UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
REGISTERED REGISTERED
NO. 1 PRINCIPAL AMOUNT
CUSIP NO. 337 358 BL8 $200,000,000
FIRST UNION CORPORATION
6.30% Putable/Callable Subordinated Notes Due April 15, 2028
FIRST UNION CORPORATION, a corporation duly organized and existing
under the laws of North Carolina (herein called the "Company," which term
includes any successor under the Indenture hereinafter referred to), for value
received, hereby promises to pay to CEDE & CO. or its registered assigns, the
principal sum of TWO HUNDRED MILLION DOLLARS on April 15, 2028 (the "Final
Maturity"), and to pay interest thereon from April 23, 1998, or from the most
recent interest payment date to which interest has been paid or duly provided
for, semi-annually on April 15 and October 15 of each year, commencing on
October 15, 1998, at the rate described below, until the principal hereof is
paid or made available for payment. The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the April 1 or October 1 (whether
or not a Business Day), as the case may be, next preceding such Interest Payment
Date. Any such interest not so punctually paid or duly provided for will
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close
of business on a Special Record Date for the payment of such Defaulted Interest
to be fixed by the Trustee, notice whereof shall be given to Holders of
Securities of this Series not less than 10 days prior to such Special Record
Date, or be paid at any time in any other lawful manner not inconsistent with
the requirement of any securities exchange on which the Securities of this
Series may be listed, and upon such notice as may be required by such exchange,
all as more fully provided in said Indenture. Interest on this Security will be
computed on the basis of a 360-day year of twelve 30-day months.
From and including April 23, 1998 to but excluding April 15, 2008,
interest shall accrue on the principal sum of this Security at an annual rate
equal to 6.30%. On April 15, 2008 (the "Coupon Reset Date"), and again on the
New Coupon Reset Date (as defined on the reverse hereof), the interest rate on
this Security shall be reset as described on the reverse hereof, unless the
Company is obligated to repurchase and cancel this Security pursuant to the Put
Option or otherwise, as described on the reverse hereof.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the Corporate Trust Office of the Trustee in The City
of New York or in the city of Chicago, Illinois, or at the office or agency of
the Company maintained for that purpose in Charlotte, North Carolina, in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts; provided, however, that at
the option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register.
This Security has initially been issued in the form of a Global
Security, and the Company has initially designated The Depository Trust Company
as the Depository for this Security. For as long as this Security is issued in
such form, and notwithstanding the foregoing, all payments of interest,
principal and other amounts in respect of this Security (including payments
pursuant to the Call Option, Put Option and Second Call Option referred to on
the reverse hereof) shall be made to the Depository or its nominee in accordance
with Applicable Procedures (as defined on the reverse hereof), in the coin or
currency specified above and as further provided on the reverse hereof.
Reference is made to the further provisions of this Security set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as though fully set forth at this place.
- 2 -
Unless the certificate of authentication hereon has been duly executed
by the Trustee referred to on the reverse hereof, or by an Authenticating Agent,
by manual signature, this Security shall not be entitled to any benefit under
the Indenture or be valid or obligatory for any purpose.
- 3 -
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: April 23, 1998
[SEAL] FIRST UNION CORPORATION
By: __________________
Name:
Title:
ATTEST:
By: ______________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein referred
to in the within-mentioned Indenture.
HARRIS TRUST AND SAVINGS BANK FIRST UNION NATIONAL BANK
as Trustee as Authenticating Agent
OR
By: ______________________________ By: ______________________
Authorized Officer Authorized Signature
- 4 -
[REVERSE OF BOND]
FIRST UNION CORPORATION
6.30% Putable/Callable Subordinated Notes Due April 15, 2028
1. Indenture. This Security is one of a duly authorized issue of
securities of the Company (hereinafter sometimes called the "Notes" or this
"Security"), issued and to be issued in one or more series under an Indenture,
dated as of March 15, 1986, as amended by supplemental indentures dated as of
August 1, 1990, November 15, 1992 and February 7, 1996 (herein called the
"Indenture"), between the Company and Harris Trust and Savings Bank, as
successor Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee, the holders of Senior Indebtedness, Entitled Persons in respect of
Other Financial Obligations and the Holders of the Notes and of the terms upon
which the Notes are, and are to be, authenticated and delivered. If any
provision of this Security necessarily conflicts with any provision of the
Indenture, the provision of this Security shall be controlling to the fullest
extent permitted under the Indenture. This Security is one of the series
designated on the face hereof.
2. Interest Rate. The Notes will bear interest at the rate of 6.30% per
annum from the date of issuance to but excluding April 15, 2008 (the "Coupon
Reset Date"). If the Callholder (as defined below) elects to exercise the Call
Option (as defined below) and the Company does not exercise the Call Option
Override (as defined below) or the Floater Option (as defined below), the
Calculation Agent (as defined below) will reset the interest rate on the Notes
effective on the Coupon Reset Date, pursuant to Section 8 below. If the Company
exercises the Floater Option, the Calculation Agent will reset the interest rate
on the Notes effective on the Coupon Reset Date, pursuant to Section 9 below. If
the Company exercises the Second Call Option (as defined below), the Calculation
Agent will reset the interest rate on the Notes effective on the New Coupon
Reset Date (as defined below) pursuant to Section 10 below. If the Callholder
does not exercise the Call Option, or if exercised, does not for any reason pay
the Call Price (as defined below) when required, or if the Company exercises the
Call Option Override, the Trustee will be required to exercise the Put Option
(as defined below), the Company will be required to repurchase and cancel the
Notes and the interest rate on the Notes will
- 5 -
not be reset on the Coupon Reset Date. If the Company exercises the Floater
Option but does not subsequently exercise the Second Call Option, the Company
will be required to purchase and cancel the Notes and the interest rate on the
Notes will not be reset on the New Coupon Reset Date.
3. Call Option. Subject to the Call Option Override, the Callholder
shall have the right to purchase the Notes in whole but not in part on the
Coupon Reset Date (the "Call Option"), at a price equal to 100 percent of the
principal amount thereof (the "Call Price"), by giving notice to the Trustee, in
writing, no later than fifteen calendar days prior to the Coupon Reset Date (the
"Call Notice"). The Trustee shall promptly give notice of exercise of the Call
Option to the Holders of the Notes.
In the event the Callholder exercises the Call Option and the Company
does not exercise the Call Option Override (whether or not the Floater Option is
exercised), then (i) not later than 2:00 p.m. New York time on the Business Day
prior to the Coupon Reset Date, the Callholder shall deliver the Call Price in
immediately available funds to the Trustee through the facilities of the DTC for
payment of the Call Price on the Coupon Reset Date, and (ii) the Holders of the
Notes shall be required to deliver, and will be deemed to have delivered, the
Notes to the Callholder against payment therefor on the Coupon Reset Date
through the facilities of DTC.
If the Callholder after having exercised the Call Option does not for
any reason pay the Call Price to the Trustee when required, or if the Company
exercises the Call Option Override, the Put Option will be automatically
exercised by the Trustee as described in Section 4 below. In such circumstances,
the Trustee shall notify the Holders of the Notes that it is exercising the Put
Option.
The Callholder may at any time assign its rights and obligations under
the Call Option; provided, however, that (i) such rights and obligations are
assigned in whole and not in part and (ii) it provides the Trustee and the
Company with notice of such assignment contemporaneously with such assignment.
Upon receipt of notice of assignment, the Trustee will treat the assignee as
Callholder for all purposes hereunder. The Callholder may assign its rights
under the Call Option without notice to, or consent of, the Holders of the Notes
(including, if applicable, the Holder hereof).
4. Put Option. If the Call Option is not exercised or, if exercised,
the Callholder does not for any reason deliver the Call Price to the Trustee not
later
- 6 -
than 2:00 p.m. New York time on the Business Day prior to the Coupon Reset Date,
or if the Company exercises the Call Option Override, the Trustee shall
automatically exercise, on behalf of the Holders of the Notes, the right (the
"Put Option") to require the Company to purchase the Notes on April 15, 2008, at
a purchase price equal to 100 percent of the principal amount thereof (the "Put
Redemption Price"). By its purchase of any Note, each Holder irrevocably agrees
that the Trustee shall automatically exercise the Put Option for, or on behalf
of, the Holder as provided herein. No Holder of any Note or any interest therein
shall have the right to consent or object to the Trustee's duty to exercise the
Put Option.
If the Put Option is exercised, the Company will deliver the Put
Redemption Price to the Trustee through the facilities of DTC by no later than
12:00 noon, New York time, on April 15, 2008, and the Holders of the Notes will
be required to deliver, and will be deemed to have delivered, the Notes to the
Company against payment therefor on such date, through the facilities of DTC.
The Notes will thereupon be cancelled and no Notes will be issued in lieu of or
in exchange therefor.
5. Call Option Override. If the Call Option is exercised, the Company
shall have the option to override such exercise (the "Call Option Override") by
giving written notice of such exercise to the Callholder, the Calculation Agent
and the Trustee not later than 2:00 p.m. New York time no later than four
Business Days prior to April 15, 2008. If the Company exercises the Call Option
Override, the Put Option will be automatically exercised by the Trustee for and
on behalf of the Holders of the Notes on April 15, 2008.
6. Floater Option. If the Call Option is exercised and the Company does
not exercise the Call Option Override, the Company shall have the option (the
"Floater Option"), exercisable by giving written notice of exercise to the
Callholder, the Calculation Agent and the Trustee not later than 2:00 p.m. New
York time no less than four Business Days prior to April 15, 2008, to reset the
coupon on the Notes to a floating interest rate for the period from and
including the Coupon Reset Date to October 15, 2008, or such earlier date
established by the Company by written notice to the Trustee and the Calculation
Agent at least six Business Days prior to such date, as the new coupon reset
date (the "New Coupon Reset Date"). In such case, the Callholder shall remain
obligated to purchase the Notes from the Holders, and the Holders of the Notes
shall remain obligated to deliver, and will be deemed to have delivered, the
Notes to the Callholder, at the Call Price on the Coupon Reset Date. After the
Coupon Reset Date, the Company may elect (i) to exercise the Second Call Option
(as defined herein) and have the coupon reset to a
- 7 -
fixed rate from the New Coupon Reset Date to the Final Maturity, as described in
Section 10 below, or (ii) to purchase and cancel the Notes on October 15, 2008
or such earlier date as it may determine, as described in Section 9 below.
7. Second Call Option. If the Floater Option is exercised, from the
Coupon Reset Date until six Business Days prior to October 15, 2008, the Company
shall have the right, exercisable by giving written notice of exercise to the
Trustee and the Calculation Agent not later than 2:00 p.m. at least six Business
Days prior to the date selected as the New Coupon Reset Date (which shall not be
later than October 15, 2008), to purchase the Notes in whole but not in part on
the New Coupon Reset Date at the Call Price plus accrued and unpaid interest (if
any) from the Coupon Reset Date to the New Coupon Reset Date (the "Second Call
Option"). The Trustee shall promptly give notice of exercise of the Second Call
Option to the Holders of the Notes.
Upon exercise of the Second Call Option, the interest rate on the Notes
will be reset from a floating rate to a fixed rate for the period from the New
Coupon Reset Date to Final Maturity pursuant to Section 10. The Company will
deliver to the Trustee through the facilities of the Depository, not later than
12:00 noon New York time on the New Coupon Reset Date, the Call Price plus
accrued and unpaid interest (if any), as aforesaid, in immediately available
funds for payment of such amount on the New Coupon Reset Date, and the Holders
of the Notes shall be required to deliver, and will be deemed to have delivered,
the Notes to the Company against payment therefor on such New Coupon Reset Date
through the facilities of the Depository.
8. Call Option Coupon Reset Process. If the Callholder exercises the
Call Option and the Company does not exercise the Call Option Override or the
Floater Option, the Company and a calculation agent selected by the Company
pursuant to a calculation agency agreement (the "Calculation Agent") shall
complete the following steps in order to determine the interest rate to be paid
on the Notes from and including the Coupon Reset Date to the Final Maturity
Date. The Company and the Calculation Agent shall use reasonable efforts to
cause the actions contemplated below to be completed in as timely a manner as
practicable.
(a) The Company shall provide the Calculation Agent with a list (the
"Dealer List"), no later than four Business Days prior to the Coupon Reset Date,
containing the names and addresses of at least three and not more than five
dealers, from which it desires the Calculation Agent to obtain the Bids (as
defined below) for the purchase of the Notes on the Coupon Reset Date.
- 8 -
(b) Within one Business Day following receipt by the Calculation Agent
of the Dealer List, the Calculation Agent shall provide to each dealer
("Dealer") on the Dealer List (i) a copy of this Prospectus Supplement and the
accompanying Prospectus relating to the offering of the Notes, (ii) a copy of
the form of the Notes, and (iii) a written request that each such Dealer submit
a Bid to the Calculation Agent by 12:00 noon, New York City time (the "Bid
Deadline"), on the third Business Day prior to the Coupon Reset Date (the "Bid
Date"). "Bid" shall mean an irrevocable written offer given by a Dealer for the
purchase of the Notes on the Coupon Reset Date, and shall be quoted by such
Dealer as a stated yield to maturity on the Notes ("Yield to Maturity"). Each
Dealer shall be provided with (i) the name of the Company, (ii) an estimate of
the Purchase Price (which shall be stated as a U.S. dollar amount and be
calculated by the Calculation Agent in accordance with paragraph (c) below),
(iii) the principal amount and maturity of the Notes, and (iv) the method by
which interest will be calculated on the Notes.
(c) The purchase price to be paid by any Dealer for the Notes (the
"Purchase Price") shall be equal to (i) the principal amount of the Notes plus
(ii) a premium (the "Fixed Notes Premium") equal to the Settlement Amount.
"Settlement Amount" means the present value of an annuity equal to the positive
difference, if any, of (x) a stream of interest payments which would have been
due on the Notes after the Coupon Reset Date assuming the Notes were to bear
interest at 6.50% (computed on the basis of a 360-day year consisting of twelve
30-day months) and the aggregate face amount of the Notes were to remain
outstanding until April 15, 2028, and (y) a stream of corresponding interest
payments which would have been due on the Notes after the Coupon Reset Date
assuming the Notes were to bear interest at the Swap Rate (computed on the basis
of a 360-day year consisting of twelve 30-day months) and the aggregate face
amount of Notes were to remain outstanding until April 15, 2028, determined by
discounting such interest payments described in clauses (x) and (y) from the
respective dates on which such interest payments would have become due to the
Coupon Reset Date using a series of discount factors corresponding to those
dates determined by the Calculation Agent from the yield curve a swap dealer
would use on the Bid Date in valuing a series of swap payments similar to that
annuity. "Swap Rate" for the Notes means the per annum rate equal to the sum of
the Base Rate plus the bid side yield to maturity of then current 20-year swaps
spread which appears on Telerate Page 19901 ("Swap Spread") at 11:00 a.m., New
York time, on the applicable Bid Date (or such other date or time that may be
agreed upon by the Company and the Calculation Agent) (the "Rate Setting Time"),
or if such Swap Spread does not appear on Telerate Page 19901 as of the Rate
Setting Time then such Swap Spread shall be as determined by the Calculation
Agent by obtaining bid quotations for the then-current 20-year
- 9 -
swap spread (quoted over the then-current on-the-run ten-year U.S. Treasury
Security) from four reference market-makers (selected in good faith by the
Calculation Agent) as of the Rate Setting Time and then computing the arithmetic
mean of the two middle bid quotations (after discarding the highest and lowest
of such quotations), which arithmetic mean shall be such Swap Spread. "Telerate
Page 19901" means the display designated as Page "19901" on the Dow Jones
Telerate Service (or any successor or substitute page as may replace such page
on such service). For purposes of the computation of Swap Rate, the "Base Rate"
means the per annum rate equal to the offered side yield to maturity of the
then-current on- the-run ten-year U.S. Treasury Security which appears on
Telerate Page 500 as of the Rate Setting Time or, if such rate does not appear
on Telerate Page 500 at such time, then the Base Rate shall be determined by the
Calculation Agent by obtaining offered quotations for the then-current
on-the-run ten-year U.S. Treasury Security from four government securities
dealers (selected in good faith by the Calculation Agent) as of the Rate Setting
Time and then computing the arithmetic mean of the yields of the two middle
offered quotations (after discarding the highest and lowest of such quotations),
which arithmetic mean shall be the "Base Rate"; provided, however, that if the
Swap Spread reported by Telerate on the applicable Bid Date is not based on an
underlying ten-year U.S. Treasury Security, then the Calculation Agent shall
determine the Base Rate by interpolation between a Base Rate computed on the
basis of a U.S. Treasury Security with a ten-year maturity and a Base Rate
computed on the basis of a U.S. Treasury Security with a 30-year maturity.
"Telerate Page 500" means the display designated as Page "500" on the Dow Jones
Telerate Service (or any successor or substitute page as may replace such page
on such service).
(d) Following receipt of the Bids, the Calculation Agent shall provide
written notice to the Company, setting forth (i) the names of each of the
Dealers from whom the Calculation Agent received Bids on the Bid Date, (ii) the
Bid submitted by each such Dealer, and (iii) the Purchase Price as determined
pursuant to paragraph (c) above. Except as provided below, the Calculation Agent
shall thereafter select from the Bids received the Bid with the lowest Yield to
Maturity (the "Selected Bid") and establish the Coupon Reset Rate (the "Coupon
Reset Rate") equal to the interest rate which would amortize the Fixed Notes
Premium fully over the term of the Notes at the Yield to Maturity indicated by
the Selected Bid; provided, however, that if the Calculation Agent has not
received a Bid from a Dealer by the Bid Deadline, the Selected Bid shall be the
lowest of all Bids received by such time, and provided, further, that if any two
or more of the lowest Bids submitted are equivalent, the Company shall in its
sole discretion select any of such equivalent Bids (and such selected Bid shall
be the Selected Bid).
- 10 -
(e) Immediately after calculating the Coupon Reset Rate, the
Calculation Agent shall provide written notice to the Company and the Trustee
setting forth such Coupon Reset Rate as the new interest rate on the Notes,
effective from and including the Coupon Reset Date, by delivery to the Trustee
on or before the Coupon Reset Date of an officers' certificate.
(f) The Callholder shall sell the Notes to the Dealer that made the
Selected Bid at the Purchase Price, such sale to be settled on the Coupon Reset
Date in immediately available funds.
(g) Notwithstanding the foregoing, if the Calculation Agent determines
that (i) since the Call Notice, an Event of Default, or any event which, with
the giving of notice or the passage of time, or both, would constitute an Event
of Default with respect to the Notes, shall have occurred and be continuing,
(ii) a Market Disruption Event (as defined below) has occurred following the
exercise of the Call Option, or (iii) two or more of the Dealers have failed to
provide Bids in a timely manner substantially as provided above, the Call Option
will be automatically revoked, and the Put Option will be automatically
exercised by the Trustee on behalf of the Holders of the Notes. "Market
Disruption Event" shall mean any of the following: (i) a suspension or material
limitation in trading in securities generally on the New York Stock Exchange or
the establishment of minimum prices in such exchange; (ii) a general moratorium
on commercial banking activities declared by either federal or New York State
authorities; (iii) any material adverse change in the existing financial,
political or economic conditions in the United States of America; (iv) an
outbreak or escalation of major hostilities involving the United States of
America or the declaration of a national emergency or war by the United States
of America; or (v) any material disruption of the U.S. government securities
market, U.S. corporate bond market, or U.S. federal wire system; provided,
however, that in the case of a Market Disruption Event, in the judgment of the
Calculation Agent, the effect thereof makes it impracticable to conduct the
procedures set forth in this Section 8.
9. Floater Option Coupon Reset Process -- Floating Rate. If the
Callholder has exercised the Call Option and the Company has exercised the
Floater Option, the Callholder shall remain obligated to purchase the Notes from
the Holders, and the Holders of the Notes shall remain obligated to deliver, and
will be deemed to have delivered, the Notes to the Callholder, at the Call Price
on the Coupon Reset Date. The Calculation Agent shall complete the following
steps in order to determine the floating interest rate to be paid on such Notes
from and including the Coupon Reset Date to but excluding the New Coupon Reset
Date. The
- 11 -
Company and the Calculation Agent shall use reasonable efforts to cause the
actions contemplated below to be completed in as timely a manner as possible.
(a) Not later than four Business Days prior to the Coupon Reset Date,
the Calculation Agent shall provide to a dealer selected by the Company (the
"Bidding Dealer") (i) a copy of this Prospectus Supplement and the accompanying
Prospectus relating to the offering of the Notes, (ii) a copy of the form of the
Notes, and (iii) a written request that the Bidding Dealer submit a Bid to the
Calculation Agent by the Bid Deadline on the Bid Date. The Bidding Dealer shall
be provided with (i) the name of the Company, (ii) the Purchase Price (which
shall be stated as a U.S. dollar amount in accordance with paragraph (b) below),
(iii) the principal amount and maturity of the Notes, and (iv) the method by
which interest will be calculated on the Notes.
(b) The Purchase Price shall be equal to the principal amount of the
Notes. The Notes shall bear interest at a per annum rate of interest, reset
daily, based on the three-month London Interbank Offered Rate ("LIBOR") plus or
minus a percentage spread to LIBOR to be determined by the Bidding Dealer (the
"Spread"). "LIBOR" means the offered rate (expressed as an interest rate per
annum) for three-month Eurodollar deposits for the semi-annual interest period
commencing on the Coupon Reset Date which appears on Telerate Screen Page 3750
(to five decimal places), as of 11:00 a.m., London time, on the Bid Date (or, if
such date is not a London Business Day, the next previous London Business Day,
where "London Business Day" means any Business Day on which dealings in deposits
in U.S. dollars are transacted in the London interbank market). "Telerate Page
3750" means the display designated as Page "3750" on the Dow Jones Telerate
Service (or such other page as may replace Page 3750 on that service or such
other service or services as may be nominated by the British Bankers'
Association for the purpose of displaying London interbank offered rates of
major banks for U.S. dollar deposits). If, on the Bid Date, LIBOR cannot be
determined as provided in the foregoing sentence, LIBOR will be determined on
the basis of the rates at which deposits in U.S. dollars having a maturity of
three months, commencing on the Coupon Reset Date in a principal amount of not
less than U.S. $1,000,000 that is representative for a single transaction in
such market at such time, are offered by four major banks in the London
interbank market selected by the Calculation Agent at approximately 11:00 a.m.,
London time, on the Bid Date to prime banks in the London interbank market. The
Calculation Agent will request the principal London office of each of such banks
to provide a quotation of its rate. If at least two such quotations are
provided, LIBOR in respect of the Bid Date will be the arithmetic mean (rounded
to the nearest one-thousandth of a percent, with five ten-
-12-
thousandths of a percent rounded upwards) of such quotations. If fewer than two
quotations are provided, LIBOR in respect of the Bid Date will be the arithmetic
mean (rounded to the nearest one-thousandth of a percent, with five ten
thousandths of a percent rounded upwards) of the rates quoted by three major
banks in New York City selected by the Calculation Agent at approximately 11:00
a.m., New York City time, on the Bid Date for loans in U.S. dollars to leading
European banks having a maturity of three months commencing on the Coupon Reset
Date and in a principal amount of not less than U.S. $1,000,000 that is
representative for a single transaction in such market at such time.
(c) Following receipt of the Bid, the Calculation Agent shall provide
written notice to the Company, setting forth the Purchase Price and shall
establish the floating coupon reset rate (the "Floating Coupon Reset Rate")
equal to LIBOR (as determined pursuant to paragraph (b) above) plus or minus the
Spread as determined pursuant to paragraph (b) above.
(d) Immediately after calculating the Floating Coupon Reset Rate, the
Calculation Agent shall provide written notice to the Company and the Trustee,
setting forth such Floating Coupon Reset Rate as the new interest rate on the
Notes, effective from and including the Coupon Reset Date, to and excluding the
New Coupon Reset Date, by delivery to the Trustee on or before the Coupon Reset
Date of an officers' certificate.
(e) The Callholder shall sell the Notes to the Bidding Dealer at the
Purchase Price, such sale to be settled on the Coupon Reset Date in immediately
available funds.
(f) Notwithstanding the foregoing, if (A) the Calculation Agent
determines that (i) since the Call Notice, an Event of Default, or any event
which, with the giving of notice or the passage of time, or both, would
constitute an Event of Default with respect to the Notes shall have occurred and
be continuing, (ii) a Market Disruption Event has occurred following the
exercise of the Call Option, or (iii) the Bidding Dealer shall not have provided
its Bid in a timely manner substantially as provided above, or (B) the Spread is
not acceptable to the Company, the Call Option and the Floater Option will be
automatically revoked, and the Put Option will be automatically exercised by the
Trustee on behalf of the Holders of the Notes.
If the Company, at any time after the Coupon Reset Date and at least
six Business Days prior to October 15, 2008, irrevocably determines not to
exercise its right to reset the floating interest rate on the Notes to a fixed
rate pursuant to
- 13 -
Section 10 below, it may repurchase and cancel the Notes and shall give written
notice to the Trustee of such determination at least six Business Days prior to
the date on which it will make such repurchase. In such case, or if the Company
otherwise does not exercise or is deemed not to have exercised the Second Call
Option, the Company (i) will be required to purchase the Notes on October 15,
2008, or such earlier date as it may determine, at a purchase price equal to 100
percent of the principal amount thereof, plus accrued and unpaid interest to
October 15, 2008 or such earlier date, (ii) will deliver to the Trustee, not
later than 12:00 noon, New York time, on such date, an amount equal to 100
percent of the principal amount of the Notes plus any accrued and unpaid
interest in immediately available funds for payment of such amount on such date,
and (iii) the Holders of the Notes shall be required to deliver, and will be
deemed to have delivered, the Notes to the Company or the Trustee against
payment therefor on such date through the facilities of the Depository. The
Notes will thereupon be cancelled and no Notes will be issued in lieu of or in
exchange therefor.
10. Floater Option Coupon Reset Process -- Floating Rate to Fixed Rate.
If the Company has exercised the Second Call Option, the Company and the
Calculation Agent shall complete the following steps in order to determine the
interest rate to be paid on the Notes from and including the New Coupon Reset
Date to the Final Maturity Date. The Company and the Calculation Agent shall use
reasonable efforts to cause the actions contemplated below to be completed in as
timely a manner as possible.
(a) The Company shall provide the Calculation Agent with the Dealer
List, no later than four Business Days prior to the New Coupon Reset Date,
containing the names and addresses of at least three and no more than five
dealers from which it desires the Calculation Agent to obtain the Bids for the
purchase of such Notes.
(b) Within one Business Day following receipt by the Calculation Agent
of the Dealer List, the Calculation Agent shall provide to each Dealer on the
Dealer List (i) a copy of this Prospectus Supplement and the accompanying
Prospectus relating to the offering of the Notes, (ii) a copy of the form of the
Notes, and (iii) a written request that each such Dealer submit a Bid to the
Calculation Agent by the Bid Deadline on the third Business Day prior to the New
Coupon Reset Date (the "New Bid Date"). Each Dealer shall be provided with (i)
the name of the Company, (ii) an estimate of the Purchase Price (which shall be
stated as a U.S. dollar amount and be calculated by the Calculation Agent in
accordance with paragraph (c) below), (iii) the principal amount and maturity of
the Notes, (iv) the New Coupon Reset Date, and (v) the method by which interest
will be calculated on the Notes.
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(c) The Purchase Price shall be equal to (i) the principal amount of
the Notes plus (ii) a premium which shall be equal to the Settlement Amount plus
an amount equal to the interest payable on a note with a maturity of the New
Coupon Reset Date, accruing interest (payable at maturity) at a per annum rate,
reset daily, equal to three-month LIBOR accruing from the Coupon Reset Date, and
having a principal amount equal to the Settlement Amount (the "New Fixed Notes
Premium").
(d) Following receipt of the Bids, the Calculation Agent shall provide
written notice to the Company, setting forth (i) the names of each of the
Dealers from whom the Calculation Agent received Bids on the New Bid Date, (ii)
the Bid submitted by each such Dealer, and (iii) the Purchase Price as
determined pursuant to paragraph (c) above. Except as provided below, the
Calculation Agent shall thereafter select, from the three Bids received, the
Selected Bid and establish a new rate of interest for the Notes (the "New Coupon
Reset Rate") equal to the interest rate which would amortize the New Fixed Notes
Premium fully over the term of the Notes at the Yield to Maturity indicated by
the Selected Bid; provided, however, that if the Calculation Agent has not
received a Bid from a Dealer by the Bid Deadline on the New Bid Date, the
Selected Bid shall be the lowest of all Bids received by such time, and
provided, further, that if any two or more of the lowest Bids submitted are
equivalent, the Company shall in its sole discretion select any of such
equivalent Bids (and such selected Bid shall be the Selected Bid).
(e) Immediately after calculating the New Coupon Reset Rate, the
Calculation Agent shall provide written notice to the Company and the Trustee,
setting forth such New Coupon Reset Rate as the new interest rate on the Notes,
effective from and including the New Coupon Reset Date to the Final Maturity
Date, by delivery to the Trustee on or before the New Coupon Reset Date of an
officers' certificate.
(f) The Company shall sell the Notes to the Dealer that made the
Selected Bid at the Purchase Price, such sale to be settled on the New Coupon
Reset Date in immediately available funds.
(g) Notwithstanding the foregoing, if the Calculation Agent determines
that (i) since the exercise of the Second Call Option, an Event of Default, or
any event which, with the giving of notice or the passage of time or both, would
constitute an Event of Default with respect to the Notes shall have occurred and
be continuing, (ii) a Market Disruption Event has occurred following the
exercise of the Second Call Option, or (iii) two or more of the Dealers shall
have failed to provide Bids in a
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timely manner substantially as provided above, the Second Call Option will be
automatically revoked, and the Company will be deemed to have determined not to
exercise its right to reset the floating rate on the Notes to a fixed rate, as
described in Section 9 above.
11. Settlement on Exercise of Call Option or Put Option. If
the Callholder exercises the Call Option and the Company does not exercise the
Call Option Override, then, on the Coupon Reset Date, all beneficial interests
in the Notes shall be transferred to an account at the Depository designated by
the Callholder. The transfers shall be made automatically, without any action on
the part of any Holder or beneficial owner, by book entry through the
Depository. The Callholder shall be obligated to make payment of the Call Price
in immediately available funds for credit to the accounts of the participants of
the Depository through which beneficial interests in the Notes are held, by 2:00
p.m. New York time on the Business Day prior to the Coupon Reset Date. Each
transfer shall be made against the corresponding payment, and each payment shall
be made against the corresponding transfer, in accordance with the Depository's
applicable procedures ("Applicable Procedures"). If the Callholder fails to pay
the Call Price when due or if the Company exercises the Call Option Override,
the Call Option shall be deemed not to have been exercised and the Put Option
shall be deemed to have been automatically exercised. In these circumstances,
the Company shall be obligated to pay the Put Redemption Price for the Notes on
the Coupon Reset Date, with settlement occurring as described in the next
paragraph. In any event, the Company shall remain obligated to make payment of
accrued and unpaid interest due on the Notes, with interest payable on the
Coupon Reset Date being payable to the Holders of the Notes on the Record Date
for such payment.
If the Call Option is not exercised, the Callholder fails to pay the
Call Price when due, or the Company exercises the Call Option Override, and the
Put Option is therefore exercised, then, on the Coupon Reset Date, all
beneficial interests in the Notes to be purchased shall be transferred to an
account at the Depository designated by the Company. The transfers shall be made
automatically, without any action on the part of any Holder or beneficial owner,
by book entry through the Depository. The Company shall be obligated to make
payment of the Put Redemption Price for credit to the accounts of the
participants of the Depository through which beneficial interests in the Notes
are held, by 12:00 noon New York Time on the Coupon Reset Date. Each transfer
shall be made against the corresponding payment, and each payment shall be made
against the corresponding transfer, in accordance with Applicable Procedures. If
the Company fails to pay the Put Redemption Price when due, accrued interest
from the Coupon Reset Date to
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the date the payment is made shall be payable as part of the Put Redemption
Price. Whether or not the Notes are purchased pursuant to the Put Option, the
Company shall remain obligated to make payment of accrued and unpaid interest
due on the Notes, with interest payable on the Coupon Reset Date being payable
to the Holders of the Notes on the Record Date for such payment.
The transactions described above shall be executed through the
Depository in accordance with Applicable Procedures, and the accounts of the
respective participants of the Depository shall be debited and credited and the
Notes delivered by book entry as necessary to effect the purchases and sales
thereof. The transactions shall settle in immediately available funds through
the Depository. Notwithstanding any provision hereof or in the Indenture, none
of the Company, the Callholder, or the Trustee, nor any agent of any such
person, shall have any responsibility with respect to Applicable Procedures or
for any payments, transfers or other transactions, or any notices or other
communications, among the Depository, any of its direct or indirect participants
and any beneficial owners of the Notes. For all purposes of this Security and
the Indenture, any payment or notice to be made or given with respect to this
Security by the Company, the Callholder or the Trustee shall be deemed made or
given when made or given to the Depository or its nominee, in accordance with
Applicable Procedures.
Substantially similar procedures shall also apply with respect to the
Second Call Option and the New Coupon Reset Date and the transactions described
in Sections 9 and 10 above.
The settlement procedures described above, including those for payment
for and delivery of the Notes purchased by the Callholder or the Company on the
Coupon Reset Date or the New Coupon Reset Date, may be modified, notwithstanding
any contrary terms of the Indenture, to the extent required by the Depository
or, if the book-entry system is no longer available for the Notes at the
relevant time, to the extent required to facilitate these transactions in the
Notes in certificated form. In addition, the Callholder and the Company may,
notwithstanding any contrary terms of the Indenture, modify the settlement
procedures referred to above in order to facilitate the settlement process.
Notwithstanding any provision to the contrary set forth in the
Indenture, the Company shall (i) use its reasonable best efforts to maintain the
Notes in book-entry form with the Depository and to appoint a successor
depository to the extent necessary to maintain the Notes in book-entry form, and
(ii) waive any discretionary right it otherwise may have under the Indenture to
cause the Notes to
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be issued in certificated form.
12. Subordination. The indebtedness evidenced by the
Securities of this series is, to the extent provided in the Indenture,
subordinate and junior in right of payment to the Company's obligations to
holders of Senior Indebtedness of the Company. The Indenture also provides that
it, upon the occurrence of certain events of bankruptcy or insolvency relating
to the Company, there remains, after giving effect to such subordination
provisions, any amount of cash, property or securities available for payment or
distribution in respect of Securities of this series (defined in the Indenture
as "Excess Proceeds"), and if, at such time, any Entitled Person has not
received payment in full of all amounts due or to become due on or in respect of
Other Financial Obligations, then such Excess Proceeds shall first be applied to
pay or provide for the payment in full of such Other Financial Obligations
before any payment or distribution may be made in respect of Securities of this
series. This Security is issued subject to the provisions of the Indenture
regarding subordination to Senior Indebtedness and payments to Entitled Persons
in respect of Other Financial Obligations. Each Holder of this Security, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination and payment of Excess
Proceeds so provided and (c) appoints the Trustee his attorney-in-fact for any
and all such purposes.
13. Default, Waiver, Amendment and Enforcement. (a) If an
Event of Default (defined in the Indenture as certain events involving the
bankruptcy, insolvency or reorganization of the Company) shall occur and be
continuing, the principal of the Securities of this series may be declared due
and payable in the manner and with the effect provided in the Indenture. The
principal of the Securities of this series may not be declared due and payable
upon a Default (as defined in the Indenture), other than a Default which also
constitutes an Event of Default, although the Trustee may in its discretion
protect the rights of Holders by appropriate judicial proceeding as provided in
the Indenture.
(b) The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of not less than a majority in principal amount of the
Securities at the time Outstanding of each series to be affected. The Indenture
also contains provisions permitting the Holders of specified percentages in
principal amount of
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the Securities of each series at the time Outstanding, on behalf of the Holders
of all Securities of such series, to waive compliance by the Company with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and all future
Holders of this Security and of any Security issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent or waiver is made upon this Security.
(c) No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional to pay the principal of (and
premium, if any) and interest on this Security herein provided, and at the
times, place and rate, and in the coin or currency, herein prescribed.
14. Form and Denomination; Global Securities. (a) The
Securities of this series are issuable only in registered form without coupons
in denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations set forth therein and herein,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
(b) As provided in the Indenture and subject to certain
limitations set forth therein, the transfer of this Security is registrable in
the Security Register, upon surrender of this Security for registration of
transfer at the office of the Company in any place where the principal of and
interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities of this series,
of authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
(c) The Security evidenced by this certificate has been issued
in the form of a Global Security and, except as otherwise provided in this
Security, the
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provisions of the Indenture governing Global Securities shall apply to this
Security for as long as this Security shall be issued in such form.
15. Holder. Prior to due presentment of this Security for
registration of a permitted transfer, the Company, the Trustee and any agent of
the Company or the trustee may treat the Person in whose name this Security is
registered as the owner hereof for all purposes, whether or not this Security
be overdue, and neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary.
16. Redemption. Except as otherwise specifically provided in
this Security, the Securities of this series will not be redeemable prior to
maturity.
17. Interpretation. All terms used in this Security which are
defined in the Indenture shall have the meanings assigned to them in the
Indenture. Unless the context requires otherwise, terms defined herein include
the plural as well as the singular and vice-versa, and the words "herein" and
"hereof", and words of similar import, refer to this Security as a whole and not
to any particular paragraph or other subdivision.
18. Governing Law. As provided in the Indenture, this Security
shall for all purposes be governed by and construed in accordance with the laws
of the State of New York.
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