specified in the
applicable Prospectus Supplement, in whole at any time or in part from time to
time, (ii) at any time, in whole (but not in part), upon the occurrence of a
Tax Event or an Investment Company Event (each as defined below) or (iii) as
may be otherwise specified in the applicable Prospectus Supplement, in each
case subject to receipt of prior approval by the Federal Reserve if then
required under applicable guidelines or policies of the Federal Reserve.
Distribution of Corresponding Junior Subordinated Debentures. Subject to the
Company having received prior approval of the Federal Reserve to do so if then
required under applicable capital guidelines or policies, the Company has the
right to terminate any Issuer, and, after satisfaction of the liabilities of
creditors of such Issuer as provided by applicable law, cause such
Corresponding Junior Subordinated Debentures in respect of the Preferred
Securities and Common Securities issued by such Issuer to be distributed to
the holders of such Preferred Securities and Common Securities in liquidation
of the Issuer.
Tax Event, Capital Treatment Event or Investment Company Event
Redemption. If a Tax Event, Capital Treatment Event or Investment Company
Event in respect of a series of Preferred Securities and Common Securities
shall occur and be continuing, the Company has the right to redeem the
Corresponding Junior Subordinated Debentures in whole (but not in part) and
thereby cause a mandatory redemption of such Preferred Securities and Common
Securities in whole (but not in part) at the Redemption Price within 90 days
following the occurrence of such Tax Event, Capital Treatment Event or
Investment Company Event. In the event a Tax Event, Capital Treatment Event or
Investment Company Event in respect of a series of Preferred Securities and
Common Securities has occurred and is continuing, and the Company does not
elect to redeem the Corresponding Junior Subordinated Debentures and thereby
cause a mandatory redemption of such Preferred Securities and Common
Securities or to terminate the related Issuer and after satisfaction of the
liabilities of creditors of such Issuer as required by applicable law cause
the Corresponding Junior Subordinated Debentures to be distributed to holders
of such Preferred Securities and Common Securities in liquidation of the
Issuer as described above, such Preferred Securities will remain outstanding
and Additional Sums (as defined below) may be payable on the Corresponding
Junior Subordinated Debentures.
"Additional Sums" means the additional amounts as may be necessary in order
that the amount of Distributions then due and payable by an Issuer on the
outstanding Preferred Securities and Common Securities of the Issuer shall not
be reduced as a result of any additional taxes, duties and other governmental
charges to which such Issuer has become subject as a result of a Tax Event.
"Investment Company Event" means the receipt by the applicable Issuer of an
opinion of counsel experienced in such matters to the effect that, as a result
of the occurrence of a change in law or regulation or a
19
change in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory authority (a
"Change in 1940 Act Law"), the applicable Issuer is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act of 1940, as amended (the "Investment Company Act"), which Change
in 1940 Act Law becomes effective on or after the date of original issuance of
the series of Preferred Securities issued by the Issuer.
"Like Amount" means (i) with respect to a redemption of any series of Trust
Securities, Trust Securities of such series having a Liquidation Amount (as
defined below) equal to that portion of the principal amount of Corresponding
Junior Subordinated Debentures to be contemporaneously redeemed in accordance
with the Indenture, allocated to the Common Securities and to the Preferred
Securities based upon the relative Liquidation Amounts of such classes and the
proceeds of which will be used to pay the Redemption Price of such Trust
Securities, and (ii) with respect to a distribution of Corresponding Junior
Subordinated Debentures to holders of any series of Trust Securities in
connection with a dissolution or liquidation of the related Issuer,
Corresponding Junior Subordinated Debentures having a principal amount equal
to the Liquidation Amount of the Trust Securities of the holder to whom such
Corresponding Junior Subordinated Debentures are distributed.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
"Tax Event" means the receipt by the applicable Issuer of an opinion of
counsel experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of issuance
of the Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) such Issuer is, or will be within 90 days of the
date of such opinion, subject to United States Federal income tax with respect
to income received or accrued on the corresponding series of Corresponding
Junior Subordinated Debentures, (ii) interest payable by the Company on such
series of Corresponding Junior Subordinated Debentures is not, or within 90
days of the date of such opinion, will not be, deductible by the Company, in
whole or in part, for United States Federal income tax purposes, or (iii) such
Issuer is, or will be within 90 days of the date of such opinion, subject to
more than a de minimis amount of other taxes, duties or other governmental
charges.
"Capital Treatment Event" means the reasonable determination by the Company
that, as a result of the occurrence of any amendment to, or change (including
any announced prospective change) in, the laws (or any regulations thereunder)
of the United States or any political subdivision thereof or therein, or as a
result of any official or administrative pronouncement or action or judicial
decision interpreting or applying such laws or regulations, which amendment or
change is effective or which pronouncement, action or decision is announced on
or after the date of issuance of the applicable Preferred Securities, there is
more than an insubstantial risk that the Company will not be entitled to treat
an amount equal to the aggregate Liquidation Amount of the Preferred
Securities as "Tier 1 Capital" (or the then equivalent thereof) for purposes
of the capital adequacy guidelines of the Federal Reserve, as then in effect
and applicable to the Company.
After the liquidation date fixed for any distribution of Corresponding
Junior Subordinated Debentures for any series of Preferred Securities (i) such
series of Preferred Securities will no longer be deemed to be outstanding,
(ii) The Depository Trust Company ("DTC") or its nominee, as the record holder
of such series of Preferred Securities, will receive a registered global
certificate or certificates representing the Corresponding Junior Subordinated
Debentures to be delivered upon such distribution and (iii) any certificates
representing such series of Preferred Securities not held by DTC or its
nominee will be deemed to represent the Corresponding Junior Subordinated
Debentures having a principal amount equal to the stated liquidation
preference of such series of Preferred Securities, and bearing accrued and
unpaid interest in an amount equal to the accrued and unpaid Distributions on
such series of Preferred Securities until such certificates are presented to
the Administrative Trustees or their agent for transfer or reissuance.
20
There can be no assurance as to the market prices for the Preferred
Securities or the Corresponding Junior Subordinated Debentures that may be
distributed in exchange for Preferred Securities if a dissolution and
liquidation of an Issuer were to occur. Accordingly, the Preferred Securities
that an investor may purchase, or the Corresponding Junior Subordinated
Debentures that the investor may receive on dissolution and liquidation of an
Issuer, may trade at a discount to the price that the investor paid to
purchase the Preferred Securities offered hereby.
REDEMPTION PROCEDURES
Preferred Securities redeemed on each Redemption Date shall be redeemed at
the Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Corresponding Junior Subordinated Debentures. Redemptions of
the Preferred Securities shall be made and the Redemption Price shall be
payable on each Redemption Date only to the extent that the related Issuer has
funds on hand available for the payment of such Redemption Price. See also "--
Subordination of Common Securities".
If an Issuer gives a notice of redemption in respect of its Preferred
Securities, then, by 12:00 noon, New York City time, on the Redemption Date,
to the extent funds are available, the Property Trustee will deposit
irrevocably with DTC funds sufficient to pay the applicable Redemption Price
and will give DTC irrevocable instructions and authority to pay the Redemption
Price to the holders of such Preferred Securities. See "Book-Entry Issuance".
If such Preferred Securities are no longer in book-entry form, the Property
Trustee, to the extent funds are available, will irrevocably deposit with the
paying agent for such Preferred Securities funds sufficient to pay the
applicable Redemption Price and will give such paying agent irrevocable
instructions and authority to pay the Redemption Price to the holders thereof
upon surrender of their certificates evidencing such Preferred Securities.
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date for any Preferred Securities called for redemption shall be
payable to the holders of such Preferred Securities on the relevant record
dates for the related Distribution Dates. If notice of redemption shall have
been given and funds deposited as required, then upon the date of such
deposit, all rights of the holders of such Preferred Securities so called for
redemption will cease, except the right of the holders of such Preferred
Securities to receive the Redemption Price, but without interest on such
Redemption Price, and such Preferred Securities will cease to be outstanding.
In the event that any date fixed for redemption of Preferred Securities is not
a Business Day, then payment of the Redemption Price payable on such date will
be made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such
Business Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day. In the event that payment of the
Redemption Price in respect of Preferred Securities called for redemption is
improperly withheld or refused and not paid either by the Issuer or by the
Company pursuant to the Guarantee as described under "Description of
Guarantees", Distributions on such Preferred Securities will continue to
accrue at the then applicable rate, from the Redemption Date originally
established by the Issuer for such Preferred Securities to the date such
Redemption Price is actually paid, in which case the actual payment date will
be the date fixed for redemption for purposes of calculating the Redemption
Price.
Subject to applicable law (including, without limitation, United States
Federal securities law), the Company or its subsidiaries may at any time and
from time to time purchase outstanding Preferred Securities by tender, in the
open market or by private agreement.
Payment of the Redemption Price on the Preferred Securities and any
distribution of Corresponding Junior Subordinated Debentures to holders of
Preferred Securities shall be made to the applicable recordholders thereof as
they appear on the register for such Preferred Securities on the Redemption
Date.
If less than all of the Preferred Securities and Common Securities issued by
an Issuer are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of such Preferred Securities and Common Securities to be
redeemed shall be allocated pro rata to the Preferred Securities and the
Common Securities based upon the relative Liquidation Amounts of such classes.
The particular Preferred Securities to be redeemed shall be selected on a pro
rata basis not more than 60 days prior to the Redemption Date by the Property
Trustee
21
from the outstanding Preferred Securities not previously called for
redemption, by such method as the Property Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $25 or an integral multiple of $25 in excess thereof) of the
Liquidation Amount of Preferred Securities of a denomination larger than $25.
The Property Trustee shall promptly notify the trust registrar in writing of
the Preferred Securities selected for redemption and, in the case of any
Preferred Securities selected for partial redemption, the Liquidation Amount
thereof to be redeemed. For all purposes of each Trust Agreement, unless the
context otherwise requires, all provisions relating to the redemption of
Preferred Securities shall relate, in the case of any Preferred Securities
redeemed or to be redeemed only in part, to the portion of the aggregate
Liquidation Amount of Preferred Securities which has been or is to be
redeemed.
Notice of any redemption will be mailed at least 15 days but not more than
60 days before the Redemption Date to each Holder of Trust Securities to be
redeemed at its registered address. Unless the Company defaults in payment of
the Redemption Price on the Corresponding Junior Subordinated Debentures, on
and after the Redemption Date interest will cease to accrue on such Junior
Subordinated Debentures or portions thereof (and distributions) will cease to
accrue on the Related Preferred Securities or portions thereof) called for
redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, each Issuer's
Preferred Securities and Common Securities, as applicable, shall be made pro
rata based on the Liquidation Amount of such Preferred Securities and Common
Securities; provided, however, that if on any Distribution Date or Redemption
Date a Debenture Event of Default shall have occurred and be continuing, no
payment of any Distribution on, or Redemption Price of, any of the Issuer's
Common Securities, and no other payment on account of the redemption,
liquidation or other acquisition of such Common Securities, shall be made
unless payment in full in cash of all accumulated and unpaid Distributions on
all of the Issuer's outstanding Preferred Securities for all Distribution
periods terminating on or prior thereto, or in the case of payment of the
Redemption Price the full amount of such Redemption Price on all of the
Issuer's outstanding Preferred Securities then called for redemption, shall
have been made or provided for, and all funds available to the Property
Trustee shall first be applied to the payment in full in cash of all
Distributions on, or Redemption Price of, the Issuer's Preferred Securities
then due and payable.
In the case of any Event of Default resulting from a Debenture Event of
Default, the Company as holder of such Issuer's Common Securities will be
deemed to have waived any right to act with respect to any such Event of
Default under the applicable Trust Agreement until the effect of all such
Events of Default with respect to such Preferred Securities have been cured,
waived or otherwise eliminated. Until any such Events of Default under the
applicable Trust Agreement with respect to the Preferred Securities have been
so cured, waived or otherwise eliminated, the Property Trustee shall act
solely on behalf of the holders of such Preferred Securities and not on behalf
of the Company as holder of the Issuer's Common Securities, and only the
holders of such Preferred Securities will have the right to direct the
Property Trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON TERMINATION
Pursuant to each Trust Agreement, each Issuer shall automatically terminate
upon expiration of its term and shall terminate on the first to occur of: (i)
certain events of bankruptcy, dissolution or liquidation of the Company; (ii)
the distribution of a Like Amount of the Corresponding Junior Subordinated
Debentures to the holders of its Trust Securities, if the Company, as
Depositor, has given written direction to the Property Trustee to terminate
such Issuer (which direction is optional and wholly within the discretion of
the Company, as Depositor and subject to the Company having received prior
approval of the Federal Reserve if so required under applicable capital
guidelines and policies); (iii) redemption of all of the Issuer's Preferred
Securities as described under "Description of Preferred Securities --
Redemption or Exchange -- Mandatory Redemption"; and (iv) the entry of an
order for the dissolution of the Issuer by a court of competent jurisdiction.
If an early termination occurs as described in clause (i), (ii) or (iv)
above, the Issuer shall be liquidated by the Issuer Trustees as expeditiously
as the Issuer Trustees determine to be possible by distributing, after
22
satisfaction of liabilities to creditors of such Issuer as provided by
applicable law, to the holders of such Trust Securities a Like Amount of the
Corresponding Junior Subordinated Debentures, unless such distribution is
determined by the Property Trustee not to be practical, in which event such
holders will be entitled to receive out of the assets of the Issuer available
for distribution to holders, after satisfaction of liabilities to creditors of
such Issuer as provided by applicable law, an amount equal to, in the case of
holders of Preferred Securities, the aggregate of the Liquidation Amount plus
accrued and unpaid Distributions thereon to the date of payment (such amount
being the "Liquidation Distribution"). If such Liquidation Distribution can be
paid only in part because such Issuer has insufficient assets available to pay
in full the aggregate Liquidation Distribution, then the amounts payable
directly by such Issuer on its Preferred Securities shall be paid on a pro
rata basis. The holder(s) of such Issuer's Common Securities will be entitled
to receive distributions upon any such liquidation pro rata with the holders
of its Preferred Securities, except that if a Debenture Event of Default has
occurred and is continuing, the Preferred Securities shall have a priority
over the Common Securities.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default" under each
Trust Agreement (an "Event of Default") with respect to the Preferred
Securities issued thereunder (whatever the reason for such Event of Default
and whether it shall be voluntary or involuntary or be effected by operation
of law or pursuant to any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body):
(i) the occurrence of a Debenture Event of Default under the Indenture
(see "Description of Junior Subordinated Debentures -- Debenture Events of
Default"); or
(ii) default by the Trust in the payment of any Distribution when it
becomes due and payable, and continuation of such default for a period of
30 days; or
(iii) default by the Trust in the payment of any Redemption Price of any
Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Issuer Trustees in such Trust Agreement
(other than a covenant or warranty a default in the performance of which or
the breach of which is dealt with in clause (ii) or (iii) above), and
continuation of such default or breach for a period of 60 days after there
has been given, by registered or certified mail, to the defaulting Issuer
Trustee or Trustees by the holders of at least 25% in aggregate Liquidation
Amount of the outstanding Preferred Securities of the applicable Issuer, a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" under such
Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by the Company to appoint a
successor Property Trustee within 60 days thereof.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of such Issuer's Preferred
Securities, the Administrative Trustees and the Company, as Depositor, unless
such Event of Default shall have been cured or waived. The Company, as
Depositor, and the Administrative Trustees are required to file annually with
the Property Trustee a certificate as to whether or not they are in compliance
with all the conditions and covenants applicable to them under each Trust
Agreement.
If a Debenture Event of Default has occurred and is continuing, the
Preferred Securities shall have a preference over the Common Securities upon
termination of each Issuer as described above. See "-- Liquidation
Distribution Upon Termination". The existence of an Event of Default does not
entitle the holders of Preferred Securities to accelerate the maturity
thereof.
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REMOVAL OF ISSUER TRUSTEES
Unless a Debenture Event of Default shall have occurred and be continuing,
any Issuer Trustee may be removed at any time by the holder of the Common
Securities. If a Debenture Event of Default has occurred and is continuing,
the Property Trustee and the Delaware Trustee may be removed at such time by
the holders of a majority in Liquidation Amount of the outstanding Preferred
Securities. In no event will the holders of the Preferred Securities have the
right to vote to appoint, remove or replace the Administrative Trustees, which
voting rights are vested exclusively in the Company as the holder of the
Common Securities. No resignation or removal of an Issuer Trustee and no
appointment of a successor trustee shall be effective until the acceptance of
appointment by the successor trustee in accordance with the provisions of the
applicable Trust Agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default shall have occurred and be continuing, at any
time or times, for the purpose of meeting the legal requirements of the Trust
Indenture Act or of any jurisdiction in which any part of the Trust Property
may at the time be located, the Company, as the holder of the Common
Securities, and the Administrative Trustees shall have power to appoint one or
more persons either to act as a co-trustee, jointly with the Property Trustee,
of all or any part of such Trust Property, or to act as separate trustee of
any such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such person or persons in such
capacity any property, title, right or power deemed necessary or desirable,
subject to the provisions of the applicable Trust Agreement. In case a
Debenture Event of Default has occurred and is continuing, the Property
Trustee alone shall have power to make such appointment.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any entity into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any entity resulting from any merger,
conversion or consolidation to which such Trustee shall be a party, or any
entity succeeding to all or substantially all the corporate trust business of
such Trustee, shall be the successor of such Trustee under each Trust
Agreement, provided such entity shall be otherwise qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATION OR REPLACEMENTS OF THE ISSUERS
An Issuer may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any entity, except as described below or as
otherwise indicated in the Prospectus Supplement. An Issuer may, at the
request of the Company, with the consent of the Administrative Trustees and
without the consent of the holders of the Preferred Securities, merge with or
into, consolidate, amalgamate, or be replaced by or convey, transfer or lease
its properties and assets substantially as an entirety to a trust organized as
such under the laws of any State; provided, that (i) such successor entity
either (a) expressly assumes all of the obligations of such Issuer with
respect to the Preferred Securities or (b) substitutes for the Preferred
Securities other securities having substantially the same terms as the
Preferred Securities (the "Successor Securities"), so long as the Successor
Securities rank the same as the Preferred Securities rank in priority with
respect to distributions and payments upon liquidation, redemption and
otherwise, (ii) the Company expressly appoints a trustee of such successor
entity possessing the same powers and duties as the Property Trustee as the
holder of the Corresponding Junior Subordinated Debentures, (iii) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does
not cause the Preferred Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating organization,
(iv) such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not adversely affect the rights, preferences and
privileges of the holders of the Preferred Securities (including any Successor
Securities) in any material respect, (v) such successor entity has a purpose
substantially identical to that of the Issuer, (vi) prior to such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, the
Company has received an opinion from independent counsel to the Issuer
experienced in such matters to the effect that (a) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of the Preferred
Securities (including
24
any Successor Securities) in any material respect, and (b) following such
merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease, neither the Issuer nor such successor entity will be required to
register as an investment company under the Investment Company Act and (vii)
the Company or any permitted successor or assignee owns all of the Common
Securities of such successor entity and guarantees the obligations of such
successor entity under the Successor Securities at least to the extent
provided by the Guarantee. Notwithstanding the foregoing, an Issuer shall not,
except with the consent of holders of 100% in Liquidation Amount of the
Preferred Securities, consolidate, amalgamate, merge with or into, or be
replaced by or convey, transfer or lease its properties and assets
substantially as an entirety to any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger, replacement, conveyance, transfer or
lease would cause the Issuer or the successor entity to be classified as other
than a grantor trust for United States Federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF EACH TRUST AGREEMENT
Except as provided below and under "Description of Guarantees -- Amendments
and Assignment" and as otherwise required by law and the applicable Trust
Agreement, the holders of the Preferred Securities will have no voting rights.
Each Trust Agreement may be amended from time to time by the Company, the
Property Trustee and the Administrative Trustees, without the consent of the
holders of the Preferred Securities (i) to cure any ambiguity, correct or
supplement any provisions in such Trust Agreement that may be inconsistent
with any other provision, or to make any other provisions with respect to
matters or questions arising under such Trust Agreement, which shall not be
inconsistent with the other provisions of such Trust Agreement, or (ii) to
modify, eliminate or add to any provisions of such Trust Agreement to such
extent as shall be necessary to ensure that the Issuer will be classified for
United States Federal income tax purposes as a grantor trust at all times that
any Trust Securities are outstanding or to ensure that the Issuer will not be
required to register as an "investment company" under the Investment Company
Act; provided, however, that in the case of clause (i), such action shall not
adversely affect in any material respect the interests of any holder of Trust
Securities, and any amendments of such Trust Agreement shall become effective
when notice thereof is given to the holders of Trust Securities. Each Trust
Agreement may be amended by the Issuer Trustees and the Company with (i) the
consent of holders representing not less than a majority (based upon
Liquidation Amounts) of the outstanding Trust Securities, and (ii) receipt by
the Issuer Trustees of an opinion of counsel to the effect that such amendment
or the exercise of any power granted to the Issuer Trustees in accordance with
such amendment will not affect the Issuer's status as a grantor trust for
United States Federal income tax purposes or the Issuer's exemption from
status as an "investment company" under the Investment Company Act, provided
that without the consent of each holder of Trust Securities, such Trust
Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount
of any Distribution required to be made in respect of the Trust Securities as
of a specified date or (ii) restrict the right of a holder of Trust Securities
to institute suit for the enforcement of any such payment on or after such
date.
So long as any Corresponding Junior Subordinated Debentures are held by the
Property Trustee, the Issuer Trustees shall not (i) direct the time, method
and place of conducting any proceeding for any remedy available to the
Debenture Trustee, or executing any trust or power conferred on the Property
Trustee with respect to such Corresponding Junior Subordinated Debentures,
(ii) waive any past default that is waivable under the Indenture, (iii)
exercise any right to rescind or annul a declaration that the principal of all
the Junior Subordinated Debentures shall be due and payable or (iv) consent to
any amendment, modification or termination of the Indenture or such
Corresponding Junior Subordinated Debentures, where such consent shall be
required, without, in each case, obtaining the prior approval of the holders
of a majority in aggregate Liquidation Amount of all outstanding Preferred
Securities; provided, however, that where a consent under the Indenture would
require the consent of each holder of Corresponding Junior Subordinated
Debentures affected thereby, no such consent shall be given by the Property
Trustee without the prior consent of each holder of the corresponding
Preferred Securities. The Issuer Trustees shall not revoke any action
previously authorized or approved by a vote of the holders of the Preferred
Securities except by subsequent vote of the holders of the Preferred
Securities. The
25
Property Trustee shall notify each holder of Preferred Securities of any
notice of default with respect to the Corresponding Junior Subordinated
Debentures. In addition to obtaining the foregoing approvals of the holders of
the Preferred Securities, prior to taking any of the foregoing actions, the
Issuer Trustees shall obtain an opinion of counsel experienced in such matters
to the effect that the Issuer will not be classified as an association taxable
as a corporation for United States Federal income tax purposes on account of
such action.
Any required approval of holders of Preferred Securities may be given at a
meeting of holders of Preferred Securities convened for such purpose or
pursuant to written consent. The Property Trustee will cause a notice of any
meeting at which holders of Preferred Securities are entitled to vote, or of
any matter upon which action by written consent of such holders is to be
taken, to be given to each holder of record of Preferred Securities in the
manner set forth in each Trust Agreement.
No vote or consent of the holders of Preferred Securities will be required
for an Issuer to redeem and cancel its Preferred Securities in accordance with
the applicable Trust Agreement.
Notwithstanding that holders of Preferred Securities are entitled to vote or
consent under any of the circumstances described above, any of the Preferred
Securities that are owned by the Company, the Issuer Trustees or any affiliate
of the Company or any Issuer Trustees, shall, for purposes of such vote or
consent, be treated as if they were not outstanding.
GLOBAL PREFERRED SECURITIES
The Preferred Securities of a series may be issued in whole or in part in
the form of one or more Global Preferred Securities that will be deposited
with, or on behalf of, the Depositary identified in the Prospectus Supplement
relating to such series. Unless otherwise indicated in the applicable
Prospectus Supplement for such series, the Depositary will be DTC. Global
Preferred Securities may be issued only in fully registered form and in either
temporary or permanent form. Unless and until it is exchanged in whole or in
part for the individual Preferred Securities represented thereby, a Global
Preferred Security may not be transferred except as a whole by the Depositary
for such Global Preferred Security to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary or by the Depositary or any nominee to a successor Depositary or
any nominee of such successor.
The specific terms of the depositary arrangement with respect to a series of
Preferred Securities will be described in the Prospectus Supplement relating
to such series. The Company anticipates that the following provisions will
generally apply to depositary arrangements.
Upon the issuance of a Global Preferred Security, and the deposit of such
Global Preferred Security with or on behalf of the Depositary, the Depositary
for such Global Preferred Security or its nominee will credit, on its book-
entry registration and transfer system, the respective aggregate Liquidation
Amounts of the individual Preferred Securities represented by such Global
Preferred Securities to the accounts of Participants. Such accounts shall be
designated by the dealers, underwriters or agents with respect to such
Preferred Securities or by the Company if such Preferred Securities are
offered and sold directly by the Company. Ownership of beneficial interests in
a Global Preferred Security will be limited to Participants or persons that
may hold interests through Participants. Ownership of beneficial interests in
such Global Preferred Security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the applicable
Depositary or its nominee (with respect to interests of Participants) and the
records of Participants (with respect to interests of persons who hold through
Participants). The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests
in a Global Preferred Security.
So long as the Depositary for a Global Preferred Security, or its nominee,
is the registered owner of such Global Preferred Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder
of the Preferred Securities represented by such Global Preferred Security for
all purposes under the Indenture governing such Preferred Securities. Except
as provided below, owners of beneficial interests in a
26
Global Preferred Security will not be entitled to have any of the individual
Preferred Securities of the series represented by such Global Preferred
Security registered in their names, will not receive or be entitled to receive
physical delivery of any such Preferred Securities of such series in
definitive form and will not be considered the owners or holders thereof under
the Indenture.
Payments of principal of (and premium, if any) and interest on individual
Preferred Securities represented by a Global Preferred Security registered in
the name of a Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner of the Global Preferred
Security representing such Preferred Securities. None of the Company, the
Property Trustee, any Paying Agent, or the Securities Registrar for such
Preferred Securities will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial ownership
interests of the Global Preferred Security representing such Preferred
Securities or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
The Company expects that the Depositary for a series of Preferred Securities
or its nominee, upon receipt of any payment of Liquidation Amount, premium or
Distributions in respect of a permanent Global Preferred Security representing
any of such Preferred Securities, immediately will credit Participants'
accounts with payments in amounts proportionate to their respective beneficial
interest in the aggregate Liquidation Amount of such Global Preferred Security
for such Preferred Securities as shown on the records of such Depositary or
its nominee. The Company also expects that payments by Participants to owners
of beneficial interests in such Global Preferred Security held through such
Participants will be governed by standing instructions and customary
practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name." Such payments will be
the responsibility of such Participants.
Unless otherwise specified in the applicable Prospectus Supplement, if a
Depositary for a series of Preferred Securities is at any time unwilling,
unable or ineligible to continue as depositary and a successor depositary is
not appointed by the Issuer within 90 days, the Issuer will issue individual
Preferred Securities of such series in exchange for the Global Preferred
Security representing such series of Preferred Securities. In addition, the
Issuer may at any time and in its sole discretion, subject to any limitations
described in the Prospectus Supplement relating to such Preferred Securities,
determine not to have any Preferred Securities of such series represented by
one or more Global Preferred Securities and, in such event, will issue
individual Preferred Securities of such series in exchange for the Global
Preferred Security or Securities representing such series of Preferred
Securities. Further, if the Issuer so specifies with respect to the Preferred
Securities of a series, an owner of a beneficial interest in a Global
Preferred Security representing Preferred Securities of such series may, on
terms accepable to the Issuer, the Property Trustee and the Depositary for
such Global Preferred Security, receive individual Preferred Securities of
such series in exchange for such beneficial interests, subject to any
limitations described in the Prospectus Supplement relating to such Preferred
Securities. In any such instance, an owner of a beneficial interest in a
Global Preferred Security will be entitled to physical delivery of individual
Preferred Securities of the series represented by such Global Preferred
Security equal in principal amount to such beneficial interest and to have
such Preferred Securities registered in its name. Individual Preferred
Securities of such series so issued will be issued in denominations, unless
otherwise specified by the Issuer, of $25 and integral multiples thereof.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities shall be made to the
Depositary, which shall credit the relevant accounts at the Depositary on the
applicable Distribution Dates or, if any Issuer's Preferred Securities are not
held by the Depositary, such payments shall be made by check mailed to the
address of the holder entitled thereto as such address shall appear on the
Register. Unless otherwise specified in the applicable Prospectus Supplement,
the paying agent (the "Paying Agent") shall initially be the Property Trustee
and any co-paying agent chosen by the Property Trustee and acceptable to the
Administrative Trustees and the Company. The Paying Agent shall be permitted
to resign as Paying Agent upon 30 days' written notice to the Property Trustee
and the Company. In the event that the Property Trustee shall no longer be the
Paying Agent, the Administrative Trustees shall appoint a successor (which
shall be a bank or trust company acceptable to the Administrative Trustees and
the Company) to act as Paying Agent.
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REGISTRAR AND TRANSFER AGENT
Unless otherwise specified in the applicable Prospectus Supplement, the
Property Trustee will act as registrar and transfer agent for the Preferred
Securities.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of each Issuer, but upon payment of any tax or other
governmental charges that may be imposed in connection with any transfer or
exchange. The Issuers will not be required to register or cause to be
registered the transfer of their Preferred Securities after such Preferred
Securities have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of an
Event of Default, undertakes to perform only such duties as are specifically
set forth in each Trust Agreement and, after such Event of Default, must
exercise the same degree of care and skill as a prudent person would exercise
or use in the conduct of his or her own affairs. Subject to this provision,
the Property Trustee is under no obligation to exercise any of the powers
vested in it by the applicable Trust Agreement at the request of any holder of
Preferred Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby. If no Event of
Default has occurred and is continuing and the Property Trustee is required to
decide between alternative causes of action, construe ambiguous provisions in
the applicable Trust Agreement or is unsure of the application of any
provision of the applicable Trust Agreement, and the matter is not one on
which holders of Preferred Securities are entitled under such Trust Agreement
to vote, then the Property Trustee shall take such action as is directed by
the Company and if not so directed, shall take such action as it deems
advisable and in the best interests of the holders of the Trust Securities and
will have no liability except for its own bad faith, negligence or willful
misconduct.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Issuers in such a way that no Issuer will be
deemed to be an "investment company" required to be registered under the
Investment Company Act or classified as an association taxable as a
corporation for United States Federal income tax purposes and so that the
Corresponding Junior Subordinated Debentures will be treated as indebtedness
of the Company for United States Federal income tax purposes. In this
connection, the Company and the Administrative Trustees are authorized to take
any action, not inconsistent with applicable law, the certificate of trust of
each Issuer or each Trust Agreement, that the Company and the Administrative
Trustees determine in their discretion to be necessary or desirable for such
purposes, as long as such action does not materially adversely affect the
interests of the holders of the related Preferred Securities.
Holders of the Preferred Securities have no preemptive or similar rights.
No Issuer may borrow money or issue debt or mortgage or pledge any of its
assets.
BOOK-ENTRY ISSUANCE
DTC will act as securities depositary for all of the Preferred Securities
and the Junior Subordinated Debentures, unless otherwise referred to in the
Prospectus Supplement relating to an offering of Preferred Securities or
Junior Subordinated Debentures. The Preferred Securities and the Junior
Subordinated Debentures will be issued only as fully-registered securities
registered in the name of Cede & Co. (DTC's nominee). One or more fully-
registered global certificates will be issued for the Preferred Securities of
each Issuer and the Junior Subordinated Debentures, representing in the
aggregate the total number of such Issuer's Preferred Securities or aggregate
principal balance of Junior Subordinated Debentures, respectively, and will be
deposited with DTC.
28
DTC is a limited purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its Participants deposit with DTC. DTC also facilitates
the settlement among Participants of securities transactions, such as
transfers and pledges, in deposited securities through electronic computerized
book-entry changes in Participants' accounts, thereby eliminating the need for
physical movement of securities certificates. "Direct Participants" include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain custodial
relationships with Direct Participants, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Participants
are on file with the Commission.
Purchases of Preferred Securities or Junior Subordinated Debentures within
the DTC system must be made by or through Direct Participants, which will
receive a credit for the Preferred Securities or Junior Subordinated
Debentures on DTC's records. The ownership interest of each actual purchaser
of each Preferred Security and each Junior Subordinated Debenture ("Beneficial
Owner") is in turn to be recorded on the Direct and Indirect Participants'
records. Beneficial Owners will not receive written confirmation from DTC of
their purchases, but Beneficial Owners are expected to receive written
confirmations providing details of the transactions, as well as periodic
statements of their holdings, from the Direct or Indirect Participants through
which the Beneficial Owners purchased Preferred Securities or Junior
Subordinated Debentures.
Transfers of ownership interests in the Preferred Securities or Junior
Subordinated Debentures are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial Owners will not
receive certificates representing their ownership interests in Preferred
Securities or Junior Subordinated Debentures, except in the event that use of
the book-entry system for the Preferred Securities of such Issuer or Junior
Subordinated Debentures is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities or Junior Subordinated Debentures; DTC's records reflect only the
identity of the Direct Participants to whose accounts such Preferred
Securities or Junior Subordinated Debentures are credited, which may or may
not be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and Beneficial Owners
will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Redemption notices will be sent to Cede & Co. as the registered holder of
the Preferred Securities or Junior Subordinated Debentures. If less than all
of an Issuer's Preferred Securities or the Junior Subordinated Debentures are
being redeemed, DTC's current practice is to determine by lot the amount of
the interest of each Direct Participant to be redeemed.
Although voting with respect to the Preferred Securities or the Junior
Subordinated Debentures is limited to the holders of record of the Preferred
Securities or Junior Subordinated Debentures, in those instances in which a
vote is required, neither DTC nor Cede & Co. will itself consent or vote with
respect to Preferred Securities or Junior Subordinated Debentures. Under its
usual procedures, DTC would mail an omnibus proxy (the "Omnibus Proxy") to the
relevant Trustee as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct Participants
to whose accounts such Preferred Securities or Junior Subordinated Debentures
are credited on the record date (identified in a listing attached to the
Omnibus Proxy).
29
Distribution payments on the Preferred Securities or the Junior Subordinated
Debentures will be made by the relevant Trustee to DTC. DTC's practice is to
credit Direct Participants' accounts on the relevant payment date in
accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payments on such payment date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices and will be the responsibility of such
Participant and not of DTC, the relevant Trustee, the Issuer thereof or the
Company, subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of Distributions to DTC is the
responsibility of the relevant Trustee, disbursement of such payments to
Direct Participants is the responsibility of DTC, and disbursements of such
payments to the Beneficial Owners is the responsibility of Direct and Indirect
Participants.
DTC may discontinue providing its services as securities depositary with
respect to any of the Preferred Securities or the Junior Subordinated
Debentures at any time by giving reasonable notice to the relevant Trustee and
the Company. In the event that a successor securities depositary is not
obtained, definitive Preferred Security or Junior Subordinated Debenture
certificates representing such Preferred Securities or Junior Subordinated
Debentures are required to be printed and delivered. The Company, at its
option, may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor depositary). After a Debenture Event of Default,
the holders of a majority in liquidation preference of Preferred Securities or
aggregate principal amount of Junior Subordinated Debentures may determine to
discontinue the system of book-entry transfers through DTC. In any such event,
definitive certificates for such Preferred Securities or Junior Subordinated
Debentures will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Issuers and the Company believe to be
accurate, but the Issuers and the Company assume no responsibility for the
accuracy thereof. Neither the Issuers nor the Company has any responsibility
for the performance by DTC or its Participants of their respective obligations
as described herein or under the rules and procedures governing their
respective operations.
DESCRIPTION OF GUARANTEES
A Guarantee will be executed and delivered by the Company concurrently with
the issuance by each Issuer of its Preferred Securities for the benefit of the
holders from time to time of such Preferred Securities. The First National
Bank of Chicago will act as indenture trustee ("Guarantee Trustee") under each
Guarantee for the purposes of compliance with the Trust Indenture Act and each
Guarantee will be qualified as an Indenture under the Trust Indenture Act.
This summary of certain provisions of the Guarantees does not purport to be
complete and is subject to, and qualified in its entirety by reference to, all
of the provisions of each Guarantee Agreement, including the definitions
therein of certain terms, and the Trust Indenture Act. The form of the
Guarantee has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part. Reference in this summary to Preferred
Securities means that Issuer's Preferred Securities to which a Guarantee
relates. The Guarantee Trustee will hold each Guarantee for the benefit of the
holders of the related Issuer's Preferred Securities.
GENERAL
The Company will irrevocably agree to pay in full on a subordinated basis,
to the extent set forth herein, the Guarantee Payments (as defined below) to
the holders of the Preferred Securities, as and when due, regardless of any
defense, right of set-off or counterclaim that such Issuer may have or assert
other than the defense of payment. The following payments with respect to the
Preferred Securities, to the extent not paid by or on behalf of the related
Issuer (the "Guarantee Payments"), will be subject to the Guarantee: (i) any
accumulated and unpaid Distributions required to be paid on such Preferred
Securities, to the extent that such Issuer has funds on hand available
therefor at such time, (ii) the Redemption Price with respect to any Preferred
Securities called for redemption, to the extent that such Issuer has funds on
hand available therefor at such time, or (iii) upon a voluntary or involuntary
termination, winding up or liquidation of such Issuer (unless the
Corresponding Junior Subordinated Debentures are distributed to holders of
such Preferred Securities in exchange therefor), the lesser
30
of (a) the Liquidation Distribution and (b) the amount of assets of such
Issuer remaining available for distribution to holders of Preferred Securities
after satisfaction of liabilities to creditors of such Issuer as required by
applicable law. The Company's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Company to the
holders of the applicable Preferred Securities or by causing the Issuer to pay
such amounts to such holders.
Each Guarantee will be an irrevocable guarantee on a subordinated basis of
the related Issuer's obligations under the Preferred Securities, but will
apply only to the extent that such related Issuer has funds sufficient to make
such payments, and is not a guarantee of collection. If the Company does not
make interest payments on the Corresponding Junior Subordinated Debentures
held by the Issuer, the Issuer will not be able to pay Distributions on its
Preferred Securities and will not have funds legally available therefor. In
such event, holders of the Issuer's Preferred Securities would not be able to
rely on the Guarantee for such payments.
Each Guarantee will rank subordinate and junior in right of payment to all
liabilities of the Company, other than any liabilities which expressly by
their terms are made pari passu or subordinate to the obligations of the
Company under the Series A Guarantee. See "-- Status of the Guarantees". Since
the Company is a holding company, the right of the Company to participate in
any distribution of assets of any subsidiary upon such subsidiary's
liquidation or reorganization or otherwise is subject to the prior claims of
creditors of that subsidiary, except to the extent that the Company may itself
be a creditor of that subsidiary. Claims on the Company's subsidiaries by
creditors other than the Company include long-term debt and substantial
obligations in respect of federal funds purchased, securities sold under
repurchase agreements and certain other short-term borrowings, as well as
deposit liabilities. There are various legal limitations on the extent to
which the Bank, which is the Company's principal subsidiary, may extend
credit, pay dividends or otherwise supply funds to the Company or its
affiliates. Accordingly, the Company's obligations under the Guarantees will
be effectively subordinated to all existing and future liabilities of the
Company's subsidiaries, and claimants should look only to the assets of the
Company for payments thereunder. See "Wells Fargo & Company". Except as
otherwise provided in the applicable Prospectus Supplement, the Guarantees do
not limit the incurrence or issuance of other secured or unsecured debt of the
Company, including Senior Indebtedness, whether under the Indenture, any other
indenture that the Company may enter into in the future or otherwise. See the
Prospectus Supplement relating to any offering of Preferred Securities.
Taken together, the Company's obligations under each series of Junior
Subordinated Debentures, the Indenture, the related Trust Agreement, the
related Expense Agreement and the related Guarantee provide, in the aggregate,
a full, irrevocable and unconditional guarantee on a subordinated basis of all
of the Issuer's obligations under the Preferred Securities. No single document
standing alone or operating in conjunction with fewer than all of the other
documents constitutes such guarantee. It is only the combined operation of
these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Issuer's obligations under the Preferred
Securities. See "Relationship Among the Preferred Securities, the
Corresponding Junior Subordinated Debentures and the Guarantee".
STATUS OF THE GUARANTEES
Each Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all liabilities of the
Company (including obligations under the Junior Subordinated Debentures), with
the exception of any liabilities which expressly by their terms are made pari
passu or subordinate to the obligations of the Company under the Series A
Guarantee.
Each Guarantee will rank pari passu with all other Guarantees issued by the
Company. Each Guarantee will constitute a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal proceeding
directly against the Guarantor to enforce its rights under the Guarantee
without first instituting a legal proceeding against any other person or
entity). Each Guarantee will be held for the benefit of the holders of the
related Preferred Securities. Each Guarantee will not be discharged except by
payment of the Guarantee
31
Payments in full to the extent not paid by the Issuer or upon distribution to
the holders of the Preferred Securities of the Corresponding Junior
Subordinated Debentures. None of the Guarantees places a limitation on the
amount of additional Senior Indebtedness that may be incurred by the Company.
The Company expects from time to time to incur additional indebtedness
constituting Senior Indebtedness.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of the related Preferred Securities (in which case no
vote will be required), no Guarantee may be amended without the prior approval
of the holders of not less than a majority of the aggregate Liquidation Amount
of such outstanding Preferred Securities. The manner of obtaining any such
approval will be as set forth under "Description of the Preferred
Securities -- Voting Rights; Amendment of Each Trust Agreement". All
guarantees and agreements contained in each Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of the Company
and shall inure to the benefit of the holders of the related Preferred
Securities then outstanding.
EVENTS OF DEFAULT
An event of default under each Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder. The
holders of not less than a majority in aggregate Liquidation Amount of the
related Preferred Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of such Guarantee or to direct the exercise of any trust or
power conferred upon the Guarantee Trustee under such Guarantee.
Any holder of the Preferred Securities may institute a legal proceeding
directly against the Company to enforce its rights under such Guarantee
without first instituting a legal proceeding against the Issuer, the Guarantee
Trustee or any other person or entity.
The Company, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not the Company is in compliance with
all the conditions and covenants applicable to it under the Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of a
default by the Company in performance of any Guarantee, undertakes to perform
only such duties as are specifically set forth in each Guarantee and, after
default with respect to any Guarantee, must exercise the same degree of care
and skill as a prudent person would exercise or use in the conduct of his or
her own affairs. Subject to this provision, the Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by any Guarantee at the
request of any holder of any Preferred Securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby.
TERMINATION OF THE GUARANTEES
Each Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price of the related Preferred Securities, upon
full payment of the amounts payable upon liquidation of the related Issuer or
upon distribution of Corresponding Junior Subordinated Debentures to the
holders of the related Preferred Securities. Each Guarantee will continue to
be effective or will be reinstated, as the case may be, if at any time any
holder of the related Preferred Securities must restore payment of any sums
paid under such Preferred Securities or such Guarantee.
GOVERNING LAW
Each Guarantee will be governed by and construed in accordance with the laws
of the State of California.
32
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE CORRESPONDING JUNIOR SUBORDINATED DEBENTURES
AND THE GUARANTEES
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Preferred Securities
(to the extent the Issuer has funds available for the payment of such
Distributions) are irrevocably guaranteed by the Company as and to the extent
set forth under "Description of Guarantees." Taken together, the Company's
obligations under each series of Junior Subordinated Debentures, the
Indenture, the related Trust Agreement, the related Expense Agreement, and the
related Guarantee provide, in the aggregate, a full, irrevocable and
unconditional guarantee on a subordinated basis of payments of Distributions
and other amounts due on the related series of Preferred Securities. No single
document standing alone or operating in conjunction with fewer than all of the
other documents constitutes such guarantee. It is only the combined operation
of these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Issuer's obligations under the Preferred
Securities. If and to the extent that the Company does not make payments on
any series of Corresponding Junior Subordinated Debentures, the related Issuer
will not have funds to pay Distributions or other amounts due on the Related
Preferred Securities. The Guarantees do not cover payment of Distributions
when the related Issuer does not have sufficient funds to pay such
Distributions. In such event, the remedy of a holder of a series of Preferred
Securities is to institute a legal proceeding directly against the Company for
enforcement of payment of a pro-rata portion of the payment due on the
Corresponding Junior Subordinated Debentures.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on each
series of Corresponding Junior Subordinated Debentures, such payments will be
sufficient to cover Distributions and other payments due on the related
Preferred Securities, primarily because (i) the aggregate principal amount of
each series of Corresponding Junior Subordinated Debentures will be equal to
the sum of the aggregate stated Liquidation Amount of the Related Preferred
Securities and related Common Securities; (ii) the interest rate and interest
and other payment dates on each series of Corresponding Junior Subordinated
Debentures will match the Distribution rate and Distribution and other payment
dates for the related Preferred Securities; (iii) under the Expense Agreement,
the Company shall pay for all and any costs, expenses and liabilities of such
Issuer except the Issuer's obligations to holders of its Preferred Securities
under such Preferred Securities; and (iv) each Trust Agreement further
provides that the Issuer will not engage in any activity that is not
consistent with the limited purposes of such Issuer.
Notwithstanding anything to the contrary in the Indenture, the Company has
the right to set-off any payment it is otherwise required to make thereunder
with and to the extent the Company has theretofore made, or is concurrently on
the date of such payment making, a payment under the related Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
A holder of any related Preferred Security may institute a legal proceeding
directly against the Company to enforce its rights under the related Guarantee
without first instituting a legal proceeding against the Guarantee Trustee,
the related Issuer or any other person or entity.
A default or event of default under any Senior Indebtedness of the Company
would not constitute an Event of Default. However, in the event of payment
defaults under, or acceleration of, Senior Indebtedness of the Company, the
subordination provisions of the Indenture provide that no payments may be made
in respect of the Corresponding Junior Subordinated Debentures until such
Senior Indebtedness has been paid in full or any payment default thereunder
has been cured or waived. Failure to make required payments on any series of
Corresponding Junior Subordinated Debentures would constitute an Event of
Default.
33
LIMITED PURPOSE OF ISSUERS
Each Issuer's Preferred Securities evidence a beneficial interest in such
Issuer, and each Issuer exists for the sole purpose of issuing its Preferred
Securities and Common Securities and investing the proceeds thereof in
Corresponding Junior Subordinated Debentures. A principal difference between
the rights of a holder of a Preferred Security and a holder of a Corresponding
Junior Subordinated Debenture is that a holder of a Corresponding Junior
Subordinated Debenture is entitled to receive from the Company the principal
amount of and interest accrued on Corresponding Junior Subordinated Debentures
held, while a holder of Preferred Securities is entitled to receive
Distributions from such Issuer (or from the Company under the applicable
Guarantee) if and to the extent such Issuer has funds available for the
payment of such Distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding-up or liquidation of
any Issuer involving the liquidation of the Corresponding Junior Subordinated
Debentures, after satisfaction of the liability of creditors as required by
applicable law, the holders of the Related Preferred Securities will be
entitled to receive, out of assets held by such Issuer, the Liquidation
Distribution in cash. See "Description of Preferred Securities -- Liquidation
Distribution Upon Termination." Upon any voluntary or involuntary liquidation
or bankruptcy of the Company, the Property Trustee, as holder of the
Corresponding Junior Subordinated Debentures, would be a subordinated creditor
of the Company, subordinated in right of payment to all Senior Indebtedness as
set forth in the Indenture, but entitled to receive payment in full of
principal and interest, before any stockholders of the Company receive
payments or distributions. Since the Company is the guarantor under each
Guarantee and has agreed under the Expense Agreement to pay for all costs,
expenses and liabilities of each Issuer (other than the Issuer's obligations
to the holders of its Preferred Securities), the positions of a holder of such
Preferred Securities and a holder of such Corresponding Junior Subordinated
Debentures relative to other creditors and to stockholders of the Company in
the event of liquidation or bankruptcy of the Company are expected to be
substantially the same.
PLAN OF DISTRIBUTION
The Junior Subordinated Debentures or the Preferred Securities may be sold
in a public offering to or through underwriters or dealers designated from
time to time. The Company and each Issuer may sell its Junior Subordinated
Debentures or Preferred Securities as soon as practicable after effectiveness
of the Registration Statement of which this Prospectus is a part. The names of
any underwriters or dealers involved in the sale of the Junior Subordinated
Debentures or Preferred Securities in respect of which this Prospectus is
delivered, the amount or number of Junior Subordinated Debentures and
Preferred Securities to be purchased by any such underwriters and any
applicable commissions or discounts will be set forth in the Prospectus
Supplement.
Underwriters may offer and sell Junior Subordinated Debentures or Preferred
Securities at a fixed price or prices, which may be changed, or from time to
time at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. In connection with the
sale of Preferred Securities, underwriters may be deemed to have received
compensation from the Company and/or the applicable Issuer in the form of
underwriting discounts or commissions and may also receive commissions.
Underwriters may sell Junior Subordinated Debentures or Preferred Securities
to or through dealers, and such dealers may receive compensation in the form
of discounts, concessions or commissions from the underwriters.
Any underwriting compensation paid by the Company and/or the applicable
Issuer to underwriters in connection with the offering of Junior Subordinated
Debentures or Preferred Securities, and any discounts, concessions or
commissions allowed by such underwriters to participating dealers, will be
described in a Prospectus Supplement. Underwriters and dealers participating
in the distribution of Junior Subordinated Debentures or Preferred Securities
may be deemed to be underwriters, and any discounts and commissions received
by them and any profit realized by them on resale of such Junior Subordinated
Debentures or Preferred Securities may be deemed to be underwriting discounts
and commissions, under the Securities Act. Underwriters
34
and dealers may be entitled, under agreement with the Company and the
applicable Issuer, to indemnification against and contribution toward certain
civil liabilities, including liabilities under the Securities Act, and to
reimbursement by the Company for certain expenses.
In connection with the offering of the Preferred Securities of any Issuer,
such Issuer may grant to the underwriters an option to purchase additional
Preferred Securities to cover over-allotments, if any, at the initial public
offering price (with an additional underwriting commission), as may be set
forth in the accompanying Prospectus Supplement. If such Issuer grants any
over-allotment option, the terms of such over-allotment option will be set
forth in the Prospectus Supplement for such Preferred Securities.
Underwriters and dealers may engage in transactions with, or perform
services for, the Company and/or the applicable Issuer and/or any of their
affiliates in the ordinary course of business.
The Junior Subordinated Debentures and the Preferred Securities will be new
issues of securities and will have no established trading market. Any
underwriters to whom Junior Subordinated Debentures or Preferred Securities
are sold for public offering and sale may make a market in such Junior
Subordinated Debentures and Preferred Securities, but such underwriters will
not be obligated to do so and may discontinue any market making at any time
without notice. Such Junior Subordinated Debentures or Preferred Securities
may or may not be listed on a national securities exchange or the Nasdaq
National Market. No assurance can be given as to the liquidity of or the
existence of trading markets for any Junior Subordinated Debentures or
Preferred Securities.
VALIDITY OF SECURITIES
Unless otherwise indicated in the applicable Prospectus Supplement, certain
legal matters will be passed upon for the Company and the Issuers by Brobeck,
Phleger & Harrison LLP, San Francisco, California, counsel to the Company and
for the Issuers by Richards, Layton & Finger, special Delaware counsel to the
Issuers and the Company. The validity of the Guarantees and the Junior
Subordinated Debentures will be passed upon for the Underwriters by Sullivan &
Cromwell, Los Angeles, California. Brobeck, Phleger & Harrison LLP and
Sullivan & Cromwell will rely on the opinion of Richards, Layton & Finger as
to matters of Delaware law. Sullivan & Cromwell, from time to time, performs
legal services for the Company. Certain matters relating to United States
federal income tax considerations will be passed upon for the Company by
Brobeck, Phleger & Harrison LLP.
EXPERTS
The consolidated financial statements of the Company as of December 31, 1995
and 1994 and for each of the years in the three-year period ended December 31,
1995 incorporated by reference in the Company's Annual Report on Form 10-K for
the year ended December 31, 1995 incorporated by reference herein and
elsewhere in the Registration Statement have been incorporated by reference
herein and in the Registration Statement in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
The consolidated financial statements of First Interstate as of December 31,
1995 and 1994 and for each of the three years in the period ended December 31,
1995 incorporated by reference herein have been incorporated by reference
herein in reliance upon the report of Ernst & Young LLP, independent auditors,
incorporated by reference herein, given upon the authority of said firm as
experts in accounting and auditing.
35
$750,000,000
WELLS FARGO & COMPANY
SENIOR DEBT SECURITIES
SUBORDINATED DEBT SECURITIES
PREFERRED STOCK
WELLS FARGO & COMPANY (the "Company") intends to offer and sell from time to
time its debt securities (the "Notes") and its Preferred Stock, $5.00 par
value ("Preferred Stock"), with an aggregate public offering price of
$750,000,000 (or the equivalent in foreign currencies or composite currencies)
on terms to be determined by market conditions at the time of sale. The Notes
and the Preferred Stock (together the "Offered Securities") may be offered
separately or together, in separate series, in amounts and at prices and terms
to be set forth in an accompanying Prospectus Supplement ("Prospectus
Supplement"). At the option of the Company, the Notes may be issued as senior
debt securities ("Senior Notes") or as subordinated debt securities
("Subordinated Notes"). The Offered Securities may be denominated in United
States dollars or, at the option of the Company, in any other currency, in a
composite currency or in amounts determined by reference to an index which is
specified in the Prospectus Supplement. The specific terms of the Offered
Securities in respect of which this Prospectus is being delivered will be set
forth in an accompanying Prospectus Supplement. The Notes may be convertible
or exchangeable into Preferred Stock or Common Stock of the Company. The
Preferred Stock may be convertible or exchangeable into Notes or Common Stock
of the Company and may be represented by Depositary Shares.
The Offered Securities may be offered and sold directly by the Company or
through one or more underwriters or agents. In addition, the Prospectus
Supplement will set forth the terms of sale of the Offered Securities and the
identity of any underwriters or agents. Any underwriters, dealers or agents
participating in any offering of the Offered Securities may be deemed
"underwriters" within the meaning of the Securities Act of 1933, as amended.
See "Plan of Distribution."
Payment of the principal of the Subordinated Notes may be accelerated only in
the case of certain events of bankruptcy, insolvency or reorganization of the
Company or the Bank. There is no right of acceleration in the case of a
default in the performance of any covenant with respect to the Subordinated
Notes, including the payment of interest or principal. See "Description of
Notes -- Events of Default."
-------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCU-
RACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE OFFERED SECURITIES ARE NOT DEPOSITS OR SAVINGS ACCOUNTS OR
OTHER OBLIGATIONS OF A BANK AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY
OR INSTRUMENTALITY.
-------------------------
This Prospectus may not be used to consummate sales of Offered Securities
unless accompanied by a Prospectus Supplement.
-------------------------
The date of this Prospectus is , 1996.
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and the
Prospectus Supplement in connection with the offering made hereby, and if
given or made, such information or representations must not be relied upon as
having been authorized by the Company or by any underwriters or agents.
Neither the delivery of this Prospectus and the Prospectus Supplement nor any
sale made thereunder shall, under any circumstances, create any implication
that information herein or therein is correct as of any time subsequent to the
date hereof or thereof.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and
other information can be inspected at the Commission's office at 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and the Commission's
Regional Offices in New York (7 World Trade Center, Suite 1300, New York, New
York 10048) and Chicago (Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511), and copies of such material can be obtained
from such facilities and the Public Reference Section of the Commission at 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, at prescribed
rates. Such material may also be accessed electronically by means of the
Commission's home page on the Internet at http://www.sec.gov. In addition,
such reports, proxy statements and other information can be inspected at the
offices of the New York and Pacific Stock Exchanges on which certain of the
Company's securities are listed. This Prospectus does not contain all
information set forth in the Registration Statement and Exhibits thereto which
the Company has filed with the Commission under the Securities Act of 1933 and
to which reference is hereby made.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference in this Prospectus the
following reports filed with the Commission pursuant to Section 13 of the Act:
(i) the Company's Annual Report on Form 10-K for the year ended December 31,
1995, (ii) the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, June 30 and September 30, 1996; (iii) the Company's Current Reports
on Form 8-K filed on January 16, January 24, January 31, February 29, April 1,
April 5, April 10, April 16, July 16, August 9, September 20, September 23,
October 15 and November 15, 1996; and (iv) the consolidated financial
statements of First Interstate Bancorp ("First Interstate") as of December 31,
1995 and 1994 and for each of the years in the three-year period ended
December 31, 1995, as contained in First Interstate's Annual Report on Form
10-K for the year ended December 31, 1995. All documents filed by the Company
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Act subsequent to the
date of this Prospectus and prior to the termination of the offering of the
Offered Securities offered hereby shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
of such documents.
Any person receiving a copy of this Prospectus may obtain without charge,
upon oral or written request, a copy of any of the documents incorporated by
reference herein, except for the exhibits to such documents unless such
exhibits are specifically incorporated by reference into the information that
the Prospectus incorporates. Requests should be directed to Wells Fargo &
Company, Investor/Public Relations, MAC #0163-029, 343 Sansome Street, San
Francisco, California 94163, telephone (415) 396-0560.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
2
WELLS FARGO & COMPANY
Wells Fargo & Company is a bank holding company registered under the Bank
Holding Company Act of 1956, as amended. On April 1, 1996, the Company
completed its acquisition of First Interstate Bancorp ("First Interstate"). On
the basis of assets as of September 30, 1996, the Company was the eighth
largest bank holding company in the United States. As of September 30, 1996,
the Company had loans of $69.2 billion, total assets of $109.2 billion, total
deposits of $83.7 billion and stockholders' equity of $14.9 billion. Its
principal subsidiary is Wells Fargo Bank, National Association (the "Bank").
The Bank is primarily engaged in retail, commercial and corporate banking,
real estate lending and trust and investment services.
The Company is a legal entity separate and distinct from the Bank and its
other affiliates. There are various legal limitations on the extent to which
the Bank may extend credit, pay dividends or otherwise supply funds to the
Company or various of its affiliates. The executive offices of the Company are
located at 420 Montgomery Street, San Francisco, California 94163. The
Company's telephone number is (415) 477-1000.
Since the Company is a holding company, the rights of the Company to
participate in any distribution of assets of any subsidiary upon its
liquidation or reorganization or otherwise (and thus the ability of holders of
the Offered Securities to benefit indirectly from such distribution) are
subject to the prior claims of creditors of that subsidiary, except to the
extent that the Company may itself be a creditor of that subsidiary. Claims on
the Company's subsidiaries by creditors other than the Company include long-
term debt and substantial obligations in respect of federal funds purchased,
securities sold under repurchase agreements and certain other short-term
borrowings, as well as deposit liabilities.
USE OF PROCEEDS
The net proceeds from the sale of the Offered Securities will be used for
general corporate purposes. Specific allocations of the proceeds to such
purposes have not been determined. The net proceeds may be used to reduce
outstanding commercial paper and other debt of the Company. Based upon the
anticipated future funding requirements of the Company and its subsidiaries,
the Company expects that it will, from time to time, engage in additional
financings of a character and in amounts to be determined and that its
commercial paper borrowings and other short-term debt may be increased above
the level prevailing after the initial use of proceeds.
3
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The following sets forth the historical consolidated ratios of earnings to
fixed charges and the historical ratios of earnings to fixed charges and
preferred stock dividends of the Company for the periods indicated:
QUARTER NINE MONTHS
ENDED ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, SEPTEMBER 30, ------------------------
1996 1996 1995 1994 1993 1992 1991
------------- ------------- ---- ---- ---- ---- ----
Consolidated Ratios of
Earnings to Fixed
Charges(1)(3)
Including interest on
deposits.............. 2.02 2.13 2.19 2.20 1.90 1.33 1.02
Excluding interest on
deposits.............. 5.34 5.46 4.56 5.04 4.53 2.56 1.10
Consolidated Ratios of
Earnings to Fixed
Charges and Preferred
Stock Dividends(1)(2)(3)
Including interest on
deposits.............. 1.91 2.02 2.09 2.07 1.77 1.26 1.00
Excluding interest on
deposits.............. 4.28 4.48 3.99 4.18 3.51 2.02 1.01
- --------
(1) For purposes of computing these ratios, earnings represent income before
income tax expense plus fixed charges. Fixed charges represent interest
expense plus the estimated interest component of net rental expense.
(2) The preferred stock dividends are increased to amounts representing the
pretax earnings required to cover such dividends.
(3) These computations are included herein in compliance with Securities and
Exchange Commission regulations. However, management believes the fixed
charge ratios are not meaningful measures for the business of the Company
because of two factors. First, even if there were no change in net income,
the ratios would decline with an increase in the proportion of income
which is tax-exempt or, conversely, they would increase with a decrease in
the proportion of income which is tax-exempt. Second, even if there were
no change in net income, the ratios would decline if interest income and
interest expense increase by the same amount due to an increase in the
level of interest rates or, conversely, they would increase if interest
income and interest expense decrease by the same amount due to a decrease
in the level of interest rates.
4
DESCRIPTION OF NOTES
The Senior Notes will be issued under an Indenture, dated as of September 1,
1984, as amended by the First Supplemental Indenture dated as of April 15,
1986, the Second Supplemental Indenture dated as of June 30, 1987, and the
Third Supplemental Indenture dated as of January 23, 1991 (together, the
"Senior Indenture"), between the Company and The Chase Manhattan Bank
(formerly known as Chemical Bank), as successor Trustee (the "Senior
Trustee"). The Subordinated Notes will be issued under an Indenture dated as
of December 10, 1992 (the "Subordinated Indenture"), between the Company and
Marine Midland Bank, as Trustee (the "Subordinated Trustee"). In this
Prospectus, the Senior Indenture and the Subordinated Indenture are referred
to as the "Indentures." The Senior Trustee and the Subordinated Trustee are
referred to as the "Trustees." As used in this Prospectus, the term "Senior
Notes" means the Senior Notes offered hereby and, unless the context otherwise
requires, any other debt securities heretofore or hereafter issued under the
Senior Indenture, the term "Subordinated Notes" means the Subordinated Notes
offered hereby and, unless the context otherwise requires, any other debt
securities heretofore or hereafter issued under the Subordinated Indenture,
and the term "Notes" means the Notes offered hereby and, unless the context
otherwise requires, any other debt securities heretofore or hereafter issued
under the Indentures; and references to "principal" of the Notes shall be
deemed to include, unless the context otherwise requires, a reference to
premium, if any, on the Notes. Copies of the Indentures and the forms of the
Notes are filed or incorporated by reference as exhibits to the Registration
Statement. The following summaries of certain provisions of the Indentures and
the summary of certain provisions of a particular series of Notes set forth in
the Prospectus Supplement relating thereto do not purport to be complete and
are subject to, and are qualified in their entirety by reference to, all the
provisions of the Indentures and the respective forms of the Notes, including
the definitions therein of certain terms. Whenever particular Sections,
Articles or defined terms of the Indentures are referred to, it is intended
that such Sections, Articles or defined terms shall be incorporated herein by
reference.
GENERAL
The Indentures do not limit the amount of debt securities which can be
issued thereunder and provide that debt securities of any series may be issued
thereunder up to the aggregate principal amount which may be authorized from
time to time by the Company. The Indentures do not limit the amount of other
indebtedness or securities which may be issued by the Company. The Notes may
be issued at various times with different maturity dates and different
principal repayment provisions, may bear interest at different rates, may be
payable in currencies other than United States dollars, in composite
currencies or in amounts determined by reference to an index and may otherwise
vary, all as provided in the Indentures.
The Prospectus Supplement will set forth the following specific terms
regarding the series of Notes offered thereby: (i) the designation and
aggregate principal amount of Notes of such series; (ii) the ranking of the
Notes as Senior Notes or Subordinated Notes; (iii) the percentage of their
principal amount at which such Notes will be issued; (iv) the date or dates on
which such Notes will mature, if any; (v) the rate per annum or the method of
determining the rate or rates per annum, if any, at which such Notes will bear
interest; (vi) the dates from and on which such interest, if any, will accrue
and be payable and the designated record dates for such interest payments;
(vii) the currency (which may be a composite currency) in which payment of
principal and interest, if any, shall be payable if other than United States
dollars; (viii) the index, if any, upon which the amount of principal or
interest is determined; (ix) any redemption terms; (x) any conversion or
exchange provisions; (xi) provisions for issuance of global securities; and
(xii) other specific terms. If so indicated in the applicable Prospectus
Supplement, the terms of the Notes offered thereby may differ from those set
forth herein.
Some of the Notes may be issued as discounted Notes (bearing no interest or
interest at a rate which at the time of issuance is below market rates) to be
sold at a discount below their stated principal amount. Some of the Notes may
be perpetual and have no stated maturity. Federal income tax consequences and
other special considerations applicable to such perpetual or discounted Notes
will be described in the Prospectus Supplement relating thereto.
5
Interest on the Notes of any series will be payable to the persons in whose
names the Notes are registered at the close of business on the record date
designated for an interest payment date (Section 2.03). The Notes may be
presented for the payment of principal and interest, if any, transfer and
exchange at the offices or agencies of the Company maintained for such
purposes in San Francisco and New York City. Payment of any installment of
interest may be made at the option of the Company by check, mailed to the
address of the person entitled thereto as it appears on the Register of the
Notes of such series (Sections 2.05, 4.01 and 4.02). The Notes will be issued
in fully registered form, without coupons, in denominations of $1,000 and any
whole multiple of $1,000, unless different authorized denominations are stated
in the Prospectus Supplement. No service charge will be made for any exchange
or registration of transfer of a Note, but the Company may require payment of
a sum sufficient to cover any tax or other governmental charge (Section 2.05).
The Indentures provide that if a series of Notes is denominated in a currency
other than United States dollars or in a composite currency, in the absence of
a contrary provision in the Notes any action or distribution under the
Indentures will be based on the relative amount of United States dollars that
could be obtained on such reasonable basis of exchange on such date as is
specified by the Company to the Trustee (Sections 14.10 of the Senior
Indenture and 16.10 of the Subordinated Indenture).
All of the Notes will be unsecured general obligations of the Company. The
Senior Notes will not be subordinated in right of payment to any other
indebtedness of the Company. Unless otherwise set forth in the applicable
Prospectus Supplement, neither the Indentures nor the Notes contain provisions
which would afford holders of the Notes protection in the event of a takeover,
recapitalization or similar restructuring involving the Company which could
adversely affect the Notes.
SUBORDINATION OF SUBORDINATED NOTES
The obligation of the Company to make any payment on account of the
principal of and interest on the Subordinated Notes of any series will be
subordinate and junior in right of payment to the Company's obligations to the
holders of Senior Indebtedness of the Company to the extent described in the
next paragraph. Senior Indebtedness of the Company includes the Senior Notes
and means (i) any indebtedness of the Company for borrowed or purchased money,
whether or not evidenced by bonds, debentures, notes or other written
instruments, (ii) obligations under letters of credit, (iii) any indebtedness
or other obligations of the Company with respect to commodity contracts,
interest rate and currency swap agreements, cap, floor and collar agreements,
currency spot and forward contracts, and other similar agreements or
arrangements designed to protect against fluctuations in currency exchange or
interest rates, and (iv) any guarantees, endorsements (other than by
endorsement of negotiable instruments for collection in the ordinary course of
business) or other similar contingent obligations in respect of obligations of
others of a type described in (i), (ii) or (iii) above, whether or not such
obligation is classified as a liability on a balance sheet prepared in
accordance with generally accepted accounting principles, in each case listed
in (i), (ii), (iii) and (iv) above, whether outstanding on the date of
execution of the Subordinated Indenture or thereafter incurred, other than
obligations "ranking on a parity" with the Subordinated Notes or "ranking
junior" to the Subordinated Notes (as those terms are defined in the
Subordinated Indenture) (Section 1.01). The definition of senior indebtedness
in certain previously issued subordinated debt of the Company (the "Prior
Subordinated Debt", which term excludes any Subordinated Notes issued under
the Subordinated Indenture) includes only indebtedness of or guaranteed by the
Company for borrowed money and any deferred obligation for the payment of the
purchase price of property or assets, other than obligations ranking on a
parity with or junior to such subordinated indebtedness. As a result of this
difference, the holders of Subordinated Notes are subordinated to greater
amounts of senior indebtedness of the Company than holders of such Prior
Subordinated Debt and, under the circumstances described in the following
paragraph, holders of Subordinated Notes may receive less, ratably, than
holders of such Prior Subordinated Debt. As of September 30, 1996, there was
$2.5 billion of Senior Indebtedness of the Company and $2.9 billion of
obligations ranking on a parity (as defined in the Subordinated Indenture)
with the Subordinated Notes. The Subordinated Indenture does not limit the
amount of Senior Indebtedness of the Company.
In the case of any insolvency, receivership, conservatorship,
reorganization, readjustment of debt, marshalling of assets and liabilities or
similar proceedings or any liquidation or winding-up of or relating to the
6
Company as a whole, whether voluntary or involuntary, all obligations of the
Company to holders of Senior Indebtedness of the Company shall be entitled to
be paid in full before any payment shall be made on account of the principal
of or interest on the Subordinated Notes. In the event of any such proceeding,
after payment in full of all sums owing with respect to Senior Indebtedness of
the Company, the holders of the Subordinated Notes, together with the holders
of any obligations of the Company ranking on a parity with the Subordinated
Notes, shall be entitled to be paid from the remaining assets of the Company
the amounts at the time due and owing on account of unpaid principal of and
interest on the Subordinated Notes before any payment or other distribution,
whether in cash, property or otherwise, shall be made on account of any
capital stock or any obligations of the Company ranking junior to the
Subordinated Notes (Section 14.01). By reason of such subordination, in the
event of the insolvency of the Company, holders of Senior Indebtedness of the
Company may receive more, ratably, and holders of the Subordinated Notes
having a claim pursuant to the Subordinated Notes may receive less, ratably,
than the other creditors of the Company. Such subordination will not prevent
the occurrence of any Event of Default in respect of the Subordinated Notes
(Section 14.10).
GLOBAL SECURITIES
The Notes of a series may be issued in whole or in part in the form of one
or more global securities ("Global Security") that will be deposited with, or
on behalf of, a depositary identified in the Prospectus Supplement relating to
such series. Global Securities will be issued in registered form and in either
temporary or definitive form. Unless and until it is exchanged in whole or in
part for Notes in definitive form, a Global Security may not be transferred
except as a whole by the depositary for such Global Security to a nominee of
such depositary or by a nominee of such depositary to such depositary or
another nominee of such depositary or by such depositary or any such nominee
to a successor of such depositary or a nominee of such successor (Sections
2.02 and 2.05).
The specific terms of the depositary arrangement with respect to any Notes
of a series will be described in the Prospectus Supplement relating to such
series. The Company anticipates that the following provisions will apply to
all depositary arrangements.
Upon the issuance of a Global Security, the depositary for such Global
Security will credit, on its book-entry registration and transfer system, the
respective principal amounts of the Notes represented by such Global Security
to the accounts of institutions that have accounts with such depositary
("Participants"). The accounts to be credited shall be designated by the
underwriters of such Notes, by certain agents of the Company or by the
Company, if such Notes are offered and sold directly by the Company. Ownership
of beneficial interests in a Global Security will be limited to Participants
or persons that may hold interests through Participants. Ownership of
beneficial interests in such Global Security will be shown on, and the
transfer of that ownership will be effected only through, records maintained
by the depositary with respect to Participants' interests in such Global
Security or by Participants or by persons that hold through Participants with
respect to beneficial owners' interests. The laws of some states require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such ownership limits and such laws may impair the ability to
transfer beneficial interests in a Global Security.
So long as the depositary for a Global Security, or its nominee, is the
holder of such Global Security, such depositary or such nominee, as the case
may be, will be considered the sole owner or holder of the Notes represented
by such Global Security for all purposes under the Indenture governing such
Notes. Except as set forth below, owners of beneficial interests in a Global
Security will not be entitled to have Notes of the series represented by such
Global Security registered in their names, will not receive or be entitled to
receive physical delivery of Notes of such series in definitive form and will
not be considered the owners or holders thereof under the Indenture governing
such Notes.
Principal and interest payments on Notes registered in the name of or held
by a depositary or its nominee will be made to the depositary or its nominee,
as the case may be, as the registered owner of the Global Security
representing such Notes. The Company expects that the depositary for Notes of
a series, upon receipt of any
7
payment of principal or interest in respect of a Global Security, will
immediately credit Participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Security as shown on the records of such depositary. The
Company also expects that payments by Participants or persons who hold
interests through Participants to owners of beneficial interests in such
Global Security held through such Participants or persons will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of such Participants or persons.
None of the Company, the Trustee for such Notes, any paying agent or any
registrar for such Notes will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in a Global Security for such Notes or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
If a depositary for Notes of a series is at any time unwilling or unable to
continue as depositary and a successor depositary is not appointed by the
Company within 90 days, the Company will issue Notes of such series in
definitive form in exchange for the Global Security or Securities representing
the Notes of such series. In addition, the Company may at any time and in its
sole discretion determine not to have any Notes of a series represented by one
or more Global Securities and, in such event, will issue Notes of such series
in definitive form in exchange for the Global Security or Securities
representing such Notes.
CONVERSION AND EXCHANGE
The terms, if any, on which Notes of any series are convertible into or
exchangeable for Common Stock or Preferred Stock will be set forth in the
Prospectus Supplement relating thereto. Such terms may include provisions for
conversion or exchange, either mandatory, at the option of the holder, or at
the option of the Company, in which the number of shares of Common Stock or
Preferred Stock to be received by the holders of Notes would be calculated
according to the market price of Common Stock or Preferred Stock as of a time
stated in the Prospectus Supplement relating thereto.
LIMITATION ON SALE OR ISSUANCE OF CAPITAL STOCK OR CONVERTIBLE SECURITIES OF,
AND MERGER OR SALE OF ASSETS BY, THE BANK
The Senior Indenture contains a covenant that (i) the Company will not, and
will not permit the Bank to issue, sell, transfer, assign, pledge or otherwise
dispose of any shares of Capital Stock of any class of the Bank or any
securities convertible or exchangeable into shares of Capital Stock of any
class of the Bank, unless, after giving effect to such transaction and to
shares issuable upon conversion or exchange of outstanding securities
convertible or exchangeable into such Capital Stock (including such
securities, if any, which may be the subject of such transaction), at least
80% of the outstanding shares of Capital Stock of each class of the Bank shall
be owned at that time directly or indirectly by the Company; and (ii) the
Company will not permit the Bank to merge or consolidate or convey or transfer
all or substantially all of its assets, unless at least 80% of the outstanding
shares of Capital Stock of each class (after giving effect to such transaction
and to shares issuable upon conversion or exchange of outstanding securities
convertible or exchangeable into Capital Stock, including such securities, if
any, which may be issued in such transaction) of the surviving corporation in
the case of merger or consolidation or of the transferee corporation in the
case of a conveyance or transfer shall be owned at that time directly or
indirectly by the Company (Section 4.07 of the Senior Indenture). There is no
similar covenant in the Subordinated Indenture.
EVENTS OF DEFAULT
An Event of Default with respect to any series of Senior Notes is defined in
the Senior Indenture as being: (a) default for 30 days in payment of any
installment of interest on Senior Notes of such series; (b) default in payment
of any principal on Senior Notes of such series; (c) default by the Company in
performance in any material respect of any of the covenants or agreements in
the Senior Notes or in the Senior Indenture specifically contained therein for
the benefit of the Senior Notes of such series which shall not have been
remedied for a
8
period of 90 days after written notice to the Company by the Trustee or to the
Company and the Trustee by the holders of not less than 25% in principal
amount of the Senior Notes of such series and all other series so benefited
(all such series voting as one class) then outstanding; or (d) certain events
of bankruptcy, insolvency or reorganization of the Company or of the Bank
(Section 6.01 of the Senior Indenture). No Event of Default described in
clause (a), (b) or (c) above with respect to a particular series of Senior
Notes necessarily constitutes an Event of Default with respect to any other
series of Senior Notes. In addition, the Senior Indenture also defines an
Event of Default with respect to any series of Senior Notes as being default
in the payment of any indebtedness for borrowed money of the Company
(including a default with respect to Senior Notes of any series other than
such series) or of the Bank in principal amount in excess of $1,000,000 and
the expiration of any period of grace with respect thereto, or the occurrence
of any event of default as defined in any mortgage, indenture or instrument
(including the Senior Indenture) evidencing, securing or under which there is
issued any indebtedness for borrowed money of the Company or of the Bank in
principal amount in excess of $1,000,000 that results in the acceleration of
such indebtedness, and such default in payment is not cured or such
acceleration is not rescinded or annulled within 10 days after written notice
to the Company by the Trustee or to the Company and the Trustee by the holders
of not less than 25% in principal amount of all Senior Notes then outstanding
(all series voting as one class), provided that so long as the Company or the
Bank, as the case may be, is contesting in good faith such default in payment
or event of default and the Company delivers to the Trustee a certificate that
the Company or the Bank, as the case may be, is contesting in good faith the
existence of such payment default or event of default, then no Event of
Default shall be deemed to exist under this clause; such Event of Default is
herein called a "Cross Default."
The Senior Indenture provides that if an Event of Default under clause (a),
(b) or (c) above shall have occurred and be continuing (but only if, in the
case of clause (c), the Event of Default is with respect to less than all
series of Senior Notes then outstanding under such Indenture), either the
Trustee or the holders of not less than 25% in principal amount of the then
outstanding Senior Notes of the series as to which the Event of Default has
occurred (each such series voting as a separate class in the case of an Event
of Default under clause (a) or (b), and all such series voting as one class in
the case of an Event of Default under clause (c)) may declare the principal
(or portion thereof specified in the terms of such series) of all the Senior
Notes of such series, or of all such series in the case of an Event of Default
under clause (c) above, in each case together with any accrued interest, to be
due and payable immediately. The Senior Indenture also provides that if an
Event of Default under clause (c) or (d) above or the Cross Default clause
shall have occurred and be continuing (but only if, in the case of clause (c),
the Event of Default is with respect to all the Senior Notes then outstanding
under the Senior Indenture), either the Trustee or the holders of not less
than 25% in principal amount of all the Senior Notes then outstanding (voting
as one class) may declare the principal (or portion thereof specified in the
terms of any series) of all the Senior Notes, together with any accrued
interest, to be due and payable immediately. Upon certain conditions, such
declaration (including a declaration caused by a default in the payment of
principal or interest, the payment for which has subsequently been provided)
may be annulled by the holders of a majority in principal amount of the Senior
Notes of the series then outstanding as were entitled to declare such default
(such series or all series voting as one class, if more than one series is so
entitled). In addition, past defaults may be waived by the holders of a
majority in principal amount of the Senior Notes of all series then
outstanding (all series voting as one class), except a default in the payment
of principal of or interest on the Senior Notes or in respect of a covenant or
provision of the Senior Indenture which cannot be modified or amended without
the consent of the holder of each Senior Note so affected (Sections 6.01 and
6.06 of the Senior Indenture).
An Event of Default with respect to any series of Subordinated Notes is
defined in the Subordinated Indenture as being: (a) default for 30 days in
payment of any installment of interest on Subordinated Notes of such series;
(b) default in payment of any principal on Subordinated Notes of such series;
(c) default by the Company in performance in any material respect of any of
the covenants or agreements in the Subordinated Notes or in the Subordinated
Indenture specifically contained therein for the benefit of the Subordinated
Notes of such series which shall not have been remedied for a period of 90
days after written notice to the Company by the Trustee or to the Company and
the Trustee by the holders of not less than 25% in principal amount of the
Subordinated Notes of such series and all other series so benefited (all such
series voting as one class) then
9
outstanding; or (d) certain events of bankruptcy, insolvency or reorganization
of the Company or the Bank (Section 6.01 of the Subordinated Indenture). No
Event of Default described in clause (a), (b) or (c) above with respect to a
particular series of Subordinated Notes necessarily constitutes an Event of
Default with respect to any other series of Subordinated Notes. No Event of
Default described in clause (a), (b) or (c) above permits acceleration of the
payment of principal of the Subordinated Notes. The Subordinated Indenture
provides that if an Event of Default under clause (d) above shall have
occurred and be continuing, either the Trustee or the holders of not less than
25% in principal amount of all the then outstanding Subordinated Notes of each
series as to which such Event of Default has occurred (voting as one class)
may declare the principal (or a portion thereof specified in the terms of any
series) of all Subordinated Notes as to which such Event of Default under
clause (d) has occurred, together with any accrued interest, to be due and
payable immediately. Upon certain conditions, such declaration may be annulled
by a majority in principal amount of the Subordinated Notes of the series then
outstanding as were entitled to declare such Event of Default (such series or
all series voting as one class, if more than one series is so entitled). In
addition, past defaults may be waived by the holders of a majority in
principal amount of the Subordinated Notes of all series then outstanding as
to which the default has occurred (all series voting as one class), except a
default in the payment of principal or interest on any such Subordinated Notes
or in respect of a covenant or provision of the Subordinated Indenture which
cannot be modified or amended without the consent of the holder of each
Subordinated Note so affected (Sections 6.01 and 6.06 of the Subordinated
Indenture).
As a result of the provisions stated in the prior paragraph, the
Subordinated Indenture does not provide for any right to accelerate the
payment of principal of the Subordinated Notes upon a default in payment of
principal or interest or in the performance of any covenant or agreement in
the Subordinated Notes or the Subordinated Indenture, or upon a default in the
payment or acceleration of other indebtedness of the Company. In the case of a
default in the payment of principal or interest, the Trustee, subject to
certain limitations and conditions, may institute judicial proceedings to
enforce payment of such principal or interest (Section 6.02 of the
Subordinated Indenture).
Each Indenture contains a provision entitling the Trustee, subject to the
duty of the Trustee during default to act with the required standard of care,
to be indemnified by the holders of Notes issued under such Indenture before
proceeding to exercise any right or power under the Indenture at the request
of such holders (Section 7.02). Each Indenture also provides that the holders
of a majority in principal amount of the outstanding Notes issued thereunder
of all series affected (voting as one class) 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 the
Notes of such series (Section 6.06).
Each Indenture contains a covenant that the Company will file annually with
the Trustee a certificate as to the absence of any default or specifying any
default that exists (Section 4.06).
MODIFICATION OF THE INDENTURE AND WAIVER
Each Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than 66 2/3% in principal amount
of the Notes of all series then outstanding under such Indenture affected by
such supplemental indenture (voting as one class), to execute supplemental
indentures adding any provisions to or changing or eliminating any of the
provisions of such Indenture or modifying the rights of the holders of Notes
of each such series, except that no such supplemental indenture may (i) extend
the fixed maturity of any Notes, or reduce the rate or extend the time of
payment of any interest thereon or on any overdue principal amount, or reduce
the principal amount thereof, or reduce any amount payable upon any redemption
thereof, or change the currency of payment of principal of or any interest
thereon or on any overdue principal amount, without the consent of the holder
of each Note so affected, or (ii) reduce the aforesaid percentage of Notes,
the holders of which are required to consent to any such supplemental
indenture, without the consent of the holders of all outstanding Notes under
such Indenture (Section 10.02).
10
Each Indenture provides that the Company may omit in any particular instance
to comply with any covenant or condition specifically contained in such
Indenture for the benefit of one or more series of Notes (including in the
case of the Senior Indenture, the covenant described above under "Limitation
on Sale or Issuance of Capital Stock or Convertible Securities of, and Merger
or Sale of Assets by, the Bank") if before the time for such compliance the
holders of a majority in principal amount of the Notes of all series then
outstanding under such Indenture, and, in the case of the Subordinated
Indenture, affected by the omission (voting as one class) waive such
compliance in such instance, but such waiver shall not extend to or affect
such covenant or condition except to the extent so expressly waived (Section
4.08 of the Senior Indenture and Section 4.07 of the Subordinated Indenture).
CONSOLIDATION, MERGER AND SALE OF ASSETS
Each Indenture provides that the Company may not merge or consolidate or
sell or convey all or substantially all of its assets unless the successor
corporation (if other than the Company) is a domestic corporation, assumes the
Company's obligations under such Indenture and on the Notes issued under such
Indenture, and, after giving effect to such transaction, the Company or the
successor corporation would not be in default under such Indenture (Section
11.01).
CONCERNING THE TRUSTEES
The Chase Manhattan Bank (formerly known as Chemical Bank) is the successor
Trustee under the Senior Indenture. Notices to the Senior Trustee should be
directed to The Chase Manhattan Bank, Corporate Trust Department, 450 West
33rd Street, New York, New York 10001, Attention: Vice President. The Company
and the Bank maintain deposit accounts and conduct other banking transactions
with the Senior Trustee in the ordinary course of business. Marine Midland
Bank is the Trustee under the Subordinated Indenture. Notices to the
Subordinated Trustee should be directed to Marine Midland Bank, 140 Broadway,
New York, New York 10015, Attention: Vice President -- Corporate Trust
Administration. The Bank has entered into correspondent banking relationships
with the Subordinated Trustee and with its corporate parent, The Hong Kong and
Shanghai Banking Corporation Limited ("HSBC"), involving various banking
transactions in the ordinary course of business. As part of their
relationship, the Bank and HSBC have an arrangement providing for the referral
of customers to each other. The Company and the parent of HSBC have
established a jointly owned trade bank with principal offices in San Francisco
called Wells Fargo HSBC Trade Bank, N.A.
DESCRIPTION OF PREFERRED STOCK
The following description of Preferred Stock sets forth certain general
terms and provisions of the series of Preferred Stock to which any Prospectus
Supplement may relate. The specific terms of a particular series of Preferred
Stock will be described in the Prospectus Supplement relating to such series
of Preferred Stock. If so indicated in the Prospectus Supplement relating
thereto, the terms of any such series of Preferred Stock may differ from the
terms set forth below. The description of Preferred Stock set forth below and
the description of the terms of a particular series of Preferred Stock set
forth in the Prospectus Supplement relating thereto do not purport to be
complete and are qualified in their entirety by reference to the Company's
Restated Certificate of Incorporation, as amended (the "Certificate of
Incorporation"), and the Certificate of Designation relating to such series of
Preferred Stock, which are filed or incorporated by reference as an exhibit to
the Registration Statement of which this Prospectus is a part.
GENERAL
The Company is authorized to issue 25,000,000 shares of Preferred Stock. The
Board of Directors has the authority to issue Preferred Stock in one or more
series and to fix the specific number of shares, title, liquidation preference
of each share, issue price, dividend rate or rates (or method of calculation),
dividend periods, dividend payment dates, any redemption or sinking fund
provisions, any conversion provisions and any other specific
11
terms of any series without any further action by stockholders of the Company
unless action is required by applicable laws or regulations or by the terms of
other outstanding preferred stock. As of the date of this Prospectus, the
Company had five series of Preferred Stock outstanding consisting of 1,500,000
shares of Adjustable Rate Cumulative Preferred Stock, Series B ("Adjustable
Rate Preferred Stock"), 477,500 shares of 9% Preferred Stock, Series C ("9%
Preferred Stock") represented by 9,550,000 Depositary Shares each representing
a one-twentieth interest in a share of 9% Preferred Stock, 350,000 shares of 8
7/8% Preferred Stock, Series D (the "8 7/8% Preferred Stock" and together with
the 9% Preferred Stock, the "Fixed Rate Preferred Stock") represented by
7,000,000 Depositary Shares each representing a one-twentieth interest in a
share of 8 7/8% Preferred Stock, 750,000 shares of 9% Preferred Stock, Series
G ("9% Series G Preferred Stock") represented by 6,000,000 Depositary Shares
each representing a one-eighth interest in a share of 9% Series G Preferred
Stock and 4,000,000 shares of Fixed/Adjustable Rate Non-cumulative Preferred
Stock, Series H (the "Fixed/Adjustable Rate Preferred Stock"). The Adjustable
Rate Preferred Stock has a liquidation preference of $50 per share, the Fixed
Rate Preferred Stock has a liquidation preference of $500 per share or $25 per
Depositary Share, the 9% Series G Preferred Stock has a liquidation preference
of $200 per share or $25 per Depositary Share and the Fixed/Adjustable Rate
Preferred Stock has a liquidation preference of $50 per share. The 9%
Preferred Stock has been called for redemption by the Company on December 31,
1996. See "Description of Capital Stock -- Existing Preferred Stock." Unless
otherwise specified in the Prospectus Supplement relating thereto, the shares
of each series of Preferred Stock will rank on a parity as to dividends and
distributions of assets with each other and with the Adjustable Rate Preferred
Stock, the Fixed Rate Preferred Stock and the New Wells Fargo Preferred Stock.
The Company may call the other series of Preferred Stock for redemption on
dates from the date of this Prospectus to October 1, 2001.
The Prospectus Supplement will set forth the following specific terms
regarding the series of Preferred Stock offered thereby: (i) the designation,
number of shares and liquidation preference per share; (ii) the initial public
offering price; (iii) the dividend rate or rates, or the method of determining
the dividend rate or rates; (iv) the index, if any, upon which the amount of
dividends, if any, is determined; (v) the dates on which dividends, if any,
will accrue and be payable and the designated record dates for determining the
holders entitled to such dividends; (vi) any redemption or sinking fund
provisions; (vii) any conversion or exchange provisions; (viii) whether the
Company has elected to offer Depositary Shares as described under "Description
of Depositary Shares"; (ix) provisions for issuance of global securities; (x)
the currency (which may be composite currency) in which payment of dividends,
if any, shall be payable if other than United States dollars; (xi) voting
rights, if different from those described under "Description of Preferred
Stock -- Voting Rights"; and (xii) any additional terms, preferences or
rights.
As described under "Description of Depositary Shares," the Company may, at
its option, elect to offer depositary shares ("Depositary Shares") evidenced
by depositary receipts ("Depositary Receipts"), each representing a fractional
interest (to be specified in the Prospectus Supplement relating to the
particular series of the Preferred Stock) in a share of the particular series
of the Preferred Stock issued and deposited with a Depositary (as defined
below).
Under regulations adopted by the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"), if the holders of shares of any series
of preferred stock of the Company become entitled to vote for the election of
directors because the Board of Directors of the Company has failed to declare
or pay dividends on such series (see "Description of Preferred Stock Voting
Rights"), such series may then be deemed a class of "voting securities" and a
holder of 25 percent or more of such series (or a holder of five percent or
more if it otherwise exercises a "controlling influence" over the Company) may
then be subject to regulation as a bank holding company in accordance with the
Bank Holding Company Act of 1956, as amended. In addition, at such time as
such series is deemed a class of voting securities, any other bank holding
company may be required to obtain the prior approval of the Federal Reserve
Board to acquire five percent or more of such series and any person other than
a bank holding company may be required to obtain the prior approval of the
Federal Reserve Board to acquire ten percent or more of such series.
12
The shares of Preferred Stock will, when issued, be fully paid and
nonassessable and will have no preemptive rights.
The transfer agent, registrar, dividend disbursing agent and redemption
agent for the Preferred Stock will be specified in the Prospectus Supplement
relating thereto.
DIVIDENDS
The holders of the Preferred Stock of each series will be entitled to
receive, when, as and if declared by the Board of Directors of the Company,
out of funds legally available therefor, cumulative or non-cumulative cash or
other dividends at such rate or rates and on such dates as will be set forth
in the Prospectus Supplement relating to such series. Such rates may be fixed
or variable or both. If variable, the formula used for determining the
dividend rate for each dividend period will be set forth in the Prospectus
Supplement. Dividends will be payable to the holders of record as they appear
on the stock books of the Company on such record dates as will be fixed by the
Board of Directors of the Company and specified in the Prospectus Supplement.
If the Board of Directors of the Company fails to declare a dividend payable
on a dividend payment date on any series of the Preferred Stock for which
dividends are noncumulative ("Noncumulative Preferred Stock"), then the
holders of such series of the Preferred Stock will have no right to receive a
dividend in respect of the dividend period ending on such dividend payment
date, and the Company will have no obligation to pay a dividend for such
period, whether or not dividends on such series are declared payable on any
future dividend payment dates.
No dividends may be declared in respect of any dividend period on any other
series or class of preferred stock ranking on a parity as to dividends with
the Preferred Stock, Adjustable Rate Preferred Stock, Fixed Rate Preferred
Stock or New Wells Fargo Preferred Stock unless full cumulative dividends on
all outstanding shares of each series of Preferred Stock on which dividends
are cumulative and on the Adjustable Rate Preferred Stock, the Fixed Rate
Preferred Stock and the New Wells Fargo Preferred Stock shall have been paid
in full or contemporaneously are declared and paid through the most recent
dividend payment date, unless otherwise indicated in the Prospectus
Supplement. In the event that full cumulative dividends on such Preferred
Stock, Adjustable Rate Preferred Stock, Fixed Rate Preferred Stock or New
Wells Fargo Preferred Stock have not been declared and paid or set apart when
due, the Company may not declare or pay any dividends on, or make other
distributions on or make any payment on account of the purchase, redemption,
or other retirement, of its Common Stock or any other stock of the Company
ranking as to dividends or upon liquidation junior to such Preferred Stock,
Adjustable Rate Preferred Stock, Fixed Rate Preferred Stock or New Wells Fargo
Preferred Stock (other than, in the case of dividends or distributions,
dividends or distributions paid in shares of, or options, warrants or rights
to subscribe for or purchase shares of, Common Stock or such other junior
ranking stock), until full cumulative dividends on such Preferred Stock,
Adjustable Rate Preferred Stock, Fixed Rate Preferred Stock and New Wells
Fargo Preferred Stock are made or set apart for payment, unless otherwise
indicated in the Prospectus Supplement.
When dividends are not paid in full upon any series of Preferred Stock, the
Adjustable Rate Preferred Stock, the Fixed Rate Preferred Stock, the New Wells
Fargo Preferred Stock and any other preferred stock ranking on a parity
therewith all dividends declared or made upon shares of Preferred Stock,
Adjustable Rate Preferred Stock, Fixed Rate Preferred Stock, New Wells Fargo
Preferred Stock and any other series of preferred stock ranking on a parity
therewith shall be declared pro rata so that the amount of dividends declared
per share on Preferred Stock, Adjustable Rate Preferred Stock, Fixed Rate
Preferred Stock, New Wells Fargo Preferred Stock and such other preferred
stock shall in all cases bear to each other the same ratio that accrued
dividends per share (which, in the case of Noncumulative Preferred Stock,
shall not include any accumulation in respect of unpaid dividends for prior
dividend periods) on shares of each series of the Preferred Stock, Adjustable
Rate Preferred Stock, Fixed Rate Preferred Stock, New Wells Fargo Preferred
Stock and such other preferred stock bear to each other. No interest shall be
payable in respect of any dividend payment which may be in arrears unless
otherwise indicated in the Prospectus Supplement.
13
REDEMPTION
The shares of any series of Preferred Stock may be redeemable at the option
of the Company and may be subject to mandatory redemption pursuant to a
sinking fund or otherwise, in each case upon the terms, on the date or dates
and at the redemption price or prices set forth in the Prospectus Supplement
relating to such series. If fewer than all shares of Preferred Stock are to be
redeemed, the shares to be redeemed shall be selected by the Company pro rata
or by lot, or by any other method determined by the Board of Directors to be
equitable.
Under regulations of the Federal Reserve Board, any perpetual preferred
stock with a feature permitting redemption at the option of the issuer may
qualify as Tier 1 capital only if the redemption is subject to prior approval
of the Federal Reserve Board. Therefore, any redemption of Preferred Stock at
the option of the Company will require the prior approval of the Federal
Reserve Board in order for the Preferred Stock to qualify as Tier 1 capital
for bank regulatory purposes.
If any dividends on shares of any series of Preferred Stock are in arrears,
no shares of Common Stock or shares of capital stock ranking junior to or on
parity with the Preferred Stock shall be redeemed and no shares of such series
of Preferred Stock shall be redeemed unless all outstanding shares of such
series are simultaneously redeemed, and the Company shall not purchase or
otherwise acquire any shares of such series; provided, however, that the
foregoing shall not prevent the purchase or acquisition of shares of such
series pursuant to a purchase or exchange offer made on the same terms to
holders of all outstanding shares of such series.
Notice of redemption shall be given by mailing the same to each record
holder of the shares to be redeemed, not less than 40 nor more than 70 days
prior to the date fixed for redemption thereof (and, in the case of New Wells
Fargo Preferred Stock, not less than 40 nor more than 60 days' notice), to the
respective addresses of such holders as the same shall appear on the Company's
stock books. Each such notice shall state: (i) the redemption date; (ii) the
number of shares and series of the Preferred Stock to be redeemed; (iii) the
redemption price and the manner in which such redemption price is to be paid
and delivered; (iv) the place or places where certificates for such shares of
Preferred Stock are to be surrendered for payment of the redemption price; and
(v) that dividends on the shares to be redeemed will cease to accrue on such
redemption date. If fewer than all shares of any series of the Preferred Stock
held by any holder are to be redeemed, the notice mailed to such holder shall
also specify the number of shares to be redeemed from such holder.
If notice of redemption has been given, from and after the redemption date
for the shares of the series of the Preferred Stock called for redemption
(unless default shall be made by the Company in providing money for the
payment of the redemption price of the shares so called for redemption),
dividends on the shares of Preferred Stock so called for redemption will cease
to accrue, any right to convert the shares of Preferred Stock will terminate,
such shares will no longer be deemed to be outstanding, and all rights of the
holders thereof as stockholders of the Company (except the right to receive
the redemption price) will cease. Upon surrender in accordance with such
notice of the certificates representing any shares so redeemed (properly
endorsed or assigned for transfer, if the Board of Directors of the Company
will so require and the notice shall so state), the redemption price set forth
above will be paid out of funds provided by the Company. If fewer than all of
the shares represented by any such certificate are redeemed, a new certificate
will be issued representing the unredeemed shares without cost to the holder
thereof.
LIQUIDATION PREFERENCE
Upon any liquidation, dissolution or winding up of the Company, the holders
of shares of each series of Preferred Stock and of the Adjustable Rate
Preferred Stock, the Fixed Rate Preferred Stock and the New Wells Fargo
Preferred Stock shall be entitled to receive out of the assets of the Company
available for distribution to stockholders, before any distribution of assets
is made to or set apart for the holders of Common Stock or of any other shares
of stock of the Company ranking as to such a distribution junior to the shares
of such series, with respect to the Preferred Stock, an amount described in
the Prospectus Supplement relating to such series of Preferred Stock, and with
respect to the Adjustable Rate Preferred Stock, Fixed Rate Preferred Stock and
New
14
Wells Fargo Preferred Stock, an amount equal to the liquidation value of such
shares. See "Description of Capital Stock -- Existing Preferred Stock." If, in
any case of any such liquidation, dissolution or winding up of the Company,
the assets of the Company or the proceeds thereof shall be insufficient to pay
in full the amounts payable with respect to shares of each series of Preferred
Stock, Adjustable Rate Preferred Stock, Fixed Rate Preferred Stock and New
Wells Fargo Preferred Stock and any other shares of stock of the Company
ranking as to any such distribution on a parity therewith, the holders of
shares of such series of Preferred Stock, Adjustable Rate Preferred Stock,
Fixed Rate Preferred Stock and New Wells Fargo Preferred Stock and of such
other shares will share ratably in any such distribution of assets of the
Company in proportion to the full respective preferential amounts to which
they are entitled. After payment to the holders of shares of such series of
Preferred Stock, Adjustable Rate Preferred Stock, Fixed Rate Preferred Stock
and New Wells Fargo Preferred Stock of the full preferential amounts to which
they are entitled, the holders of shares of such series of Preferred Stock,
Adjustable Rate Preferred Stock, Fixed Rate Preferred Stock and New Wells
Fargo Preferred Stock will not be entitled to any further participation in any
distribution of assets by the Company, unless otherwise provided in the
Prospectus Supplement. A consolidation or merger of the Company with one or
more corporations shall not be deemed to be a liquidation, dissolution or
winding up of the Company.
CONVERSION AND EXCHANGE
The terms, if any, on which shares of any series of Preferred Stock are
convertible into or exchangeable for Notes or Common Stock will be set forth
in the Prospectus Supplement relating thereto. Such terms may include
provisions for conversion or exchange, either mandatory, at the option of the
holder, or at the option of the Company, in which the number of shares of
Common Stock to be received by the holders of Preferred Stock would be
calculated according to the market price of Common Stock as of a time stated
in the Prospectus Supplement.
VOTING RIGHTS
Except as indicated below or in the Prospectus Supplement relating to a
particular series of the Preferred Stock, or except as expressly required by
applicable law, the holders of Preferred Stock will not be entitled to vote.
On matters on which holders of such series and holders of any other series
of Preferred Stock are entitled to vote as a single class, each full share of
any series of the Preferred Stock shall be entitled to one vote. Therefore,
the voting power of such series will depend on the number of shares in such
series, not the liquidation preference or initial offering price of the shares
of such series of the Preferred Stock. However, as more fully described under
"Description of Depositary Shares," if the Company elects to provide for the
issuance of Depositary Shares representing fractional interests in a share of
a series of the Preferred Stock, the holders of each such Depositary Share
will, in effect, be entitled through the Depositary to such fraction of a
vote, rather than a full vote. To the extent the Depositary does not receive
specific instructions from the holders of Depositary Shares relating to such
Preferred Stock, it will vote such shares of Preferred Stock in accordance
with the recommendation of the Company, unless otherwise indicated in the
Prospectus Supplement.
Whenever the Board of Directors shall have failed to declare and pay
dividends on a series of Preferred Stock, Adjustable Rate Preferred Stock,
Fixed Rate Preferred Stock or New Wells Fargo Preferred Stock for dividend
periods, whether or not consecutive, containing in the aggregate a number of
days equivalent to six calendar quarters, the holders of such series of
Preferred Stock, Adjustable Rate Preferred Stock, Fixed Rate Preferred Stock
or New Wells Fargo Preferred Stock (voting as a class with all other affected
series of Preferred Stock, Adjustable Rate Preferred Stock, Fixed Rate
Preferred Stock and New Wells Fargo Preferred Stock ranking on a parity
therewith either as to dividends or upon liquidation and 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 directors of the
Company at the next annual meeting of stockholders and at each subsequent
meeting until all dividends which the Board of Directors failed to declare or
pay on such series of Preferred Stock, Adjustable Rate Preferred Stock, Fixed
Rate Preferred Stock or New Wells Fargo Preferred Stock have been fully paid
or
15
set apart for payment. In addition, under such circumstances, certain holders
of Preferred Stock, Adjustable Rate Preferred Stock, Fixed Rate Preferred
Stock and New Wells Fargo Preferred Stock may become subject to regulation as
a bank holding company. See "Description of Preferred Stock -- General." The
term of office of all directors elected by the holders of Preferred Stock,
Adjustable Rate Preferred Stock, Fixed Rate Preferred Stock and New Wells
Fargo Preferred Stock shall terminate immediately upon the termination of the
right of the holders of Preferred Stock, Adjustable Rate Preferred Stock,
Fixed Rate Preferred Stock and New Wells Fargo Preferred Stock to vote for
directors.
So long as any shares of Preferred Stock, Adjustable Rate Preferred Stock,
Fixed Rate Preferred Stock and New Wells Fargo Preferred Stock remain
outstanding, the Company shall not, without the consent of the holders of at
least two-thirds of the shares of the affected series of Preferred Stock,
Adjustable Rate Preferred Stock, Fixed Rate Preferred Stock and New Wells
Fargo Preferred Stock outstanding at the time (voting separately as a class
with all other affected series of Preferred Stock ranking on a parity with the
affected series of Preferred Stock, Adjustable Rate Preferred Stock, Fixed
Rate Preferred Stock and New Wells Fargo Preferred Stock), (i) authorize,
create or issue, or increase the authorized amount of, any class or series of
stock ranking prior to the affected series of Preferred Stock, Adjustable Rate
Preferred Stock, Fixed Rate Preferred Stock and New Wells Fargo Preferred
Stock as to dividends or upon liquidation; or (ii) amend, alter or repeal the
provisions of the Company's Restated Certificate of Incorporation, whether by
merger, consolidation or otherwise, so as to materially and adversely affect
any right, preference, privilege or voting power of the affected series of
Preferred Stock, Adjustable Rate Preferred Stock, Fixed Rate Preferred Stock
or New Wells Fargo Preferred Stock or the holders thereof; provided, however,
that any increase in the amount of the authorized Common Stock or authorized
Preferred Stock or the creation and issuance of other series of common stock
or preferred stock ranking on a parity with or junior to the affected series
of Preferred Stock, Adjustable Rate Preferred Stock, Fixed Rate Preferred
Stock or New Wells Fargo Preferred Stock as to dividends and upon liquidation
shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers.
DESCRIPTION OF DEPOSITARY SHARES
The description set forth below and in any Prospectus Supplement of certain
provisions of the Deposit Agreement (as defined below) and of the Depositary
Shares and Depositary Receipts does not purport to be complete and is subject
to, and qualified in its entirety by reference to, the form of Deposit
Agreement and form of Depositary Receipts relating to each series of the
Preferred Stock which are filed with the Commission as an exhibit to the
Registration Statement of which this Prospectus is a part.
GENERAL
The Company may, at its option, elect to offer fractional interests in
shares of Preferred Stock. The shares of any series of the Preferred Stock
underlying the Depositary Shares will be deposited under a separate Deposit
Agreement (the "Deposit Agreement") between the Company and a bank or trust
company selected by the Company (the "Depositary"). The Prospectus Supplement
relating to a series of Depositary Shares 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 Preferred Stock underlying
such Depositary Share (including dividend, voting, redemption, conversion and
liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the Deposit Agreement, each of which will represent the fractional
interest in a share of a particular series of the Preferred Stock described in
the Prospectus Supplement.
Unless otherwise specified in the Prospectus Supplement, a holder of
Depositary Shares is not entitled to receive the whole shares of Preferred
Stock underlying the Depositary Shares.
16
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the Preferred Stock to the record holders
of Depositary Shares relating to such Preferred Stock in proportion to the
numbers of such Depositary Shares owned by such holders on the relevant record
date. The Depositary shall distribute only such amount, however, as can be
distributed without attributing to any holder of Depositary Shares a fraction
of one cent, and any balance not so distributed shall be added to and treated
as part of the next sum received by the Depositary for distribution to record
holders of Depositary Shares.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary determines that it is not feasible to
make such distribution, in which case the Depositary may, with the approval of
the Company, sell such property and distribute the net proceeds from such sale
to such holders.
The Deposit Agreement also contains provisions relating to the manner in
which any subscription or similar rights offered by the Company to holders of
the Preferred Stock shall be made available to holders of Depositary Shares.
REDEMPTION OF DEPOSITARY SHARES
If a series of the Preferred Stock underlying the Depositary Shares is
subject to redemption, the Depositary Shares will be redeemed from the
proceeds received by the Depositary resulting from the redemption, in whole or
in part, of such series of the Preferred Stock held by the Depositary. The
redemption price per Depositary Share will be equal to the applicable fraction
of the redemption price per share payable with respect to such series of the
Preferred Stock. If less than all the Depositary Shares are to be redeemed,
the Depositary Shares to be redeemed will be selected by lot or pro rata as
may be determined by the Depositary.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to receive the
moneys payable upon such redemption and any money or other property to which
the holders of such Depositary Shares were entitled upon such redemption upon
surrender to the Depositary of the Depositary Receipts evidencing such
Depositary Shares. Any funds deposited by the Company with the Depositary for
any Depositary Shares which the holders thereof fail to redeem shall be
returned to the Company after a period of two years from the date such funds
are so deposited.
VOTING
Upon receipt of notice of any meeting at which the holders of the Preferred
Stock are entitled to vote, the Depositary will mail the information contained
in such notice of meeting to the record holders of the Depositary Shares
relating to such Preferred Stock. Each record holder of such Depositary Shares
on the record date (which will be the same date as the record date for the
Preferred Stock) will be entitled to instruct the Depositary as to the
exercise of the voting rights pertaining to the number of shares of Preferred
Stock underlying such holder's Depositary Shares. The Depositary will
endeavor, insofar as practicable, to vote the number of shares of Preferred
Stock underlying such Depositary Shares in accordance with such instructions,
and the Company will agree to take all action which may be deemed necessary by
the Depositary in order to enable the Depositary to do so. To the extent the
Depositary does not receive specific instructions from the holders of
Depositary Shares relating to such Preferred Stock, it will vote shares of
Preferred Stock in accordance with the recommendation of the Company, unless
otherwise indicated in the Prospectus Supplement.
AMENDMENT OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Depositary, provided,
17
however, that any amendment which materially and adversely alters the rights
of the existing holder of Depositary Shares will not be effective unless such
amendment has been approved by the record holders of at least a majority of
the Depositary Shares then outstanding.
CHARGES OF DEPOSITARY
The Company will pay all transfer and other taxes and governmental charges
that arise solely from the existence of the depositary arrangements. The
Company will pay charges of the Depositary in connection with the initial
deposit of the Preferred Stock and any redemption of the Preferred Stock.
Holders of Depositary Shares will pay all other transfer and other taxes and
governmental charges, and, in addition, such other charges as are expressly
provided in the Deposit Agreement to be for their accounts.
TAXATION
Owners of Depositary Shares will be treated for Federal income tax purposes
as if they were owners of the Preferred Stock represented by such Depositary
Shares and, accordingly, will be entitled to take into account for Federal
income tax purposes income and deductions to which they would be entitled if
they were holders of such Preferred Stock. In addition, (i) no gain or loss
will be recognized for Federal income tax purposes upon the withdrawal of
Preferred Stock in exchange for Depositary Shares as provided in the Deposit
Agreement, (ii) the tax basis of each share of Preferred Stock to an
exchanging owner of Depositary Shares will, upon such exchange, be the same as
the aggregate tax basis of the Depositary Shares exchanged therefor, and (iii)
the holding period for shares of the Preferred Stock in the hands of an
exchanging owner of Depositary Shares who held such Depositary Shares at the
time of the exchange thereof for Preferred Stock will include the period
during which such person owned such Depositary Shares.
MISCELLANEOUS
The Company, or at the option of the Company, the Depositary, will forward
to the holders of Depositary Shares all reports and communications from the
Company which the Company is required to furnish to the holders of the
Preferred Stock.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Company and
the Depositary under the Deposit Agreement will be limited to performance in
good faith of their duties thereunder and they will not be obligated to
prosecute or defend any legal proceeding in respect of any Depositary Shares
or Preferred Stock unless satisfactory indemnity is furnished. They may rely
upon written advice of counsel or accountants, or information provided by
persons presenting Preferred Stock for deposit, holders of Depositary Shares
or other persons believed to be competent and on documents believed to be
genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY; TERMINATION OF THE DEPOSIT AGREEMENT
The Depositary may resign at any time by delivering to the Company notice of
its election to do so, and the Company may at any time remove the Depositary,
any such resignation or removal to take effect upon the appointment of a
successor Depositary and its acceptance of such appointment. Such successor
Depositary will be appointed by the Company within 60 days after delivery of
the notice of resignation or removal. The Deposit Agreement may be terminated
at the direction of the Company or by the Depositary if a period of 90 days
shall have expired after the Depositary has delivered to the Company written
notice of its election to resign and a successor depositary shall not have
been appointed. Upon termination of the Deposit Agreement, the Depositary will
discontinue the transfer of Depositary Receipts, will suspend the distribution
of dividends to the holders thereof, and will not give any further notices
(other than notice of such termination) or perform any further acts under the
Deposit Agreement except that the Depositary will continue to deliver
Preferred Stock certificates together with such dividends and distributions
and the net proceeds of any sales of rights, preferences, privileges
18
or other property in exchange for Depositary Receipts surrendered. Upon
request of the Company, the Depositary shall deliver all books, records,
certificates evidencing Preferred Stock, Depositary Receipts and other
documents respecting the subject matter of the Deposit Agreement to the
Company.
DESCRIPTION OF CAPITAL STOCK
GENERAL
The Company is authorized to issue 150,000,000 shares of Common Stock, par
value $5.00 per share, and 25,000,000 shares of preferred stock, par value
$5.00 per share.
COMMON STOCK
Holders of Common Stock are entitled to one vote for each share of Common
Stock held. All outstanding shares of Common Stock are fully paid and
nonassessable.
Holders of Common Stock are entitled to receive such dividends as are
declared by the Board of Directors out of funds legally available therefor
subject to the limitations described below. In the event of liquidation,
holders of the Common Stock are entitled to receive pro rata any assets
distributed after payment of liabilities and the liquidation preference, if
any, on any shares of Preferred Stock then outstanding. There are no
conversion, preemptive or redemption rights of the Common Stock. The dividend
rights and liquidation preferences relating to the preferred stock are
superior to those relating to the Common Stock.
The transfer agent and registrar for the Common Stock is First Chicago Trust
Company of New York, New York.
EXISTING PREFERRED STOCK
As of the date of this Prospectus, the Company had five series of preferred
stock outstanding, consisting of 1,500,000 shares of Adjustable Rate
Cumulative Preferred Stock, Series B, 477,500 shares of 9% Preferred Stock,
Series C represented by 9,550,000 Depositary Shares each representing a one-
twentieth interest in a share of 9% Preferred Stock, 350,000 shares of 8 7/8%
Preferred Stock, Series D represented by 7,000,000 Depositary Shares each
representing a one-twentieth interest in a share of 8 7/8% Preferred Stock,
750,000 shares of 9% Preferred Stock, Series G represented by 6,000,000
Depositary Shares each representing a one-eighth interest in a share of 9%
Series G Preferred Stock and 4,000,000 shares of Fixed/Adjustable Rate Non-
cumulative Preferred Stock, Series H. The 9% Preferred Stock, Series C has
been called for redemption by the Company on December 31, 1996. The Adjustable
Rate Preferred Stock has a liquidation preference of $50 per share, the Fixed
Rate Preferred Stock has a liquidation preference of $500 per share or $25 per
Depositary Share, the 9% Series G Preferred Stock has a liquidation preference
of $200 per share or $25 per Depositary Share and the Fixed/Adjustable Rate
Preferred Stock has a liquidation preference of $50 per share. Unless full
cumulative dividends on the Preferred Stock, Adjustable Rate Preferred Stock,
Fixed Rate Preferred Stock and New Wells Fargo Preferred Stock have been paid,
the Company may not declare dividends on or make any other payment in respect
of any class of stock ranking junior to the Preferred Stock, Adjustable Rate
Preferred Stock, Fixed Rate Preferred Stock or New Wells Fargo Preferred
Stock, including the Common Stock. Whenever the Board of Directors of the
Company shall have failed to declare and pay dividends on any series of
Preferred Stock, Adjustable Rate Preferred Stock, Fixed Rate Preferred Stock
or New Wells Fargo Preferred Stock for dividend periods, whether or not
consecutive, containing in the aggregate a number of days equivalent to six
calendar quarters, the holders of such series of Preferred Stock, Adjustable
Rate Preferred Stock, Fixed Rate Preferred Stock or New Wells Fargo Preferred
Stock (voting as a class with all other affected series of Preferred Stock,
Adjustable Rate Preferred Stock, Fixed Rate Preferred Stock or New Wells Fargo
Preferred Stock ranking on a parity therewith either as to dividends or upon
liquidation and 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 directors of the Company at the next annual meeting of
stockholders and at each subsequent meeting
19
until all dividends which the Board of Directors failed to declare or pay on
the affected series of Preferred Stock, Adjustable Rate Preferred Stock, Fixed
Rate Preferred Stock or New Wells Fargo Preferred Stock have been fully paid
or set apart for payment. The holders of Preferred Stock, Adjustable Rate
Preferred Stock, Fixed Rate Preferred Stock, New Wells Fargo Preferred Stock
and Fixed/Adjustable Rate Preferred Stock have preference and priority over
holders of Common Stock in the event of liquidation for payment of the
liquidation preference of the Preferred Stock, Adjustable Rate Preferred
Stock, Fixed Rate Preferred Stock, New Wells Fargo Preferred Stock and
Fixed/Adjustable Rate Preferred Stock plus an amount equal to all accrued and
unpaid dividends thereon. The Company may call the other series of Preferred
Stock for redemption on dates from the date of this Prospectus to October 1,
2001.
PLAN OF DISTRIBUTION
The Company may offer and sell the Offered Securities to one or more
underwriters for resale by them or through agents, or to investors directly.
The Prospectus Supplement with respect to each series of Offered Securities
will set forth the terms of the offering of the Offered Securities, including
the name or names of any underwriters or agents, the purchase price of the
Offered Securities and the net proceeds to the Company from such sale, any
underwriting discounts, agency fees and other items constituting underwriters'
or agents' compensation, any initial public offering price and any discounts
or concessions allowed, reallowed or paid to dealers.
If any underwriters are involved in the offer and sale, the Offered
Securities will be acquired by the underwriters for their own account and may
be resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. Unless otherwise set forth in the accompanying Prospectus
Supplement, the obligations of the underwriters to purchase the Offered
Securities will be subject to certain conditions precedent and the
underwriters will be obligated to purchase all the Offered Securities
described in such Prospectus Supplement if any are purchased. Any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
Underwriters and agents may be entitled, under agreements entered into with
the Company, to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act of 1933.
Employees of the Bank may act as finders of purchasers of Offered
Securities. Their activities will be limited to contacting customers and
informing them of the terms of the Offered Securities offered by the Company.
The Company believes that such persons are not required to be registered as
brokers or dealers under Section 3(a)(4) and 3(a)(5) of the Act since they are
acting as employees on behalf of a bank.
LEGAL OPINIONS
The legality of the Offered Securities offered hereby will be passed upon
for the Company by Brobeck, Phleger & Harrison LLP, San Francisco, California.
20
EXPERTS
The consolidated financial statements of the Company as of December 31, 1995
and 1994 and for each of the years in the three-year period ended December 31,
1995 incorporated by reference in the Company's Annual Report on Form 10-K for
the year ended December 31, 1995 incorporated by reference herein and
elsewhere in the Registration Statement have been incorporated by reference
herein and in the Registration Statement in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
The consolidated financial statements of First Interstate as of December 31,
1995 and 1994 and for each of the three years in the period ended December 31,
1995 incorporated by reference herein have been incorporated by reference
herein in reliance upon the report of Ernst & Young LLP, independent auditors,
incorporated by reference herein, given upon the authority of said firm as
experts in accounting and auditing.
21
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Registration Fee .................................................. $227,273
NYSE Listing Fees ................................................. 135,000
Printing and Engraving ............................................ 40,000
Legal Fees ........................................................ 200,000
Accounting Fees ................................................... 40,000
Blue Sky and Legal Investment Fees ................................ 5,000
Rating Agencies' Fees ............................................. 300,000
Trustee's Fees .................................................... 30,000
Miscellaneous ..................................................... 727
--------
Total ............................................................. $978,000
========
The foregoing amounts are the best estimates of the Company.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Section 145 of the Delaware General Corporation Law, Wells Fargo &
Company has broad powers to indemnify its directors and officers against
liabilities they may incur in such capacities, including liabilities under the
Securities Act of 1933. Wells Fargo & Company's By-Laws require it to
indemnify its directors, officers and employees to the full extent permitted
by Delaware law against certain liabilities and expenses incurred as a result
of proceedings involving such persons as a result of their acting as an
officer, director or trustee of any of the Registrants, including proceedings
under the Securities Act of 1933 or the Securities Exchange Act of 1934. The
By-Laws further provide that rights conferred under such By-Laws shall not be
deemed to be exclusive of any other right such persons may have or acquire
under any statute, provision or any certificate of incorporation, by-law,
agreement, vote of stockholders, disinterested directors or otherwise. The
Restated Certificate of Incorporation of Registrant precludes, with certain
exceptions, Wells Fargo & Company and its stockholders from recovering
monetary damages from directors for business decisions found by a court to
have been negligent or grossly negligent, including decisions relating to a
change in control of Wells Fargo & Company.
Reference is made to the form of Underwriting Agreement filed as an exhibit
hereto pursuant to which underwriters may under certain circumstances
indemnify the directors and officers of the Registrant. Directors and officers
of the Registrant may also be indemnified in certain circumstances under the
terms of other underwriting agreements entered into by the Registrant in
connection with prior public offerings.
ITEM 16. EXHIBITS.
1(a) Form of firm commitment Underwriting Agreement for Senior Notes.
Incorporated by reference to Exhibit 1(a) to Registration Statement No.
33-53514 filed on December 8, 1992.
1(b) Form of firm commitment Underwriting Agreement for Subordinated Notes.
Incorporated by reference to Exhibit 1(b) to Registration Statement No.
33-53514 filed on December 8, 1992.
1(c) Form of firm commitment Underwriting Agreement for Preferred Stock.
Incorporated by reference to Exhibit 1(c) to Registration Statement No.
33-53514 filed on December 8, 1992.
1(d)* Form of Underwriting Agreement for offering of Preferred Securities by
Wells Fargo Capital I, II and III.
II-1
1(e) Form of Distribution Agreement. Incorporated by reference to Exhibit
1(d) to Registration Statement No. 33-60573 filed on June 26, 1995.
1(f) Finder Agreement. Incorporated by reference to Exhibit 1(d) of the
Company's Report on Form 8-K filed January 23, 1991.
1(g) Amendment No. 1 to Finder Agreement. Incorporated by reference to
Exhibit 1(g) to Registration Statement No. 33-42273 filed on August 19,
1991.
1(h) Form of Amendment No. 2 to Finder Agreement. Incorporated by reference
to Exhibit 1(h) to Registration Statement No. 33-42273 filed on August
19, 1991.
1(i) Amendment No. 3 to Finder Agreement. Incorporated by reference to
Exhibit 1(h) to Registration Statement No. 33-53514 filed on December
8, 1992.
1(j) Amendment No. 4 to Finder Agreement. Incorporated by reference to
Exhibit 1(i) to Registration Statement No. 33-51227 filed on November
30, 1993.
1(k) Amendment No. 5 to Finder Agreement. Incorporated by reference to
Exhibit 1(j) to Registration Statement No. 33-60573 filed on June
26,1995.
1(l) Amendment No. 6 to Finder Agreement, dated August 24, 1995.
Incorporated by reference to Exhibit 1(k) to Registration Statement No.
333-10469 filed on August 20, 1996.
1(m)* Amendment No. 7 to Finder Agreement, dated September 11, 1996.
4(a) Form of Senior Indenture, dated as of September 1, 1984, between Wells
Fargo & Company and Manufacturers Hanover Trust Company. Incorporated
by reference to Exhibit 4(a) to Registration Statement No. 2-93314
filed on September 18, 1984.
4(b) Form of First Supplemental Indenture, dated as of April 15, 1986,
between Wells Fargo & Company and Manufacturers Hanover Trust Company.
Incorporated by reference to Exhibit 4(b) to Registration Statement No.
33-4573 filed on April 4, 1986.
4(c) Form of Second Supplemental Indenture, dated as of June 30, 1987,
between Wells Fargo & Company and Manufacturers Hanover Trust Company.
Incorporated by reference to Exhibit 4.10 to Form 8-B filed June 30,
1987.
4(d) Form of Third Supplemental Indenture, dated as of January 23, 1991,
between Wells Fargo & Company and Manufacturers Hanover Trust Company.
Incorporated by reference to Exhibit 4(a) to Form 8-K filed on January
23, 1991.
4(e) Form of Subordinated Indenture, dated as of December 10, 1992, between
Wells Fargo & Company and Marine Midland Bank, N.A. Incorporated by
reference to Exhibit 4(e) to Registration Statement No. 33-53514 filed
on December 8, 1992.
4(f)* Junior Subordinated Indenture, dated as of November 27, 1996, between
Wells Fargo & Company and the First National Bank of Chicago to be used
in connection with the issuance of Junior Subordinated Debentures.
4(g) Form of fixed rate Senior Note. Incorporated by reference to Exhibit
4(b) to Registration Statement No. 2-95939 filed on February 20, 1985.
4(h) Form of floating rate Senior Note. Incorporated by reference to Exhibit
4(c) to Registration Statement No. 2-95939 filed on February 20, 1985.
4(i) Form of original issue discount or zero coupon Senior Note.
Incorporated by reference to Exhibit 4(d) to Registration Statement No.
2-95939 filed on February 20, 1985.
4(j) Form of fixed interest bearing Subordinated Note. Incorporated by
reference to Exhibit 4(i) to Registration Statement No. 33-53514 filed
on December 8, 1992.
4(k) Form of floating interest bearing Subordinated Note. Incorporated by
reference to Exhibit 4(j) to Registration Statement No. 33-53514 filed
on December 8, 1992.
4(l) Form of original issue discount or zero coupon Subordinated Note.
Incorporated by reference to Exhibit 4(k) to Registration Statement No.
33-53514 filed on December 8, 1992.
II-2
4(m) Form of Medium-Term Fixed Rate Note. Incorporated by reference to
Exhibit 4(l) to Registration Statement No. 33-60573 filed on June 26,
1995.
4(n) Form of Medium-Term Floating Rate Note. Incorporated by reference to
Exhibit 4(m) to Registration Statement No. 33-60573 filed on June 26,
1995.
4(o) Restated Certificate of Incorporation of the Company. Incorporated by
reference to Exhibit 3(a) to Annual Report on Form 10-K for the year
ended December 31, 1993.
4(p) Certificate of Determination for 9-7/8% Preferred Stock, Series F.
Incorporated by reference to Exhibit 4(a) of Form 8-K filed April 10,
1996.
4(q) Certificate of Determination for 9% Preferred Stock, Series G.
Incorporated by reference to Exhibit 4(b) of Form 8-K filed April 10,
1996.
4(r) Bylaws of the Company. Incorporated by reference to Exhibit 3(ii) to
Form 8-K filed on April 18, 1995.
4(s) Form of Certificate of Designation for Preferred Stock. Incorporated
by reference to Exhibit 4(c) to Registration Statement No. 33-45066
filed on January 22, 1992.
4(t) Form of Deposit Agreement. Incorporated by reference to Exhibit 4(f)
to Registration Statement No. 33-45066 filed on January 22, 1992.
4(u) Form of Depositary Receipt. Incorporated by reference to Exhibit 4(g)
to Registration Statement No. 33-45066 filed on January 22, 1992.
4(v)** Trust Agreement of Wells Fargo Capital I.
4(w)** Certificate of Trust of Wells Fargo Capital I.
4(x)** Trust Agreement of Wells Fargo Capital II.
4(y)** Certificate of Trust of Wells Fargo Capital II.
4(z)* Trust Agreement of Wells Fargo Capital III.
4(aa)** Certificate of Trust of Wells Fargo Capital III.
4(bb)* Form of Amended and Restated Trust Agreement for each of Wells Fargo
Capital I, II and III.
4(cc)* Form of Preferred Security (included as Exhibit E in Exhibit 4(bb)).
4(dd)* Form of Junior Subordinated Debt Security.
4(ee)* Form of Guarantee Agreement with respect to Preferred Securities.
4(ff)* Restated Certificate of Trust of Wells Fargo Capital I.
4(gg)* Restated Certificate of Trust of Wells Fargo Capital II.
4(hh)* Restated Certificate of Trust of Wells Fargo Capital III.
5(a)* Opinion of Brobeck, Phleger & Harrison LLP.
5(b)* Opinion of Richards, Layton & Finger.
5(c)* Opinion of Richards, Layton & Finger.
5(d)* Opinion of Richards, Layton & Finger.
8(a)* Opinion of counsel as to certain federal income tax matters.
12(a)* Ratio of earnings to fixed charges (consolidated). Attached hereto
and incorporated by reference to Exhibit 12(a) to Form 10-K filed by
the Company on March 19, 1996, and to Exhibit 12(a) to the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1996.
12(b)* Computation of ratios of earnings to fixed charges and preferred
dividend requirements (consolidated). Attached hereto and
incorporated by reference to Exhibit 12(b) to
Form 10-K filed by the Company on March 19, 1996, and to Exhibit
12(b) to the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1996.
II-3
23(a)* Consent of KPMG Peat Marwick LLP.
23(b)* Consent of Ernst & Young LLP.
23(c)* Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit 5(a)).
23(d)* Consent of Richards, Layton & Finger (included in Exhibits 5(b), 5(c) and 5(d)).
24(a) Powers of Attorney (included on II-6).
24(b) Powers of Attorney for Wells Fargo Capital I, II and III (included in Exhibits 4(v), 4(x) and 4(z),
respectively).
25(a)* Statement of Eligibility of The First National Bank of Chicago as Trustee under the Junior
Subordinated Indenture.
25(b)* Statement of Eligibility of The First National Bank of Chicago as Trustee under the Trust Agreement
of Wells Fargo Capital I.
25(c)* Statement of Eligibility of The First National Bank of Chicago as Trustee under the Trust Agreement
of Wells Fargo Capital II.
25(d)* Statement of Eligibility of The First National Bank of Chicago as Trustee under the Trust Agreement
of Wells Fargo Capital III.
25(e)* Statement of Eligibility of The First National Bank of Chicago as Trustee under the Guarantee
Agreement of Wells Fargo & Company for the benefit of the holders of Preferred Securities of Wells
Fargo Capital I.
25(f)* Statement of Eligibility of The First National Bank of Chicago as Trustee under the Guarantee
Agreement of Wells Fargo & Company for the benefit of the holders of Preferred Securities of Wells
Fargo Capital II.
25(g)* Statement of Eligibility of The First National Bank of Chicago as Trustee under the Guarantee
Agreement of Wells Fargo & Company for the benefit of the holder of Preferred Securities of Wells
Fargo Capital III.
25(h)* Statement of Eligibility of The Chase Manhattan Bank (formerly known as Chemical Bank) as Trustee
under the Senior Indenture.
25(i)* Statement of Eligibility of Marine Midland Bank as Trustee under the Subordinated Indenture.
- --------
*Filed herewith.
**Previously filed.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to
reflect in the prospectus any facts or events arising after the effective date
of the Registration Statement (or the most recent post-effective amendment
thereof) which individually or in the aggregate represent a fundamental change
in the information set forth in the Registration Statement; and (iii) to
include any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change to
such information in the Registration Statement; provided, however, that (i)
and (ii) do not apply if the Registration is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by (i) and
(ii) is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15 of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
II-4
Notwithstanding subparagraph (ii) above, any increase or decrease in volume
of securities offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) under the
Securities Act of 1933 if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the effective
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the Registration Statement shall be deemed to be
a new Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling persons of the Registrant in the successful defense of any
action, suit or proceeding and other than indemnification covered by
insurance) is asserted by such director, officer or controlling persons in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has duly caused this Amendment to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City and County of San Francisco, State of California, this 3rd day of
December , 1996.
WELLS FARGO & COMPANY
By /s/ Alan J. Pabst
-------------------------------------
Alan J. Pabst
Senior Vice President and Treasurer
Pursuant to the requirements of the Securities Act of 1933, the Amendment to
the Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated:
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Paul Hazen* Chairman and Chief Executive December , 1996
- ------------------------------------ Officer (Principal Executive
Paul Hazen Officer)
/s/ William F. Zuendt* President and Director December , 1996
- ------------------------------------
William F. Zuendt
/s/ Rodney L. Jacobs* Vice Chairman and Chief December , 1996
- ------------------------------------ Financial Officer (Principal
Rodney L. Jacobs Financial Officer)
/s/ Frank A. Moeslein* Executive Vice President and December , 1996
- ------------------------------------ Controller (Principal
Frank A. Moeslein Accounting Officer)
II-6
SIGNATURE TITLE DATE
--------- ----- ----
Director
____________________________________
H. Jesse Arnelle
Director
____________________________________
Michael R. Bowlin
Director
____________________________________
Edward M. Carson
/s/ William S. Davila* Director December , 1996
____________________________________
William S. Davila
/s/ Rayburn S. Dezember Director
____________________________________
Rayburn S. Dezember
Director
____________________________________
Myron DuBain
Director
____________________________________
Don C. Frisbee
Director
____________________________________
Robert K. Jaedicke
Director
____________________________________
Thomas L. Lee
Director
____________________________________
William F. Miller
/s/ Ellen M. Newman* Director December , 1996
____________________________________
Ellen M. Newman
/s/ Philip J. Quigley* Director December , 1996
____________________________________
Philip J. Quigley
/s/ Carl E. Reichardt* Director December , 1996
____________________________________
Carl E. Reichardt
/s/ Donald B. Rice* Director December , 1996
____________________________________
Donald B. Rice
/s/ Richard J. Stegemeier* Director December , 1996
____________________________________
Richard J. Stegemeier
/s/ Susan G. Swenson* Director December , 1996
____________________________________
Susan G. Swenson
/s/ Daniel M. Tellep* Director December , 1996
____________________________________
Daniel M. Tellep
/s/ Chang-Lin Tien* Director December , 1996
____________________________________
Chang-Lin Tien
/s/ John A. Young* Director December , 1996
____________________________________
John A. Young
*By /s/ Alan J. Pabst
____________________________
Attorney-in-Fact
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Wells Fargo
Capital I, Wells Fargo Capital II and Wells Fargo Capital III each certify
that it has duly caused this Amendment to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City and County of San Francisco, State of California, this 3rd day of
December, 1996.
WELLS FARGO CAPITAL I
By: Wells Fargo & Company, as
Sponsor
By: /s/ Guy Rounsaville, Jr.
-------------------------------------
Name: Guy Rounsaville, Jr.
Title: Secretary
WELLS FARGO CAPITAL II
By: Wells Fargo & Company, as
Sponsor
By: /s/ Guy Rounsaville, Jr.
-------------------------------------
Name: Guy Rounsaville, Jr.
Title: Secretary
WELLS FARGO CAPITAL III
By: Wells Fargo & Company, as
Sponsor
By: /s/ Guy Rounsaville, Jr.
-------------------------------------
Name: Guy Rounsaville, Jr.
Title: Secretary
II-8
INDEX OF EXHIBITS
FOUND ON
SEQUENTIALLY
NUMBERED
PAGE
------------
1(a) Form of firm commitment Underwriting Agreement for
Senior Notes. Incorporated by reference to Exhibit
1(a) to Registration Statement No. 33-53514 filed on
December 8, 1992.
1(b) Form of firm commitment Underwriting Agreement for
Subordinated Notes. Incorporated by reference to
Exhibit 1(b) to Registration Statement No. 33-53514
filed on December 8, 1992.
1(c) Form of firm commitment Underwriting Agreement for
Preferred Stock. Incorporated by reference to
Exhibit 1(c) to Registration Statement No. 33-53514
filed on December 8, 1992.
1(d)* Form of Underwriting Agreement for offering of
Preferred Securities by Wells Fargo Capital I, II
and III.
1(e) Form of Distribution Agreement. Incorporated by
reference to Exhibit 1(d) to Registration Statement
No. 33-60573 filed on June 26, 1995.
1(f) Finder Agreement. Incorporated by reference to
Exhibit 1(d) of the Company's Report on Form 8-K
filed January 23, 1991.
1(g) Amendment No. 1 to Finder Agreement. Incorporated by
reference to Exhibit 1(g) to Registration Statement
No. 33-42273 filed on August 19, 1991.
1(h) Form of Amendment No. 2 to Finder Agreement.
Incorporated by reference to Exhibit 1(h) to
Registration Statement No. 33-42273 filed on August
19, 1991.
1(i) Amendment No. 3 to Finder Agreement. Incorporated by
reference to Exhibit 1(h) to Registration Statement
No. 33-53514 filed on December 8, 1992.
1(j) Amendment No. 4 to Finder Agreement. Incorporated by
reference to Exhibit 1(i) to Registration Statement
No. 33-51227 filed on November 30, 1993.
1(k) Amendment No. 5 to Finder Agreement. Incorporated by
reference to Exhibit 1(j) to Registration Statement
No. 33-60573 filed on June 26, 1995.
1(l) Amendment No. 6 to Finder Agreement, dated August
24, 1995. Incorporated by reference to Exhibit 1(k)
to Registration Statement No. 333-10469 filed on
August 20, 1996.
1(m)* Amendment No. 7 to Finder Agreement, dated September
11, 1996.
4(a) Form of Senior Indenture, dated as of September 1,
1984, between Wells Fargo & Company and
Manufacturers Hanover Trust Company. Incorporated by
reference to Exhibit 4(a) to Registration Statement
No. 2-93314 filed on September 18, 1984.
4(b) Form of First Supplemental Indenture, dated as of
April 15, 1986, between Wells Fargo & Company and
Manufacturers Hanover Trust Company. Incorporated by
reference to Exhibit 4(b) to Registration Statement
No. 33-4573 filed on April 4, 1986.
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4(c) Form of Second Supplemental Indenture, dated as of
June 30, 1987, between Wells Fargo & Company and
Manufacturers Hanover Trust Company. Incorporated by
reference to Exhibit 4.10 to Form 8-B filed June 30,
1987.
4(d) Form of Third Supplemental Indenture, dated as of
January 23, 1991, between Wells Fargo & Company and
Manufacturers Hanover Trust Company. Incorporated by
reference to Exhibit 4(a) to Form 8-K filed on
January 23, 1991.
4(e) Form of Subordinated Indenture, dated as of December
10, 1992, between Wells Fargo & Company and Marine
Midland Bank, N.A. Incorporated by reference to
Exhibit 4(e) to Registration Statement No. 33-53514
filed on December 8, 1992.
4(f)* Junior Subordinated Indenture, dated as of November
27, 1996, between Wells Fargo & Company and the
First National Bank of Chicago to be used in
connection with the issuance of Junior Subordinated
Debentures.
4(g) Form of fixed rate Senior Note. Incorporated by
reference to Exhibit 4(b) to Registration Statement
No. 2-95939 filed on February 20, 1985.
4(h) Form of floating rate Senior Note. Incorporated by
reference to Exhibit 4(c) to Registration Statement
No. 2-95939 filed on February 20, 1985.
4(i) Form of original issue discount or zero coupon
Senior Note. Incorporated by reference to Exhibit
4(d) to Registration Statement No. 2-95939 filed on
February 20, 1985.
4(j) Form of fixed interest bearing Subordinated Note.
Incorporated by reference to Exhibit 4(i) to
Registration Statement No. 33-53514 filed on
December 8, 1992.
4(k) Form of floating interest bearing Subordinated Note.
Incorporated by reference to Exhibit 4(j) to
Registration Statement No. 33-53514 filed on
December 8, 1992.
4(l) Form of original issue discount or zero coupon
Subordinated Note. Incorporated by reference to
Exhibit 4(k) to Registration Statement No. 33-53514
filed on December 8, 1992.
4(m) Form of Medium-Term Fixed Rate Note. Incorporated by
reference to Exhibit 4(l) to Registration Statement
No. 33-60573 filed on June 26, 1995.
4(n) Form of Medium-Term Floating Rate Note. Incorporated
by reference to Exhibit 4(m) to Registration
Statement No. 33-60573 filed on June 26, 1995.
4(o) Restated Certificate of Incorporation of the
Company. Incorporated by reference to Exhibit 3(a)
to Annual Report on Form 10-K for the year ended
December 31, 1993.
4(p) Certificate of Determination for 9- 7/8% Preferred
Stock, Series F. Incorporated by reference to
Exhibit 4(a) of Form 8-K filed April 10, 1996.
4(q) Certificate of Determination for 9% Preferred Stock,
Series G. Incorporated by reference to Exhibit 4(b)
of Form 8-K filed April 10, 1996.
4(r) Bylaws of the Company. Incorporated by reference to
Exhibit 3(ii) to Form 8-K filed on April 18, 1995.
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4(s) Form of Certificate of Designation for Preferred
Stock. Incorporated by reference to Exhibit 4(c) to
Registration Statement No. 33-45066 filed on January
22, 1992.
4(t) Form of Deposit Agreement. Incorporated by reference
to Exhibit 4(f) to Registration Statement No. 33-
45066 filed on January 22, 1992.
4(u) Form of Depositary Receipt. Incorporated by
reference to Exhibit 4(g) to Registration Statement
No. 33-45066 filed on January 22, 1992.
4(v)** Trust Agreement of Wells Fargo Capital I.
4(w)** Certificate of Trust of Wells Fargo Capital I.
4(x)** Trust Agreement of Wells Fargo Capital II.
4(y)** Certificate of Trust of Wells Fargo Capital II.
4(z)* Trust Agreement of Wells Fargo Capital III.
4(aa)** Certificate of Trust of Wells Fargo Capital III.
4(bb)* Form of Amended and Restated Trust Agreement for
each of Wells Fargo Capital I, II and III.
4(cc)* Form of Preferred Security (included as Exhibit E in
Exhibit 4(bb)).
4(dd)* Form of Junior Subordinated Debt Security.
4(ee)* Form of Guarantee Agreement with respect to
Preferred Securities.
4(ff)* Restated Certificate of Trust of Wells Fargo Capital
I.
4(gg)* Restated Certificate of Trust of Wells Fargo Capital
II.
4(hh)* Restated Certificate of Trust of Wells Fargo Capital
III.
5(a)* Opinion of Brobeck, Phleger & Harrison LLP.
5(b)* Opinion of Richards, Layton & Finger.
5(c)* Opinion of Richards, Layton & Finger.
5(d)* Opinion of Richards, Layton & Finger.
8(a)* Opinion of counsel as to certain federal income tax
matters.
12(a)* Ratio of earnings to fixed charges (consolidated).
Attached hereto and incorporated by reference to
Exhibit 12(a) to the Company's Form 10-K filed March
19, 1996, and to Exhibit 12(a) to the Company's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996.
12(b)* Computation of ratios of earnings to fixed charges
and preferred dividend requirements (consolidated).
Attached hereto and incorporated by reference to
Exhibit 12(b) to the Company's Form 10-K filed March
19, 1996, and to Exhibit 12(b) to the Company's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996.
23(a)* Consent of KPMG Peat Marwick LLP.
23(b)* Consent of Ernst & Young LLP.
23(c)* Consent of Brobeck, Phleger & Harrison LLP (included
in Exhibit 5(a)).
23(d)* Consent of Richards, Layton & Finger (included in
Exhibits 5(b), 5(c) and 5(d)).
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24(a) Powers of Attorney (included on page II-6).
24(b) Powers of Attorney for Wells Fargo Capital I, II and
III (included in Exhibits 4(v), 4(x) and 4(z),
respectively).
25(a)* Statement of Eligibility of The First National Bank
of Chicago as Trustee under the Junior Subordinated
Indenture.
25(b)* Statement of Eligibility of The First National Bank
of Chicago as Trustee under the Trust Agreement of
Wells Fargo Capital I.
25(c)* Statement of Eligibility of The First National Bank
of Chicago as Trustee under the Trust Agreement of
Wells Fargo Capital II.
25(d)* Statement of Eligibility of The First National Bank
of Chicago as Trustee under the Trust Agreement of
Wells Fargo Capital III.
25(e)* Statement of Eligibility of The First National Bank
of Chicago as Trustee under the Guarantee Agreement
of Wells Fargo & Company for the benefit of the
holders of Preferred Securities of Wells Fargo
Capital I.
25(f)* Statement of Eligibility of The First National Bank
of Chicago under the Guarantee Agreement of Wells
Fargo & Company for the benefit of the holders of
Preferred Securities of Wells Fargo Capital II.
25(g)* Statement of Eligibility of The First National Bank
of Chicago as Trustee under the Guarantee Agreement
of Wells Fargo & Company for the benefit of the
holder of Preferred Securities of Wells Fargo
Capital III.
25(h)* Statement of Eligibility of The Chase Manhattan Bank
as Trustees under the Senior Indenture (formerly
known as Chemical Bank).
25(i)* Statement of Eligibility of Marine Midland Bank as
Trustees under the Subordinated Indenture.
* Filed herewith.
**Previously filed.
II-12